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Wittaler [7]
3 years ago
12

n R&D lab will receive $250,000 when a proposed contract is signed, a $200,000 progress payment at the end of Year 1, and $4

00,000 when the work is completed at the end of Year 2. What is the present worth of the contract at 15%?

Business
1 answer:
AfilCa [17]3 years ago
8 0

Answer:

$726,370.51

Explanation:

The present value of the contract is the sum of the discounted cash flows.

Present value can be calculated using a financial calculator:

Cash flow in year 0 = $250,000 

Cash flow in year 1 = $200,000 

Cash flow in year 2 = $400,000 

Discount rate = 15%

Present value = $726,370.51

I hope my answer helps you

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A University is offering a charitable gift program. A former student who is now 50 years old is consider the following offer: Th
xenn [34]

Answer:

The value of this deferred annuity today on his 50th birthday is <u>$2,621.27</u>.

Explanation:

Since the student's desired return of 6% will also start to be paid starting on his 65th birthday, the value of this deferred annuity today on his 50th birthday can be calculated by first calculating the value of the investment on the 65th birthday.

We therefore proceed with the following two steps:

Step 1: Calculation of the value of the investment on the 65th birthday

The value of the investment on the 65th birthday can be calculated using the formula for calculating the present value of an ordinary annuity as follows:

PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)

Where;

PV at 65 = Present value of the annuity at 65th birthday =?

P = Annuity payment = Invested amount * Student's desired return = $8,900 * 6% = $534

r = Student's desired return rate = 6%, or 0.06

n = number of more years anticipate to live after 65th birthday = 21

Substitute the values into equation (1) to have:

PV at 65 = $534 * ((1 - (1 / (1 + 0.06))^21) / 0.06)

PV at 65 = $534 * 11.764076621288

PV at 65 = $6,282.02

Therefore, the value of the investment on the 65th birthday is $6,282.02.

Step 2: Calculation of the value of this deferred annuity today on his 50th birthday

The value of this deferred annuity today on his 50th birthday can therefore be calculated using the simple present value for as follows:

PV at 50 = PV at 65 / (1 + r)^N …………………………….. (2)

Where;

PV at 50 = the value of this deferred annuity today on his 50th birthday = ?

PV at 65 = Present value of the annuity at 65th birthday = $6,282.02

r = Student's desired return rate = 6%, or 0.06

N = number of years from 50th birthday to 65th birthday = 65 - 50 = 15

Substitute the values into equation (2) to have:

PV at 50 = $6,282.02 / (1 + 0.06)^15

PV at 50 = $6,282.02 / 2.39655819309969

PV at 50 = $2,621.27

Therefore, the value of this deferred annuity today on his 50th birthday is <u>$2,621.27</u>.

5 0
2 years ago
The Minnesota legislature passed a law requiring that employers allow each employee adequate time within each four consecutive h
Reika [66]

Answer: a statute

Explanation:

Minnesota legislature passed a law requiring that employers allow each employee adequate time within each four consecutive hours of work to utilize the nearest convenient restroom. This law is a statute.

A statute is simply a written law that has been passed by a legislative body. It is a specific statement that the legislative body has approved and also endorsed by an executive body.

5 0
3 years ago
The net cash flows of Advantage Leasing for the next 3 years are $42,000, $49,000 and $64,000 respectively, after which the grow
liberstina [14]

Answer:

$863,689.50

Explanation:

The computation of the present value of the terminal value is shown below:

The terminal value at the end of the third year is

=  Third year Cash flows × (1 + growth rate) ÷ (required rate of return - growth rate)

= $64,000 × (1 + 2%) ÷ (8% - 2%)

= $1,088,000

Now its present value is

= terminal value at the end of the third year ÷ (1 + rate of interest)^number of years

= $1,088,000 ÷ (1 + 8%)^3

= $863,689.50

This is the answer but the same is not provided in the given options

3 0
3 years ago
Which of the following is an example of a price?
RUDIKE [14]
The answer is liquidity (A)
4 0
3 years ago
Andrew gillum experience
MrRa [10]
A lot of hatred in school
5 0
3 years ago
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