An Investment Will Pay You $120 in One Year and $200

question 6

Multiple Choice

An investment will pay you $120 in one year and $200 in two years. If the interest rate is 4%, what is the present value of these cash flows?

• A) $304.91
• B) $307.69
• C) $300.29
• D) $320.00

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Definitions:

Variable Costing

A pricing strategy that incorporates only variable manufacturing expenses such as direct materials, direct labor, and variable factory overhead into the cost of products.

Absorption Costing

A method of cost calculation that takes into account all expenses related to manufacturing, such as direct materials, direct labor, and all overheads, whether fixed or variable, in determining a product's cost.

Production Cost

The total cost of materials, labor, and overheads incurred in the production of goods or services.

Per Unit

A term referring to a measurement or cost on an individual item or quantity basis.