
Understanding Discount Rates and Present Value

Interactive Video
•
Mathematics, Business
•
10th Grade - University
•
Hard

Liam Anderson
FREE Resource
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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens to the interest rate when you lock your money for a longer period in a bank CD?
The interest rate increases.
The interest rate becomes zero.
The interest rate remains the same.
The interest rate decreases.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
If a government bond offers a 1% interest rate for one year, how much will $100 grow to in one year?
$105
$102
$100
$101
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How do you calculate the present value of $110 received in two years at a 5% annual rate?
Divide $110 by 1.05 squared
Multiply $110 by 1.05
Multiply $110 by 1.05 squared
Divide $110 by 1.05
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In scenario analysis, what happens when the discount rate changes?
The present value remains constant.
The best investment choice may change.
The future value becomes zero.
The interest rate becomes negative.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a discounted cash flow?
A method to avoid paying taxes.
A way to increase interest rates.
A technique to determine the present value of future cash flows.
A method to calculate future values.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why is the discount rate assumption crucial in finance?
It is only used in scientific calculations.
It influences the present value of future payments.
It has no impact on financial decisions.
It determines the future value of cash flows.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What can you use to perform a discounted cash flow analysis?
A stopwatch
A calculator
Excel
A calendar
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