Answer:
Option 1 PV lumpsum = $200000
Option2 PV of Annuity = $195413.08035 rounded off to $195413.08
Based on the present value of both the options, Option 1 should be chosen as it has a higher present value than option 2.
Explanation:
To decide on the best option to choose among the given two, we need to find the present value of both the options.
As the first option is to receive a lumpsum payment of $200000 today, the present value of this option is also equal to $200000 as it will be received today.
Option two, on the other hand, is an annuity as fixed payments will be received after equal intervals of time and for a limited time period and at the end of the period which satisfies the criteria of annuity ordinary. We will use the formula for the present value of annuity which is,
PV of Annuity = C * [( 1 - (1+r)^-n) / r]
Where,
- C is the periodic payment
- r is the rate of return of discount rate
- n is the number of periods
The periodic payment is provided as $1400. We are also provided with and APR of 6% which is the Annual rate. We will have to convert it into monthly rate by dividing it by 12. We are also provided with the number of years which we will need to convert into number of months by multiplying it by 12.
Monthly r = 6%/12 = 0.5%
Number of periods = 20 * 12 = 240
PV of Annuity = 1400 * [( 1 - (1+0.5%)^-240) / 0.5%]
PV of Annuity = $195413.08035 rounded off to $195413.08
Answer:
Yes, it is very much true that making decisions often involve both financial and non-financial factors. There are some situations in life where we have to consider both of them in order to make a valid or correct decision. For example, when we are buying a laptop, we will definitely consider its price and other specifications like, hard drive space, ram, but we will also consider its style, design and color as well not only price. In another case, when we have to choose between three jobs. One job offers $10000 per month in New York city, while other is offering $15000 in London and third one in China offering $18000. I love to live in New York city which is quite near to my hometown as well but it is offering me the less salary as compared to the other 2 options, I have to do a trade-off here. I will go for opting New York's job in $10000, I will not considering money factor here because I will be more comfortable in this city as many of my family members and friends live here, hence, sometimes both financial and non-financial factors matter when we have to make a decision.
In one view, the asset prices are objectively based on fluctuating principles, whilst in the certain, psychological factors and prejudices play an important role.
Explanation:
As the rate of interest increases, the price of the investments declines because the yield on risk-free investing can sometimes be greater to buyers. On the other hand, the price of assets is rising as interest rates are falling.
This is usually the interest rate owed by small investors on an approved FDIC portfolio, checking account, term deposit acct or mutual fund of the monetary sector. This is now the so-called US "risk-free" limit for bigger creditors, companies and individuals. Bills for the Treasury.
<em>In order to give lower-level staff members access to the corporate network but bar them from seeing confidential human resources records, you would employ:</em><em>a system of authorization management.</em>
<h3>What is an authorization management system?</h3>
One of the crucial elements of Management Information Systems (MIS) for the security consideration is authorization management. The Role-Based Access Control (RBAC) solution increases the security and efficiency of Authorization Management.
<h3>What is the authorization procedure?</h3>
A server assesses if a client has permission to use a resource or access a file through the authorization procedure. Authentication and authorization are frequently combined so that the server can identify the client making the access request.
<h3>What is an example of authorization?</h3>
Good instances of authorization include allowing specific users to have administrative access to an application or granting someone permission to download a specific file from a server.
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Answer:
Total incremental cost of Making = $370,800 and Buying = $378,400.
Decision : The company should continue to manufacture the part instead of buying the part from the outside supplier
Explanation:
<u>Analysis of the Buy or Decision</u>
Buy Make Difference
Costs :
Purchase Price ( $4.30 × 88,000 units) $378,400 $ 0 ($378,400)
Savings :
Variable Costs ($3.10 × 88,000 units ) $0 $272,800 $272,800
Fixed Cost $0 $98,000 $98,000
Total $378,400 $370,800 ($7,600)
<em>Note that, Allocated fixed costs are unavoidable whether the company makes or buys the part thus not relevant for this decision.</em>
Conclusion :
It can be seen that it is quite expensive to buy the part from the outside supplier, so continue making the part internally
