Consider the Following Timeline: If the Current Market Rate

question 51

Multiple Choice

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

• A) $20.67
• B) $320.67
• C) -$20.67
• D) $70.00

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.

Treasury Shares

Stock that has been bought back by the issuing company, reducing the amount of outstanding stock on the open market.

Par Value

Par value is a nominal value assigned to a security or stock as stated in its corporate charter, often used to determine legal capital or face value.

Journal Entry

A record in accounting that represents a transaction and its effect on accounts.