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rusak2 [61]
3 years ago
5

Does compound interest have more of an impact for short-term investments or long-term investments? Why?

Business
1 answer:
vaieri [72.5K]3 years ago
5 0

Answer:

Compound interest have more of an impact for <em>long-term</em> investments

Explanation:

Interest earn on the principal for one period (P) is the same for compound and non-compound interest

The <u>non-compound interest</u> of period n is is the sum of P for all n periods: P*n

<u>Compound interest</u> is the result of reinvesting interest.

The compound interest of period n (I_{n}) = interest earned on the principal (P) + interest on <em>previously accumulated interest of n-1 periods</em> (I_{n-1}), where...

...<em>previously accumulated interest of n-1 periods</em> (I_{n-1})= interest earned on the principal (P) + interest on <em>previously accumulated interest of n-2 periods</em> (I_{n-2})

... and so on backward to the interest of period 1 = interest earned on the principal (P) = non-compound interest of period 1

It can be seen that the less (more) time pass, the less (more) the gap between compound interest and non - compound interest

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A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity and a yield to maturity of 8.3%. If intere
ohaa [14]

Answer:

The price of the bond will be $879

Explanation:

Price of the bond is the present value of all cash flows of the bond. Price of the bond is calculated by following formula:

According to given data

Coupon payment = C = $1,000 x 6.2 = $62 annually = $31 semiannually

Number of periods = n = 2 x 8 years = 16 periods

Current Yield = r = 8.3% / 2  = 4.15% semiannually

Price of the Bond = $31 x [ ( 1 - ( 1 + 4.15% )^-16 ) / 4.15% ] + [ $1,000 / ( 1 + 4.15% )^16 ]

Price of the Bond = $31 x [ ( 1 - ( 1 + 0.0415)^-16 ) / 0.0415 ] + [ $1,000 / ( 1 + 0.0415 )^16 ]  

Price of the Bond = $31 x [ ( 1 - ( 1.0415)^-16 ) / 0.0415 ] + [ $1,000 / ( 1.0415 )^16 ]  

Price of the Bond = $521.74 + $357.26   = $879

7 0
3 years ago
Kingbird, Inc. receives a $11000, 9-month, 6% promissory note from Sunland Company in settlement of an open accounts receivable.
Scorpion4ik [409]

Answer and Explanation:

The journal entry at the time of receiving the note is as follows:

Note receivable Dr $11,000

         To Account receivable $11,000

(Being the note receivable is recorded)

Here the note receivable is debited as it increased the assets and credited the account receivable as it decreased the assets

6 0
3 years ago
A value chain is a set of: a) similarly profitable firms competing against each other in any given industry. b) large firms that
OLEGan [10]

Answer:

c) activities through which a product or service is created and delivered to customers.

Explanation:

A value chain is the entire range of activities that a company undertakes to create a product or a service. These activities include design,  production, marketing and distribution.  A manufacturing company will have its value chain processes start with the procurement of raw materials and end when the product is sold.

Companies will, from time to time, perform value chain analysis.  Value chain analysis involves a detailed examination of all the business processes and procedures. The purpose of the analysis is to improve the efficiency of the value chain. An efficient system of production has cost-saving benefits to the organization.

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3 years ago
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Flura [38]
I think that what you should maybe be very social, and outgoing
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Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the ind
weqwewe [10]

Answer: increase in inventory

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