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3 years ago

(a) A local bookseller is considering expanding store space to increase his capacity for books.

Business

1 answer:

Ksju [112]3 years ago

8 0

The book seller should invest in the extra space.

<u>Explanation:</u>

As per the given data:

rent for the additional space given is $300 per year, the additional profit that will be pulled by adding on the space = $4000 per year, the current rate of interest given is = 12%

In order to calculate about the decision, the present values needs to be calculated first

The present value of the investment = (- $ 3000 plus $ 4000) by 1.121

The present value of the investment = $ 571.43

The present value of the investment is positve, hence the book seller should invest in the extra space.

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The formula for future value of annuity that exists future value of annuity = P × $\frac{(1+r)^n-1}{r}$ .

Save each year to reach their goal exists $2152.48

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<h3>What is meant by future value of annuity?</h3>

The worth of a series of recurrent payments at a specific future date, assuming a specific rate of return, or discount rate, is the future value of an annuity. The future value of the annuity increases with the discount rate.

Given: amount saved = 120,000

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Where, annual savings = P

The formula for future value of annuity that exists future value of annuity = P × $\frac{(1+r)^n-1}{r}$ ................(1)

where r exists rate and n exists a time period

put her value

$ 120,000 = P × $$\frac{(1+0.12)^{18}-1}{0.12}$

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we consider here annual savings = P

From (1),

Future value of annuity = P × $\frac{(1+r)^n-1}{r}$

$ 160,000 = P × $\frac{(1+0.12)^{18}-1}{0.12}$

P = $2869.97

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save each year to reach their new goal is $2869.97

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Answer:

The remaining part of the question is:

Which of the following statements are TRUE?

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D. I, II, III

Correct Answer:

C. II and III only

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<em>Treasury Bonds and Agency Bonds are issued at par or in most cases at a very slight discount to par, and make periodic interest payments.</em>

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