You Are Scheduled to Receive $10,000 in One Year

question 33

Multiple Choice

You are scheduled to receive $10,000 in one year. What will be the effect of an increase in the interest rate on the present value of this cash flow?

• A) It will cause the present value to fall.
• B) It will cause the present value to rise.
• C) It will have no effect on the present value.
• D) The effect cannot be determined with the information provided.

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Definitions:

Sales

The process or activity of selling goods or services to customers.

Cash Discounts

Discounts earned by buyers who pay bills within a stated period.

Sterling Industries

A fictitious or placeholder name that could refer to a company involved in manufacturing, technology, or another sector.

Net 30

A payment term that indicates the invoice amount must be paid in full within 30 days from the invoice date.