In which of the following situations would it not be appropriate to use the following formula: PV = C0 + C1/(1 + r) + C2/(1 + r)2 + . . . . + Cn/(1 + r)n when determining the present value (PV) of a cash flow stream?

A) when yield curves are flat
B) when short-term and long-term interest rates vary widely
C) when the inflation rate is high
D) when the discount rate is high


Answer: B

Business

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Indicate whether the statement is true or false

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When Kraft's earlier efforts to achieve continued growth and efficiencies were hindered, in 2012 it initiated a major reorganization that included

A. acquiring the British confectioner Cadbury. B. withdrawing from the grocery business and selling its assets to another food company. C. splitting the company into two independent companies. D. withdrawing from emerging markets. E. selling off brands such as Oreo cookies to a Chinese firm.

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Business