The Table Above Shows the Interest Rates Available from Investing

question 91

Multiple Choice

The table above shows the interest rates available from investing in risk-free U.S. Treasury securities with different investment terms. What is the present value (PV) of cash flows from an investment that yields $6000 at the end of each year for the next four years?

• A) $18,111
• B) $27,167
• C) $31,695
• D) $22,639

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Definitions:

Noncash Financing

Noncash financing activities are financial transactions that do not involve the physical flow of cash, such as issuing stock to purchase an asset or converting debt to equity.

Investing Activities

Investing activities are financial transactions related to the acquisition or sale of long-term assets or investments not related to the core business operations.

Financing Activities

Transactions and events affecting the equity and debt of the company, usually related to borrowing, repaying, and issuing equity.

Noncash Investing

Investment activities that do not involve the immediate outlay of cash, such as the exchange of one asset for another.