Which of the Following Statements Are Correct Concerning Present Value

question 125

Multiple Choice

Which of the following statements are correct concerning present value?
I. The present value interest factor for a single sum is always equal to or less than 1.
II. The lower the discount rate for a given year, the smaller the present value interest factor.
III. The further in time, the smaller the present value interest factor.
IV. The present value is equal to the future value only when the stated interest rate is 1%.

• A) I and II only
• B) I and III only
• C) II and III only
• D) I, III and IV only

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Definitions:

Safety Stock

Inventory kept on hand to protect against stockouts caused by variations in supply and demand.

Lead Time

The total time that elapses from the initiation of a process or order until its completion, often used in manufacturing and project management to measure efficiency.

Ohno's Seven Wastes

A foundational concept in lean manufacturing, identifying seven types of waste to eliminate: overproduction, waiting, transport, over-processing, inventory, motion, and defects.

Distance Reductions

A strategy aimed at minimizing the distance traveled during manufacturing or supply chain operations to enhance efficiency and reduce costs.