Your Subscription to Consumer Reports Is About to Expire

question 32

Multiple Choice

Your subscription to Consumer Reports is about to expire.You may renew it for $24 a year or, instead, you may get a lifetime subscription to the magazine for a onetime payment of $400 today.Payments for the regular subscription are made at the beginning of each year.Using a discount rate of 5%, how many years does it take to make the lifetime subscription the better deal?

• A)25 years
• B)28 years
• C)30 years
• D)40 years

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Definitions:

Activity-based Costing

A strategy for attributing overhead and indirect costs to specific products and services, guided by the activities those offerings demand.

Cost of Services

The total expense incurred to provide services, including labor, materials, and overhead costs, applicable in service-oriented businesses.

Process Cost Systems

These are accounting systems used in manufacturing environments where production is continuous, and costs are tracked and accumulated by process or department.

Pharmaceuticals

Products and substances manufactured and used in the diagnosis, treatment, or prevention of diseases and medical conditions.