1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ipn [44]
3 years ago
9

A rich donor gives a hospital $100,000 one year from today. Each year after that, the hospital will receive a payment 5% larger

than the previous payment, with the last payment occurring in ten years' time. What is the present value (PV) of this donation, given that the interest rate is 9%?
A) $772,173.49
B) $585,987.27
C) $467,922.22
D) $779,843.27
Business
1 answer:
wariber [46]3 years ago
5 0

Answer:

D) $779,843.27

Explanation:

The present value of this donation = Donation in Year 1/(1+ discount rate)^9 + Donation in Year 2/(1+ discount rate)^8 + ….. + Donation in Year 2/(1+ discount rate)^1

= $100,000/(1+9%) + $100,000*(1+5%)/(1+9%)^2 +$100,000*(1+5%)^2/(1+9%)^3…. +$100,000*(1+5%)^9/(1+9%)^10 = $779,843.27

Or we can easily input in excel and generate NPV as file attached; in which the formula is NPV(discount rate, cash inflow year 1 : cash inflow year 10) = (9%, 100000,100000*(1+5%)….,100000*(1+5%)^9) = $779,843.27

Download xlsx
You might be interested in
QS 9-13 Note receivable interest and maturity LO P4 On December 1, Daw Co. accepts a $12,000, 45-day, 7% note from a customer. (
iragen [17]

Answer and Explanation:

The journal entries are shown below;

a. Interest receivable Dr ($12,000 × 7% × 30 days ÷ 360 days) $70

        To Interest revenue $70

(Being the interest revenue is recorded)

For recording this we debited the interest receivable as it increased the asset and credited the interest revenue as it also increased the revenue

b. Cash Dr $12,105

           To interest receivable  $70

           To interest revenue ($12,000 × 7% × 15 days ÷ 360 days) $35

           To Note receivable $12,000

(being cash received is recorded)

For recording this we debited the cash as it increased the assets and credited the interest receivable, interest revenue and note receivable as it decreased the asset and increased the revenue

3 0
3 years ago
Tracy, age 22, is riding the city bus home after her evening college class. A mother with a young child gets on the bus and beca
olga_2 [115]
I think it is d or b
4 0
3 years ago
A five-year security was purchased two years ago by an investor who plans to resell it. The security will be sold by the investo
Zielflug [23.3K]

Answer:

Secondary market.

Explanation:

In this scenario, a five-year security was purchased two years ago by an investor who plans to resell it.

Hence, the security will be sold by the investor in the so-called secondary market.

When one investor sells his or her stock directly to another, the transaction is said to occur in the secondary market.

Secondary market can be defined as a market where various investors sell and buy securities from other investors.

Some examples of secondary market around the world are New York Stock Exchange (NYSE), NASDAQ, London Stock Exchange (LSE) and National Stock Exchange (NSE).

On the other hand, the primary market refers to the market where these securities that are being sold are issued or created.

5 0
3 years ago
Lifeworks is a nongovernment not-for-profit organization that recently received a large gift from a donor in the amount of $3,00
blagie [28]

Answer:

Explanation:

The net assets would increase. This is because the $100,000 earnings from investments are additional cash inflows hence an increase in current assets. For the $3,000,000 if invested, it will be considered an asset. It is a cash donation invested to generate earnings for the non-profit organization. Thus, these two instances add onto the net asset value of Lifeworks.

7 0
3 years ago
Groupong Inc. recently paid a $2.78 annual dividend on its common stock. This dividend increases at 3.50 percent per year and th
liq [111]

Answer:

c) 11%

Explanation:

The question is to determine the rate of return on Groupong Inc's

The rate of return represents an investment's net gain or net loss calculated over a period of time and usually expressed in terms of the percentage of the initial cost of investment.

The rate of return in this question is calculated as follows:

Rate of Return = (The Dividend for the next year/ the current price of the share) + The Growth rate

The dividend for the next year = current year dividend x (1+r), where r is 3.5

= 2.78 x (1+0.035)

=2.78 x 1.035

= (2.8773/38.3) + 0.035

=0.1101 or 11%

5 0
3 years ago
Other questions:
  • Every customer that exited the store was subjected to close scrutiny of their shopping cart and receipt by a highly trained insp
    6·1 answer
  • In a general ledger, credits always go on the
    12·2 answers
  • A taxable bond with a coupon rate of 6.00% has a market price of 98.19% of par. The bond matures in 9.00 years ans pays semi-ann
    14·1 answer
  • Perez Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Super Supreme Sales
    9·1 answer
  • A company uses radio frequency identification (RFID) tags to keep track of its inventory. This is an example of the impact of te
    13·1 answer
  • Sean and Yvette Durand live in Swarthmore, PA. Their son, Bob, owns his own plumbing business.
    13·1 answer
  • Avent, Inc. is a real estate investment company located in Boston, Massachusetts. Avent was approached by a property owner in No
    10·1 answer
  • Anyone know the answer to this question
    6·2 answers
  • Help! Which tasks commonly are performed in Management and Entrepreneurship jobs? Check all that apply.
    5·2 answers
  • If the economy goes into a recession and incomes fall, what happens in the markets for inferior goods?.
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!