What Amount Should Be Deposited in a Bank Account Today

question 28

Multiple Choice

What amount should be deposited in a bank account today to grow to $10,000 three years from today?

• A)$10,000 × 1.260
• B)$10,000 × 1.260 × 3
• C)$10,000 ÷ 1.260
• D)$10,000 ÷ 1.080 × 3

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Definitions:

Valuation Model

A systematic approach used to determine the present value of an asset or a company based on expected future cash flows or earnings.

Weighted Average

A statistical measure calculated by multiplying each number in the data set by a predetermined weight and then summing all the products together to find their average, often used in finance for rates or costs.

Free Cash Flow

Free cash flow represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Weighted Average

A calculation that considers the varying weights of different items in a dataset, providing a measure that reflects their relative importance.