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Fudgin [204]
3 years ago
13

Mark Ventura has just purchased an annuity to begin payment two years from today. The annuity is for $8,000 per year and is desi

gned to last 10 years. If the interest rate for this problem calculation is 13 percent, what is the most he should have paid for the annuity?
Business
1 answer:
Bess [88]3 years ago
7 0

Answer:

  • <u>$38,415.88</u>

Explanation:

<u>1. Calculate the value of the annuity one year from now.</u>

The following equation is used to calculate the present value of an annuity that starts payments one year from now:

      PV=C\times \bigg[\dfrac{1}{r}-\dfrac{1}{r(1+r)^t}\bigg]

Where:

  • PV is the present value
  • C is the constant annuity: $8,000
  • r is the interest rate: 13% = 0.13
  • t is the number of years: 10

Substitute and compute:

        PV=\$8,000\times \bigg[\dfrac{1}{0.13}-\dfrac{1}{0.13(1+0.13)^{10}}\bigg]

        PV=\$43,409.95

Notice that, since the annuity will begin the payment two years from today, that value is the value in a year. Then, to find the value today you must discount the calculated value one year, at the same rate.

<u>2. Value today</u>

      V_{today}=\dfrac{PV}{(1+r)}=\dfrac{\$43,409.95}{1.13}=\$38,415.88

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3 years ago
Permian Underground Machines &amp; Pipes Co. (PUMP) is in the oil and gas equipment and services industry. It is considering a n
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Answer:

Option A is correct.

The required rate of return for the bond that PUMP managers are considering is <u>1.46%</u>

Explanation:

Required rate of return for the bond that PUMP managers are considering is 1.46%.  Because, currently, the yield on a U.S. Treasury bond with about 10 years to maturity is 1.46%. same type of bond yielding is 1.46%.

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3 years ago
Products are invented and revised by which department? marketing production research and development finance 2. what is the indu
Vanyuwa [196]

1. The answer is <u>"research and development".</u>


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Research and development are exceptionally hard to oversee, since the characterizing highlight of research is that the analysts don't know ahead of time precisely how to achieve the coveted outcome.  


2. The answer is <u>"capstone courier".</u>


Client buys and sensor organization money related outcomes are accounted for in an industry pamphlet called the Capstone Courier.  

Successful organizations will think about the Courier to comprehend the commercial center and discover openings. As the reenactment advances and systems are executed, organization results will start to shift.  


3. The answer is <u>"wage increases".</u>


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Production is the useful territory in charge of transforming contributions to completed yields through a progression of generation forms. The Production Manager is in charge of ensuring that crude materials are given and made into completed merchandise successfully. He or she should ensure that work is completed easily, and must manage methods for making work more productive and more charming.  


4. The answer is <u>"Borrowing Long-term debt , Borrowing Short-term debt and Issuing Stock".</u>


Short-term debt alludes to any money related commitment that is either due inside a year time frame or due inside the current monetary year. The estimation of the transient obligation account is imperative while deciding an organization's execution.  

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6. The answer is<u> "true".</u>


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8 0
3 years ago
Some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.
Nadya [2.5K]

Answer:

Purchase  12000 debit

Accounts Payable  12000 credit

--to record purchase--    

Accounts Payable   1200 debit

Returns&Allowance       1200 credit

--to record returned goods--

Purchase  16000 debit

Accounts Payable  16000 credit

--to record purchase--    

Purchase          20000 debit

Accounts Payable  20000 credit

--to record purchase--  

Account Payable    16,000 debit

     Purchase Discount      160 credit

     Cash                        15,840 credit

-to record payment within--

SECOND METHOD:

Purchase  11,760 debit

Accounts Payable  11,760 credit

--to record purchase--    

Accounts Payable   1,176 debit

Returns&Allowance       1,176 credit

--to record returned goods--

Purchase  15,840 debit

Accounts Payable  15,840 credit

--to record purchase--    

Purchase          19,600 debit

Accounts Payable  19,600 credit

--to record purchase--  

Account Payable    16,000 debit

     Cash                        15,840 credit

-to record payment within--

interst expense      216 debit

  account payable         216 credit

--to record interest incurred--

Explanation:

As we use periodic system we calculate the inventory and COGS at the end of the period so we use purchase and returns accounts rather than adjusting inventories in every transactions.

In the second method we use itnerest expense when the discount is loss.

<u><em>interest incurred for the period:</em></u>

(12,000 - 1,200) x 2% = 216

The secodn purchase at the end of the monthcan be paid within discount period therefore, we do not recognize interest expense yet.

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4 0
3 years ago
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