All categories

2 years ago

Calculate the 2 year annuity factor if the required rate of return is 10%.

Business

1 answer:

Schach [20]2 years ago

6 0

The 2-year annuity factor can be computed as 1.7355 if the desired rate of return is 10%.

<h3>What is the annuity factor?</h3>

The amount of money that can be taken out of retirement funds ahead of schedule without being penalized can be calculated using the annuity factor approach. For annuities and individual retirement funds, the computation mostly uses life expectancy statistics (IRAs).

The formula for calculating an annuity's present value can be used to calculate the 2-year annuity factor.

Such are:

= Amount x (number of periods - (1 + rate)) x rate

When figuring out the amount for the factor:

equals 1 x (1 - (1 + 10%)2) / 10%

= 1 time 0.173553719% of the total

= 1.7355

Thus, the annuity factor of 2 years is 1.7355.

Learn more about annuity factors:

brainly.com/question/21801625

#SPJ1

You might be interested in

You are 30 years old today and are considering studying for an MBA. You just received your annual salary of $50,000 and expect i

Liono4ka [1.6K]

Answer:

Yes, you should take the MBA because the NPV of taking the MBA is positive.

Explanation:

the total economic costs of taking the MBA program include the lost wages + the costs of taking the MBA and any interest you could have earned by investing it on something else = ($50,000 x 1.03) + ($50,000 x 1.03²) + (2 x $30,000 x 1.08) = $51,500 + $53,045 + $64,800 = $169,345

the present value of your total economic costs:

$51,500/1.08 + $53,045/1.08² + $32,400/1.08 + $32,400/1.08² = $47,685.19 + $45,477.54 + $30,000 + $27,777.78 = $150,940.51

if you continued to work, your salary at year 3 would be $54,636.35 and it would continue to increase by 3% every year. The salary that you can earn with an MBA is $80,000 and it will grow by 4% per year. I used an excel spreadsheet to calculate future salaries and the differential amount between them. Then I calculated the PV at the beginning of year 3 of the differential income.

The PV of the differential income today = $560,281.31 /1.08³ = $444,769.38

the NPV of taking an MBA = $444,769.38 - $150,940.51 = $293,828.87

6 0

4 years ago

_______ is defined in marketing terms as the basic problem-solving benefits consumers are seeking.

omeli [17]

The term that is being referred to the description is CORE CUSTOMER VALUE. The core customer value is a marketing term that describes the fundamental benefits of problem solving that consumers are looking for. The customer value are classified into two and these are the perceived and the desired value.

7 0

4 years ago

Tyson Inc. is currently trading at $18 per share. The company is expected to pay a dividend of $1.63/per share next year. The di

viktelen [127]

Answer:

$20.38 buy

Explanation:

The computation of present value is shown below:-

Fair Value according to Gordon Model = Expected Div ÷ (Required Return - Growth rate)

= $1.63 ÷ (10.5% - 2.5%)

= $1.63 ÷ 8%

= $20.38

Fair Price = $ 20.38 and Actual Price = $18.00

As Fair Price is greater than the Actual Price so, the stock is under priced. Therefore advice to buy.

5 0

3 years ago

Sheldon has the following year-end account balances: Accounts Receivable, $5,000; Supplies, $12,000; Equipment, $18,000; Account

Reptile [31]

Answer:

the balance in the Cash account should be C : $25,000.

Explanation:

Assets=(Liabilities+Owner’s Equity)

Assets= Cash+account receivable+Suplies+Equipment

Cash 25.000

Acoount Receivable 5.000

Supllies 12.000

Equipment 18.000

Assets 60.000

Account Payable 17.000

Liabilities 17.000

Stakholder equity 43.000

Equity 43.000

Liabilities+ Equity 60.000

4 0

3 years ago

Melanie invests $4,000 into an account offering 4% interest compounded annually. Gina invests $4,000 into a simple interest savi

denpristay [2]

Answer:

$4,900 (From simple interest method)

Explanation:

Given:

Amount invested (p) = $4,000

Interest rate for simple interest (r) = 4.5% = 4.5/100 = 0.045

Interest rate for Compound interest (i) = 4%

Number of year (t) = 5

Computation of amount from simple interest method:

Amount = p(1+rt)

Amount = $4,000[1+(0.045 × 5)]

Amount = $4,000[1+0.225]

Amount = $4,000[1.225]

Amount (from simple interest method) = $4,900

Computation of amount from compound interest method:

$Amount = p(1+i)^t\\\\Amount = 4,000(1+0.04)^5\\\\Amount = 4,000(1.04)^5\\\\Amount = 4,000(1.2166529)\\\\Amount = 4,866.616\\\\$

Therefore, Amount from simple interest method is higher .

3 0

3 years ago