With an Interest Rate of 6 Percent,the Present Value of $100

question 21

Multiple Choice

With an interest rate of 6 percent,the present value of $100 received one year from now is approximately

• A) $106.
• B) $100.
• C) $94.
• D) $92.

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Definitions:

Variable Costing

An accounting method that only includes variable production costs (materials, labor) in product cost, excluding fixed costs.

Mixed Cost

A cost that has both fixed and variable components, which changes with the level of output but not in direct proportion.

Fixed Manufacturing Costs

Overhead expenses that do not vary with production level, such as rent, salaries, and utility costs in a manufacturing environment.

Margin of Safety

Margin of Safety is the difference between actual sales and the break-even point, indicating the amount of sales decline a company can sustain before incurring a loss.