Which of the following statements is true?
a. The higher the discount rate, the higher the present value.
b. The process of accumulating interest on interest is referred to as discounting.
c. If money is worth 10% compounded annually, $1,100 due one year from today is equivalent to $1,000 today.
d. If a single sum is due on December 31, 2012, the present value of that sum decreases as the date draws closer to December 31, 2012.
Answer: c. If money is worth 10% compounded annually, $1,100 due one year from today is equivalent to $1,000 today.
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The present value of an ordinary annuity of $350 each year for five years, assuming an opportunity cost of 4 percent, is ________
A) $288 B) $1,896 C) $1,750 D) $1,558
In early 2015, Plattsville Plastics recently decided to dispose of an extrusion machine. The original cost was $460,000 and accumulated depreciation was $310,000. At that time, the machine was retired from operations, the book value of the machine approximated its fair value. On December 31, 2016, the fair value of the machine was determined to be $110,000. Which of the following would be
included in a related adjusting entry on December 31, 2016. A) debit Loss on Machine Held for Disposal for $150,000 B) debit Loss on Machine Held for Disposal for $40,000 C) credit Loss on Machine Held for Disposal for $150,000 D) credit Loss on Machine Held for Disposal for $40,000