You Are Scheduled to Receive a $750 Cash Flow in One

question 94

Multiple Choice

You are scheduled to receive a $750 cash flow in one year, a $1,000 cash flow in 2 years, and pay a $300 payment in 4 years. If interest rates are 6% per year, what is the combined present value of these cash flows?

• A) $1,359.92
• B) $1,413.92
• C) $1,592.63
• D) $1,613.02

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Definitions:

Natural Business Year

A fiscal year that ends when business activities have reached the lowest point in an annual operating cycle.

Formal Accounting Records

Official documents and books that systematically record financial transactions and positions of a business.

Work Sheet

An internal document used by accountants to prepare financial statements, gather information, and perform adjustments before the closing of accounts.

Reversing Entries

Journal entries made the first day of the period that are the exact opposite of the related adjusting entries of the prior period.