In Which of the Following Situations Would It Not Be

question 94

Multiple Choice

In which of the following situations would it not be appropriate to use the following formula: PV = C₁/(1 + r₁) + C₂/(1 + r₂) ² + ....+ Cn/(1 + rn) ⁿ
When determining the present value (PV) of a cash flow stream?

• A) when yield curves are flat
• B) when short-term and long-term interest rates vary widely
• C) when the inflation rate is high
• D) when the discount rate is high
• E) when the real interest rate is high