In order to break even, your minimum selling price must be _________

True False All other variables held constant, investments paying simple interest have to pay significantly higher interest rates

Likurg_2 [28]

Answer:

All other variables held constant, investments paying simple interest have to pay significantly higher interest rates to earn the same amount of interest as an account earning compound interest. TRUE. 

This is a true statement because compound interest is based on the previous balance in addition to the interest earnings on the balance. It therefore accrues on a higher balance than simple interest which builds on the same amount of principal throughout. Simple interest would therefore need a higher rate to bridge this gap.

Everything else held constant, an account that earns compound interest will grow more quickly than an otherwise identical account that earns simple interest. TRUE.

An account earning compound interest would increase faster than an identical one using simple interest because compound interest is based on an accrued balance whilst simple interest does not change the balance it is based on.

All other factors being equal, both the simple interest and the compound interest methods will accrue the same amount of earned interest by the end of the first year. TRUE.

At the end of the first year, an assuming yearly compounding, both simple and compound interest will yield the same result because they would be based on the same principal amount.

5 0

3 years ago

On January 1, 2016, NFB Visual Aids issued $800,000 of its 20-year, 8% bonds. The bonds were priced to yield 10%. Interest is pa

Vaselesa [24]

Answer:

Compound Interest Bond

Explanation:

the company has issued compound interest bonds, compound equity bond that means that contains liability and equity. it has obtained the loan and the loan has been categorized at fair value.

we need to find out Equity portion in face value of bond so we solve as follows

We will identify the present value of interest payments and face value of bond at 10% yield

Face Value = 800000

Coupon Rate = 8%

IRR = 10% Annual = Semi Annual = 5%

Present Value of bond =

Cash Out flow At 8% = 64000 Annual

No of Outflows = 20

IRR =10

Present Value of the bond 8% interest at 10% with annuity formula:

P=R* (1-(1+I)^-n)/I = P=64000 *(1(1+10%)-20)/10%

= P=64000 *(1-0.14)/10% = 64000 * (0.8513/10%)

= P = 64000*5.5135 = 544868

Present Value OF Face Value At year O At 10% issued for 20 years :

P=800000/(1+10%)^20

P= 118115

present Value of the bond = 118115+544868 =663,783

Equity = Face Value - Present Value of liability

Equity = 800000-663783

Equity = 136,217

1) Price Of the bond = 663783

Journal Entry :

Cash 800000

Liability 663783

Equity 136217

To record the liability at present value

2) We need amortization schedule for this requirement

Amortization Schedule for first six months

Year Face Value IRR 6% CR8% Closing Value

6 months 663783 39827 -

Journal Entry

Interest Expense 39827

Liability 39827

To record the interest Expense 30 June 2016

3)

Year Face Value IRR 6% CR8% Closing Value

6 months 663783 39827 - 703610

6 months 703610 42217 -64000 681827

Journal Entry

Interest Expense 42217

Liability 21783

Cash 64000

To record the interest Expense 3 December 2016.

4)

Closing Value of the bond = 681827

Fair Value At 31-Dec-2016 = 668000

Gain on Fair valuation = 13827

Journal Entry

Liability 13827

Gain on Fair Valuation 13827

To record the fair valuation of bond at reporting date

8 0

3 years ago

The government claimed that, to illegally control the market, Microsoft used

nalin [4]

Answer:

B. Predatory pricing and buying out competitors

5 0

3 years ago

A reduction in the saving rate starting from a steady state with more capital than the golden rule causes investment to?

Studentka2010 [4]

Starting from a steady state with greater capital than the Golden Rule, a decrease in the saving rate results in a decline in investment.

<h3>What is the definition of the golden rule?</h3>

The Golden Rule instructs people to make decisions for others based on their own personal preferences. Putting yourself in another person's shoes or "doing unto others as you would have them do unto you" are two common definitions of the Golden Rule (Baumrin 2004).

The golden rule would advise us to release someone who has been convicted of a crime and given a prison sentence, for instance, because we would not want to go to prison ourselves. This holds true even if we use the platinum rule because it's likely that the prisoner would choose to stay out of jail or prison.

To learn more about Golden Rule, refer to:

brainly.com/question/16313509

#SPJ4

8 0

2 years ago

Health Maintenance Organizations (HMOs) are MOST LIKELY associated with which of these types of insurance? A) life insurance B)

sleet_krkn [62]

Answer:

.

Explanation:

8 0

3 years ago

In order to break even, your minimum selling price must be __________ your variable costs.