Which of the Following Is the Correct Expression for Finding

question 266

Multiple Choice

Which of the following is the correct expression for finding the present value of a $1,000 payment one year from today if the interest rate is 6 percent?

• A) $1,000 1.06)
• B) $1,0001.06)
• C) $1,000/1.06)
• D) None of the above is correct.

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Definitions:

Net Present Value

A financial metric that calculates the value of a project or investment in today's dollars by discounting future cash flows to the present.

Security Market Line

A graphical representation in the Capital Asset Pricing Model (CAPM) that displays the expected return of an investment as a function of its beta, or systematic risk.

Risky Projects

Initiatives or investments that carry a high level of uncertainty or likelihood of not achieving the expected financial returns.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, providing a measure that reflects the relative significance of each number.