Joshua Has Decided That He Will Only Purchase a One-Year

question 47

Multiple Choice

Joshua has decided that he will only purchase a one-year Treasury bill with a face value of $500 000 if he receives an interest rate of 6.25%.How much will Joshua end up paying for this Treasury bill?

• A) $439 338
• B) $468 750
• C) $470 588
• D) $531 250

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Definitions:

Overhead Costs

Overhead costs refer to the indirect expenses related to the operation of a business, such as utilities, rent, and administrative salaries.

Activity-Based Costing

A technique in cost accounting which allots overhead and indirect costs to related products and services, dependent on the activities they engage in.

Activity Cost Pools

Groups of individual costs driven by the same cost drivers, used in activity-based costing to allocate costs more accurately.

Customer Margin

The profit margin that a company earns from a particular customer, taking into account all revenues and costs associated with that customer.