If the Friend Offers to Pay You $1 Five Years

question 15

Multiple Choice

If the friend offers to pay you $1 five years from today, the present value will:

• A)be higher than $1.
• B)depend upon the prevailing interest rate.
• C)be equal to zero, since you don't have the dollar.
• D)not be important in understanding the time value of money.

---

Definitions:

Intellectual Property

Intangible property that is the product of one’s mind and not one’s hands.

Partnership Agreement

A contract between business partners outlining the terms of their partnership, responsibilities, profit distribution, and rules for leaving the partnership.

Winding-Up Phase

The process of settling accounts and liquidating assets in the final stage of a company's existence.

Limited Liability

is a legal structure that limits the financial responsibility of an entity's owners or shareholders to the amount they have invested, protecting personal assets from business debts and obligations.