If the Present Value of a Perpetuity Is $6,000 and the Discount

question 107

Multiple Choice

If the present value of a perpetuity is $6,000 and the discount rate is 8%, how large are the payments?

• A)$60,000
• B)$750
• C)$480
• D)$1,000
• E)$75,000

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Definitions:

Cost-to-Retail Ratio

A method used in retail to convert the cost of goods available for sale into the retail price.

FIFO Cost

A cost flow assumption for inventory valuation where the first items purchased are the first ones to be used or sold.

Retail Inventory Method

An accounting method used by retailers to estimate inventory cost by calculating a cost-to-retail percentage and applying it to the retail price.

Beginning Inventory

The value of goods available for sale at the start of an accounting period.