What Is the Present Value of a Payment of $100

question 70

Multiple Choice

What is the present value of a payment of $100 to be made one year from today if the interest rate is 5 percent?

• A)$105.26
• B)$105.00
• C)$95.24
• D)$95.00

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Definitions:

Allowance Account

A contra-asset account used to estimate and offset the value of accounts receivable that may not be collectible.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that may not be collected.

Percentage of Receivables

A method for estimating the allowance for doubtful accounts based on the expected percentage of accounts receivable that may not be collectible.

Write Offs

Financial accounting action where the value of an asset is declared worthless, removing it from balance sheet accounts due to loss or impairment.