What Is the Total Present Value of Two Payments of $100

question 34

Multiple Choice

What is the total present value of two payments of $100 paid to you, one a year from now, and the second two years from now, if the rate of interest is 5%?

• A) $190.50
• B) $185.94
• C) $210.93
• D) $200.88

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Definitions:

Order Costs

Expenses associated with placing and processing orders for products or services.

Inventory Management

The supervision of non-capitalized assets and stock items, including the management of ordering, storing, and using a company's inventory.

ABC Approach

A methodology used in inventory management and cost accounting that prioritizes items based on their importance, cost, or another criterion, often categorized into A, B, and C groups.

Cash Discount

A reduction in the invoice amount by a seller if the buyer pays within a specified period, incentivizing early payment.