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:

Periodic System

An inventory system that updates inventory and cost of goods sold at the end of each accounting period.

Vouchers Payable

A liability account in the general ledger that represents the controlling account for the sum of individual vouchers.

Voucher Register

A special journal replacing the purchases journal; it records prenumbered vouchers at the time the liabilities are incurred.

Check Register

A special journal that replaces the cash payments journal in recording payments of vouchers.