A Finite Stream of Regular Cash Flows Over a Given

question 55

Multiple Choice

A finite stream of regular cash flows over a given period is known as a/an:

• A) perpetuity.
• B) annuity.
• C) debenture.
• D) allowance.

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Definitions:

Discount Rate

An interest rate used to discount future cash flows to their present value, often applied in capital budgeting and investment valuation.

Working Capital

A financial metric representing the difference between a company's current assets and current liabilities, indicating its short-term liquidity.

Salvage Value

The calculated leftover value of an asset at the expiry of its service life.

Straight-Line Method

A depreciation method that allocates an equal amount of depreciation expense for an asset over its useful life.