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3 years ago

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 long-term investments

Explanation:

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

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

Compound interest is the result of reinvesting interest.

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

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

... 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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All Kiwi Ltd (a New Zealand-based company) has a wholly-owned subsidiary in Malaysia whose manager is being evaluated on the bas

Ulleksa [173]

Answer:

Variance (Unfavorable) (NZD 340,000)

Explanation:

Budget Variance using exchange rate projected at the time of budget

Budget Actual Variance Exc. Rate Variance in NZD

MYR MYR

Revenue 12000000 11000000 -1000000 0.34 -340000

Expenses 9000000 9000000 0 0.34 0

Profit 3000000 2000000 -1000000 0.34 -340000

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3 years ago

In order to encourage employee ownership of the company’s $1 par common shares, Washington Distribution permits any of its emplo

svetoff [14.1K]

Answer:

The appropriate journal entry to record the March purchases of shares under the employee share purchase plan are as follows:

Debit: Cash ($12 × 85%) × $50,000 = $510,000

Debit: Compensation Expense ($12 × 8%) × $50,000 = $90,000

Credit: Common Stock = $50,000

Paid in Capital – Excess of Par ($50,000 × $11) = $550,000

7 0

3 years ago

Emily's trust fund has a value of 100,000 on January 1, 1997. On April 1, 1997, 10,000 is withdrawn from the fund, and immediate

mafiozo [28]

Answer:

(a) Dollar Weighted Rate of return = 0.27

(b) Simple interest-based rate of return = (115000- 100000)/ 100000 = 0.15

(c) Since, the data or investment portfolio of Emily is of one year, we can calculate the money weighted rate of return but time weighted rate of return couldn’t be calculated.

Explanation:

For (a) Dollar Weighted Rate of return = 0.27

Calculations: 115000 = ((-10000) *(1 + r) ^ ((365-90)/365)) + 100000*(1+r)

So, using calculator we found r= 0.27

Here we’ve equated the value of portfolio at Jan 1, 1998 with Value of portfolio on Jan 1, 1997 and using the formula for money weighted average rate of return we’ve found the rate of return. Since, we are taking annual money weighted average rate of return, so we don’t include the value of July cash flow, i.e. $5000.

For (b) Simple interest-based rate of return = (115000- 100000)/ 100000 = 0.15

Since, the distribution of deposits and withdrawals is uniform, so it is simply the newer value minus original value divided by the original value and is most likely to percentage calculation.

(c) Since, the data or investment portfolio of Emily is of one year, we can calculate the money weighted rate of return but time weighted rate of return couldn’t be calculated.

4 0

3 years ago

At Hodgson Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied.

nika2105 [10]

Answer:

$2.25 per unit

Explanation:

The computation of the cost per equivalent is shown below:

= Total conversion cost ÷ total units completed

where,

Total conversion cost is

= Beginning work in process conversion cost + cost of conversion added

= $20,250 + 271,125

= 291,375

And, the number of units is

= Units completed + work in process ending inventory units × completion percentage

= 115,700 units + 23,000 units × 60%

= 115,700 + 13,800

= 129,500 units

So, the cost per equivalent unit for conversion cost is

= $291,375 ÷ 129,500 units

= $2.25 per unit

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3 years ago

In the classic downward-sloping demand curve, as price increases, the demand for the product or service

vesna_86 [32]

The demand for a product or service would likely decrease as price increases as far as the classic downward-sloping demand curve is concerned. In addition, this specific type of demand curve characterises increase of consumer demand as the price significantly falls.

5 0

3 years ago