An Investment Will Pay $289,940 at the End of Next

question 88

Multiple Choice

An investment will pay $289,940 at the end of next year for an investment of $190,000 at the start of the year. If the market interest rate is 9% over the same period, should this investment be made?

• A) No, because the investment will yield $82,840 less than putting the money in a bank.
• B) Yes, because the investment will yield $66,272 more than putting the money in a bank.
• C) Yes, because the investment will yield $74,556 more than putting the money in a bank.
• D) Yes, because the investment will yield $82,840 more than putting the money in a bank.

---

Definitions:

Tax Purposes

The reasonings or rationalizations related to the computation and payment of taxes, often guiding how financial transactions are structured or reported.

LIFO

Last-In, First-Out, an inventory valuation method where the most recently produced items are recorded as sold first.

Cost Flow Assumption

Accounting methods that companies use to assign costs to inventory and cost of goods sold, such as FIFO, LIFO, and weighted average cost.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from total sales revenue.