The Present Value Concept Is Widely Applied in Business Because

question 7

Multiple Choice

The present value concept is widely applied in business because:

• A)inflation erodes the purchasing power of money.
• B)money has value over time.
• C)long-term operating assets depreciate over time.
• D)most obligations are settled within a year.

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Definitions:

Beta

A gauge of the level of variability, or consistent risk, attached to a security or portfolio against the backdrop of the broader market.

Treasury Bills

Short-term government securities with maturities of one year or less, considered a safe and liquid investment.

Debt-equity Ratio

A numerical expression that demonstrates how a company's assets are financed through shareholders' equity and debt, typically used to analyze financial leverage.

Weighted Average Cost

A calculation that takes into account the varying costs of different sources of capital, weighted by their proportions in the capital structure.