Answer:
£718,607
Explanation:
Annuities are investment opportunities that require an initial settlement and gives a series of returns of a fixed amount for a specific number of periods.
In simple terms, the question requires us to calculate the amount to be paid today (Present Value) of an annuity that pays £80,000 per year for the next 10 years.
To establish the [Present Value of the Annuity, the future Cash Flows must be discounted to the Present Value using the appropriate discount rate. In our case, we will use the annual effective interest rate of 2%.
Present Value = PMT × [ 1 - 1/(1+r)^n ÷ r ]
Where,
PMT = £80,000
n = 10
r = 2%
Therefore,
Present Value = £80,000 × [ 1 - 1 / (1.02) ^ 10 ÷ 0.02]
= £718,606.80 or £718,607
Conclusion :
She be willing to pay £718,607 today for the annuity.
Answer:
Debit
$14,181
Explanation:
Given:
Fair Value Adjustment account = $32,217 (Debit)
Net unrealized gain = $46,398 (Credit)
According to Fair Value Adjustment account , Debit balance is lower than Credit balance, So they should Debit (Fair Value Adjustment account)
Debit amount = Net unrealized gain - Fair Value Adjustment account
Debit amount = $46,398 - $32,217
Debit amount = $14,181
Answer: Decrease government revenue and decrease deadweight loss from the tax.
Explanation:
Decrease gov rev and decrease deadweight loss from the tax.
At AB, the government revenue will be:
= Quantity × Tax rate
= 1 × 5
= 5
The deadweight loss will be:
Deadweight Loss= 0.5 × Change in quantity × Change in Price
= 0.5 × (9-4) × (2-1)
= 0.5 × 5 × 1
= 2.5
At CD,
the government revenue will be:
= 1.5 × 2.5
= 3.75
The deadweight loss will be:
= 0.5 × (7.5-5) × (2-1.5)
= 0.5 × 2.5 × 0.5
= 0.625
Based on the calculation above, both the government revenue and the deadweight loss decreases.
