The Present Value of the Following Cash Flows Is Known

question 112

Multiple Choice

The present value of the following cash flows is known to be $6,939.91; $500 today, $2,000 in one year, and $5,000 in two years.What discount rate is being used?

• A)3 percent
• B)4 percent
• C)5 percent
• D)6 percent $6,939.91 = $500/(1 + i)⁰ + $2,000/(1 + i)¹ + $5,000/(1 + i)²

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Definitions:

Thermoreceptor

A type of sensory receptor specialized to detect changes in temperature.

Meissner's Corpuscles

Specialized nerve endings in the skin that are sensitive to light touch and texture.

Hypodermis

The deepest layer of the skin, composed of fat and connective tissue, providing insulation and cushioning for the body.

Type I Error

Type I Error occurs when a false null hypothesis is rejected, indicating a false positive finding in hypothesis testing.