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3 years ago

When discount rate:

Business

1 answer:

Anna71 [15]3 years ago

8 0

Answer:

C. decreases, the present value of any future cash flow increases.

Explanation:

An increase in the discount reduces the net present value (NPV). The net present value is the present value of the future projected future cash flows and inflows. The discount rate is the interest rate used to discount future value to the present time. It represents the acceptable or expected rate of return from an investment.

A high discount rate will require a lower level of investment today to earn the desired amount in the future. A high discount rate indicates high returns are expected from the project. Using a low discount rate increases the net present value, meaning high-value investment today will yield high returns in the future.

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A law used to finance public services, such as waste treatment plants, parks, and schools, in newly developed areas, can result

Troyanec [42]

The law is Mello-Roos Community Facilities Act of 1982.

Senator Henry Mello and the Assemblyman Mike Roos worked together in order to enact the "Mello-Roos Community Facilities Act of 1982," which authorized local governments and the developers to form Community Facilities Districts (CFDs) to issue tax-exempt bonds to fund public works.

The Mello-Roos Community Facilities Act of 1982 is a statute that is used to finance public services in newly built regions, such as waste treatment facilities, parks, and schools. This might result in additional taxes on top of the regular property taxes and must be disclosed to any buyer prior to the acquisition.

Therefore, the answer is Mello-Roos Community Facilities Act of 1982.

To know more about Mello-Roos Community Facilities Act of 1982 click here:

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4 0

2 years ago

Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $9

Leviafan [203]

Answer:

Debit cash $7800

Credit unearned revenue $7800

Explanation:

The amount of $7800 was received in cash on October 1. Therefore, the cash account will be debited with the $7800 received.

The corresponding credit entry of $7800 will be to the unearned revenue account since the revenue has not been earned. Revenue will be earned at the end of each month of the lease. This account will subsequently debited each time the revenue is earned i.e at the end of each lease month.

3 0

3 years ago

Stephen plans to purchase a car 5 years from now. The car will cost $43,011 at that time. Assume that Stephen can earn 7.11 perc

olga nikolaevna [1]

Answer:

$30,174.74

Explanation:

The computation of present value is shown below:-

Future value = Present value × (1 + Rate of interest ÷ 1200)^12 × time period

$43,011 = Present value × (1 + 7.11 ÷ (12 × 100)^(12 × 5)

$43,011 = Present value × (1 + 7.11 ÷ 1,200)^60

$43,011 = Present value × (1 + 0.005925 )^60

Present value = $43,011 ÷ (1 + 0.005925 )^60

= $43,011 ÷ (1.005925 )^60

= $43,011 ÷ 1.425397857

= $30,174.73317

= $30,174.74

Therefore for computing the present value we simply applied the above formula.

We also attached the spreadsheet for better understanding

In compounded monthly, the interest rate is divided by 12 months and the time period is multiplied by 12 months and the same is to be considered

8 0

3 years ago

True or false There are no jobs that are able to fit into multiple career categories

Tatiana [17]

Answer:

false

Explanation:

7 0

4 years ago

Grouper Inc. has completed the purchase of new Dell computers. The fair value of the equipment is $675,803. The purchase agreeme

Maslowich

Answer:

The interest rate, to the nearest percent, used in discounting this purchase transaction 8%.

Explanation:

The interest rate can be calculated using the following RATE function in Excel:

Interest rate = RATE(nper,pmt,-pv,fv,type)*n .............(1)

Where;

nper = number of periods = number of years to maturity * number of semiannual in a year = 5 * 2 = 10

pmt = semiannual payments = $63,101 = 63101

pv = present value = fair value balance = fair value - immediate down payment = $675,803 - $164,000 = $511,803 = 511803

fv = future value = desired cash balance after last payment = 0

type = when payments are due (0 = end of period. 1 = beginning of period) = 0

n = number of compounding period per year = number of semiannual in a year = 2

Substituting the values into equation (1), we have:

Interest rate = RATE(10,63101,-511803,0,0)*2 .................. (2)

Inputting =RATE(10,63101,-511803,0,0)*2 into an excel sheet (Note: as done in the attached excel file), the Interest rate is obtained as 8.00%.

Therefore, the interest rate, to the nearest percent, used in discounting this purchase transaction 8%.

Download xlsx

6 0

3 years ago