The Present Value of $1 Payable in the Future Decreases

question 5

Multiple Choice

The present value of $1 payable in the future decreases

• A)the higher r is and the sooner it is to be paid.
• B)the lower r is and the sooner it is to be paid.
• C)the higher r is and the longer time until it is paid.
• D)the lower r is and the longer time until it is paid.

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Definitions:

Accounting Statements

Financial documents that summarize the financial status and performance of a company, including the balance sheet, income statement, and cash flow statement.

Corporate Income Tax

A tax imposed on the net income or profit of corporations, calculated as a percentage of their earnings.

Working Capital

The gap between a business's present assets versus its current debts, showcasing the liquid funds for operational needs.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets, calculated as current assets divided by current liabilities.