What is the present value of an annuity that pays $58 per year for 13 years and an additional $1,000 with the final payment
Answer:
$882.03
Explanation:
Interest rate used is 7.23%
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 to 12 = 58
cash flow in year 13 = 1058
I = 7.23
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
what service do you get from district administrative office?
Answer:
they ensure that there is maintenance of law and order
by mostly dealing with calamities
sorry if am wrong
Well Water Inc. wants to produce and sell a new flavored water. In order to penetrate the market, the product will have to sell at $2.00 per 12 oz. bottle. The following data has been collected:
Annual sales......................................................50,000 bottles
Projected selling and administrative costs.....$8,000
Desired profit.....................................................$80,000
The target cost per bottle is:__________
Answer:
The answer is "0.4".
Explanation:
[tex]\\\to \text{Total Cost of Goods Sold = Sales revenue - Desired profit}[/tex]
[tex]= (2\times 50,000) - 80,000\\\\= 1,00,000 - 80,000\\\\= 20,000[/tex]
Calculating the target cost per bottle:
[tex]= \frac{\text{Total cost of goods sold}}{ \text{units sold}}\\\\= \frac{20,000}{50,000}\\\\= \frac{2}{5}\\\\= 0.4[/tex]
On Jan. 1, 2018, your cousin, Laura, purchased one $1,000, 5-year semiannual bond with a coupon rate of 8%. The yield of the bond was 8% at the time. How much did Laura pay for the bond?
Answer:
the amount pay for the bond is $1,000
Explanation:
The computation of the amount pay for the bond is shown below:
Given that
Future value be $1,000
NPER is 5 × 2 = 10
RATE = 8% ÷ 2 = 4%
PMT = $1,000 × 8% ÷ 2 = $40
The formula is given below:
=-PV(RATE,NPER,PMT,FV,TYPE)
After applying the above formula, the present value is $1,000
Hence, the amount pay for the bond is $1,000
Money markets trade securities that: _______________
I. mature in one year or less.
II. have little chance of loss of principal.
III. must be guaranteed by the federal government.
a. I and III only
b. I only
c. I and II only
d. I, II, and III
Han Products manufactures 29,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is:
Direct materials $3.70
Direct labor 12.00
Variable manufacturing overhead 2.30
Fixed manufacturing overhead 9.00
Total cost per part $27.00
An outside supplier has offered to sell 29,000 units of part S-6 each year to Han Products for $23 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $79,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier.
Required:
What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?
Answer:
Financial advantage of accepting supplier's offer = $21,000
Explanation:
Relevant costs saved by outsourcing production:
Direct materials $3.70
Direct labor $12.00
Variable manufacturing overhead $2.30
Fixed manufacturing overhead $9.00 * 1/3 = $3
Total cost per part $21.00
Total savings per year = $21 * 29,000 = $609,000
Additional rental income = $79,000
Total = $688,000
Cost of purchasing 29,000 parts = $23 * 29,000 = $667,000
Financial advantage of accepting supplier's offer = $21,000
An organization's job structure consists of relative pay for different functions and different levels of responsibility.
a. True
b. False
Answer:
a). True
Explanation:
The given statement asserts a true claim that the job structure of an organization comprises of corresponding pay scales for the different employees performing different activities and functions according to the levels of authority or leadership they have been provided. The job structure is the aspect that establishes the hierarchy or of various ranks and positions in which the company is organized to aptly manage the running of the business and its associated activities successfully and efficiently. Thus, the statement is true.
Dunbar sold 640 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.)
Answer:
$428.13
Explanation:
Note The missing word have been attached as picture below
Weighted average cost per unit = [(450*$2.18) + (370*$2.62)] / (450 + 370)
Weighted average cost per unit = ($981 + $969.4) / 820
Weighted average cost per unit = $1950.4 / 820
Weighted average cost per unit = 2.378536585365854
Weighted average cost per unit = $2.3785
Ending inventory unit = 450 + 370 - 640
Ending inventory unit = 180
Value of ending inventory = $2.3785 * 180 units
Value of ending inventory = $428.13
Tucker Company's Work in Process account decreased by $1,000, while its Finished Goods Inventory account increased by $500. Assuming total manufacturing costs were $5,000, what was the company's cost of goods sold amount?
