To Reflect Greater Uncertainty (Greater Risk)about a Future Cash Inflow,an

question 135

Multiple Choice

To reflect greater uncertainty (greater risk) about a future cash inflow,an analyst could

• A)increase the discount rate for the cash flow.
• B)decrease the discounting period for the cash flow.
• C)increase the expected value of the future cash flow before it is discounted.
• D)extend the acceptable length for the payback perioD.

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Definitions:

Hourly Rate

The amount of money paid or earned for each hour of work.

Equivalent

Equal in value, amount, function, meaning, etc.

Rate Optimizer GIC

A Guaranteed Investment Certificate (GIC) that adjusts its interest rate based on market changes to provide optimal returns.

Total Interest

The cumulative amount of interest paid or earned over a particular period of time.