Consider the Following Timeline Detailing a Stream of Cash Flows

question 6

Multiple Choice

Consider the following timeline detailing a stream of cash flows: If the current market rate of interest is 8%,then the present value of this stream of cash flows is closest to:

• A)$22,871
• B)$21,211
• C)$24,074
• D)$26,000

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Definitions:

TVC

Total Variable Costs, which refer to costs that change in proportion to the level of output or activity in a business.

MC

Marginal Cost refers to the additional total cost incurred from the production of one more unit of a product or service.

Marginal Costs

Marginal Costs represent the change in total cost that arises from producing one additional unit of a good or service.

Average Variable Costs

The cost per unit of variable inputs divided by the total output, indicative of the average amount spent on variable costs per unit of output produced.