If the Interest Rate Is 18%, and Will Remain 18

question 15

Multiple Choice

If the interest rate is 18%, and will remain 18% forever, how much would a rational investor be willing to pay for an asset that will pay him 9,440 dollars 1 year from now, 1,392 dollars 2 years from now, and nothing at any other time?

• A)9,000 dollars
• B)171,000 dollars
• C)8,000 dollars
• D)50,000 dollars
• E)10,000 dollars

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Definitions:

Inventory on August 1

The quantity and value of goods available for sale or use by a business at the start of August, often used for financial or supply chain analysis.

Perpetual LIFO

A method of inventory valuation where the last item of inventory purchased is assumed to be the first sold, continuously updated for each sale and purchase.

Cost of Goods Sold

Direct expenditures connected with fabricating the products a business sells, encompassing labor and material expenses.

Ending Inventory

The value of goods available for sale at the end of an accounting period, determined by a physical count or estimation.