Compare the Economic Values of Two Options Given an Annual

question 274

Multiple Choice

Compare the economic values of two options given an annual rate of 6.6%. Option 1 - $900 in 90 days and $1,200 in 120 days. Option 2 - $850 in 240 days and $1,390 in 320 days. Given the following information, choose the best option.

• A) Option 1 - benefit of $22.35
• B) Option 1 - benefit of $68.51
• C) No difference between options
• D) Option 2 - benefit of $22.35
• E) Option 2 - benefit of $68.51

Recognize the implications of fiscal year alignment with property tax cycles on financial statements.

Comprehend the characteristics and accounting treatment of provisions and contingent liabilities.

Identify the nature of current liabilities and their impact on liquidity.

Distinguish between secured and unsecured notes, and their reporting in financial statements.

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Definitions:

Face Value

The nominal or dollar value of a security stated by the issuer, primarily relevant for bonds and the amount repaid at maturity.

Yield To Maturity

The total return anticipated on a bond if it is held until the date it matures, including both interest payments and capital gains.

Real Rate Of Return

The annual percentage profit earned on an investment, adjusted for changes in the price level due to inflation or other external effects.

Inflation Rate

The general rise in prices across goods and services, resulting in a decrease in the ability to purchase.