If for five years, the cash inflows are uniform at P120,000 which present value of annuity factor are you going to use to covert the inflows into the present value assuming that the cost of capital is 12%? • 0.56743 • 1.56743 • 3.60478 • 2.40188

If for five years, the cash inflows are uniform at P120,000 which present value of annuity factor are you going to use to covert the inflows into the present value assuming that the cost of capital is 12%? • 0.56743 • 1.56743 • 3.60478 • 2.40188

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Multiple choice:

Definition Definition Transfer of funds into a company by any third party, which may happen due to any operational, investing, and financing activities. The cash inflow includes payments made by customers or investments made by the investors into the company by purchasing its equity.

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