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Alex_Xolod [135]
3 years ago
14

10. You are offered an annuity that will pay you $200,000 once every year, at the end of each year, for 25 years (i.e. the first

payment will arrive one year from now, the last payment will arrive 25 years from now). Suppose your annual discount rate is i=5.25%, how much are you willing to pay for this annuity? Hint: this is the same as the present value of an annuity.
Business
1 answer:
seraphim [82]3 years ago
6 0

Answer:

PV= $2,749,494

Explanation:

Giving the following information:

Cash flow= $200,000

Number of periods= 25

Interest rate= 5.25%

<u>First, we need to calculate the future value using the following formula:</u>

FV= {A*[(1+i)^n-1]}/i

A= annual cash flow

FV= {200,000* [(1.0525^25) - 1]} / 0.0525

FV= $9,881,102.14

<u>Now, the present value:</u>

PV= FV/(1+i)^n

PV= 9,881,102.14 / (1.0525^25)

PV= $2,749,494

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Answer:

2.3

Explanation:

Levered Beta = Unlevered Beta x (1+D/E)

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8 0
3 years ago
PA11.
NARA [144]

Answer:

Using Traditional allocation method

Allocation rate per unit

=<u> Budgeted overhead</u>

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Brass

Overhead allocation rate

= <u>$47,500</u>

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=  $67.86 per direct labour hour

Gold

= <u>$47,500</u>

   1,200 hours

=  $39.58 per direct labour hour

Using activity-based costing

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Allocation rate for material cost pool                                                                                                                                                  

= <u>$12,500</u>

   400

=  $31.25 per material moved

Gold

Allocation rate for material cost pool

= <u>$12,500</u>

   100    

= $125 per material moved

Brass

Allocation rate for machine set-up pool

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  400

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= <u>$35,000</u>

   600

= $58.33                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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The allocation rate for machine set-up pool is obtained by dividing the machine set-up overhead by the number of machine set-up for each              product.                                                                                      

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Answer:

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