Which of the following statements is INCORRECT? A)In general,money today is worth more than money in one year. B)We define the risk-free interest rate,r_f for a given period as the interest rate at which money can be borrowed or lent without risk over that period. C)We refer to (1 - r_f)as the interest rate factor for risk-free cash flows. D)For most financial decisions,costs and benefits occur at different points in time.

Question

Quizplus · Accepted Answer

The correct formula for the interest rate factor for risk-free cash flows is (1 + r_f). The incorrect formula given in statement C subtracts the risk-free interest rate from 1, which results in the discount factor rather than the interest rate factor.

Which of the Following Statements Is INCORRECT