MyLab Accounting with Pearson eText -- Access Card -- for Financial Accounting
12th Edition
ISBN: 9780134727677
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 of the following affects the present value of an investment?
a. The type of investment (annuity versus single lump sum)
b. The number of time periods (length of the investment)
c. The interest rate
d. All of the above
Chapter F Solutions
MyLab Accounting with Pearson eText -- Access Card -- for Financial Accounting
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- What is the difference between the discount rate used for net present value and the internal rate of return methods?arrow_forwardWhat is the internal rate of return? How is it used? How does it relate to the concept of compound interest?arrow_forwardBriefly explain the followinga. Relation between present value and interest ratearrow_forward
- which 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_forwardWhich of the following affects the present value of an investment? The type of investment (annuity versus single lump sum) The number of time periods (length of the investment) The interest rate All of the abovearrow_forward
- How would an increase in the interest rate or a decrease in the number of periods until the payment is received affect the present value (PV) of a sum of money? Please explain properly. Thank you!arrow_forwardHow to find the initial interest rate? for first investment? How to find value of second investemnt?arrow_forwardHow does the present value of a future payment change as the time to receipt islengthened? As the interest rate increases?arrow_forward
- What effect do interest rates have on the calculation of future and present value? How does the length of time affect future and present value? How do these two factors correlate?arrow_forwardHow can we determine the borrowing rate of return?arrow_forwardWhich one of the theories states that “the rate of interest is set in the market for money balances”? Time-Preference Theory of Interest Liquidity Preference Theory Fisher’s Law Loanable Funds Theory of Interest Ratesarrow_forward
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