BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

What is the present value of a stream of annual endoftheyear annuity cash flows if the discount rate is 0%, and the cash flows of $50 last for 20 years?

Less than $1, 000


Exactly $1, 000


More than $1, 000


This question cannot be answered because we have an interest rate of 0.0%.

Explanation:
Detailed explanation1: The present value of a cash flow (i.e. the value of future cash in today’s dollars) is calculated by multiplying the cash flow for each projected year by the discount factor, which is driven by the discount rate and the matching time period.
There is 1 question to complete.