When considering the time value of money, one uses discounting to find the value

Question

When considering the time value of money, one uses discounting to find the value of money to be received Which of the following methods for evaluating capital Investment proposals recognizers the time value of money? Using the Information presented in this problem, answer questions 39,40,41 and 42. and Associates wants to buy an automated coffee master/grinder/brewer. This piece equipment could have a useful life of 6 years. The initial cost is $218,500 and it increase net cash inflows by $57,000 each year. There is no residual value but company's rate of return is 14%. The table to use for discounting the cash inflows is:

Explanation / Answer

Ans

31. True

Principle amount under simple interest method is remains same for period to period

32. False

An annuity is a series of identical payments occurring at equal time intervals

33. False

Required rate of return to be used to arrive the present value of future cash flows instead of minimum rate of return

34. False

Earlier cashflow leads higher NPV since present vale factor is lower in earlier years than future years

35. True

36. E all of the above

37. E

futures cash flow will be discounted to arrive the present value

38. D All of the above

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