An Annuity Is Set Up That Will Pay $1500 Per

question 54

Multiple Choice

An annuity is set up that will pay $1500 per year for ten years. What is the present value (PV) of this annuity given that the discount rate is 9%?

• A) $5776
• B) $9626
• C) $11,551
• D) $13,476

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Definitions:

Overhead Allocation Base

A measure used to distribute overhead costs among various products or service units within a business.

Machine Hours

A measure of the amount of time machines are operated in the production process, commonly used as an allocation base for assigning overhead costs.

Indirect Labor

Labor costs attributed to anything other than the direct manufacturing of goods or provision of services, such as maintenance, supervision, and administrative tasks.

Factory Utilities

Expenses incurred for electricity, gas, water, and sewage services used in the operation of a manufacturing plant or factory.