Discounting One Year What Is the Present Value of a $250

question 49

Multiple Choice

Discounting One Year What is the present value of a $250 payment in one year when the discount rate is 6 percent?

• A)$245.00
• B)$235.85
• C)$250.00
• D)$265.00

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Definitions:

Cash Inflows

The total amount of money being transferred into a company, typically from operations, financing, or investing activities.

Net Cash Inflows

The total amount of cash received by a company during a specific period, minus the total amount of cash outflows.

Payback Period

The length of time required to recover the cost of an investment, calculated by dividing the initial investment by the annual cash inflow.

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the time value of money and risk.