If the Risk-Free Rate of Interest (Rf)is 6%,then You Should

question 73

Multiple Choice

If the risk-free rate of interest (rf) is 6%,then you should be indifferent between receiving $250 in one year or

• A) $235.85 today.
• B) $250.00 today.
• C) $265.00 today.
• D) $244.00 today.
• E) $256.00 today.

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Definitions:

Direct Labor-Hours

A measure of the work time spent by employees directly involved in the production of goods or services.

Machine-Hours

A measurement of production output or activity based on the number of hours machines are operated in the manufacturing process.

Machining Department

A specific division within a manufacturing plant where machining, a process of shaping metal or other materials, is carried out.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate indirect costs to products or services based on a consistent activity measure.