What Is the Present Value of a $500 Payment Made

question 77

Multiple Choice

What is the present value of a $500 payment made in 4 years when the discount rate is 8 percent?

• A)$365.35
• B)$367.51
• C)$460.00
• D)$680.24

Analyze the effect of a project's incremental cash flows on its overall feasibility.

Understand the impact of income taxes on project cash flows and profitability.

Calculate the total cash flow net of income taxes for a given project year.

Apply the concept of discounting to evaluate the present value of future cash flows.

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Definitions:

Incremental Manufacturing Cost

The additional costs incurred by a company when increasing production by one unit.

Relevant Range

The range of activity levels within which the assumptions about fixed and variable cost behaviors hold true, critical for accurate budgeting and decision-making.

Average Costs

The total costs divided by the number of goods produced, used to calculate the per-unit cost of production.

Incremental Manufacturing Cost

The additional costs incurred when increasing production by one unit.