If the Annual Interest Rate Is 10 Percent, $5

question 55

Multiple Choice

If the annual interest rate is 10 percent, $5.00 received today has the same present value as

• A)$4.00 received one year from now.
• B)$4.50 received one year from now.
• C)$5.00 received one year from now.
• D)$5.50 received one year from now.
• E)$6.00 received one year form now.

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Definitions:

GAAP

Generally Accepted Accounting Principles, a set of rules and standards used for financial reporting and accounting.

Principles-based

An approach that bases decisions on general principles or values rather than specific rules.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board that are becoming the global standard for the preparation of public company financial statements.

GAAP

Generally Accepted Accounting Principles; a collection of commonly-followed accounting rules and standards for financial reporting.