Answer:
£718,607
Explanation:
Annuities are investment opportunities that require an initial settlement and gives a series of returns of a fixed amount for a specific number of periods.
In simple terms, the question requires us to calculate the amount to be paid today (Present Value) of an annuity that pays £80,000 per year for the next 10 years.
To establish the [Present Value of the Annuity, the future Cash Flows must be discounted to the Present Value using the appropriate discount rate. In our case, we will use the annual effective interest rate of 2%.
Present Value = PMT × [ 1 - 1/(1+r)^n ÷ r ]
Where,
PMT = £80,000
n = 10
r = 2%
Therefore,
Present Value = £80,000 × [ 1 - 1 / (1.02) ^ 10 ÷ 0.02]
= £718,606.80 or £718,607
Conclusion :
She be willing to pay £718,607 today for the annuity.
Answer:
present value = $500,000/1.08 + $515,000/1.08² + $600,000/1.08³ = $1,380,791.80
you calculated the present value correctly, assuming that you receive the annual payments at the end of each year (ordinary annuity).
but if you receive the annual payment at the beginning of the year (annuity due) = $500,000 + $515,000/1.08 + $600,000/1.08² = $1,493,255
it's not exactly the same value, but it is much closer and you could assume that the difference is due to rounding: ($1,493,255 - $1,495,370) / $1,495,370 = -0.1%
Are the sum of a company's profits, after dividendpayments, since the company's inception. They are also called earned surplus, retained capital, or accumulated earnings.
(EXAMPLE):
Let's assume Company XYZ has been around for five years. During this time, it reported the following net income:
Year 1: $10,000
Year 2: $5,000
Year 3: -$5,000
Year 4: $1,000
Year 5: -$3,000
Assuming Company XYZ paid no dividends during this time, XYZ's retained earnings equal the sum of its net profits since inception, or in this case, $8,000. In subsequent years, XYZ's retained earnings will change by the amount of each year's net income, less dividends.
The retained earnings statement summarizes changes in retained earnings for a fiscal period, and total retained earnings appear in the shareholders' equity portion of thebalance sheet. This means that every dollar of retained earnings means another dollar of shareholders' equity ornet worth.
A company's board of directors may apprompany's retained earnings when it want to restrict dividend distributions to shareholders. Appropriations are usually done at the board's discretion, although bondholders and other circumstances may contractually require the board to do so. Appropriations appear as a special account in the retained earnings section. When an appropriation is no longer needed, it is transferred back to retained earnings. Because retained earnings are not cash, a company mayfund appropriations by setting aside cash or marketable securities for the projects indicated in the appropriation.
Why its important
It is important to understand that retained earnings do not represent surplus cash or cash left over after the payment of dividends. Rather, retained earnings demonstrate what a company did with its profits.
Explanation:
For international businesses to settle in a specific location and achieve success in the market, a market segmentation survey must be carried out. This research is essential to discover relevant characteristics about the community of a country or city for example, it is important that the company knows the population that lives in the place where it wants to carry out its activities, therefore, to know characteristics such as age group, tastes, culture, monthly income, etc. is so important for a company, be it a franchise, management contracts or electronic businesses, to be able to align its strategy and action plans in order to conquer the market of a region.
It is important that companies are aware of the peculiar characteristics of a community, in order to adapt to their tastes, customs and values, so that their business is well positioned and meets the desires and needs of a community.
In addition to paying attention to local customs and culture, international companies guarantee jobs for the local community, convenience and must take advantage of the advantages that a local offers, such as cheaper labor, government incentives, potential markets, and develop plans to reduce disadvantages, which can be the disqualified labor and the lack of interest and identification for your product or service.
