Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter F, Problem F.6Q
To determine
To identify: The factor that is not needed for computation of present value of an investment.
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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 receipT
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 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
Chapter F Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
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- ,Match the following terms with the appropriate definition.Effective yield or interest rateMonetary liabilityCompound interestPresent ValueFuture value of a single amountA.Fixed obligation to pay an amount in cash.B.The rate at which money will actually grow.C.Interest accumulates on interest.D.Current worth of future cash flows.E.The money to which an amount invested will grow over time.arrow_forwardwhich of the following is necessary to solve a discount problem? a.future amount b.interest rate c. number of periods d. all of the abovearrow_forwardDistinguish the nominal rate of return from the real rate of return.arrow_forward
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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 methodarrow_forwardSelect all of the time value of money factors that are known in a NPV assessment. O Present value of single-sums O Present value of annuities O Interest rate Number of periods O Future value of single-sums O Future value of annuitiesarrow_forwardWhy there is a difference between the interest rate and the APRarrow_forward
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