Suppose You Are Trying to fiNd the Present Value of Two

question 105

Multiple Choice

Suppose you are trying to find the present value of two different cash flows using the same interest rate for each. One cash flow is $1,000 ten years from now, the other $800 seven years from now.
Which of the following is true about the discount factors used in these valuations?

• A) The discount factor for the cash flow ten years away is always less than or equal to the discount factor for the cash flow that is received seven years from now.
• B) Both discount factors are greater than one.
• C) Regardless of the interest rate, the discount factors are such that the present value of the $1,000 will always be greater than the present value of the $800.
• D) Since the payments are different, no statement can be made regarding the discount factors.
• E) You should factor in the time differential and choose the payment that arrives the soonest.

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Definitions:

Immediate Input

Refers to a type of input in programmable logic controllers (PLCs) that is processed as soon as the state change is detected without waiting for the rest of the program to be executed.

Immediate Output

An output action in a control system that occurs directly in response to an input condition without delay.

Program Scan

A program scan is the sequential process by which a programmable logic controller (PLC) or controller cycles through its instructions to control connected devices.

Forcing Functions

In the context of programming and engineering, forcing functions are elements designed to ensure certain actions occur or prevent undesired states, often used in automated systems to override standard operations for testing or emergency purposes.