Which of the Following Statements Is/are True Concerning the Time

question 116

Multiple Choice

Which of the following statements is/are true concerning the time value of money?

• A) Money to be received seven years from now has a lower present value than money to be received in three years.
• B) Money received seven years from now will have a lower present value if a higher discount rate is used.
• C) Money received seven years from now will have a greater present value if a higher discount rate is used.
• D) Money to be received seven years from now has a lower present value than money to be received in three years AND money received seven years from now will have a lower present value if a higher discount rate is used.

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Definitions:

Equity Method

A method of accounting employed by companies to evaluate the earnings from their investments in other firms.

Subsidiary

A company controlled by another company, often referred to as the parent company.

Fair Value

The likely receipts from offloading an asset or the expenditure to relocate a liability, in a systematic transaction at the market rate on the day of valuation.