If the Interest Rate Is 5 Percent, Then What Is

question 40

Short Answer

If the interest rate is 5 percent, then what is the present value of $2,000 to be received in three years?

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Definitions:

Mixed Cost

A cost that contains both variable and fixed cost elements, changing in total with the level of activity but having a portion that remains constant.

Variable Cost

Costs that vary directly with the level of production or service activity.

Fixed Cost

Expenses that do not change with the level of production or sales over the short term, such as rent, salaries, and insurance.

Period Cost

An expense that is not directly tied to the production process but rather incurred over a specific time period.