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Two cash flows occurring at different dates

  • A.may be added directly if the interest rate is low
  • B.may never be compared under any circumstances
  • C.cannot be added until brought to a common date
  • D.may be added directly if the amounts are equal

Answer: C

Equivalence at a stated interest rate is what makes comparison possible, and every technique in the subject amounts to moving cash flows to a common point. Adding them as they stand is the commonest error a beginner makes.

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