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.

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Definitions:

Full Capacity Sales

The maximum sales level that a company can achieve with its current resources and capabilities without incurring additional costs.

Operating Capacity

The maximum output that a company can produce and sell with its existing equipment and resources, without incurring unsustainable costs.

Marble

A metamorphic rock composed primarily of calcite or dolomite, known for its use in sculpture and as a building material.

Long-range Financial Planning

The process of determining a company's financial goals, strategies, and resources over a future period, typically spanning several years.