Asked by Mackenzie Vatter on Apr 25, 2024
Verified
The discount factor used to obtain the present value of money in the next period where k represents the rate of return is
A) k.
B) 1 + k.
C) 1/(1 + k) .
D) k /(1 + k) .
Discount Factor
A multiplier used in discounted cash flow analysis to present value future cash flows.
- Become familiar with the fundamental principles of financial appraisal in supply chains, which encompass the discounting of cash flows and the calculation of rates of return.
Verified Answer
TT
Thomas Turner8 days ago
Final Answer :
C
Explanation :
The discount factor used to obtain the present value of money in the next period is given by the formula 1/(1 + k), where k represents the rate of return. This is because the present value is equal to the future value divided by (1 + k) raised to the power of the number of periods between the present and the future. Therefore, the correct answer is C.
Learning Objectives
- Become familiar with the fundamental principles of financial appraisal in supply chains, which encompass the discounting of cash flows and the calculation of rates of return.