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kirza4 [7]
3 years ago
5

Ted purchased an annuity today that will pay $1,000 a month for five years. He received his first monthly payment today. Allison

purchased an annuity today that will pay $1,000 a month for five years. She will receive her first payment one month from today. Which one of the following statements is correct concerning these two annuities?
a) Both annuities are of equal value today.
b) Ted’s annuity is an ordinary annuity.
c) Allison’s annuity is an annuity due.
d) Allison’s annuity has a higher present value than Ted’s.
e) Ted’s annuity has a higher present value than Allison’s.
Business
1 answer:
victus00 [196]3 years ago
7 0

Answer:

The correct option is E,Ted's annuity has a higher present value than Allison's

Explanation:

Both annuities do not have equal amount today as $1000 received today is higher in value terms than $1000 receivable in a month's time since cash receivable earlier is much more valued than the one receivable later.

Ted's annuity is an  annuity due not an ordinary annuity

Allison's annuity is an ordinary annuity not annuity due

Allison's annuity has a lower present value than Ted's and not the other way round.

The only correct statement is option E,since Ted is expected to receive $1000 today, his annuity has a higher present value compared to Allison's

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The date on which the principal amount is repaid to the bondholder is known as the​ ________.
blagie [28]
The answer is “Bond Maturity Date”.
8 0
1 year ago
A bond has a face value of $1,000, a coupon of 5% paid annually, a maturity of 34 years, and a yield to maturity of 8%. What rat
Lyrx [107]

Answer:

- 3.21%

Explanation:

In this question, we use the PV formula which is shown in the spreadsheet.  

The NPER represents the time period.

Given that,  

Future value = $1,000

PMT = 1,000 × 5% = 50

NPER = 34 years -  1 year =  33 year

Rate of interest = 9%

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the present value would be $581.42

Now the return would be

=  Sale price + interest - purchase price

= $581.42 + $50 - $652.39

= -$20.97

And, the total return would be

=  Return ÷ purchase price

=  -$20.97 ÷ $652.39

= - 3.21%

5 0
2 years ago
1. Congress passed the Sarbanes-Oxley Act to ensure that investors invest only in companies that will be profitable.
Oksana_A [137]

Answer:

1. False

2. False

3. False

4. True

5. True

Explanation:

1.

Sarbanes-Oxley Act was a federal law that was established by congress to sweep auditing and financial statements for public companies. The main aim for this was to improve the investor confidence by improving reliability in accounting statements. Errors in the financial statements for the public companies were to be minimized following this law especially in the wake of numerous cases of corporate crime. This law was never passed to ensure that investors only invest in companies that will be profitable, since the choice of which company to invest in is exclusively left to the investor. So the above statement is false.

2.

Ethics can be defined as a set of rules and regulation that govern the moral behavior of someone. Ethical standards vary from one region to another since they are majorly cultural, for example; a behavior in the United States can be considered as appropriate while the same behavior in a different place can be inappropriate. Ethical standards are either right or wrong, and the actions are judged on these terms. Ethics don't measure whether a actions are loyal or disloyal, thus the statement is false.

3.

The primary accounting standard setting body in the United States is Financial Accounting Standards Board (FASB). This body is charged with regulating and setting the best standard of accounting practice. The FASB usually constitutes a board whose officials are rigorously assessed. The board members have to be professionals in the field of accounting.  Securities and Exchange Commission on the other hand is an independent federal agency with the authority to enforce federal security laws. Thus the statement above is false.

4.

The historical cost principle suggests that the companies record assets cost at their original cost and continue to report them at their original cost over the time the asset is held. The historical cost principle is a generally accepted accounting principle that has been in use for a long time. The definition about the historical cost principle in the question above is therefor true.

5.

The monetary unit assumption dictates that business related activities be converted to monetary units. There are some business transactions that are however quite difficult to convert into monetary units, therefor the accountant in using this principle is only obliged to record only the transactions that can be measured in money terms. The statement about monetary units in the question above is thus true.

8 0
3 years ago
Which of the following is an advantage of first movers? Group of answer choices they are not prone to mistakes they have an oppo
joja [24]

Answer:

they have an opportunity to exploit network effects and positive feedback loops

Explanation:

The first mover advantage refers to competitive advantages that can be achieved by a firm that first enters a market or launches a new product first. E.g. Volkswagen has a first mover advantage in China because it was the first foreign car manufacturer to successfully a car factory there. Another type of first mover advantage would be the ones obtained by Apple for launching the first smartphone.

Network effects refers to a good or service becoming more valuable because more people purchase or use them, e.g. social media apps.  

Positive feedback loops occurs when a company's output is used as a positive input in the productive system, e.g. when a company uses information gathered by customer service (CRM) to improve the products or services it offers.

6 0
3 years ago
Inventory Analysis A company reports the following: Cost of goods sold $347,480 Average inventory 86,870 Determine (a) the inven
stiks02 [169]

Answer:

a. 4

b. 91.25 Days

Explanation:

a. Inventory Turnover = Cost of goods sold/ Average Inventory

= $347,480 / 86,870

= 4

b. Number of days sales in Inventory = Inventory/ COGS*365

= 86,870 / $347,480 * 365

= 91.25 Days

5 0
3 years ago
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