The Present Value of a Future Sum Increases as Either

question 129

True/False

The present value of a future sum increases as either the discount rate or the number of periods per year increases, other things held constant.

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Definitions:

Sustainable Rate Of Growth

The maximum rate at which a company can grow its sales and earnings without increasing its financial leverage or debt.

Retention Ratio

The retention ratio is a financial metric indicating the percentage of a company's earnings that are not paid out as dividends but are reinvested back into the business.

Profit Margin

A financial metric that measures the percentage of revenue remaining after deducting all expenses, indicating the efficiency and profitability of a company's operations.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing debt or equity financing.