Assume That $100 Is Deposited at the End of Each

question 77

Multiple Choice

Assume that $100 is deposited at the end of each year for five years at 10% compound interest and that no withdrawals are made over the five-year period. Based on this data, which one of the following statements is correct?

• A) The future value will be $550.
• B) The present value can be determined by computing the present value of $500 in five years at 10%.
• C) The present value can be determined by computing the present value of a $100 ordinary annuity for five years at 10%.
• D) The present value will be $500.

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Definitions:

Resource Ownership

The legal rights to possess, use, and dispose of resources such as land, buildings, goods, or intellectual property.

Corporation

A legal entity that is separate from its owners, with its own rights and responsibilities, allowing it to own property, sue or be sued, and enter contracts.

Board of Directors

A group of individuals elected to represent shareholders and oversee the management and major decisions of a corporation.

Sarbanes-Oxley Act

U.S. legislation enacted in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations.