You Expect to Receive $5, 000 in 25 Years

question 16

Multiple Choice

You expect to receive $5, 000 in 25 years.How much is it worth today if the discount rate is 5.5%?

• A) $1, 067.95
• B) $1, 124.16
• C) $1, 183.33
• D) $1, 245.61
• E) $1, 311.17

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the price of a product.

Idle Capacity

Unused or underutilized resources within a business, often indicating inefficiency, where machinery, space, or labor is not being employed to full capacity.

Variable Overhead Cost

Costs that vary with the level of production output, such as supplies and utilities for manufacture.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold, excluding fixed overhead costs.