Present Value Is Based on

question 15

Multiple Choice

Present value is based on

• A) the dollar amount to be received.
• B) the length of time until the amount is received.
• C) the interest rate.
• D) All of these answer choices are correct.

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Definitions:

Perpetuity

A financial instrument that provides a stream of infinite cash flows or payments.

Compounded Monthly

Interest calculated on the initial principal and also on the accumulated interest of previous periods, done monthly.

RRSP

Registered Retirement Savings Plan, a tax-deferred savings account in Canada that allows individuals to save for retirement while potentially reducing their taxable income.

RRIF

Registered Retirement Income Fund, a tax-deferred retirement plan in Canada that an individual can use to generate income from the assets inside their Registered Retirement Savings Plan.