-Refer to the Figure Above

question 36

Multiple Choice

-Refer to the figure above. If AV1 = 75 and AV2 = 95, AVT would be

• A)7125.
• B)95.
• C)75.
• D)1275.

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Definitions:

Present Value

The actual value now of future money amounts or cash inflows based on a defined rate of yield.

Earnings Rate

The rate at which a company or investment generates income, usually expressed as a percentage of the investment or the company's capital.

Compound Interest

Interest on a deposit or loan that is calculated based on the initial amount along with the total of all interest accumulated in earlier periods.

Present Value Index

A financial calculation that allows the comparison of the present value of cash inflows to the present value of cash outflows.