The Present Value of $475 Received 3 Years in the Future

question 282

Multiple Choice

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 percent?

• A)475/(1.6)³
• B)475/(1.06)⁵
• C)475 × 1.6 × 3
• D)3.06/475

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Definitions:

Fixed Asset

Long-term tangible property or equipment that a firm owns and uses in its operations to generate income, typically not expected to be converted to cash within a year.

Fixed Asset Turnover

A ratio that measures a company's ability to generate sales from its fixed-assets investments such as property, plant, and equipment.

Generating Sales

The process of creating revenue for a business through activities such as marketing, sales calls, and customer service.

Depletion Expense

The allocation of the cost of natural resources over their productive lives, recognizing the reduction in natural resource value as it is extracted and sold.