Question
Consider a single cash flow of $220,000 to be paid in ten years and a ten-year annuity paying $20,000 annually for ten years. Suppose both
Consider a single cash flow of $220,000 to be paid in ten years and a ten-year annuity paying $20,000 annually for ten years. Suppose both the futurity of the single cash flow and maturity of the annuity are increased to eleven years. What happens to their respective present values, assuming unchanged discount rates and yields? 4 points
| The present value of the single cash flow rises, but that of the annuity declines | ||
| The present value of the single cash flow declines, but that of the annuity rises | ||
| The present values of both the single cash flow and the annuity decline | ||
| The present value of the single cash flow does not change, but that of the annuity rises | ||
| The present values of both the single cash flow and the annuity rise
|
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Financial Accounting
Authors: Robert K. Eskew, Daniel L. Jensen
5th Edition
0070213550, 978-0070213555
