In Answering Which of the Following Questions Would You Find

question 140

Multiple Choice

In answering which of the following questions would you find it necessary to calculate a present value?

• A)Should Ryan put $2,000 today into a 5-year certificate of deposit that pays 5percent annual interest?
• B)Should XYZ Corporation buy a factory today for $4 million, knowing that the factory will yield the corporation $5 million after 4 years?
• C)If Ellie puts $1,000 today into a bank account that pays 4 percent interest, then how much will she have in the account after 3 years?
• D)If William lends his friend Miya $450, how much will she owe him in a year if she insists on paying 5 percent interest?

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Definitions:

Other Items

This term can refer to various non-primary or exceptional items in financial reporting, including extraordinary gains or losses and items of other comprehensive income.

Prepaid Expenses

Expenses paid in advance for goods or services to be received in the future.

Insurance Expense

The cost associated with purchasing insurance to protect against various risks, recorded as an expense.