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Alina [70]
3 years ago
14

A small foundry agrees to pay $220,000 two years from now to a supplier for a given amount of coking coal. The foundry plans to

deposit a fixed amount in a bank account every three months, starting three months from now, so that at the end of two years the account holds $220,000.
If the account pays 12.5% APR compounded monthly, how much must be deposited every three months?


A) $24,602

B) $27,063

C) $29,523

D) $31,983
Business
1 answer:
MaRussiya [10]3 years ago
3 0

Answer:

A) $24,602

Explanation:

We can solve this question by finding the periodic deposits needed by using the formula:

FV=PMT*\frac{(1+i)^n-1}{i}

where:

FV= future value   = $220,000

PMT = periodic deposits required = ???

i = effective  interest rate per period = 0.0331

n= number of deposits = 8

However, since the interest is compounded monthly, let's also  calculate the effective interest rate

Effective interest rate = (1+\frac{r}{m}) ^m-1

where; r = 12.5% = 0.125

(1+\frac{0.125}{12})^{12} -1

= 0.1324

Interest rate per period = \frac{0.1324}{4}

= 0.0331

Then;

220,000=PMT*\frac{(1+0.033)^8-1}{0.033}

220,000 = PMT × 8.986

PMT = \frac{220,000}{8.986}

PMT = $ 24,482.5

Since A) $24,602 is closer to $ 24,482.5

Therefore,  $ $24,602  must be deposited every three months

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Trade has allowed societies to exchange their products according to their needs. Thanks to trade those goods are distributed accordingly more <em>efficiently </em>since, in isolation, countries would be specialists of certain types of products only which is unlikely to be enough to cover all the individuals' needs in those societies.

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What is the difference between an authoritarian and a democratic manager?
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Answer:

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Explanation:

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2 years ago
Why should policies that attempt to create a ladder of opportunity be carried out in the spirit of open-mindedness? Select all t
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Answer:

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Explanation:

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Open mindedness accepts people from diverse background and tends to listen first before judging. It also consider opinions from all side without segregation. Although this is the right thing expected but the result is usually not the case.

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3 years ago
Lucie is reviewing a project with an initial cost of $38,700 and cash inflows of $9,800, $16,400, and $21,700 for Years 1 to 3,
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Answer:

Results are below.

Explanation:

To determine whether the project should be accepted or not, we need to calculate the net present value. <u>If the NPV is positive, the project should be accepted.</u>

<u>To calculate the NPV, we will use the following formula:</u>

NPV= -Io + ∑[Cf/(1+i)^n]

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NPV= 260.12

<u>The project is profitable. </u>

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