How do fixed costs per unit behave?

You can buy property today for $2.1 million and sell it in 6 years for $3.1 million. A. If the interest rate is 11%, what is the

Katyanochek1 [597]

Answer:

Present value of sales price = 465,395.16

Present Value of future cash flow= 465,359.16

Explanation:

The present value of a sum expected in the future is the worth today given an opportunity cost interest rate. In another words ,it is amount receivable today that would make the investor to be indifferent between the amount receivable today and the future sum.

The present value of a lump sum can be worked out as follows:

PV = FV × (1+r)^(-n)

Present Value of sales price= 3.1 × 1.11^(-6) =1.65739

Present Value=165,738.65

Present Value of an annuity of 110,000 for 6 years:

PV = A × 1- ( (1+r)^(-n))/r

PV = 110,000× (1-1.11^(-6))/0.11= 465,359.16

PV = 465,359.16

5 0

3 years ago

In January 2017, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $889,000. This investme

jasenka [17]

Answer:

$923,450

Explanation:

The question is to calculate the equity method balance of Domingo's investment in Martes. Inc at December 31,2015

Step 1: Determine the amortization of patents

Particulars Amount

Martes Inc Assets' Book Value $4,808,000

Subtract: Liabilities ($968,000)

Martes Inc Net Assets Book Value $3,840,000

20% Voting Stock Book Value $768,000

(20% of $3,840,000)

Subtract: Purchase cost of the 20% ($889,000)

Excess of Cost over book value $121,000

Patent (the excess above) $121,000

Amortization of the patent in 10 years = $121,000/10 years = $12,100

Step 2: Calculate the Equity Investment of Domingo Inc

Particulars Amount

Cost of Investment $889,000

Income accrued 2017 (0.2 x $225,000) $45,000

Subtract: Declared dividend (0.2 x $104,000) ($20,800)

Income Accrued 2018 (0.2 x $276,250) $55,250

Subtract: Patent Amortization ($12,100)

Subtract: Dividend declared 2018 (0.2 x $104,000) ($20,800)

Subtract: Patent Amortization ($12,100)

Domingo Inc's Investment in Martes Inc $923,450

6 0

4 years ago

An employee has proposed adding new equipment that would speed up the loading rate to 5.71 trucks per day. the equipment would c

AleksAgata [21]

No...actually I’m just going with my gut

4 0

3 years ago

Dividend growth rate is important to many investors. You are considering investing in a firm after looking at the firm's dividen

Gennadij [26K]

Answer:

Growth rate will be 6.94 %

So option (c) will be the correct answer

Explanation:

We have given principal amount in 2002 is $1.15

So P = $1.15

And after seven year in 2009 amount become $1.84

We have to find the rate of interest

Time period n = 7 years

We know that future amount is given by

$A=P(1+\frac{r}{100})^n$

$1.84=1.15(1+0.01r)^n$

$1.6=(1+0.01r)^7$

$(1+0.01r)=1.0694$

$0.01r=0.0694$

r = 6.94 %

So option (C) will be the correct option

5 0

3 years ago

How do the owners of a partnership relate to the business?

lawyer [7]

The correct option is A.
A partnership business is a type of business that is formed by two or more people. The maximum number of people that can form a partnership is not restricted in some countries while it is restricted in some other countries. For instance, the maximum number of people that can form a partnership in Nigeria is 20. In a partnership business, the owners and the business are considered to be one and the same, this means that, if the business runs into financial problem, the owners may end up losing everything that they have including private properties.<span />

6 0

4 years ago

How do fixed costs per unit​ behave?

How do fixed costs per unit behave?