If $100 Is Invested for One Year at 8% P

question 10

Multiple Choice

If $100 is invested for one year at 8% p.a. and inflation during the same period is 3%, the real value of the investment at the end of the year is:

• A) $104.85.
• B) $103.00.
• C) $104.76.
• D) $105.00.

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Definitions:

Historical Rates

Exchange rates used for the conversion of items on the financial statements that have remained unchanged from past to present.

Foreign Subsidiary

A company owned or controlled by another company, the parent company, that is based in a different country than the subsidiary.

Functional Currency

The functional currency is the main currency used by a business or economic entity, reflecting the primary economic environment in which it operates.

Opening Inventory

The value of the goods available for sale at the beginning of an accounting period.