Answer:
$5500.
Explanation:
The computation of the cost of goods sold is shown below:
Let us assume beginning WIP be $2000
So,
ending WIP is
= ($2000 - $1000)
= $1000
And,
Let us assume the beginning finished goods be $1000
So, the ending finished goods is
= ($1000 + $500)
= $1500
Now as we know that
Cost of goods manufactured = Total manufacturing cost + Beginning WIP - Ending WIP
= $5000 + $2000 - $1000
= $6000
Now
cost of goods sold=Cost of goods manufactured+Beginning finished goods-Ending finished goods
= $6000 + $1000 - $1500
=$5500.
Investors with 30 per cent of the voting stock of a corporation, interested in a seat on the board of directors, had better have __________ voting privileges. a. straight b. cumulative c. proxy d. limited
Answer:
B)cumulative
Explanation:
Fruit Computer Company makes a fruit themed computer. Variable costs are $220 per unit, and fixed costs are $32,000 per month. Fruit Computer Company sells 500 units per month at a sales price of $300. The company believes that it can increase the price if the computer quality is upgraded. If so, the variable cost will increase to $240 per unit, and the fixed costs will rise by 50%. The CEO wishes to increase the company's operating income by 25%. Which sales price level would give the desired results
Answer:
Fruit Computer Company
The sales price level that would give the desired results is:
= $356 per unit
Explanation:
a) Data and Calculations:
Variable costs per unit = $220
Fixed costs per month = $32,000
Monthly sales units = 500 units
Selling price per unit = $300
Before Change After Change
Sales revenue $150,000 $178,000 ($168,000 + $10,000)
Variable costs 110,000 120,000
Fixed costs 32,000 48,000
Total costs $142,000 $168,000
Operating income $8,000 $10,000 ($8,000 * 1.25)
The sales price level that would give the desired results is $356 ($178,000/500). This represents an increase of 18.7% ($56/$300 * 100).
Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel; $40,000 on seed, fertilizer, and pesticides; and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations. What is the family's accounting cost? What is the family's economic cost? Could the family's economic cost ever exceed its accounting cost? Why or why not?
Answer:
Accounting Cost
Accounting costs refers to the explicit costs which ar the actual costs related to the business venture. In this case that would be:
= Fuel costs + Seed costs + Equipment
= 25,000 + 40,000 + 25,000
= $90,000
Economic cost
This includes the accounting costs and then adds the implicit costs which are the opportunity costs of choosing the current business venture. In this case it is the $20,000 they could have been making working at other occupations.
= Accounting cost + Salary foregone
= 90,000 + 20,000
= $110,000
Economic costs will always be higher than Accounting costs because they include both the accounting costs and opportunity costs.
Forsyth Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. During the year, the company produced and sold 10,000 units at a price of $155 per unit. Its standard cost per unit produced is $125 and its selling and administrative expenses totaled $245,000. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year:
Materials price variance $6,800 F
Materials quantity variance $10,500 U
Labor rate variance $3,800 U
Labor efficiency variance $4,700 F
Fixed overhead budget variance $2,800 F
Fixed overhead volume variance $12,300 F
Required:
a. When Forsyth closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?
b. Prepare an income statement for the year.
Answer:
a. Cost of goods sold will decrease by $12,300.
b. Net income = $67,300
Explanation:
a. When Forsyth closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?
This can be determined by calculating the net variance as follows:
Forsyth Company
Calculation of Net Variance
Details Amount ($)
Materials price variance (F) 6,800
Materials quantity variance (U) (10,500)
Labor rate variance (U) (3,800)
Labor efficiency variance (F) 4,700
Fixed overhead budget variance (F) 2,800
Fixed overhead volume variance (F) 12,300
Net variance 12,300
Since the net variance of $12,300 is positive which is favorable, this implies that the cost of goods sold will decrease by $12,300.
b. Prepare an income statement for the year.
