Finding a present value is the reverse of finding a future value. Which of the following is true about finding the present value of cash flows? -Finding the present value of cash flows tells you what a cash flow will be worth in future years at a specified rate of return. -Finding the present value of cash flows tells you how much you need to invest today so that it grows to a given future amount at a specified rate of return. Which of the following investments that pay will $18,000 in 4 years will have a lower price today? -The security earns an interest rate of 4.00%. -The security earns an interest rate of 6.00%.
Finding a present value is the reverse of finding a future value. Which of the following is true about finding the present value of cash flows? -Finding the present value of cash flows tells you what a cash flow will be worth in future years at a specified rate of return. -Finding the present value of cash flows tells you how much you need to invest today so that it grows to a given future amount at a specified rate of return. Which of the following investments that pay will $18,000 in 4 years will have a lower price today? -The security earns an interest rate of 4.00%. -The security earns an interest rate of 6.00%.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 4MC
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4. Present value
Finding a present value is the reverse of finding a future value .
Which of the following is true about finding the present value of cash flows?
-Finding the present value of cash flows tells you what a cash flow will be worth in future years at a specified rate of return .
-Finding the present value of cash flows tells you how much you need to invest today so that it grows to a given future amount at a specified rate of return.
Which of the following investments that pay will $18,000 in 4 years will have a lower price today?
-The security earns an interest rate of 4.00%.
-The security earns an interest rate of 6.00%.
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