A Four-Year Annuity of $1,000 Annual Payments at the Beginning

question 166

Multiple Choice

A four-year annuity of $1,000 annual payments at the beginning of each year, with a 10% interest rate is worth how much today?

• A)$2,914.67
• B)$3,486.85
• C)$3169.87
• D)None of the above

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Definitions:

Composite Unit

A grouping of assets or costs that are combined and treated as a single unit for accounting or valuation purposes.

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as raw materials and labor.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance expenses.

Break Even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.