Suppose the Present Value of a 2-Year Ordinary Annuity Is

question 102

Multiple Choice

Suppose the present value of a 2-year ordinary annuity is $100.If the discount rate is 10 percent,what must be the annual cash flow?

• A) $65.45
• B) $82.64
• C) $57.62
• D) $53.78
• E) $79.22

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Definitions:

Net Operating Income

is the total profit of a business after deducting operating expenses but before subtracting taxes and interest.

Contribution Margin Ratio

A metric that reveals the percentage of sales revenue that exceeds variable costs and contributes to covering fixed costs and generating profit.

Margin of Safety

Represents the extent to which sales can drop before a business reaches its break-even point.

Units

Units refer to the individual items or quantities that are produced, sold, or held in inventory.