Calculating the Present Value of a Future Cash Flow to Determine

question 107

Multiple Choice

Calculating the present value of a future cash flow to determine its value today is called:

• A) Discounted cash flow valuation.
• B) The discount rate.
• C) Future value compounding.
• D) Present value compounding.
• E) Timing the cash flow.

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Definitions:

Decrease in Accounts Receivable

A reduction in the amount of money owed to a business by its customers for goods or services delivered on credit.

Non-Operating Gains

Income from activities not related to a company's core operations such as profits from investments, property sales, or currency exchange.

Retirement of Notes Payable

The process of paying off or settling a debt obligation represented by promissory notes.

Cash Flows from Operating Activities

The section of a company's cash flow statement that represents the amount of money a company brings in from its regular business activities.