In Which of the Following Situations Would It Not Be

question 39

Multiple Choice

In which of the following situations would it not be appropriate to use the following formula: PV = C₀ + C₁/(1 + r) + C₂/(1 + r) ² + . . . . + C_n/(1 + r) ⁿ
When determining the present value (PV) of a cash flow stream?

• A)when yield curves are flat
• B)when short-term and long-term interest rates vary widely
• C)when the inflation rate is high
• D)when the discount rate is high

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Definitions:

Sales on Account

Transactions where goods or services are sold and payment is deferred, resulting in the creation of accounts receivable for the seller.

Sales on Account

Transactions where goods or services are sold and payment is deferred, leading to the creation of accounts receivable on the balance sheet.

Merchandise

Goods that are purchased, stored, and sold by a business in its regular operations, often referred to as inventory.

Cash Collections

The process of receiving payment from customers for goods or services provided, impacting the company's cash flow positively.