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zimovet [89]
3 years ago
8

You have some property for sale and have received two offers. The first offer is for $89,500 today in cash. The second offer is

the payment of $35,000 today and an additional guaranteed $70,000 two years from today. If the applicable discount rate is 11.5 percent, which offer should you accept and why?
Business
1 answer:
kvv77 [185]3 years ago
6 0

Answer:

We should accept offer 2 because the amount <u>today</u> is higher than offer 1.  

(offer 1 is $89,500, offer 2 is 91305)

Explanation:

To get the right answer we have to compare the 2 offers in the same moment of time.  We use interest formula to bring the future amount to this moment.  

First offer is for $89,500 today

Second offer is $35,000 today and $70,000 in two years  discount rate is 11.5.

The formula of interest is A=P (1+r)ⁿ

A=Final amount  

P= Principal ( deposit)  

r= interest rate

n= time

We know A, r and n

Looking for P,

then  P= A/(1+r)ⁿ

P= 70000/(1+0,115)² =56305

Offer 2 is =35000+56305=91305

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faust18 [17]

Answer: See explanation

Explanation:

September 1:

Debit Common stock $6000

Credit: Cash $60000

September 1:

Debit: Rent $1500

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September 3:

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Credit: Note payable $10000

September 3:

Debit: Cleaning Equipment $5,500

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Credit: Account payable $2,500

September 4:

Debit: Supplies $4200

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September 10:

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September 21:

Debit: Account receivable $3800

Credit: Service revenue $3800

September 23:

Debit: Account payable $2500

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September 28:

Debit: Bank $2800

Credit: Account receivable $2800

September 29:

Debit: Electricity expense $85

Credit: Electricity payable $85

September 30:

Debit: Wages $1950

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September 30:

Debit: Gasoline $275

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3 0
2 years ago
Which of the following items is included in the calculation of GDP? a.purchase of 100 shares of Microsoft stock b.purchase of a
Nady [450]

Answer:

The correct answer is option e.

Explanation:

The GDP of a country is the value of final goods and services produced in the geographical boundaries of a nation in a year. It does not include the value of intermediate goods produced. This is because it may lead to double counting. So the value of intermediate goods is included as a part of the value of the final good. It also does not include the value of services provided by homemakers.

Financial transactions such as purchase and sale of stocks and shares are not included. This is because it does not involve the production of any good or service. Sale of second-hand goods is also not included because of the problem of double counting.

7 0
3 years ago
A study has been conducted to determine if Product A should be dropped. Sales of the product total $400,000 per year; variable e
klio [65]

Answer:

Option (A) is correct.

Explanation:

Contribution Margin:

= Total sales of the product - variable expenses

= $400,000 - $270,000

= $130,000

Avoidable fixed cost = Total fixed cost - Unavoidable fixed cost

                                  = $160,000 - $ 70,000

                                  = $90,000

Net Margin :  

= Contribution Margin - Avoidable fixed expense

= $130,000 - $90,000

= $40,000

Hence, if product A is dropped, the company's overall net operating income would decrease by $40,000 per year.

3 0
3 years ago
how do polling firms respond to the difficulties of obtaining a body of respondents that truly reflects the population at large?
SSSSS [86.1K]

By weighing the responses of diverse groups, polling companies attempt to overcome the challenges of assembling a sample of respondents that accurately reflects the entire population.

<h3>What is a survey research ?</h3>

The definition of survey research is "the gathering of data from a sample of people through their responses to questions". A variety of techniques can be used to find participants, gather data, and instrument the study in this type of research. Both quantitative and qualitative research methods can be applied to surveys.

Historically, large-scale population-based data gathering has been a component of survey research. This kind of survey research's main goal was to quickly gather information on the features of a wide sample of interesting people. Consumer feedback surveys and large census surveys that gather data on demographic and personal characteristics are two prominent examples. These questionnaires, which were frequently mailed out, were designed to gather information for programs or products aimed at a specific population or group or to describe the demographic characteristics of individuals.

To know more about survey research, visit :

brainly.com/question/16255150

#SPJ4

The complete question is mentioned below :

Polling firms respond to the difficulties of obtaining a body of respondents that truly reflects the population at large by:

a. sampling the responses of the target group.

b. weighting the responses of various groups.

c. randomly selecting the best responses.

d. counting the number of positive responses.

e. counting the number of negative responses.

8 0
1 year ago
The market price of a security is $74. Its expected rate of return is 20.2%. The risk-free rate is 3% and the market risk premiu
tigry1 [53]

Answer:

The market price of the security if its correlation coefficient with the market portfolio doubles (and all other variables remain unchanged) will be $44.10.

Explanation:

Note: This question is not complete. The complete question is therefore presented before answering the question as follows:

The market price of a security is $74. Its expected rate of return is 20.2%. The risk-free rate is 3% and the market risk premium is 6.5%. What will be the market price of the security if its correlation coefficient with the market portfolio doubles (and all other variables remain unchanged)

Assume that the stock is expected to pay a constant dividend in perpetuity.

Explanation of the answer is now given as follows:

Since the correlation coefficient with the market portfolio doubles (and all other variables remain unchanged), it implies that beta and also the risk premium will also double.

From the question, we can obtain:

Current risk premium = Expected rate of return - Market risk premium = 20.2% - 6.5% = 13.70%

As the current risk premium will double, we have:

New risk premium = Current risk premium * 2 = 13.70% * 2 = 27.40%

Also, we have:

New discount rate = New risk premium + Market risk premium = 27.40% + 6.5% = 33.90%

Since it is assumed that the stock is expected to pay a constant dividend in perpetuity, the dividend can therefore e calculated as follows:

Dividend = Current market price * Current expected rate of return = $74 * 20.2% = $14.95

The new market price of the security can now be calculated as follows:

New market price of the security = Dividend / New discount rate = $14.95 / 33.90% = $44.10

Therefore, the market price of the security if its correlation coefficient with the market portfolio doubles (and all other variables remain unchanged) will be $44.10.

5 0
3 years ago
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