The Rate Used to Find the Present Value of a Future

question 88

Multiple Choice

The rate used to find the present value of a future payment is called the:

• A) Simple rate.
• B) Discount rate.
• C) Compound rate.
• D) Future value rate.
• E) Loan rate.

---

Definitions:

Conversion Privilege

A feature of certain securities that allows the holder to convert them into a different type of security, typically common stock, under specific conditions.

Bonds Payable

A long-term liability account on a company's balance sheet, representing bonds that the company is obligated to repay at a specified future date.

Additional Paid-in Capital

The amount of money investors pay for shares over the par value, reflecting the additional funds contributed by shareholders.