What Is the Present Value, When Interest Rates Are 10

question 118

Multiple Choice

What is the present value, when interest rates are 10 percent, of a $75 payment made every year forever?

• A) $6.75
• B) $675.00
• C) $750.00
• D) $1,000.00

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Definitions:

GAAP

Generally Accepted Accounting Principles, a set of accounting standards and procedures used in the United States to govern financial reporting.

Financing Provided

Funds supplied to businesses or individuals for the purpose of investing, expansion, or operating expenses that are expected to be repaid in the future.

Retained Earnings

The segment of net profits that are not distributed as dividends, instead kept within the company for reinvestment in its main operations or for debt repayment.

Current Asset

A slightly different term for assets likely to be used or turned into cash within one fiscal year or operating cycle, emphasizing liquidity.