Costs That Have Not Yet Been Incurred but Will Be

question 18

Multiple Choice

Costs that have not yet been incurred but will be incurred in the future based on decisions that have already been made are:

• A)value-added costs.
• B)locked-in costs.
• C)non-value-added costs.
• D)targeted costs.
• E)conversion costs.

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Definitions:

Present Value

The value today of a future payment, or series of future payments, discounted at some appropriate interest rate.

Earnings Rate

The rate at which an investment or savings account generates income, usually expressed as a percentage of the principal.

Compound Interest

Interest calculated on the initial principal, including all of the accumulated interest from previous periods on a deposit or loan.

Present Value Factor

A factor used in calculating the present value of a future sum of money or a stream of cash flows, given a specific interest rate.