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nasty-shy [4]
3 years ago
9

Suppose your opportunity cost rate is 11 percent compounded annually. (a) How much must you deposit in an account today if you w

ant to pay yourself $230 at the end of each of the next 15 years? (b) How m uch must you deposit if you want to pay yourself $230 at the beginning of each of the next 15 years?
Business
1 answer:
BlackZzzverrR [31]3 years ago
3 0

Answer:

a. Amount = $1653.93

b. Amount = $1835.82

Explanation:

a.

The Present Value is the deposited amount of future payments.

The payments are annuity if they are made at the end of each year.

To compute the present value of an annuity with periodic payment, we'll make use of the following formula:

M(1 - (1 + r)^- T)/ r

Where

M = Periodic Payment = $230

T = Periods = 15

r = rate = 11% = 0.11

So, Amount of Deposit = 230(1 - (1 + 0.11)^-15)/0.11

Amount = 230(1 - (1.11)^-15)/0.11

Amount = 230 ( 1 - 0.209)/0.11

Amount = 230 * 0.791/0.11

Amount = 230 * 7.191

Amount = $1653.93

b.

In this case payments are made at the beginning of each period

This means that the payments are an annuity due.

To compute the present value of an annuity due with periodic payment, we'll make use of the following formula

M((1 + r) - ( 1 + r) ^ ( 1 - T))/r

Amount = 230(( 1 + 0.11) - (1 + 0.11) ^ (1 - 15))/0.11

Amount. = 230((1.11 - 1.11^-14))/0.11

Amount = 230(1.11 - 0.232)/0.11

Amount = 230 * 0.878/0.11

Amount = 201.94/0.11

Amount = $1835.82

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Akimi4 [234]

Answer:

D

Explanation:

7 0
3 years ago
Luis has $170,000 in his retirement account at his present company. Because he is assuming a position with another company, Luis
serious [3.7K]

Answer:

Luis will have $ 1,153,675.657524 in his account at the time of his retirement.

Explanation:

Acording to the data Luis has $170,000 in his retirement account

His current account after 30 years at 4.5% compounded quarterly will be

Current account = $ 170,000(1 + (0.045/4))^(4*30)

Current account = $ 650,838.260724

Acording to the data Luis also plans to put $2000/quarter into the new account until his retirement 30 years from now.

The future value (FV) of the account will be

FV = 2000[(1 + (0.045/4))^(4*30) -1] / (0.045/4)  0.01125

FV = $ 502,837.3968

Therefore, to calculate how much will Luis have in his account at the time of his retirement we have to calculate the following:

Total amount = Current account+FV

Total amount = $ 650,838.260724 +  $ 502,837.3968

Total amount = $ 1,153,675.657524

Luis will have $ 1,153,675.657524 in his account at the time of his retirement.

4 0
3 years ago
There are more corporations in this country than any other business structure.<br> OTrue<br> O False
Ket [755]
It would be false, Shareholders in a corporation are legally considered partial owners of the corporation.
6 0
3 years ago
Read 2 more answers
Adele Corp., a wholesaler of music equipment, issued $32,700,000 of 20-year, 6% callable bonds on March 1, 20Y1, at their face a
kirill115 [55]

Answer:

20Y1

Mar 1

Dr Cash 32,700,000

Cr Bonds payable 32,700,000

Sept 1

Dr Interest expense 981,000

Cr Cash 981,000

20Y2

Sept 1

Dr Bonds payable $32,700,000

Cr Loss on Redemption of Bonds 654000

Cr Cash 33,354,000

Explanation:

Adele Corp. Journal entries

20Y1

Mar 1

Dr Cash 32,700,000

Cr Bonds payable 32,700,000

Sept 1

Dr Interest expense 981,000 ($32,700,000*6%/2)

Cr Cash 981,000

20Y2

Sept 1

Dr Bonds payable $32,700,000

Cr Loss on Redemption of Bonds 654,000

Cr Cash 33,354,000 ($32,700,000*1.02)

5 0
3 years ago
Choose the letter of the item that best completes the statement or answers the question. Last year Jackson earned $500,000, Vele
Vitek1552 [10]

1. According to their states’ tax laws, which require each one to pay a tax of $500 despite their different earnings, the best description of the tax is <u>(c) regressive</u>.

<h3>What is a regressive tax system?</h3>

A regressive tax system is one where taxpayers pay a disproportionate share of the tax burden, given their earning levels.

A regressive tax system is not proportional or progressive.

2. An example of an excise tax is (b) tax on perfume.

3. The amount Rose Chin paid for the purchase of school supplies based on the state sales tax of 5% is <u>a) $12.60</u> ($12 x 1.05).

4. An example of a property tax is a) a tax based on the value of one's home.

5. The best example of the ability-to-pay principle is <u>b) income tax</u>.

6. An example of a tax based on the benefits-received principle is (a) bridge toll.

7. In the United States, taxes are used to accomplish all of the following except (c) determine which brands consumers buy.

8. For the apartment tenants, the tax is <u>d) a sales tax</u>.

9. The ultimate tax-burden bearer in question 8 is <u>(d) the tenants</u>.

10. An example of a protective tariff is (d) tax on the importation of foreign-made cars.

Thus, while income tax is mostly progressive in the United States, sales taxes are proportional, while some taxes are regressive because the amount paid is fixed and does not depend on the ability-to-pay principle.

Learn more about tax systems at brainly.com/question/12890967

#SPJ1

5 0
2 years ago
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