The income statement for the year can be prepared as follows:
Forsyth Company
Income Statement for the Year
Details $ $
Sales (10,000 * $155) 1,550,000
Cost of goods sold (COGS):
Standard COGS (10,000 * $125) (1,250,000)
Net variance 12,300
Net Cost of goods sold (1,237,700)
Gross margin 312,300
Selling and administrative expenses (245,000)
Net income 67,300
The following information is from Princeton Company's comparative balance sheets.
At December 31 Current year Priro year
Common stock, $10 par value $124,000 118,000
Paid—in capital in excess of par 585,000 351,000
Retained earnings 331,500 305,500
The company's net income for the current year ended December 31 was $57,000.
Required:
Write down the T-accounts to calculate the cash received from the sale of its common stock during the current year.
Answer:
cash received = $ 240,000
Explanation:
On calculating the common stock $10 par
Beg. balance - $ 118,000
$6,000 - Issuance of common stock
Thus the ending balance = $124,000
On calculating the paid in capital in excess of par
Beg. balance - $ 351,000
$ 234,000 - Issuance of common stock
Thus the end balance - $ 585,000
Therefore,
The cash received - $ 240,000
1. Center of the World. The Ecuadorian sucre (S) suffered from hyper-inflationary forces throughout 1999. Its value moved from S5,000/$ to S25,000/$. What was the percentage change in its value?2. Reais Reality. The Brazilian reais (R$) value was R$1.80/$ on Thursday, January 24, 2008. Its value fell to R$2.39/$ on Monday, January 26, 2009. What was the percentage change in its value?
Answer:
1- The percentage change in the value of the Ecuadorian Sucre was an increase of 400%.
2- The change in the percentage of the value of the Brazilian Real was a decrease of 32.77% of its value.
Explanation:
1- Given that the Ecuadorian sucre (S) suffered from hyper-inflationary forces throughout 1999, and its value moved from S5,000 / $ to S25,000 / $, to determine what was the percentage change in its value, the following calculation:
5000 = 100
25000 = X
25000 x 100/5000 = X
2500000/5000 = X
500 = X
500 - 100 = 400
Therefore, the percentage change in the value of the Ecuadorian Sucre was an increase of 400%.
2- Given that the Brazilian reais (R $) value was R $ 1.80 / $ on Thursday, January 24, 2008, and its value fell to R $ 2.39 / $ on Monday, January 26, 2009, to determine what was the percentage change in its value the following calculation must be performed:
1.80 = 100
2.39 = X
2.39 x 100 / 1.8 = X
239 / 1.8 = X
132.77 = X
132.77 - 100 = 32.77
Therefore, the change in the percentage of the value of the Brazilian Real was a decrease of 32.77% of its value.
Stacy Cool wants to invest her money to earn at least 14%. A friend who is interested in investments has suggested her to buy a bond issued by the Buckeye Bravo Company that will mature in seven years. It has a face value of $1,000, pays an annual coupon of $110, and currently sells for $950. Should she buy this bond
Answer:
no
the yield to maturity is 12% which is less than 14%
Explanation:
To determine if Stacy should buy the bond, determine the yield to maturity of the bond
yield to maturity can be determined using a financial calculator
Cash flow in year 0 = -950
Cash flow in year 1 - 6 = 110
Cash flow in year 7 = 110 + 1000
YTM = 12.1%
The YTM is less than the minimum return she wants. So, she should not buy the bond
To determine YTM using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
To determine YTM using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
Kiwi Plc sold an antique painting which had been purchased inJanuary 1996 for £21,000. It was sold for £4,200 in January 2021. The proceeds were received net of auction fees of £650. What is Kiwi Plc's allowable loss?
Answer:
$17,450
Explanation:
The antique painting that was bought in January 1996 was sold for $21,000
It was sold for 4,200 in January 2021
It received a net auction fee of 650
Therefore the allowable loss can be calculated as follows
= 21,000-4200+650
= 17,450
Hence the allowable loss is $17,450
A select list of transactions for Goals follows:
For each transaction, identify what type of adjusting entry would be needed. Select from the following four types of adjusting entries: deferred expense, deferred revenue, accrued expense, and accrued revenue.
Apr. 1 Paid six months of rent, $4,800.
