In Determining the Future Value of a Single Amount, One

question 88

Multiple Choice

In determining the future value of a single amount, one measures

• A)the future value of periodic payments at a given interest rate.
• B)the present value of an amount discounted at a given interest rate.
• C)the future value of an amount allowed to grow at a given interest rate.
• D)the present value of periodic payments at a given interest rate.

---

Definitions:

Sales Discounts

Reductions granted on the selling price of goods or services to encourage prompt payment by the customer.

Cash Collection

The process of gathering and managing payments received from customers.

Discount Period

The period between the issuance of a bill, note, or bond and its maturity date, during which it may be purchased at a reduced price to yield interest upon redemption at full price.

Receivables Turnover Ratio

A financial metric that measures how efficiently a company collects its outstanding receivables over a period, calculated as sales divided by average accounts receivable.