What is the present value of a stream of annual end-of-the-year annuity cash flows if the discount rate is 0%, and the cash flows of $50 last for 20 years?
A) Less than $1,000
B) Exactly $1,000
C) More than $1,000
D) This question cannot be answered because we have an interest rate of 0.0%.
Answer: B
Explanation: B) Since the interest rate is 0.0%, the PV is simply the cash flow of $50 times the number of periods, 20 = $1,000.
You might also like to view...
The Resource Conservation and Recovery Act (RCRA) applies only to active facilities, not future ones.
Answer the following statement true (T) or false (F)
A negotiated transfer price is one that is bargained for between the managers of the buying and selling divisions of a company
Indicate whether the statement is true or false
Which of the following will increase the contribution margin?
a. Reduction in variable costs b. Reduction in fixed costs c. Reduction in sales d. Reduction in net income
Flattened management hierarchies allow companies to react more quickly to market changes
Indicate whether the statement is true or false