Which of the Following Is Used as the Denominator While

question 41

Multiple Choice

Which of the following is used as the denominator while calculating the present value for a growing perpetuity that begins next period (PVP) ?

• A) The difference between i (the discount or interest rate) and g (the constant rate of growth of the cash flow)
• B) i (the discount or interest rate)
• C) g (the constant rate of growth of the cash flow)
• D) The addition of i (the discount or interest rate) and g (the constant rate of growth of the cash flow)

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period.

Net Realizable Value

The estimated selling price of an item in the ordinary course of business minus any costs associated with the sale or disposal of the item.

Bad Debt Expense

An estimated expense that represents the amount of receivables that a company does not expect to collect due to customers' inability to pay.

Credit Balance

This occurs when the total credits in an account exceed the total debits, often indicating money owed to a customer or client.