The Present Value of a $110 Payment in One Year

question 205

Multiple Choice

The present value of a $110 payment in one year, given an annual 10% interest rate, is:

• A) $10.
• B) $11.
• C) $100.
• D) $110.

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer.

Resold

A term referring to items that have been sold and then sold again, either by the original buyer or by another party.

Additional Paid-In Capital

The amount of equity capital that is more than the par value of issued shares, representing additional investment from shareholders.

Stock Dividend

A distribution of additional shares of a company's stock to its shareholders, usually in lieu of cash dividends.