The Time Value of Money Is

question 31

Multiple Choice

The time value of money is:

• A)Never relevant.
• B)Relevant only to merchandising firms.
• C)Relevant when deciding among alternatives with cash flows over one month to a year.
• D)Relevant when deciding among alternatives with cash flows over six months to a year.
• E)Relevant when deciding among alternatives with cash flows over two or more years.

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Definitions:

Financial Statement Users

Individuals or groups, such as investors, creditors, and regulatory agencies, who analyze financial statements to make informed decisions.

Cash Flows

The entirety of monetary transactions coming into and going out of a corporation, crucially affecting its immediate financial resources.

Indirect Method

An approach to preparing the cash flow statement where the net income is adjusted for non-cash transactions and changes in working capital to estimate cash flows from operating activities.

Cash Dividends

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.