TRUE / FALSE The discount rate used to discount the value of future dollars can generally be referred to as the investor’s required rate of return.
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TRUE / FALSE
The discount rate used to discount the value of future dollars can generally be referred to as the investor’s required
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- Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the Initial Investment? A. internal rate of return (IRR) method B. net present value (N PV) C. discounted cash flow model D. future value methodA business wishes to discount a future value dollar amount to present value. Which type of interest is used for this calculation? Inflationary Compound Paid SimpleA market rate of discount for a single payment to be made in the future is a forward rate. Select one: True False
- Which of these will increase the present value of an amount to be received sometime in the future? Group of answer choices Increase in the discount rate. Increase in the time until the amount is received. Decrease in the interest rate Decrease in the future valueIt is the difference between the present value and the worth of money at some time in the future. Interest Perpetuity Discount Present worthThe value of a sum after investing over one or more periods is calleda) Discount Valueb) Nonec) Compound and future valued) Present value
- Which of the following is not needed to compute the present value of an investment?a. The length of time between the investment and future receiptb. The interest ratec. The rate of inflationd. The amount of the receipTWhich of the following statements is true about the present value factors? a. The present value factor is the reciprocal of the present value of annuity due factor. b. The present value factor decreases as the interest rate decreases. c. The present value factor is also known as the discount factor. d. The present value factor should always be greater than 1.The discount rate used in a net present value analysis is the ________. A. rate of interest earned on a savings account B. rate of inflation C. rate of interest charged for debt financing of an investment D. required rate of return or the hurdle rate
- Which of the following statements is true about the present value factors? The present value factor is the reciprocal of the present value of annuity due factor. The present value factor is also known as the discount factor. The present value factor decreases as the interest rate decreases. The present value factor should always be greater than 1.What do we call the process of finding future value? Discounting Compounding Discount interest Compound interest Time value of moneyWhich method does not consider the time value of money? Choose the correct. A. Net present value B. Internal Rate of Return C. Average rate of return D. Profitability Index