If the Interest Rate Is 10%, the Present Value of $1

question 9

Multiple Choice

If the interest rate is 10%, the present value of $1 next year is:

• A) $1.20.
• B) $1.10.
• C) 91 cents.
• D) 10 cents.
• E) 9 cents.

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Definitions:

Activity Rate

A measure used in activity-based costing to allocate overhead costs to products or services, based on specific activities or cost drivers.

Machine Hour

A measure of production time, used as a basis for allocating manufacturing overhead costs to products based on machine usage.

Factory Overhead Rates

A calculation used in manufacturing to allocate indirect costs, like utilities and salaries, to products.

Machine Hours

A measure of the amount of time a machine is operated, used as a basis for allocating manufacturing overhead costs to products.