Amanda Is Considering One of Two Options

question 123

Multiple Choice

Amanda is considering one of two options. The first option is to receive $48,000 now. The second option is to receive $75,000 at the end of the fifth year. Determine which option should be chosen to maximize benefits now given an interest rate of 8.8% compounded annually.

• A) Second option, as it provides benefit of $54,194.53 compared to $48,000 for second
• B) Second option, as it provides benefit of $53,194.53 compared to $48,000 for second
• C) Second option, as it provides benefit of $52,194.53 compared to $48,000 for second
• D) Second option, as it provides benefit of $51,194.53 compared to $48,000 for second
• E) Second option, as it provides benefit of $49,194.53 compared to $48,000 for second

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Definitions:

Credit Terms

Conditions under which credit will be extended to a customer, including repayment timeframe and interest rate.

Merchandise Inventory

Goods a company has in stock and available for sale, typically in a retail or wholesale setting.

Inventory Shrinkage

The loss of products between purchase and sale, often due to theft, damage, or errors in counting.

Physical Count

The process of counting the actual number of items in inventory, typically to verify accounting records or when preparing financial statements.