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:

Retained Earnings

The portion of net income that is retained by the company rather than distributed to its shareholders as dividends, used for reinvestment in the business or to pay off debt.

Prior Period Adjustments

Adjustments made to the financial statements to correct errors or omissions in previously issued financial statements.

Treasury Stock

Shares that were issued and subsequently reacquired by the company, reducing the amount of outstanding stock on the open market.

Income Statement

A financial report summarizing the revenues, costs, and expenses incurred during a specific period, typically a fiscal quarter or year.