When Computing a Present Value,which of the Following Is TRUE

question 78

Multiple Choice

When computing a present value,which of the following is TRUE?

• A)You should adjust the discount rate to match the time period of the cash flows.
• B)You should adjust the future value to match the present value.
• C)You should adjust the time period to match the present value.
• D)You should adjust the cash flows to match the time period of the discount rate.

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Definitions:

Accounting Numbers

Quantitative financial data reported in the financial statements of a company, representing its economic activities.

Unsecured

Pertaining to loans or debts that are not backed by collateral, making them riskier for lenders.

Debenture

A type of debt instrument that is not secured by physical assets or collateral but is based on the issuer's creditworthiness and reputation.

Risk Premium

The additional return over the risk-free rate that an investment is expected to yield, compensating investors for taking on higher risk.