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kow [346]
2 years ago
6

You have just received notification that you have won the $1.4 million first prize in the lottery. However, the prize will be aw

arded on your 100th birthday, 70 years from now. (Wow, you’re older than I generally think!) The appropriate discount rate is 8%. What is the present value of your winnings?a. $4,288.16
b. $6,404.20
c. $15,309.91
d. $23,333.33
e. $25,000.00
Business
1 answer:
eimsori [14]2 years ago
7 0

Answer:

b. $6,404.20

Explanation:

Value of prize = $1.4 million = $1,400,000

Amount to be received in years = 70 years

Interest Rate  = 8%

Future value = Present value x ( 1 + interest rate )^-number of years

FV = PV x ( 1 + r )^n

1,400,000 = PV ( 1 + 0.08 )^70

1,400,000 = PV ( 1.08 )^70

1,400,000 / ( 1.08 )^70 = PV

PV = $6404.20

So The present value of the winning is $6,404.20.

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Unlike other car rental agencies that are based in airports to serve travelers, wheelz-on-rent has a network of neighborhood off
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It can be concluded that the Wheelz On Rent most likely practices the concentrated marketing. Concentrated marketing is a type of strategy in which the products are being made and produced because of a specific segment of the population of the consumer of that they are likely to be made for a specific segment.

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3 years ago
Integrated Masters Inc. (IMI) is presently operating at 80% of capacity and manufacturing 116,000 units of a patented electronic
balu736 [363]

Answer:

a. $3.13 per unit

b. No

c Yes

Explanation:

The computation is shown below

a. Fixed overhead per unit is

= Fixed overhead ÷ Number of units manufactured

= $363,000 ÷ 116,000 units

= $3.13 per unit      

b. The cost calculation is not appropriate because the fixed overhead per unit is not be involved while calculating the cost

c. Now the acceptance of the offer should be based on total relevant cost which is            

Total relevant cost

= $6.1 + $6.1 + $8.1

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Since the offer is accepted because total relevant cost is less than the offered purchase price i.e $24.50    

       

3 0
3 years ago
What is Jared's accounting profit? Suppose Jared could have used his talents to run a similar kind of business instead. If he va
Deffense [45]

Answer:

Explanation:

I think your question is missed of key information, allow me to add in and hope it will fit the original one.  

<em>After working as a head chef for years, Jared gave up his $60,000 salary to open his own restaurant last year. He withdrew $50,000 of his own savings that had been earning 4% interest and borrowed another $100,000 from the bank at a rate of 5%. As the restaurant space he was leasing had no separate office, Jared converted his basement apartment into office space. He had previously rented the apartment to a student for $300/month. The following table summarizes his operations for the past year. </em>

<em>Total sales revenue    $590,000       </em>

<em>  Employee wages $120,000   </em>

<em>  Materials                 $350,000   </em>

<em>  Interest on loan $5,000   </em>

<em>  Utilities                 $10,000   </em>

<em>  Rent                 $25,000   </em>

<em>Total explicit costs              $510,000 </em>

<em>a, What is Jared's accounting profit? </em>

<em>b, Suppose Jared could have used his talents to run a similar kind of business instead. If he values his entrepreneurial skill at $10,000 annually, find Jared's total implicit costs. </em>

<em>c, What was Jared's economic profit last year?</em>

My answer:

a. , What is Jared's accounting profit?

As we know that accounting profit is the difference between total sales revenue and Total explicit cost, from the table we can find that:

$590,000  - $510,000  = $80,000 is the accounting profit

b. Jared's total implicit costs.

Implicit costs include his foregone wages ($60,000), the value of his entrepreneurial skill ($10,000), foregone rent on the apartment ($3,600 = 12 x $300) plus the foregone interest on his savings ($2,000 = .04 x $50,000). These total $75,600.

c. What was Jared's economic profit last year?

Explicit plus implicit, was $585,600 = $510,000 + $75,600. His economic profit is the difference between revenue and economic cost, or $4,400 (= $590,000 – $585,600).

8 0
3 years ago
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5 0
1 year ago
What role do primary financial markets play in our economy? What role do secondary markets fill? Describe the relationship that
Bezzdna [24]

Answer:

What role do primary financial markets play in our economy?

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What role do secondary markets fill?

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Financial markets are the places where Financial Instruments are bought and sold by Financial Institutions.

Explanation:

What role do primary financial markets play in our economy?

The key function of the primary market is to facilitate capital growth by enabling individuals to convert savings into investments. It facilitates companies to issue new stocks to raise money directly from households for business expansion or to meet financial obligations

What role do secondary markets fill?

Secondary markets include option markets and deal markets in which ownership of securities is transferred. Investors create auction markets, such as the New York Stock Exchange, by congregating in one physical area to announce bids and ask prices and to trade and sell stock.

Describe the relationship that exists between financial institutions and financial markets and suggest a method in which this relationship can run more smoothly.

Financial instruments are those instruments that allow you to take an exposure to a specific type of risk, or simply to invest your money! Financial instruments are bought and sold by all the financial institution with different goals (to get a fixed return, to speculate, to provide short term and long term funding, to achieve a specific rate of return, to fund themselves, to buy or sell for a client…) and in different ways.

Financial markets are the places where Financial Instruments are bought and sold by Financial Institutions.

7 0
3 years ago
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