In Order to Discount Multiple Cash Flows to the Present

question 13

Multiple Choice

In order to discount multiple cash flows to the present, one would use

• A) the appropriate compound rate.
• B) the appropriate discount rate.
• C) the appropriate simple rate.
• D) the appropriate tax rate.

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Definitions:

Planned Investment

Expenditures on capital goods by firms, intended to increase their future production capacity.

Marginal Propensity

The fraction of an additional amount of income that is spent on consumption.

Aggregate Expenditure

The total amount spent on national-level goods and services in an economy.

Disposable Income

Income available to households after accounting for taxes and social security charges, available for spending or saving.