If You Are Able to Earn an 8% Rate of Return

question 29

Multiple Choice

If you are able to earn an 8% rate of return, what amount would you need to invest to have $30,000 one year from now?

• A)$27,747
• B)$27,778
• C)$27,273
• D)$29,700

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Definitions:

Jointly Controlled Entity

A business arrangement under shared control by two or more parties, each having strategic and financial control.

Proportionate Consolidation

A method of accounting for a business partnership where the income, expenses, assets, and liabilities of the partnership are combined in proportion to the owning company's percentage of interest in the venture.

Equity Method

An accounting technique used to record investments in other entities, where the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor’s share of investee’s net assets.