Lotta Dough Just Won the State Lottery and Has Elected

question 22

Multiple Choice

Lotta Dough just won the state lottery and has elected to receive $50,000 per year for 20 years in the form of an annuity due. What is the present value of this stream of payments if money can earn 7 percent annual interest?

• A) $566,780
• B) $977,665
• C) $500,000
• D) $779,664

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Definitions:

Direct Labour

The workforce involved directly in manufacturing products or delivering services, whose costs are tied to the production output.

Manufacturing Overhead

Indirect costs associated with manufacturing, such as utilities, maintenance, and factory management salaries.

Job Costing

A costing method that determines the cost of a specific job or project, making it suitable for industries like construction, where products are customized.

Continuous Mass Production

A manufacturing process that continuously produces large volumes of standardized products, often on an assembly line.