Assuming the Interest Rate Is 6 Percent, Which of the Following

question 23

Multiple Choice

Assuming the interest rate is 6 percent, which of the following has the greatest present value?

• A)$300 paid in two years
• B)$150 paid in one year plus $140 paid in two years
• C)$100 paid today plus $100 paid in one year plus $100 paid in two years
• D)$285 today

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Definitions:

Common Stock

Equity securities that represent ownership in a company, entitling holders to vote on corporate matters and receive dividends.

Last-in First-out (LIFO)

Last-in First-out (LIFO) is an inventory valuation method where the most recently produced or acquired items are sold first, leading to older stock being recorded in inventory.

Development Costs

Development costs are the expenses associated with the research and development of new products or services, aiming to improve or create new offerings.