What Is the Present Value of a Stream of Annual

question 98

Multiple Choice

What is the present value of a stream of annual end-of-the-year annuity cash flows if the discount rate is 0%,and the cash flows of $50 last for 20 years?

• A)Less than $1,000
• B)Exactly $1,000
• C)More than $1,000
• D)This question cannot be answered because we have an interest rate of 0.0%.

---

Definitions:

Credit

An accounting entry that represents an increase in liabilities or equity or a decrease in assets, opposite of a debit.

Offset Side

The side of a transaction that counterbalances the primary entry, ensuring the accounting equation remains balanced.

Increase Side

The side of an account on which increases are recorded, depending on the type of account it could be the debit or credit side.

Right Side

In accounting, refers to the credit side of a ledger account, opposite to the left or debit side, showcasing the sources of funds or increases in liabilities or equity.