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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:

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Explanation:

a. Depreciation of the machinery has been recorded at a rate of $2,976 per year.

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b.

Accumulated depreciation account at December 31, 2020 has credit balance of $12,400 ($10,416 + $1,984 = $12,400)

The carrying amount of the machinery = Cost of the machinery -  Accumulated depreciation = $24,800 - $12,400 = $12,400

Sales price - Carrying amount of the machinery = $13,020 - $12,400 = $620>0

The company recognizes gain on the sale. Journal entries to record the sale:

Debit Cash $13,020

Debit Accumulated depreciation account $12,400

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Credit Machinery asset $24,800

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Problem location and definition is the first step toward finding a solution to a marketing problem or launching a research study
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Type the correct answer in the box. Spell all words correctly.
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minimize

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A publishing company has estimated the following cost probability distribution for the next year. What is the expected cost to t
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