How Much Would You Have to Invest Today in the Bank

question 10

Multiple Choice

How much would you have to invest today in the bank at an interest rate of 5% to have an annuity of $1,400 per year for 5 years, with nothing left in the bank at the end of the 5 years? Select the amount below that is closest to your answer.

• A)$6,667
• B)$6,061
• C)$7,000
• D)$1,098

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Definitions:

Overhead Rate

A measure used to allocate overhead costs to products or services, often calculated by dividing total overheads by a base measure such as labor hours or machine hours.

Estimated Labor-Hours

The projected number of labor hours required to complete a batch of goods or provide a service.

Predetermined Overhead Rate

A rate used to allocate estimated overhead costs to products or job orders, based on a planned level of activity or driver.

Unused Capacity

Resources available for use that are not being employed in production, often representing inefficiency.