Part 1 Multiple Choice - Problems 1 through 16 are worth 3 points each. 1. What is an annuity? (a) the future worth of a present amount (b) an annual repayment of a loan (c) a series of uniform (equal amounts over periods of time (d) a lump sum at the end of the year (c) the present worth of a future amount is the decrease in value of physical properties with the passage of time and use. It is an accounting concept, not a cash flow. (a) Book value (b) Cost basis c) Depreciation (d) Market value (e) Salvage value 3. is the worth of a depreciable property as show on the accounting records (books) of a company. It is the original cost basis of the property, including any adjustments, less all allowable depreciation adjustments. (a) Book value (b) Cost basis (c) Depreciation (d) Market value (e) Salvage value 4. is the expected or estimated period that a property will be used in a trade or business to produce income. It is not how long the property will last but how long the owner expects to productively use it. (a) Declining-Balance (DB) (b) Recovery period (c) Straight-Line (SL) (d) Useful life