The Difference Between the Amount of Capital at the Beginning

question 105

Multiple Choice

The difference between the amount of capital at the beginning of a year and the amount of capital at the end of the year is equal to

• A) net investment.
• B) capital consumption.
• C) gross investment.
• D) financial consumption.
• E) depreciation.

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Definitions:

Present Value

The present value of future cash or cash flow amounts, determined using a specific rate of return.

Discount Rate

The rate of interest applied to calculate the current value of future cash flows within the discounted cash flow analysis framework.

Future Sum

Refers to the value of a current asset at a specified date in the future based on an assumed rate of growth or interest.

Mutual Fund

An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market devices, and other assets.