If the Present Value of the $1,000 to Be Received

question 6

Multiple Choice

If the present value of the $1,000 to be received in one year is $800,the interest rate is

• A)25 percent per year.
• B)8 percent per year.
• C)10 percent per year.
• D)12 percent per year.
• E)125 percent per year.

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Definitions:

Straight-Line Basis

An approach to determine depreciation or amortization by equally distributing an asset's cost throughout its usable life.

Residual Value

The estimated value of an asset at the end of its useful life, often considered in depreciation calculations.

Estimated Useful Life

The expected service life of an asset to the present owner