Exhibit 19-2

question 39

Multiple Choice

Exhibit 19-2.Hugh Wallace has the following information regarding three investment options.Each investment option involves the same one-year period. Refer to Exhibit 19-2.What nominal rate of return will Hugh earn if he invested in option 1?

• A)0.79 percent
• B)3.22 percent
• C)0.32 percent
• D)6.67 percent

Grasp the concept of normal balances of accounts and how they are determined.

Analyze the process of preparing a trial balance and its role in verifying the equality of debits and credits in the ledger.

Identify common errors in the accounting process and understand methods to find and correct them.

Distinguish between different account groups and their normal balance sides.

---

Definitions:

Net Present Value

Calculating the variance between the present-day value of cash flows in and out over an established timeframe.

Average Accounting Return

The ratio of average net income to average invested capital, often used in financial analysis to assess investment attractiveness.

Profitability Index

A financial metric that calculates the ratio of the present value of future cash flows from an investment to the initial investment cost, used to evaluate the desirability of projects.

Present Value

Present value refers to the current value of a future amount of money or series of cash flows, calculated using a specific rate of return.