The formula to calculate the present value of a single cash flow is given by:
Correct answer: A. CF1 / (1+r)n
- A. CF1 / (1+r)n
- B. C2 / (1+r)
- C. C0 + C (1+r)n
- D. None of theseGet Executive Coaching
Explanation
A single future cash flow is discounted as CFₙ/(1+r)ⁿ, where r is the discount rate and n is the number of periods. Option a gives this formula, although its notation uses CF1 with the exponent n.
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