The Present Value of Receiving M Dollars in Year T

question 196

Multiple Choice

The present value of receiving M dollars in year t when the prevailing interest rate is i is given by the formula _____

• A)M − i^t.
• B)M × (1 − i)^t.
• C)M/(1 + i)^t.
• D)M × i^t.
• E)M/i^t.

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Definitions:

Revenue Recognition

The guideline in accounting that determines the precise situations where revenue should be recognized or reported.

Future Event

An occurrence or situation that has not yet happened but is anticipated or expected to occur in the course of business or life.

Accounts Receivable

Amounts owed to a business by its customers for goods or services delivered on credit.

Revenue Recognition

A principle guiding how and when revenue is recognized in the accounting records, generally when earned and realizable.