Answer:
$19,144.61
Explanation:
The first step would be to determine the present value of $1.25 million. After, the future value of that amount in 2 years has to be calculated
The formula for calculating future value:
P = FV / (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
$1.25 million / (1.135)^35 = $14,861.23
Now we find the future value using this formula :
FV = P (1 + r)^n
$14,861.23 x (1.135)^2 = $19,144.61
Answer:
Service revenue of $ 440
Explanation:
When the customer prepays, the revenue is yet to be earned hence the entries required would be a debit to cash account and a credit to unearned or deferred revenue.
As the service is rendered and revenue is earned, debit the deferred revenue account and credit the revenue account with the amount earned.
Since $660 was collected for 6 training sessions
Revenue from a training session
= 1/6 × $660
= $110
After 4 training sessions, revenue earned and to be recognized in the income statement
= 4 × $110
= $440
Answer:
The maturity risk premium is 1.0%.
Explanation:
The maturity risk premium or the 2-year security can be calculated as follows:
Maturity Risk Premium = Yield of the treasury note - Nominal risk free Interest rate
Nominal risk free Interest rate = Real risk-free rate of interest + Expected inflation = 3% + 2% = 5%
Therefore;
Maturity Risk Premium = 6.0% - 5.0% = 1.0%
Therefore, the maturity risk premium or the 2-year security is 1.0%.
An increase from 16k to 20k is a 20%increase proportionate to production
