A:
A. The amount of interest expected to be generated each year
B. The time horizon – how long the investment is expected to be held in the portfolio
C. The interest rate to be used for discounting the annual payments to be received
D. The amount needed at the end of the holding period
Answer: D
to calculate net present value, the discount rate, cash flows and time horizon are all required. The amount desired at the end of the period is not part of the equation.
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