If You Make an Investment and Agree to Pay Regular

question 49

Multiple Choice

If you make an investment and agree to pay regular monthly payments of $450 at the end of the next twelve months,starting one month from today,what is the present value of this investment if the interest rate is 8.4% per annum compounded monthly?

• A) $3322.06
• B) $4916.30
• C) $5162.12
• D) $5198.25

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.

Prepaid Expenses

Costs that are paid for in advance and recorded as assets until they are used or consumed, at which point they become expenses.

Asset Account

Represents a resource owned or controlled by a company that is expected to provide future economic benefits.

Expense Account

An expense account tracks the outflow of money to cover operational costs or purchases related to running a business.