The Present Value of an Annuity Is the Value in the Future

question 92

True/False

The present value of an annuity is the value in the future at a specified date of a series of future payments using a compound interest rate.

---

Definitions:

Variable Costing

An accounting method that includes only variable production costs in product cost, excluding fixed manufacturing overhead.

Absorption Costing

An accounting method where all of the costs associated with manufacturing a product are absorbed by the units produced.

Fixed Manufacturing Overhead

Indirect production costs that remain constant regardless of the level of production, such as rent and salaries of managers.

Fixed Manufacturing Overhead

The consistent, indirect costs associated with manufacturing that do not vary with the level of production, such as rent, insurance, and salaries of permanent staff.