1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
san4es73 [151]
3 years ago
8

ABC Company sold the rights to use one of their patented processes that will result in them receiving cash payments of $10,000 a

t the end of every six months for each of the next five years and a lump sum payment of $20,000 at the end of the sixth year. Calculate the total present value of these payments assuming the interest rate is 10% compounded semi-annually.
Business
1 answer:
BigorU [14]3 years ago
6 0

Answer:

$77,217

$11,289

Explanation:

Fist we will calculate the present value of $10,000 payment

A fix Payment for a specified period of time is called annuity. The discounting of these payment on a specified rate is known as present value of annuity. The value of the annuity is also determined by the present value of annuity payment.

Formula for Present value of annuity is as follow

PV of annuity = P x [ ( 1- ( 1+ r )^-n ) / r ]

Where

P = Annual payment = $10,000

r = rate of return = 10% / 2  = 5%

n = number of period = 5 years x 2 semiannual payments per year = 10 payments

PV of annuity = $10,000 x [ ( 1- ( 1+ 0.05 )^-10 ) / 0.05 ]

PV of Annuity = $77,217

Now we will use the discounting method to calculate the present value of lump sum payment of $20,000

Present value = Future value x Present value factor

PV = FV x ( 1 + r )^-n

PV = $20,000 x ( 1 + 0.1 )^-6

PV = $11,289

You might be interested in
What is - x when x=12
maksim [4K]
If x is 12 the answer is -12
6 0
3 years ago
This a type of unemployment that always exists and are relatively stable over time, including seasonal, structural, and friction
Darya [45]

<u>Answer: </u>Natural unemployment

<u>Explanation:</u>

Natural unemployment always exists even in a healthy economy this is because the people keep changing their jobs and they even leave the current job in search of the new ones. Natural unemployment also includes other types of unemployment such as seasonal, structural and frictional unemployment types.

Also some people might possess skills that are not necessary in the labor market. The natural unemployment is still in the economy even when there is technological advancement, industry expansion. New labor forces enter into market every year and people search jobs for better opportunities.

6 0
3 years ago
Read 2 more answers
Athena Company provides employee health insurance that costs $14,500 per month. In addition, the company contributes an amount e
erik [133]

Answer:

Explanation:

130500

3 0
3 years ago
Andy, a junior in high school, is considering his options for employment following graduation. His uncle, a master electrician,
mojhsa [17]

Answer:

Andy should look and identify his field of interest before choosing a specific career path. If she has none of preferences for his career choice then se can look for other factors to select specific career path.

Explanation:

Andy's grandfather has spend his life in building trades and he is a successful person. He thinks Andy should choose same career path as he did and he can be successful too but this is not the case. The thing can be different in this era, the preferences and nature of Andy might be different from his grand father. There are many others factors which also need to be considered as the job security, learning potential in the field, progress in career, wages and pay rise, working environment and others.

3 0
3 years ago
In an effort to simplify the multiple production department factory overhead rate method, the same rate can be used for all depa
Free_Kalibri [48]

Answer: False

Explanation:

Different departments incur different types of costs based on the product that they are producing. It would therefore not be right to use the same rate for all departments as it might capture cost inadequately.

The overhead rate should always take into account the unique circumstances of a department such that costs can be assigned as accurately as possible.

3 0
2 years ago
Other questions:
  • Chan has been happily married to Mei Lin for the last five years and is very secure in their relationship. Over the last year, h
    15·1 answer
  • g Estimate the cost of common equity for a firm, given the following information. For the next year, the firm plans to pay a div
    15·1 answer
  • The managerial function of leading: is a part of the planning process. involves monitoring the organization s progress toward it
    15·1 answer
  • Bottle Top, Inc. recently announced they will pay their first annual dividend next year in the amount of $0.75 a share. The divi
    15·1 answer
  • In economics, what is it called when individuals focus on perfecting a limited range of tasks, so as to become experts in those
    6·1 answer
  • Which is a way that companies attempt to get consumers to buy their products instead of their competitor's products? 1. market r
    9·1 answer
  • Because ________ often make it possible for young firms to provide services that are equivalent or superior to an incumbent, a n
    13·1 answer
  • 3. Considered the back office", Involves behind the scenes paperwork
    6·1 answer
  • Say the following 2 events occur at the same time: 1) an increase in the price of milk, an input in the production of cheese; 2)
    9·1 answer
  • You have commissioned a local survey to see what consumers are most interested in.
    13·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!