In future value or present value problems, unless stated otherwise, cash flows are assumed to be
A)at the end of a time period.
B)at the beginning of a time period.
C)in the middle of a time period.
D)spread out evenly over a time period.

Question

Quizplus · Accepted Answer

In finance, unless otherwise stated, cash flows are assumed to occur at the end of each period. This is because most investments require an up-front cost, and the investor wants to know the future value of their investment after it has had time to earn a return. By assuming that cash flows occur at the end of a period, we are able to calculate the future value of an investment more accurately.

In Future Value or Present Value Problems, Unless Stated Otherwise