Recall Application 2, "Options for a Lottery Winner," to Answer

question 171

Multiple Choice

Recall Application 2, "Options for a Lottery Winner," to answer the following questions:
-According to the application, if the interest rate is exactly 8 percent, then the present value of $1 million per year for the next 20 years is:

• A) $13.1 million.
• B) $9.8 million.
• C) $10.02 million.
• D) $8.8 million.

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Definitions:

Perpetual Inventory System

An accounting method that records inventory transactions in real-time, thus providing a continual account of inventory balances.

Net Price Method

The net price method calculates the final price after all discounts, rebates, and allowances have been subtracted from the list price.

Catalog Price

The price listed in a catalog, not accounting for any discounts or promotions.

Credit Terms

Credit Terms are the payment terms and conditions established by a seller, including the period that has to pass before an invoice is considered overdue.