Which one of the following variables is the exponent in the present value formula?
A. Present Value
B. Interest Rate
C. Number of time periods
D. Future Value
E. There is no exponent in the present value formula
Answer Explanation for Question: Which one of the following variables is the exponent in the present value formula?
The formula to calculate present value is:
Present Value = FV/ (1+i)^n
Where,
FV= Face Value
r = Rate of return
n = number of time periods
Therefore, number of time period is the exponent in the present value formula.
Which of the following is a present value method of analyzing capital investment proposals?