A 10-Year Ordinary Annuity That Provides a Return of 7

question 28

Multiple Choice

A 10-year ordinary annuity that provides a return of 7% has a present value of $15,000.What are the annual annuity payments?

• A) $2,135.66
• B) $2,038.02
• C) $2,235.44
• D) $1,500.00
• E) $2,232.84

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Definitions:

Allocation of Limited Resources

The process of distributing scarce resources among various projects or business units.

Incremental Costs

The additional costs incurred when producing an additional unit of a product or service.

Fixed Manufacturing Costs

Costs that do not change with the level of production, such as rent, salaries, and insurance, which are incurred regardless of output volume.

Full Capacity

The maximum level of output that a company can sustain to make a product or provide a service.