Present Value Is

question 259

Multiple Choice

Present value is

• A) unrelated to the rate of interest.
• B) lower the longer the time horizon.
• C) not expressed in today's dollars.
• D) opposite the time value of money.

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Definitions:

Investment

The action of dedicating financial resources in expectation of gaining profits or income.

Discounted Payback Period

The time it takes to recoup an investment considering the time value of money, by discounting future cash flows to present value.

Market Value

The immediate cost at which services or assets are exchangeable in a free trading market.

Net Present Value

A financial metric that discounts all expected future cash flows to their present value to assess the viability or profitability of an investment.