If the Interest Rate Is 5 Percent (0

question 57

Multiple Choice

If the interest rate is 5 percent (0.05) per year,what is the present value of $3,000 to be received two years from now?

• A)$2,850.00
• B)$3,000.00
• C)$2,707.50
• D)$2,721.09
• E)$2,857.14

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Definitions:

Absorption Costing

A method of inventory costing in which all costs of production (both variable and fixed) are treated as product costs.

Variable Costing

Variable Costing is an accounting method that only allocates variable costs to inventory and cost of goods sold, excluding fixed manufacturing overhead from inventory valuation.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, showing revenues, expenses, and net income.

Variable Costing

An accounting method that only considers variable costs (costs that fluctuate with production levels) in the calculation of product cost.