The Present Value of $10,000 to Be Received in Five

question 11

Multiple Choice

The present value of $10,000 to be received in five years will be smaller if the discount rate is

• A)increased.
• B)decreased.
• C)not changed.
• D)equal to the stated rate of interest.

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Definitions:

Liabilities

Financial obligations or debts a company owes to external parties that must be settled in the future.

Uncertain Timing

Refers to the ambiguity or unpredictability associated with the timing of an event or outcome, often affecting planning and decision-making processes.

Uncertain Amount

An Uncertain Amount refers to a value or quantity that is not fixed or precisely determined, often due to volatility or incomplete information.

Harmonized Sales Tax (HST)

A combined tax in some Canadian provinces that merges the federal goods and services tax (GST) with the provincial sales tax (PST) into a single value-added tax.