The Interest Rate Used to Compute the Present Value of a Future

question 36

Multiple Choice

The interest rate used to compute the present value of a future cash flow is called the:

• A)prime rate.
• B)current rate.
• C)discount rate.
• D)compound rate.
• E)simple rate.

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Definitions:

Taxable Income

The amount of income subject to tax, after deductions and exemptions.

Missed Dividend Payment

Occurs when a company does not make a scheduled dividend payment to its shareholders, often indicating financial difficulties.

Preferred Stock

A class of ownership in a corporation with a fixed dividend that is paid before any dividends are paid to common stockholders.

Cumulative

Describes something that increases in quantity, degree, or force by successive additions.