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Anna35 [415]
3 years ago
10

Suppose a bank decides to make a mortgage loan to an individual so that she may purchase a home. The homeowner will pay the bank

$1,500 per month in mortgage payments for the next thirty years. The bank will collect the mortgage payments at the end of the month. What is this promised stream of cash flows worth to the bank today if they could reinvest the monthly income at an annualized rate of 5% for the entire investment horizon?
Business
1 answer:
Nesterboy [21]3 years ago
4 0

Answer:

The answer is $279,422.42

Explanation:

The promised stream of cash flows can be calculated using the below formula

=PMT*((1-(1+(i/t))^(-n*t))/(i/t))

PMT is the periodic mortgage payment of $1,500

i is the interest rate of 5% annualized rate

n is number of years which 30 years

t is the period in a year ,12 months

=1500*((1-(1+(5%/12))^(-30*12))/(5%/12))

=$279,422.42

The promised stream of cash flows worth $279422.42

Ordinarily, n would have been 30 years, but since we are looking the cash flows from a monthly perspective and there 12 months in a year, the best bet is to multiply 30 by 12 (30 years where each year has 12 months)

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Which of the following funds of a governmental unit uses the same basis of accounting as an enterprise fund?
ycow [4]

Answer:

The correct answer is a. Special revenue.

Explanation:

A special revenue fund is an account established by a government to raise money that must be used for a specific project. Special income funds provide an extra level of responsibility and transparency to taxpayers that their taxes will be used for a specific purpose.

Example: A city could establish a special income fund to pay the costs associated with stormwater management. The money from this fund could only be used for stormwater management expenses, such as street sweeping, sewer and ditch cleaning, system maintenance and a public awareness campaign. The city would have to publicly report where it raised the money from the special income fund and how it spent the budget of the special income fund.

3 0
3 years ago
Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the
Marina86 [1]

Answer and Explanation:

The Preparation of the company's revenue and spending variances for December is prepared below:-

The report with respect to the company revenue and spending variance is presented in the attachment below

The revenue refers to the sales of the company

And, the spending variance refers to the difference between the actual amount of expenses incurred and the budgeted amount of expenses incurred. The same is shown in the below attachment.

8 0
3 years ago
3. The last dividend paid by New Technologies was an annual dividend of $1.40 a share. Dividends for the next 3 years will be in
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Answer:

$12.60

Explanation:

The computation of the current value of the stock is shown below:-

= $1.40 × (1.08) ÷ 1.16 + 1.40 × (1.08)^2 ÷ (1.16)^2 + 1.40 × (1.08)^3 ÷ (1.16)^3 + 1.40 × (1.08)^3 × (1.03) ÷ (0.16 - 0.03) × (1.16)^3

= $1.3034 + $1.2136 + $1.1299 + $8.9520

= $12.60

Therefore for computing the current value of stock we simply solved the above equation.

7 0
2 years ago
Small differences in growth rates can create large differences in income levels because of:
Bingel [31]

Answer:

Answer is option B, i.e. compounding.

Explanation:

Compounding can be understood as an ability of an organization to generate earnings from previous given income. This leads to small growth compared to the previous one and therefore, leads to large differences in income.    

6 0
3 years ago
Dejarnette Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hour
seropon [69]

Answer:

Predetermined manufacturing overhead rate= $8.3 per machine hour

Explanation:

Giving the following information:

Total machine-hours 80,000

Total fixed manufacturing overhead cost $416,000

Variable manufacturing overhead per machine-hour $ 3.10

<u>First, we need to calculate the predetermined overhead rate:</u>

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (416,000/80,000) + 3.1

Predetermined manufacturing overhead rate= $8.3 per machine hour

8 0
3 years ago
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