What Is the Present Value of $27 Received at the End

question 29

Multiple Choice

What is the present value of $27 received at the end of each year for five years? Assume a discount rate of 9%. The first payment will be received one year from today (round to the nearest $1) .

• A) $42
• B) $114
• C) $88
• D) $105

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Definitions:

Credit Accounts

Financial accounts that track money owed to creditors; they increase with credit entries and decrease with debit entries, reflecting the entity's borrowing of funds.

Accounting Equation

The fundamental equation of double-entry bookkeeping, stating that Assets = Liabilities + Equity.

Debit And Credit

A fundamental concept in accounting that describes the two sides of every financial transaction; debits increase assets or decrease liabilities, while credits decrease assets or increase liabilities.

Dr. And Cr.

Abbreviations for Debit (Dr.) and Credit (Cr.), fundamental concepts in accounting used to record business transactions in the ledger.