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cupoosta [38]
3 years ago
12

8 months from now, your organization is planning to purchase new video conferencing equipment for a cost of $12,000. The equipme

nt will have a useful life of 10 years and no salvage value. To pay for it, the organization plans to deposit $4,000 today in an investment account with an annual interest rate of 6.5%. In order to be able to purchase the equipment, the amount of additional money the organization must put in that investment account at the end of each month for 8 months is (select one): A. $1,536.79 B. $149.18 C. $533.90 D. $959.53 E. $42.09 F. $505.08
Business
1 answer:
enot [183]3 years ago
7 0

Answer:

  • <u><em>D. $959.53</em></u>

Explanation:

<u>1. Calculate how much money the $4,000 deposit today will be worth 8 months from now:</u>

       Future\text{ }value=Deposit\times (1+i)^{(n)}

Where:

  • Deposit = $4,000
  • i = monthly compound interest = 6.5% / 12 = 0.065/12
  • n = number of months (periods)

      Future\text{ }value=\$4,000\times (1+0.065/12)^{8}=\$4,176.66

<u>2. Calculate how much additioanl money you will need:</u>

  • Cost of the equipment - Future value of deposit
  • $12,000 - $4,176.66 = $7,823.34

<u>3. Calculate the amount of additional money the organization must put in that investment account, at the end of each month for 8 months, to produce $7,823.34 over the $4,176.66.</u>

Use the formula for the future value, FV, of a constant periodic deposit, D, during n periods at the interest rate i:

    FV=D\times \bigg[\dfrac{(1+i)^n-1}{i}\bigg]

  • FV = $7,823.34
  • D = your unknown
  • i = 6.5% / 12 = 0.065/12
  • n = 8

      \$7,823.34=D\times \bigg[\dfrac{(1+(0.065/12))^8-1}{(0.065/12)}\bigg]

      \$7823.34=D\times 8.153320895\\\\\\D=\$959.53

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Answer: 1.67 years

Explanation:

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The table attached explains how the payback was calculated.

The $3600 cost of the cart would be recouped between the first and second years. Therefore, it would be calculated as 1 year + $2400 / $3600 = 1.67 years

I hope my answer helps you.

6 0
4 years ago
Which most accurately characterizes the method used to calculate inflation? Bureaucrats evaluate changes in the price of a natio
Irina-Kira [14]

Answer:

Analysts measure the cost of a bundle of goods representative of overall spending at two points in time and compare the difference in cost.

Explanation:

Inflation refers to a situation in which there is a rise in the price level of the goods in an economy at a particular point of time.

For determining inflation, we need to compare the cost of buying certain baskets of goods in the current year and the cost of buying same basket of goods in the previous year. So that we are able to find the exact rise in the price level of the goods.

We need to analyse the cost of the same basket of goods for the two different periods. Hence, we will get the most appropriate values of the inflation.

4 0
4 years ago
Which type of account typically has low liquidity
zimovet [89]
<span>Which type of account typically has low liquidity? Certificate of deposit. 

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3 years ago
Q 8.3: When would a credit card holder be entitled to lower interest charges? A : When the card company calculates finance charg
Yanka [14]

Answer: Option  C  

       

Explanation: The given question relates to the concept of time value of money which in simple words states that the value of money decreases over time. The value of a dollar today will be less than tomorrow.

Hence if a card holder gets grace period to pay the interest before the interest accrues than it means he actually gets to pay lower interest that he could have paid before.

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4 years ago
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The correct answer is C. Helps developing nations escape from poverty

Explanation:

The World Trade Organization (WTO) is one of the most important organizations worldwide that regulate the trade between nations, the WTO includes almost all countries in all continents and aims at facilitating trade and other economic activities. Despite this, the WTO is criticized by many for multiple reasons that include the pollution and environmental degradation due to more trade and manufacture, the irregularities in protections and conditions as some countries skip laws about workplace safety, child labor, etc. and that it supports big multinational corporations rather than small local businesses.

However, one of the reasons critics of the WTO do not mention because it is a positive aspect of the WTO and the liberalized trade is that it actually "helps developing nations escape from poverty" as it provides opportunities for all the members to trade products especially those that are exclusive from each country.

8 0
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