When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining
A) the annual rate earned.
B) the annual payments required.
C) whether the present value or the future value is a cash inflow.
D) whether the present value or the future value is a cash outflow.

Question

Quizplus · Accepted Answer

The number of years between the present and future cash flows is crucial in calculating the annual rate earned on an investment, as it affects the compounding period and ultimately the rate of return.

When Computing the Rate of Return from Selling an Investment