MENU
A township wants to buy a new piece of equipment that will reduce costs by $20,550 at the end of year 2. If the
township could invest its funds at a rate of 10%, what is the most the township should spend now to get the return it
desires?
Suggested Answer: D
Get Premium CGFM Questions
as Interactive Web-Based Practice Test or PDF
Real Exam Format
Detailed Explanations
Instant Access
Get Your Practice Test
33 comments · newest first
TU
Tula
11 months ago
Is it really that simple? I thought it would be more complicated.
NI
Nickole
11 months ago
I think it’s definitely A, can’t go wrong with that calculation!
DO
Donte
12 months ago
Wait, how do we know the investment will actually save that much?
EA
Earlean
12 months ago
Totally agree, A is the right choice!
JO
Jose
12 months ago
The future value of $20,550 at 10% for 2 years is about $16,440.
BO
Bobbye
1 year ago
I’m a bit confused about the calculations. I thought we might need to consider the time value of money more carefully. Could it really be as low as $16,440?
DE
Denny
1 year ago
I practiced a similar question where we had to find the present value for a different amount. I think the answer was lower than the future value, so maybe around $16,440 sounds right?
SH
Sharee
1 year ago
I'm not entirely sure, but I feel like the formula for present value is involved here. Was it something like PV = FV / (1 + r)^n?
NI
Nicolette
1 year ago
I think we need to calculate the present value of the $20,550 using the 10% rate. I remember something about discounting future cash flows.
MA
Malcom
1 year ago
Okay, let's see. I know there are some standard dashboard folders, but I'm not sure which three are mentioned here. I'll have to read the options closely.
AR
Arlyne
1 year ago
I've used the "data:object:upsert" command before for adding test data, so I'm leaning towards that as one of the answers. But I'll double-check the other options to make sure I'm not missing anything.
FI
Filiberto
1 year ago
Wait, wait, wait... are we supposed to account for inflation or something? I'm going with D. $20,550 just to be safe. Can't be too careful with these township finances, you know?
TA
Talia
1 year ago
Yeah, D seems like the most logical choice. Let's go with $20,550.
LA
Laticia
1 year ago
I agree, better to be safe than sorry. D seems like the best option.
SH
Sharika
1 year ago
I think we should consider inflation, so I'm going with D. $20,550.
MI
Mindy
1 year ago
Haha, I bet the township treasurer is just trying to get a new golf cart with this 'equipment' purchase. Either way, the answer is definitely B. $16,983.
HA
Haydee
1 year ago
Hmm, I'm not so sure about that. Didn't they say the township wants to 'reduce costs'? I think the answer might be C. $18,495 to get that cost reduction.
AN
Antonette
1 year ago
I agree with you, I also think the answer is C. $18,495 would make sense to get the cost reduction.
ED
Edward
1 year ago
I'm not sure about that, but I think the answer might be B. $16,983 seems like a reasonable amount to spend.
MA
Marya
1 year ago
I disagree, I believe the answer is A. $16,440 would be the most the township should spend.
HE
Henriette
1 year ago
I think the answer is D. $20,550 is the most the township should spend now to get the desired return.
NI
Nicolette
1 year ago
I see your point. It's all about balancing the initial investment with the long-term savings.
DA
Daniel
1 year ago
That's true, but if they want to see the cost reduction at the end of year 2, they might need to invest more upfront.
VI
Vi
1 year ago
But wouldn't it make more sense to spend less now to get the same return?
EL
Elly
1 year ago
I think the answer might be C. $18,495 to get that cost reduction.
LI
Linwood
2 years ago
I agree with Dortha, we need to calculate the present value of the future savings to determine the most the township should spend now.
HO
Hoa
2 years ago
I'm pretty sure the answer is B. $16,983 seems like the most the township should spend now to get the desired return of $20,550 at the end of year 2 with a 10% investment rate.
AD
Adrianna
1 year ago
Great, so the township should spend $16,983 to get the return it wants.
CA
Carmela
1 year ago
It makes sense, considering the desired return and investment rate.
LE
Leila
1 year ago
I agree, that seems like the most the township should spend now.
AL
Alexia
1 year ago
I think the answer is B. $16,983.
DO
Dortha
2 years ago
I disagree, I believe the answer is A) $16,440 because we need to consider the present value of the future savings.
AN
Antonio
2 years ago
I think the answer is D) $20,550.