10 Received $1,200 from customer for six month service contract that began April 1.
Apr. 15 Purchased a computer for $1,000.
Apr. 18 Purchased $300 of office supplies on account.
Apr. 30 Work performed but not yet billed to customer, $500
Apr. 30 Employees earned $600 in salaries that will be paid May 2.
Answer:
Goals
Identification of Needed Adjusting Entry:
Transaction Adjusting Entry Type
Apr. 1 Paid six months of rent, $4,800. Deferred expense
Apr. 10 Received $1,200 from customer for Deferred revenue
six month service contract that began April 1.
Apr. 15 Purchased a computer for $1,000. Deferred expense
Apr. 18 Purchased $300 of office
supplies on account. Accrued expense
Apr. 30 Work performed but not yet
billed to customer, $500 Accrued revenue
Apr. 30 Employees earned $600 in Accrued expense
salaries that will be paid May 2.
Explanation:
Four types of adjusting entries:
Goal's deferred expense refers to an expense that Goal will incur in future periods but already paid for.
Goal's deferred revenue includes its revenue received in advance of service.
Goal's accrued expense refers to an expense that has been incurred but not yet paid for.
Goal's accrued revenue includes revenue that has been earned but not yet received.
An individual in the 36 percent tax bracket has $20,000 invested in a tax-exempt account. If the individual earns 10 percent annually before taxes and inflation is 3.0 percent per year, what is the real value of the investment in 10 years?
Answer:
the real value of the investment in 10 years is $38,614
Explanation:
The computation of the real value of the investment is given below:
but before that the rate of return is
= (1.10) ÷ (1.03) - 1
= 6.8%.
Now the
Future value
= $20,000 × (1 + 0.068)^10
= $38,613.80
Hence, the real value of the investment in 10 years is $38,614
The same should be calculated
The Dominican Republic and Nicaragua both produce coffee and rum. The Dominican Republic can produce 25 thousand tons of coffee per year or 5 thousand barrels of rum. Nicaragua can produce 18 thousand tons of coffee per year or 3 thousand barrels of rum. Suppose the Dominican Republic and Nicaragua sign a trade agreement in which each country would specialize in the production of either coffee or rum.
RequireDd
a. Which country should specialize in coffee?
b. Which country should specialize in rum?
Answer:
a. Nicaragua
b, Dominican Republic
Explanation:
A country should specialise in the production of goods for which it has a comparative advantage in its production
A country has comparative advantage in production if it produces at a lower opportunity cost when compared with other countries.
The Dominican Republic
opportunity cost of producing rum = 25,000 / 5000 = 5
opportunity cost of producing coffee = 5000 / 25000 = 0.2
Nicaragua
opportunity cost of producing rum = 6
opportunity cost of producing coffee = 0.17
The Dominican Republic has a lower opportunity cost in the production of rum. It should specialise in the production of rum
Nicaragua has a lower opportunity cost in the production of coffee. It should specialise in the production of coffee
Consider the following information for Maynor Company, which uses a periodic inventory system: Transaction Units Unit Cost Total Cost January 1 Beginning Inventory 21 $ 71 $ 1,491 March 28 Purchase 31 77 2,387 August 22 Purchase 42 81 3,402 October 14 Purchase 47 87 4,089 Goods Available for Sale 141 $ 11,369 The company sold 47 units on May 1 and 42 units on October 28. Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. FIFO LIFO Weighted Average
Answer:
FIFO LIFO WEIGHTED AVERAGE
Ending inventory 4494 3878 4193
Cost of Goods Sold 6875 7491 7176
Explanation:
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
balance 21 71 1491 21 71 1491
Purchasse
28-Mar 31 77 2387 31 77 2387
22-Aug 42 81 3402 37 81 2997 5 81 405
14-Oct 47 87 4089 47 87 4089
TOTAL 141 11369 89 6875 52 4494
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
balance 21 71 1491 21 71 1491
Purchasse
28-Mar 31 77 2387 31 77 2387
22-Aug 42 81 3402 42 81 3402
14-Oct 47 87 4089 47 87 4089
TOTAL 141 11369 89 7491 52 3878
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
balance 21 71 1491
Purchasse
28-Mar 31 77 2387
22-Aug 42 81 3402
14-Oct 47 87 4089
TOTAL 141 80.63 11369 89 80.63 7176 52 80.63 4193
Say that Fed policy requires all banks to hold 8% of deposits in reserves. If Ventura Bank does not hold any excess reserves and the Fed increases the reserve requirement to 10%, what will be the result
Answer:
the money supply decreases
Explanation:
Reserve ratio is the percentage of deposits that is required of commercial banks to keep as reserves. The higher the ratio, the lower the money supply
For example, assume reserve ratio is initially 8% of deposits. It is later reduced to 10%. 1000 is deposited
Increase in money supply = deposit / reserve ratio
1000 / 0.08 = 12,500
1000 / 0.1 = 10,000
It can be seen the money supply decreased when reserve ratio was increased from 8% to 10%
LO, Inc., is considering an investment of $444,000 in an asset with an economic life of five years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $283,100 and $88,800, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 2 percent. The company will use the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be $64,000 in nominal terms at that time. The one-time net working capital investment of $19,500 is required immediately and will be recovered at the end of the project. The corporate tax rate is 24 percent.
