What Is the Present Value of a Payment of $21,000

question 46

Multiple Choice

What is the present value of a payment of $21,000 three years from now if the effective annual interest rate is 4%?

• A) $17,951
• B) $18,480
• C) $18,658
• D) $18,669
• E) $19,218

---

Definitions:

Opening WIP Inventory

The value of unfinished goods that a company has at the beginning of an accounting period.

FIFO Method

FIFO Method (First In, First Out) is an inventory valuation method where goods first acquired are the first to be sold or removed, affecting stock and cost of goods sold.

Equivalent Units

A concept in cost accounting used to apportion costs to partially completed goods, calculated by taking the number of completed units plus the equivalent units in the process.

Conversion Costs

The costs incurred in the process of converting raw materials into finished goods, typically including labor and overhead.