Your Car Loan Requires Payments of $200 Per Month for the First

question 22

Multiple Choice

Your car loan requires payments of $200 per month for the first year and payments of $400 per month during the second year.The APR is 12% and payments begin in one month.What is the present value of this 2-year loan?

• A) $6,246.34
• B) $6,389.78
• C) $6,428.57
• D) $6,753.05

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Definitions:

First-In, First-Out Method

This is an inventory valuation method where goods first added to inventory are the first ones to be sold.

Equivalent Units

A concept used in cost accounting to assign costs to partially completed goods, expressed in terms of fully completed units.

Conversion Costs

The sum of direct labor and manufacturing overhead expenses involved in turning raw materials into completed goods.

Direct Method

A cash flow statement preparation method that lists major categories of gross cash receipts and payments, directly showing sources and uses of cash.