Required:
What is the projectâs total nominal cash flow from assets for each year?
Answer:
LO, Inc.
The project's total nominal cash flow from assets for each year:
Revenue Expenses Net Cash Flow
Year 1 $283,100 $108,300 $174,800
Year 2 288,762 90,576 198,186
Year 3 294,537 92,388 202,149
Year 4 300,428 94,236 206,192
Year 5 389,937 96,121 293,816
Explanation:
a) Data and Calculations:
Cost of investment in an asset = $444,000
Estimated economic life of the asset = 5 years
Nominal annual revenues for the first year = $283,100
Nominal annual expenses for the first year = $88,800
Annual inflation rate = 2%
Salvage value of the asset = $64,000
One-time net working capital investment = $19,500
Corporate tax rate = 24%
Project's total nominal cash flow from asset for each year:
Revenue Expenses
Year 1 $283,100 $108,300 ($88,800+$19,500)
Year 2 288,762 ($283,100 * 1.02) 90,576 ($88,800 * 1.02)
Year 3 294,537 ($288,762 * 1.02) 92,388 ($90,576 * 1.02)
Year 4 300,428 ($294,537 * 1.02) 94,236 ($92,388 * 1.02)
Year 5 306,437 ($300,428 * 1.02) 96,121 ($94,236 * 1.02)
Year 5 83,500 ($64,000 + $19,500) (Salvage value and Working capital recovery)
Suppose Valley Technology has the following results related to cash flows for 2020:
Decrease in Debt of $1,000,000
Dividends Paid of $200,000
Purchases of Property, Plant, & Equipment of $5,700,000
Other Adjustments from Financing Activities of $100,000
Other Adjustments from Investing Activities of $900,000
Assuming no other cash flow adjustments than those listed above, create a statement of cash flows for investing and financing activities with amounts in thousands.
Required:
What is the Net Cash Flow from Investing and Financing Activities?
Answer:
Valley Technology
Statement of Cash Flows (in thousands):
Investing activities:
Other Adjustments from Investing Activities $900
Financing activities:
Decrease in Debt of ($1,000)
Dividends Paid of ($200)
Other Adjustments from Financing Activities of $100
Net cash flow from financing activities (1,100)
Net cash flows ($200)
Explanation:
a) Data and Calculations:
Decrease in Debt of $1,000,000
Dividends Paid of $200,000
Purchases of Property, Plant, & Equipment of $5,700,000
Other Adjustments from Financing Activities of $100,000
Other Adjustments from Investing Activities of $900,000
International trade in goods and services is a major component of the globalization process.
a. True
b. False
If Marjorie makes an investment of principal, and leaves the full amount, both principal and interest in the account to some time in the future when she withdraws all funds, she is earning what type of interest
Answer: Compounding
Explanation:
Based on the information given, we can infer that Marjorie earns a compounding interest. The compound interest is the interest on a loan that is calculated based on the initial principal as well as the interest that is accumulated from the previous periods. In compounding interest, the interest is earned on the principal and the interest amount. The compounding interest is also referred to as the interest on interest.
