Joe Has to Pay $50 000 in 1

question 3

Multiple Choice

Joe has to pay $50 000 in 1.5 years' time.If the interest rate is 15% p.a. ,compounded continuously,how much does she owe in present value terms?

• A)$46 387
• B)$49 077
• C)$39 926
• D)$37 041

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Definitions:

Useful Life

The estimated duration of time that an asset is expected to be functional and economically viable for its intended purpose.

Target Costing

A pricing method that involves subtracting a desired profit margin from a competitive market price to determine the maximum cost of production.

Return on Investment

A financial metric evaluating the profitability or effectiveness of an investment, calculated by dividing net profit by the investment's cost.

Common Fixed Costs

Costs that do not change with the level of production or sales and are shared across different products or departments within a company.