Final answer:
Calculating terms based on the length of time since the date of the invoice or bill involves using index numbers and base years to simplify the total quantity spent over a year for products. An example of using index numbers and base years is calculating inflation rates.
Step-by-step explanation:
Calculating terms based on the length of time since the date of the invoice or bill involves using index numbers and base years. Index numbers are used to simplify the total quantity spent over a year for products. The base year serves as a reference point for comparison.
To calculate terms, begin by calculating the total cost of buying the basket in each time period. Then, add up all the present values for the different time periods to get a final answer.
An example of using index numbers and base years would be calculating inflation rates. By comparing the index numbers from different time periods, the rate of inflation can be determined.