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1 FINANCE MCQS

In estimating the value of cash flows, the compounded future value is called its ____________?

  • Terminal value
  • Existed value
  • Quit value
  • Relative value
Correct Answer: A. Terminal value

Detailed Explanation

The compounded future value of cash flows represents the amount that cash inflows will grow to at the end of the project or investment period when interest or return is compounded. This is known as the Terminal Value, and it is crucial in valuation models, especially in discounted cash flow (DCF) analysis.

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