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azamat
3 years ago
9

Clarissa want to fund a growing perpetuity that will pay $5000 per year to a local museum starting next year. she wants the annu

al amount paid to the museum to grow by 5% per year. given that the interest rate is 8% how much does she need to fund this perpetuity?
Business
1 answer:
Akimi4 [234]3 years ago
3 0

Answer:

Clarissa needs to fund the growing perpetuity by $166666.67

Explanation:

A perpetuity is an investment that will give a future series of infinite payments so if the perpetuity gives you a periodic growth rate then you find the difference between the interest rate and the growth rate then use the perpetuity formula which is:

Pv = C/(i-g)

where Pv is the present value of the perpetuity which will be the initial investment.

C is the periodic payments that will be received in future in this case $5000

i is the interest rate given for the perpetuity which is 8%

g is the growth rate per fixed period which is 5%

thereafter we substitute on the above mentioned formula:

Pv= $5000/(8%-5%) then compute

Pv = $166666.67 which will be the initial investment for Clarissa to be paid $5000 per year until she dies.

 

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marketing channel management is already transparent or many of these activities take place behind the scenes

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A diesel-powered tractor with a cost of $186,240 and estimated residual value of $5,700 is expected to have a useful operating l
scoundrel [369]

Answer:

$612

Explanation:

To compute the depreciation, first we have to compute the depreciation per hour which is given below:

= (Cost of diesel-powered tractor  - estimated residual value) ÷ (useful operating life)

= ($186,240 - $5,700) ÷ (59,000 hours)

= ($180,540) ÷ (59,000 hours)

= $3.06 per hour

Now the depreciation would be

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3 years ago
It costs ​$34,000 to retrofit the gasoline pumps at a certain filling station so the pumps can dispense E85 fuel​ (85% ethanol a
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Answer:

The investor will pay up the rereofitted pumps in a period of 22.52 months.

Explanation:

<em><u>First,</u></em> we solve for the amount of profit generate per month:

21,000 gallons a month x $0.09 per gallon = $1,890

Now, we calcualte the time at which an monthly income of 1890 discounted at 2% per month matches a present value of 34,000

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C  $1,890.00

time    n

rate 0.02

PV $34,000.0000

1890 \times \frac{1-(1+0.02)^{-n} }{0.02} = 34000\\

(1+0.02)^{-n}= 1-\frac{34000\times0.02}{1890}

(1+0.02)^{-n}=  0.64021164

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7 0
3 years ago
During its first month of operations, Neptune Company (1) borrowed $200,000 from a bank, and then (2) purchased an equipment cos
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Answer:

$330,000

Explanation:

the journal entries would be:

Dr Cash 200,000

    Cr Notes payable - bank 200,000

Dr Equipment 80,000

    Cr Cash 40,000

    Cr Notes payable 40,000

Dr Merchandie inventory 60,000

    Cr Accounts payable 60,000

Dr Accounts receivable 120,000

    Cr Service revenue 120,000

Dr Accounts payable 30,000

    Cr Cash 30,000

Dr Utilities expense 60,000

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Assets:

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  • Merchandise inventory = $60,000
  • Accounts receivable =$120,000
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3 years ago
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</span>
7 0
3 years ago
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