On January 1, 2009, You Are Considering Making an Investment

question 3

Multiple Choice

On January 1, 2009, you are considering making an investment that will pay three annual payments of $10,000. The first payment is not expected until December 31, 2012. You are eager to earn 3%. What is the present value of the investment on January 1, 2009?

• A)$28,286.
• B)$25,886.
• C)$26,662.
• D)$27,300.PVA = $10,000 x (5.41719* - 2.82861**) = $25,886 *PVA of $1: n=6; i=3% **PVA of $1: n=3; i=3%

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Definitions:

Direct Labour Hours

The number of hours worked by employees who are directly involved in the production of goods or services.

Standard Costing Systems

A cost accounting system that estimates the cost of products or services by assigning expected costs for materials, labor, and overhead to the actual production volumes.

Variances

The difference between expected and actual performance, costs, or revenues, often analyzed in budgeting and accounting to manage and improve financial performance.

Direct Labour Costs

Expenses associated with the labor directly involved in the production of goods or services.