If the Annual Interest Rate Is 5 Percent

question 172

Multiple Choice

If the annual interest rate is 5 percent,

• A)$100 saved today will be worth $105 after one year
• B)$90 saved today will be worth $100 after one year
• C)$100 saved today will be worth $5 after one year
• D)$99 saved today will be worth $100 after one year
• E)$100 saved today will be worth $1, 000 after one year

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Definitions:

Variable Costs

Expenses that change in proportion to the amount of goods produced or sold, like labor and material costs.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much revenue is available to cover fixed costs and generate profit.

Variable Costs

These are expenses that vary directly with the level of production or sales volume; they rise as production increases and fall as production decreases.

Contribution Margin Ratio

The percentage of sales revenue that remains after deducting variable costs, used to cover fixed costs and generate profit.