A Company Bought a New Display Case for $42,000 and Was

question 44

Multiple Choice

A company bought a new display case for $42,000 and was given a trade-in of $2,000 on an old display case,so the company paid $40,000 cash with the trade-in.The old case had an original cost of $37,000 and accumulated depreciation of $34,000.The company should record the value of new display case at:

• A)$2,000
• B)$3,000
• C)$40,000
• D)$42,000
• E)$43,000

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Future Value

The amount of money an investment is expected to grow to over a period of time, assuming a particular interest or growth rate.

Volatility

Refers to the degree of variation of a trading price series over time as measured by the standard deviation of returns.

Market Rate

The prevailing interest rate available in the marketplace for securities or loans, influenced by supply and demand, economic conditions, and the risk profile of the investment.