If You Want to Have $ 2,000 in Your Pocket

question 109

Multiple Choice

If you want to have $ 2,000 in your pocket at the end of one year, what amount would you have to invest today given an interest rate of 5%?

• A) $ 1,951.22
• B) $ 1,818.18
• C) $ 1,904.76
• D) Additional information is required to complete the calculation.

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Definitions:

Cost-volume-profit Analysis

An accounting technique that analyzes how changes in costs, sales volume, and price affect a company's profit.

Contribution Margin Ratio

The contribution margin ratio quantifies the portion of sales revenue that is not consumed by variable costs and is available to cover fixed costs and generate profit.

Variable Costs

Costs that change in proportion to the level of activities or volume of production in a business.

Fixed Costs

Expenses that do not fluctuate with changes in production level or sales volume.