A Certain Investment Promises to Pay You $2,500 Per Year

question 60

Multiple Choice

A certain investment promises to pay you $2,500 per year forever with the first payment starting next year.If you can earn a 5% return on similar investments,what's the most you would pay for this investment today?

• A)$50,000
• B)$5,000
• C)$41,667
• D)$62,500

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Definitions:

Machine Breakdowns

Unplanned failures or malfunctions of machinery, often disrupting production processes and requiring repair or replacement.

Direct Materials Quantity Variance

The cost associated with the difference between the actual quantity and the standard quantity of direct materials used in producing a commodity multiplied by the standard direct materials price.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the product's cost.

Direct Materials Quantity Variance

A measure of the difference between the actual quantity of materials used in production and the expected amount, indicating efficiency in material usage.