Given a Discount Rate of 10 Percent, the Present Value

question 424

Multiple Choice

Given a discount rate of 10 percent, the present value of receiving $100,000 two years in the future is

• A) $12,000.
• B) $80,000.
• C) $82,645.
• D) $121,000.

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Definitions:

Fixed Expenses

Recurring costs that do not vary with the volume of production or sales, similar to fixed costs.

Variable Costing

An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Direct Labour

The labour costs directly attributable to the production of goods or services, including wages for workers who physically manufacture a product.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, excluding direct materials and direct labor costs.