Consider the Following Timeline: If the Current Market Rate

question 1

Multiple Choice

Consider the following timeline: If the current market rate of interest is 12%,then the net present value of the cash flows is closest to:

• A) $20.6678
• B) $320.6678
• C) -$20.6678
• D) $70.00

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Definitions:

Direct Method

A way of preparing the cash flow statement in which actual cash receipts and payments are reported, rather than adjusting net income for changes in non-cash accounts.

Net Cash Flow

The amount of cash generated or lost over a period, taking into account cash inflows from operations, investments, and financing.

Operating Activities

Transactions and events that relate to the primary operations of the business, such as sales and purchase of goods and services.

Accounts Receivable

Unpaid customer dues to an enterprise for availed services or acquired goods.