What Is the Present Value of an Ordinary Annuity That

question 77

Multiple Choice

What is the present value of an ordinary annuity that pays $1,000 per year over each of the next twenty years if the discount rate is 10%? Round to the nearest whole dollar.

• A) $8,364
• B) $385
• C) $424
• D) $8,514
• E) $1,537

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding direct production costs, such as rent, utilities, and administrative salaries.

Perpetual Inventory System

An inventory accounting system where adjustments to inventory levels are continuously recorded on a transaction by transaction basis.

Acquisition of Merchandise

The process of obtaining goods for sale, typically involving selection, ordering, and purchasing from suppliers.

Inventory Account

An inventory account is an account on the balance sheet that represents the value of unsold goods held by a company.