If the Interest Rate Is 7

question 140

Multiple Choice

If the interest rate is 7.5 percent,then what is the present value of $4,000 to be received in 6 years?

• A)$2,420.68
• B)$2,591.85
• C)$2,996.33
• D)$3,040.63

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Definitions:

Yielding

The income return on an investment, such as the interest or dividends received from holding a particular security.

FASB 13

Accounting standard issued by the Financial Accounting Standards Board related to lease accounting.

Operating Lease

A lease in which the lessee does not effectively acquire ownership of the leased asset. Accounted for as a stream of expense payments on the income statement. No entry is made on the balance sheet to reflect the acquisition of the asset. The most common form of off balance sheet financing. Compare with Financing lease.

Economic Life

The expected period during which an asset remains useful to the average owner.