Solution:
1 : The interest rate that fits the lifetime cash flows to the PV of cash flows is expected here.
PV of an equation of perpetuity:
PV = C/ r
$326,000 = $3,000 / r
With the interest rate, we could now solve the following:
r= $3,000 / $326,000
r= 0.0092 or 0.92% per month
2 :The interest rate per month is 0.92 percent.
In order to calculate the APR, the number of months in a year is determined by:
APR = (12) 0.92%
APR = 11.04%
3 : And using the equation to find the EAR, we find:
EAR = [1 + (APR / m)]m– 1
EAR = [1 + 0.0092]12– 1
EAR = 0.1162 or 11.62%
The correct answer in this particular situation would be it increased.
Answer:
The amount that Gees Consulting would report as the ending balance in the R. Gees, Capital account at the end of the year is $8,000
Explanation:
For computing the ending balance of capital account, first, we have to compute the net income or loss which is shown below:
Net income/loss = Fees revenue - salary expense - rent expense - supplies expense
= $10,000 - $7,000 - $6,000 - $6,000
= ($19,000)
Now the ending balance would be
= Opening capital - net loss - drawings
= $18,000 - $9,000 - $1,000
= $8,000
Contains the account of each vendor that make credit sales to the company
