The Present Value of $475 Received 3 Years in the Future

question 12

Multiple Choice

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 percent?

• A) 475/(1.6)³
• B) 475/(1.06)³
• C) 475 × 1.6 × 3
• D) 3.06/475

Understand the preparation and reporting of cash flows from investing activities, including the treatment of sales and purchases of capital assets.

Know the reporting requirements for the operating activities section of the cash flow statement under both the direct and indirect methods.

Understand the components and interpretation of balance sheets and income statements.

Calculate and interpret financial ratios such as current ratio, acid-test ratio, and average collection period.

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Definitions:

Competitive Private Market

A market structure where multiple firms compete against each other under minimal governmental intervention, offering goods and services to consumers.

Copyright Laws

Legal protections granted to creators for their original works, preventing unauthorized use or distribution.

Private Good

a category of goods that are excludable and rival in consumption, meaning that access can be restricted and one person's consumption prevents another's.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be either positive or negative.