The rate of return used when computing a present value is referred to as the __ rate while the rate used when computing a future value is referred to as the _ rate.

A) Compound; discount.
B) Compound; simple.
C) Compound; compound.
D) Discount; discount.
E) Discount; compound.

Question

The rate of return used when computing a present value is referred to as the ______ rate while the rate used when computing a future value is referred to as the _____ rate.

A) Compound; discount.
B) Compound; simple.
C) Compound; compound.
D) Discount; discount.
E) Discount; compound.

Via Fe Bunao · Accepted Answer

Final Answer : E, Explanation :  The rate of return used when computing a present value is referred to as the discount rate, as it discounts future cash flows back to their present value. When computing a future value, the rate used is referred to as the compound rate, as it compounds the value of current funds over time.

The rate of return used when computing a present value is referred to as the __ rate while the rate used when computing a future value is referred to as the _ rate.

A) Compound; discount.
B) Compound; simple.
C) Compound; compound.
D) Discount; discount.
E) Discount; compound.

Definitions

Learning Objectives

Learning Objectives

Related questions

The rate of return used when computing a present value is referred to as the ______ rate while the rate used when computing a future value is referred to as the _____ rate.A) Compound; discount.B) Compound; simple.C) Compound; compound.D) Discount; discount.E) Discount; compound.

Definitions

Learning Objectives

Learning Objectives

Related questions

The rate of return used when computing a present value is referred to as the __ rate while the rate used when computing a future value is referred to as the _ rate.

A) Compound; discount.
B) Compound; simple.
C) Compound; compound.
D) Discount; discount.
E) Discount; compound.