Assume You Are to Receive a 20-Year Annuity with Annual

question 56

Multiple Choice

Assume you are to receive a 20-year annuity with annual payments of R50.The first payment will be received at the end of Year 1, and the last payment will be received at the end of Year 20.You will invest each payment in an account that pays 10 percent.What will be the value in your account at the end of Year 30?

• A) R6,354.81
• B) R7,427.83
• C) R7,922.33
• D) R8,591.00
• E) R6,752.46

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Definitions:

Average Variable Cost

The total variable cost divided by the number of units produced, representing the variable cost per unit of output.

Average Fixed Cost

The fixed costs (costs that do not change with the level of output) of producing a good or service, divided by the quantity of output produced.

Total Cost

The entire cost of production, including both fixed and variable costs.

Average Total Cost

Average total cost is the total cost of production (fixed plus variable costs) divided by the total quantity produced, indicative of the cost per unit at different levels of output.