If Joe Doe Invests $40,000 in Franchise and Is Able

question 42

Multiple Choice

If Joe Doe invests $40,000 in franchise and is able to generate $20,000 a year in benefits for 8 years, the following holds true:

• A) The 20,000 received in year 2 is worth more than the 20,000 received in year 5.
• B) The 20,000 received in year 1 is worth less than the 20,000 received in year 3.
• C) The 20,000 received in year 8 is worth more than the 20,000 received in year 4.
• D) None of the above.

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Definitions:

Sales Revenue

Money a company makes from its merchandise sales or services rendered.

Service Charge Expense

Service charge expense refers to fees charged for specific services provided, often recognized as an expense in accounting records.

Accounts Receivables

Sums due to a company from its clients for products or services provided but not yet compensated for.

Factor

A financial intermediary that purchases receivables from businesses, providing them with immediate cash flow.