The interest rate used to compute the present value of future cash flows refers to:

A) discount rate.
B) investment rate.
C) transfer rate.
D) future cash flow rate.
E) valuation rate.


A
Explanation: A) The interest rate (n in the example) at which money can be borrowed or invested, the cost of capital, is called the discount rate for TVM calculations. For example, PVn = Y * 1/ (1 + i)n
CL

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