Which of the Following Statements Is True

question 5

Multiple Choice

Which of the following statements is true?

• A) The process of discounting is the inverse of the process of compounding.
• B) Ending balances using simple interest is always greater than the ending balance using compound interest at positive interest rates.
• C) Present value of an annuity due is always less than the present value of an equivalent annuity at positive interest rates.
• D) All of the above are true.

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Definitions:

Equipment Purchase

Equipment purchase involves acquiring physical assets, such as machinery or office equipment, that are used in the operations of a business.

Residual Value

Residual value is the estimated amount that an asset will be worth at the end of its useful life, after depreciation has been taken into account.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or wear and tear.

Operating Hours

The hours during which a business is open to customers, typically specified for workplaces, retail stores, or service providers.