If the Interest Rate Is Positive, the Present Value of a Stream

question 30

Multiple Choice

If the interest rate is positive, the present value of a stream of payments is

• A)greater than the sum of the actual payments over time.
• B)less than the sum of the actual payments over time.
• C)equal to the sum of the actual payments over time.
• D)unrelated to the stream of actual payments over time.

---

Definitions:

Unemployment Compensation

Financial payments provided to individuals who have lost their job and meet certain eligibility requirements.

Federal Income Tax

is the tax levied by the national government on individuals' and entities' annual earnings, varying based on income levels and filing status.

Withholding

This refers to the amount of an employee's pay withheld by the employer and sent directly to the government as partial payment of income tax.

Exemptions

Deductions allowed by law to reduce the amount of income that is subject to taxation.