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NeX [460]
3 years ago
6

Karen and mike currently insure their cars with separate companies, paying $700 and $900 a year. if they insure both cars with t

he same company, they would save 10 percent on the annual premiums. what would be the future value of the annual savings over 10 years based on an annual interest rate of 4 percent
Business
1 answer:
Bumek [7]3 years ago
4 0
Given:
Karen - 700
Mike - 900
Same insurance company, they will save 10% on annual premiums.
period - 10 years
annual interest rate - 4%

Total Annual Premium:
700 + 900 = 1600 

Annual Savings:
1600 * 10% = 160

New Annual Premium:
1600 - 160 = 1,440

Future Value of Annual Savings:

FV = PV * FV factor for n = 10 ; i = 4%

FV = 160 * (1.04)¹⁰
FV = 160 * 1.480
FV = 236.80

The future value of the annual savings is 236.80.


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According to liquidity preference theory investment spending would rise if the price level
ANTONII [103]

Answer:

A.rose making the interest rate fall

Explanation:

According to the liquidity preference theory developed by John Keynes, if the money supply rises, price level also rises, interest rate falls. If interest rate falls, the price of bond rises which would increase capital gains. People would prefer to hold bonds instead of money, therefore, investment spending would rise.

The liquidity preference theory states that we hold money for transactive, speculative and precautionary motives.

4 0
3 years ago
During January, Year 2, Geo entered into the following transactions: Paid $728 on account for utilities that were used during De
MAXImum [283]

Answer:

Geo

1. Journal Entries:

1. Debit Utilities Payable $728

Credit Cash $728

To record the payment of utilities on account.

2. Debit Supplies $488

Credit Cash $488

To record the purchase of supplies for cash.

3. Debit Prepaid Rent $6,100

Credit Cash $6,100

To record the prepayment of rent for 6 six months.

4. Debit Equipment $21,000

Credit Note Payable $21,000

To record the purchase of equipment on account.

5. Debit Cash $16,000

Debit Accounts Receivable $16,500

Credit Services Revenue $32,500

To record the rendering of services for cash and on account.

6. Debit Salaries Expense $7,400

Credit Cash $7,400

To record the payment of salaries for January.

2. T-accounts:

Utilities Payable

Accounts Titles       Debit        Credit

Cash                        $728

Cash

Accounts Titles       Debit        Credit

Utilities payable                       $728

Supplies                                     488

Prepaid Rent                           6,100

Service Revenue  $16,000

Salaries Expense                   7,400

Supplies

Accounts Titles       Debit        Credit

Cash                       $488

Prepaid Rent

Accounts Titles       Debit        Credit

Cash                    $6,100

Equipment

Accounts Titles       Debit        Credit

Note Payable        $21,000

Note Payable

Accounts Titles       Debit        Credit

Equipment                             $21,000

Accounts Receivable

Accounts Titles       Debit        Credit

Service Revenue $16,500

Services Revenue

Accounts Titles            Debit        Credit

Cash                          $16,000

Accounts Receivable 16,500

Salaries Expense

Accounts Titles       Debit        Credit

Cash                      $7,400

Explanation:

Since the beginning balances were not supplied, the T-accounts are not balanced at the end of the period.  Journal entries were prepared to record the daily business transactions for the first time in the accounting system.  The entries showed the accounts to be debited and credited respectively.

5 0
2 years ago
A firm's attempts to shorten the length of time a process takes, may lead to disappointing outcomes because of ______.
liraira [26]

A firm's attempts to shorten the length of time a process takes may lead to disappointing outcomes because of time compression diseconomies.

<h3>What are time compression diseconomies?</h3>
  • According to time compression diseconomies, which are defined as inefficiencies that arise when work is done more quickly, the cost of building a competency will rise exponentially as the amount of time permitted to do so decreases.
  • Not every subsidiary deals with time compression diseconomies to the same extent.
  • The date of a later subsidiary formation may affect how strong TCD is. Early-established subsidiaries may have greater TCD than later entries due to two factors.
  • First, for late movers, vicarious learning may lower TCD. Second, TCD is made worse by the higher environmental uncertainty that early mover subsidiaries frequently experience.
  • TCD explains why the well-studied relationship between the level of multi-nationality and business success is negatively moderated by the rate of overseas expansion.

To learn more about Diseconomies refer to:

brainly.com/question/14563017

#SPJ4

4 0
1 year ago
Lohn Corporation is expected to pay the following dividends over the next four years: $16, $12, $11, and $7.50. Afterwards, the
andreev551 [17]

Answer:

Current share price =$77.81

Explanation:

Price of the stock today = \frac{D1}{(1+ke)^1}+\frac{D2}{(1+ke)^2}+\frac{D3}{(1+ke)^3}+\frac{D4}{(1+ke)^4}+\frac{P4}{(1+ke)^4}.

where P4 = \frac{D5}{ke-g}

where D5 = D4(1+g)

Price of the stock today = \frac{16}{(1+0.16)^1}+\frac{12}{(1+0.16)^2}+\frac{11}{(1+0.16)^3}+\frac{7.50}{(1+0.16)^4}+\frac{7.50(1.06)}{(0.16-0.06)(1+0.16)^4} = $77.81

8 0
3 years ago
4.An important feature of a is that the holder has the right, but not the obligation, to buy or sell currency.(a)swap(b)foreign
Ratling [72]

Answer:

(c) Foreign exchange option

Explanation:

Derivatives refer to those securities whose value is derived from the underlying asset. Examples being currency derivatives, commodity derivatives, etc.

Foreign exchange option refers to a derivative instrument whereby the holder has the right but not the obligation to buy or sell a currency at a future date at a  predetermined rate fixed today.

In a call option, the holder has the right but not the obligation to buy a currency while in a put option the holder has the right but not the obligation to sell a currency.

The predetermined price at which the holder can buy or sell a currency is referred to as the strike price or exercise price.

5 0
2 years ago
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