You Have a Choice Among Three Options

question 97

Multiple Choice

You have a choice among three options. Option 1: receive $900 immediately. Option 2: receive $1,200 one year from now. Option 3: receive $2,000 five years from now. The interest rate is 15 percent. Rank these three options from highest present value to lowest present value.

• A)Option 1; Option 2; Option 3
• B)Option 3; Option 2; Option 1
• C)Option 2; Option 3; Option 1
• D)Option 3; Option 1; Option 2

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Definitions:

Inventory Management

The overseeing and controlling of the ordering, storage, and use of components that a company uses in the production of the items it sells.

Specific Identification

An inventory costing method where each item in inventory is identified and tracked individually.

Ending Inventory

The complete worth of goods on the market at the closure of a bookkeeping period.

First-In, First-Out (FIFO)

An accounting method where the cost of the earliest inventory items purchased are the first to be recognized in determining cost of goods sold.