To Compute the Present Value of $1,000 Discounted at the Rate

question 44

Multiple Choice

To compute the present value of $1,000 discounted at the rate of 5% per year, to be received at the end of 3 years, you should enter the following variables into a financial calculator

• A) N=3, i=.05, PV=1000
• B) N=3, i=5, FV=1000
• C) N=3, i=5, PMT=1000
• D) N=3, i=5, PV=1000

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Definitions:

Actual Cost

The true total amount spent on a project or acquisition, including all relevant expenses and fees.

Market Rate

The prevailing interest rate available in the marketplace for loans, savings, and investments, also reflecting the cost of borrowing money.

Weighted Average Cost

The calculation that takes into account the varying costs of goods and the quantity of each, to determine an average cost.

Preferred Stock

A class of stock that typically has a priority claim on dividends and assets in the event of liquidation over common stock.