Future Value Measures

question 100

Multiple Choice

Future value measures:

• A) what one or more cash flows are worth at the end of a specified period.
• B) what one or more cash flows that is to be received in the future will be worth today.
• C) the value of an investment after subtracting interest earned on it for one or more periods.
• D) the value of an investment in today's terms.

---

Definitions:

Fixed Costs

Fixed costs that stay the same no matter how much is manufactured or sold, including expenses for rent, employee salaries, and insurance charges.

Hard Rationing

A situation where companies cannot obtain funds for projects despite having positive net present values due to external financing constraints.

Capital Funds

Financial resources that are used to fund a company's operations and growth, typically sourced from equity or debt.

Net Present Value

A method to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows over a period.