U.S. real gross domestic product changed from $14.6 trillion in 2006 to $14.4 trillion in 2009. During that same time period, the share of manufactured goods (e.g., cars, appliances) of U.S. real gross domestic product was 12.8 percent in 2006 and 12.0 percent in 2009. What was the dollar value of manufactured output Instructions: Enter your responses rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. In 2006
Answer:
Missing word "b. In 2009"
a. Dollar value (2006) = Real GDP (2006) * Share of manufacturing goods (2006) / 100
Dollar value (2006) = 14.6 * 12.8 / 100
Dollar value (2006) = 186.88 / 100
Dollar value (2006) = $1.8688 trillion
Dollar value (2006) = $1.87 trillion
Thus, the dollar value of manufactured output in 2006 is $1.9 trillion
b. Dollar value (2009) = Real GDP (2009) * Share of manufacturing goods (2009) / 100
Dollar value (2009) = 14.4 * 12.0 / 100
Dollar value (2009) = 172.8 / 100
Dollar value (2009) = $1.728 trillion
Dollar value (2009) = $1.73 trillion
Thus, the dollar value of manufactured output in 2009 is $1.7 trillion
During a period, an RV company purchased three vehicles for $33,000, $46,000, and $24,000, and sold two of them for $125,000. Using the specific identification method of costing inventory, they identified the $46,000 vehicle as still in stock. Calculate the gross profit for the period.
Answer: $68,000
Explanation:
If the inventory that remains is the $46,000 then that means that the cars costing $33,000 and $24,000 have been sold.
With specific identification, the actual prices of the stock are used so the cost of goods sold is:
= 24,000 + 33,000
= $57,000
The gross profit is therefore:
= Sales - Cost of goods sold
= 125,000 - 57,000
= $68,000
When you retire, you wish to have $3 million in your retirement account. You decided to add $2,000 every quarter to your retirement account and invest to generate annualized return of 8% from your investment, how many years do you think it will take to have $3 million in the account
Answer:
43.35 years
Explanation:
Use the following formula to determine the number of years
Future Value of Annuity = Periodic Annuity x ( 1 + Periodic Interest rate )^numbers of periods ) - 1 / Periodic Interest rate
Where
Future Value of Annuity = $3 million = $3,000,000
Periodic Annuity = $2,000 per quarter
Periodic Interest rate = Interest rate x Quarterly fraction = 8% x 3/12 = 2%
Numbers of periods = n = ?
Placing values in the formula
$3,000,000 = $2,000 x ( 1 + 2% )^n ) - 1 / 2%
$3,000,000 / $2,000 = ( 1 + 2% )^n ) - 1 / 2%
1,500 = ( 1.02 )^n ) - 1 / 2%
1,500 x 2% = ( 1.02 )^n ) - 1
30 = ( 1.02 )^n ) - 1
30 + 1 = 1.02^n
31 = 1.02^n
Log 31 = n log 1.02
n = Log 31 / Log1.02
n = 173.41
Now calculat ethe nUmbers of years as follow
Numbers of years = n x 3/12
Numbers of years = 173.41 x 3/12
Numbers of years = 43.35 years
Evaluate whether all of the following are considered to be investment (I) in calculating GDP.
a. The purchase of a new automobile for private, non-business use
b. The purchase of a new house
c. The purchase of corporate bonds
Answer:
only the purchase of a new house would be considered investment spending of the three options
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Consumption spending includes spending by households on goods and services. Consumption spending includes :
spending on durables - e.g. laptop
spending on nondurables - e.g. clothes, food
spending on services - e.g. payment of hospital bill
the purchase of a textbook by a student is an example of consumption spending on durable goods
Investment - It includes purchases of goods and services made by businesses in the production of goods and services
Government spending - It includes government consumption expenditure and gross investment. The purchase of a new limousine for the president is an example of consumption expenditure
The purchase of a new automobile for private, non-business use is an example of consumption spending on durables
The purchase of a new house is an example of investment spending
The purchase of corporate bonds is not included in the calculation of GDP
