Patrick Has a Contract That Will Pay Him $3,500 in 11

question 14

Multiple Choice

Patrick has a contract that will pay him $3,500 in 11 months. If money can earn 15%, what will be the value of that contract three months from now?

• A) $2,975
• B) $3,077
• C) $3,150
• D) $3,182
• E) $3,355

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Definitions:

Useful Life

The estimated period of time over which a fixed asset is expected to be usable by the business, influencing depreciation calculations.

Depreciation Expense

The allocated cost of using a fixed asset over its useful life, reflecting its decrease in value over time.

Straight-line Method

A method for calculating depreciation of an asset, which assumes the asset will lose an equal amount of value each year over its useful life.

Depreciation Expense

The allocation of the cost of an asset over its useful life, reflecting the decrease in value of the asset over time due to usage, wear and tear, or obsolescence.