Given an Interest Rate of 5%, Which Has a Higher

question 60

Multiple Choice

Given an interest rate of 5%, which has a higher present value: A payment of $80 at the present time, or $100 in 2 years?

• A)The present amount ($80 now) has a higher present value because of a positive time preference.
• B)The future amount ($100 in 2 years ) has a higher present value, give an interest rate of 5%.
• C)The present amount ($80 now) has a higher present value, given an interest rate of 5 %.
• D)The present amount ($80 now) has a higher compounded value.

---

Definitions:

Inventory On September 30

The stock of goods a company has available for sale or used in production as recorded on September 30th.

Inventory Cost Flow Assumptions

Accounting methods assumed about how costs flow through inventory; basic types include FIFO, LIFO, and weighted average.

Financial Statements

Documented records that outline the financial activities and conditions of a business, including the balance sheet, income statement, and cash flow statement.

Perpetual Inventory System

A perpetual inventory system is an accounting method that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.