You Are Currently at Time Period 0, and You Will

question 76

Multiple Choice

You are currently at time period 0, and you will receive the first payment on an annual payment annuity of R100 in perpetuity at the end of this year.Six full years from now you will receive the first payment on an additional R150 in perpetuity, and at the end of time period 10 you will receive the first payment on an additional R200 in perpetuity.If you require a 10 percent rate of return, what is the combined present value of these three perpetuities?

• A) R2,349.50
• B) R2,526.85
• C) R2,685.42
• D) R2,779.58
• E) R2,975.40

Recognize the importance of maintaining adequate levels of liquidity and asset management for operational efficiency.

Evaluate the impact of financial ratios on company decision-making and performance assessment.

Understand the concept of liquidity and its measurement.

Identify and understand the measures of asset management.

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Definitions:

Average Cost

The cost per unit of output, calculated by dividing the total cost of production by the number of units produced.

Marginal Cost

The additional cost incurred in producing one more unit of a good or service.

Variable Cost

Costs that change in proportion to the level of production or sales activity of a business.

Total Cost

The overall expense incurred in the production of goods or services, including both fixed and variable costs.