If the Interest Rate Is 5 Percent,what Is the Present

question 175

Multiple Choice

If the interest rate is 5 percent,what is the present value of a payment of $500 to be made one year from today?

• A) $457.14
• B) $475.00
• C) $480.77
• D) None of the above are correct to the nearest cent.

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Definitions:

Operating Cost

Expenses associated with the day-to-day functions of a business, including costs for rent, utilities, and payroll.

Useful Life

The estimated period over which an asset is expected to be usable for its intended purpose, affecting depreciation calculations.

Economic Value

A measure of the benefit provided by a good or service to an economic agent, often quantified in terms of willingness to pay or the added utility it offers.

Operating Cost

Expenses related to the day-to-day functioning of a business, such as rent, utilities, salaries, and equipment maintenance.