The Value That a Series of Payments Will Grow to in the Future

question 40

Multiple Choice

The value that a series of payments will grow to in the future is referred to as the:

• A) Future value of a single amount.
• B) Present value of a single amount.
• C) Future value of an annuity.
• D) Present value of an annuity.

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Definitions:

Payback Period

The duration required to recoup the cost of an investment or project.

Cash Inflows

Money received by a company from its various business activities, like sales, investments, and financing.

Initial Cost

Initial cost refers to the amount of money spent to acquire, or the cost associated with starting, an investment, project, or venture, including all necessary expenses to prepare the asset for its intended use.

Payback

The period of time required to recoup the funds expended in an investment, or how long it takes for an investment to reach a breakeven point.