If You Receive $10 000 Back as Principal and Interest

question 65

Multiple Choice

If you receive $10 000 back as principal and interest at the end of two years for an initial investment of $9127 at the start of the term,what is the yield on your investment?

• A) 4.37% per annum
• B) 4.78% per annum
• C) 8.73% per annum
• D) 9.57% per annum

---

Definitions:

High-low Method

A technique in cost accounting used to estimate fixed and variable costs given the highest and lowest levels of activity.

Variable Cost Per Unit

The cost that varies with each unit of product produced, directly tied to the production volume, such as materials and labor.

Fixed Costs

Expenses that remain constant regardless of the level of production or sales, including items like rent, salaries, and insurance.

Contribution Margin Ratio

The percentage of sales revenue that exceeds variable costs, indicating how much sales contribute to fixed costs and profit.