The Interest Rate Used to Calculate the Present Value of Future

question 2

Multiple Choice

The interest rate used to calculate the present value of future cash flows is called the:

• A)compound interest rate
• B)present value factor
• C)future value factor
• D)current yield rate
• E)discount rate

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Definitions:

Fixed Expenses

Costs that do not fluctuate with the level of production or sales, such as rent, insurance, and salaries.

Budgeted Sales

An estimate of the sales in units or revenue that a company plans to achieve during a specific period.

Cash Disbursements

The process of paying out money from a fund or account, usually for business-related expenses or transactions.

Manufacturing Overhead Budget

A detailed plan that outlines the expected costs other than direct materials and direct labor that will be incurred in the manufacturing process within a specific period.