What Is the Present Value of a $500 Deposit in Year

question 44

Multiple Choice

What is the present value of a $500 deposit in year 1, and another $100 deposit at the end of year 4 if interest rates are 5 percent?

• A) $480.00
• B) $493.62
• C) $558.46
• D) $582.27

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Definitions:

Variable Cost

A cost that varies with the level of output or production, such as raw materials and labor expenses.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, which remain constant regardless of the company's output.

Sales Price

The price at which a product or service is offered for sale in the market.

Fixed Costs

Expenses that do not change with the level of production or sales, examples include rent, salaries, and insurance premiums.