In Answering Which of the Following Questions Would You Find

question 206

Multiple Choice

In answering which of the following questions would you find it necessary to calculate a future value?

• A)If Jill puts $5,000 today into a bank account that pays 3 percent interest,then how much will she have in the account after 2 years?
• B)Should ABC Corporation buy a factory today for $2 million,knowing that the factory will yield the corporation $3 million after 5 years?
• C)As the winner of a lottery,should Michael choose an immediate payment of $250,000 or should he choose annual payments of $30,000 for each of the next 10 years?
• D)You would find it necessary to calculate a future value in order to answer all of these questions.

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Definitions:

Physical Measures

Quantitative indicators used to assess the physical aspects of a business, such as volume of production or quantity of materials used.

Market Value

The present cost for purchasing or selling a product or service in a market.

Split-Off Point

The Split-Off Point is a stage in a production process where multiple products are generated from common inputs, each taking a different processing path thereafter.

Joint Costs

Costs incurred in the process of producing two or more products simultaneously, where the costs cannot be individually attributed to the products until a certain split-off point.