Two Payments of $49 000 Each Must Be Made 3

question 153

Multiple Choice

Two payments of $49 000 each must be made 3 year and 5 year from now. If money can earn 4.9% compounded monthly, what single payment 3 years from now would be equivalent to the two scheduled payments?

• A) $93 435
• B) $98 000
• C) $88 869
• D) $105 742
• E) $101 177

---

Definitions:

Holding Cost Rate

The cost associated with keeping inventory in stock, including storage, insurance, and opportunity costs.

Standard Deviation

A statistical measurement that quantifies the variability or dispersion of a set of data points from its mean.

Warehouse Space

The area available in a warehouse used for the storage of goods.

Holding Costs

Expenses related to storing and maintaining inventory, including warehousing, insurance, depreciation, and potential obsolescence.