If a Father and Mother Set Aside a Certain Amount

question 55

Multiple Choice

If a father and mother set aside a certain amount each year for their daughter's college fund, which table would be used to determine the amount necessary to be put away each year in order to reach a certain goal once the daughter attends college?

• A) The present value of $1
• B) The future value of $1.
• C) The future value of an annuity of $1.
• D) Present value of an annuity of $1.

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Definitions:

Net Present Value

The disparity between the current value of cash coming in and the current value of cash going out over a specific duration.

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from its total revenue.

Net Cash Flow

The difference between a company's cash inflows and outflows over a specific period, indicating its ability to generate cash.

Differential Revenue

The amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative.