In Order to Receive $12,000 at the End of Three

question 16

Multiple Choice

In order to receive $12,000 at the end of three years and $10,000 at the end of five years,how much must be invested now if you can earn 14% rate of return? (Ignore income taxes in this problem.) (Round your PV factor to 5 decimal places and final answer to nearest whole dollar amount.)

• A) $8,100.
• B) $12,978.
• C) $13,293.
• D) $32,054.

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Definitions:

Accrual-Basis Accounting

An accounting method where revenue is recorded when earned and expenses are recorded when incurred, regardless of cash flow.

Unearned Revenue

Income received by a business for goods or services yet to be provided, often recorded as a liability on the balance sheet until the revenue is earned.

Accrued Revenue

Income that a company has earned but has not yet received payment for.

Depreciation

The methodical distribution of a physical asset's cost across its lifespan, mirroring its depreciation over time.