When Computing a Present Value, Which of the Following Is

question 35

Multiple Choice

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

• A) You should adjust the discount rate to match the interval between 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.

Analyze the factors influencing the savings and loan industry.

Understand the role and operations of non-bank financial institutions.

Recognize the global aspect of currency distribution.

Identify the functions and importance of large denomination time deposits and other banking elements.

---

Definitions:

Long-term Capital Gain

Profit from the sale of an asset held for more than one year, typically taxed at a lower rate than regular income.

Section 1245

A section of the tax code that involves recapturing depreciation on certain types of property as ordinary income upon sale.

Section 1231 Gain

A gain from the sale or exchange of property used in a business, subject to favorable tax treatment under Section 1231 of the U.S. tax code.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.