Answer:
Future value (FV) = $57,908
Present value (PV) = $8,860
Number of years (n) = 18 years
Interest rate = ?
FV = PV(1 + r)n
$57,908 = $8,860(1 + r)18
$57,908 = $8,860(1 + r)18
<u>$57,908</u> = (1 + r)18
$8,860
6.535891648 = (1 + r)18
18√6.535891648 = 1 + r
1.10993 - 1 = r
r = 0.10992 = 10.99%
Explanation:
In this case, we will apply the future value of a lump sum (single investment) formula. The present value, future value and number of years are given with the exception of interest rate. Thus, interest rate is made the subject of the formula.
Answer:
$466,500
Explanation:
Assuming Metlock, Inc is free of tax, tax rate = 0%
Net profit of the year = (revenues - expenses) * (1- tax rate)
= $487,000 - $384,000 = $103,000
Retained earnings balance at the end of the year
= Retained earnings balance at beginning of the year + net profit - dividend paid
= $402,000 + $103,000 - $38500
= $466,500
Answer:
PV= $55,760.42
Explanation:
Giving the following information:
Monthly payment= $800
Number of periods= 10*12= 120
Interest rate= 0.12/12= 0.01
The investment is worth its present value.
<u>First, we will calculate the future value and the present value.</u>
FV= {A*[(1+i)^n-1]}/i
A= monthly payment
FV= {800*[(1.01^120) - 1]} / 0.01
FV= $184,030.95
<u>Now, the present value:</u>
PV= FV/(1+i)^n
PV= 184,030.95 / (1.01^120)
PV= $55,760.42