When calculating the present value of either a future single sum or a future annuity, the applicable interest rate is usually called the
A)yield to maturity.
B)compound interest rate.
C)internal rate of return.
D)discount rate.

Question

Quizplus · Accepted Answer

The applicable interest rate used in calculating the present value of a future single sum or annuity is referred to as the discount rate. This rate is used to discount the future cash flows back to their present values. The yield to maturity, compound interest rate, and internal rate of return are all related to investment returns but do not specifically refer to the discount rate used in present value calculations.

When Calculating the Present Value of Either a Future Single