The Present Value of a Future Payment of Money Will

question 33

Multiple Choice

The present value of a future payment of money will be higher the

• A)higher the interest rate or the further in the future the payment.
• B)lower the interest rate or the further in the future the payment.
• C)higher the interest rate or the nearer the date of the future payment.
• D)lower the interest rate or the nearer the date of the future payment.
• E)lower the interest rate,independent of the date of the future payment.

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Definitions:

Bid Price

The price at which a buyer is willing to purchase a security, currency, or commodity.

Discount Rate

It’s the interest rate applied for determining the current value of cash flows expected in the future through discounted cash flow analysis.

Depreciation Tax Shield

A reduction in taxable income that results from taking the depreciation expense as a tax deduction, thus reducing the firm's tax liability.

Corporate Tax Rate

The corporate tax rate is the percentage of a corporation's taxable income that it must pay to the government, which varies by country and sometimes within regions of countries.