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:

Expected Profit

The anticipated earnings from an investment or business venture after accounting for potential risks and expenses.

Loanable Funds

The total amount of capital available for borrowing, comprised of savings from individuals, businesses, and government, which is available for investment purposes.

Commercial Paper

A short-term, unsecured promissory note issued by corporations, often used for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Treasury Bill

Short-term government securities issued with a maturity of one year or less, used to finance the government's debt.