Assuming a Positive Interest Rate, the Present Value of Money

question 77

Multiple Choice

Assuming a positive interest rate, the present value of money suggests:

• A) $1 today = $1 in one year
• B) $1 today > $1 in one year
• C) $1 today < $1 in one year
• D) $1 today <= $1 in one year
• E) None of these

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Definitions:

Net Present Value (NPV)

A method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Capital Cost Allowance (CCA)

A yearly deduction or depreciation on the cost of certain assets that can be claimed for tax purposes in Canada.

Operating Cash Flow

Cash generated from the core business operations of a company, excluding financing and investment activities.

Sensitivity Analysis

A method employed to understand the effect of varying independent variable values on a specific dependent variable, considering certain assumptions.