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1 year ago

The time value of money is explicitly considered in which one of the following capital budgeting method(s)?

Business

1 answer:

Alexandra [31]1 year ago

4 0

The time value of money is explicitly considered in Net present value (NPV) capital budgeting methods.

The process of deciding whether to invest in capital assets is known as capital budgeting. Companies can more efficiently assess and prioritize which projects, programs, and other investment assets could be the most financially advantageous in the long-term by integrating strategically planned capital budgeting into their financial processes. Internal Rate of Return, Net Present Value, Profitability Index, Accounting Rate of Return, and Payback Period are the five capital budgeting methodologies.

An investment opportunity's whole value is intended to be captured by the financial term known as Net Present Value (NPV). The goal of NPV is to forecast all potential future cash inflows and outflows related to an investment, discount each one to the present, and then tally them all up.

Learn more about capital budgeting methods here:

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To save for retirement, Jamie decides to invest in an annuity that pays 5% annual interest, compounded annually. If Jamie contri

tatyana61 [14]

Answer:

Interest= $26,131.91

Explanation:

Giving the following information:

Annual deposit= $2,000

Number of periods= 20 years

Interest rate= 5%

<u>First, we need to calculate the future value using the following formula:</u>

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {2,000*[(1.05^20) - 1]} / 0.05

FV= $66,131.91

<u>Now, we can determine the interest earned:</u>

Interest= future value - total investment

Interest= 66,131.91 - 20*2,000

Interest= $26,131.91

6 0

3 years ago

Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost

Llana [10]

Answer:

$89,350

Explanation:

Calculation to determine the outstanding balance of the lease liability in Lone Star's December 31, 2018, balance sheet

First step is to calculate the Balance after first payment

Initial lease liability $130,000

Less: First payment $23,000

Balance after first payment $107,000

Second step is to calculate the Interest expense for June 30,2021

Interest expense for June 30,2021= $107,000*5%

Interest expense for June 30,2021=$5,350

Third step is to calculate the Principal payment for June 30,2021

Principal payment for June 30,2021=$23,000-$5,350

Principal payment for June 30,2021=$17,650

Now let calculate the Outstanding balance on June

Balance after first payment. $107,000

Less: Principal payment for June $17,650

Outstanding balance on June $89,350

Therefore the outstanding balance of the lease liability in Lone Star's December 31, 2018, balance sheet is $89,350

8 0

3 years ago

A certain delivery service offers both express and standard delivery. Seventy-five percent of parcels are sent by standard deliv

Elena L [17]

Answer:

Probability, P(n) = 3/8

Explanation: Let standard delivery be S and express delivery be E.

I) When the parcels were sent:

S(n) = 75/100 and E(n) = 25/100

II) When the parcels arrived:

S(n)← = 80/100 and E(n)← = 95/100

The probability a record of a parcel delivery is chosen, P(n) = S(n)*E(n) + E(n)*S(n) = 75/100*25/100 + 25/100*75/100

P(n) = 3/16 + 3/16 = 6/16

∴ P(n) = 3/8

7 0

3 years ago

You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make 25 deposits in your bank, w

klemol [59]

Answer: $34,696

Explanation: $1000,000/25=$40,000 as deposit to be made 25 times, but out of this amount 8% interest will be subtracted which gives 8/100×40,000=$3200.

Hence annual deposit will be $40000-$3200=$36800.

But annual raise of 3% should be subtracted as well making deposit to be 3/100×36800=$1104.

Substracting we have $36800-$1104=$35696.

Hence i must deposit $35696 first to meet this goal.

7 0

3 years ago

Cullumber Corporation earns $840000 and pays cash dividends of $300000 during 2021. Dexter Corporation owns 4200 of the 10000 ou

umka21 [38]

Answer: $1,306,800

Explanation:

In answering this question, we look at how much of that income, Cullumber still had on hand and then take the proportion that belongs to Dexter.

Cullumber Corporation earns $840,000 and pays cash dividends of $300,000 during 2021.

That means that after paying the dividends they are left with,

= 840,000 - 300,000

= $540,000

Now, Dexter owns 4200 out of 10,000 shares. That means they own,

= 4,200/10,000

= 42% of Cullumber Corporation stock.

If they own 42% of the stock, they are entitled to 42% of the income so,

= 42% * 540,000

= $226,800

Now we then add this figure to the opening balance,

= $1,080,000 + $226,800

= $1,306,800

$1,306,800 is the amount Dexter should show in the investment account at December 31, 2021.

8 0

3 years ago