Which of the Following Transactions Would Best Use the Present

question 116

Multiple Choice

Which of the following transactions would best use the present value of an annuity due table?

• A) Bengatti, Inc. leases a truck for 4 years with annual lease payments of $20,000 to be made at the beginning of each year.
• B) Turkel Co. leases a warehouse for 9 years with annual lease payments of $150,000 to be made at the end of each year.
• C) Ponzi, Inc. borrows $60,000 and has agreed to pay back the principal plus interest in three years.
• D) Skool, Inc. wants to deposit a lump sum to accumulate $80,000 for the construction of a new parking lot in 4 years.

---

Definitions:

Variable Input

An input in the production process that changes quantity with the level of output, such as labor or raw materials.

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production, key in making decisions on resource allocation.

Profit-maximizing

A strategy or process utilized by businesses to determine the price and output level that results in the highest profit.

Labor Cost

The total sum of all compensation given to employees for their services, including wages, benefits, and payroll taxes.