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
Luba_88 [7]
2 years ago
11

A company will make $74,000 in annual revenue each year for the next seven years from a new investment. The interest rate of 7.2

5 percent per year is appropriate for investments of this risk. Calculate the present value. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
UkoKoshka [18]2 years ago
4 0

Answer:

The present value is $395,354.84

Explanation:

The computation of the Present value is shown below

= Present value of all yearly cash inflows after applying discount factor

The discount factor should be computed by

= 1 ÷ (1 + rate) ^ years

where,  

rate is 7.25%  

Year = 0,1,2,3,4 and so on

Discount Factor:

For Year 1 = 1 ÷ 1.0725 ^ 1 = 0.9324

For Year 2 = 1 ÷ 1.0725 ^ 2 = 0.8694

For Year 3 = 1 ÷ 1.0725 ^ 3  = 0.8106

For Year 4 = 1 ÷ 1.0725 ^ 4  = 0.7558

For Year 5 = 1 ÷ 1.0725 ^ 5  = 0.7047

For Year 6 = 1 ÷ 1.0725 ^ 6  = 0.6571

For Year 7 = 1 ÷ 1.0725 ^ 7  = 0.6127

So, the calculation of a Present value of all yearly cash inflows are shown below

= (Year 1 cash inflow × Present Factor of Year 1) + (Year 2 cash inflow × Present Factor of Year 2) + (Year 3 cash inflow × Present Factor of Year 3) + (Year 4 cash inflow × Present Factor of Year 4)  + (Year 5 cash inflow × Present Factor of Year 5)  + (Year 6 cash inflow × Present Factor of Year 6)  + (Year 7 cash inflow × Present Factor of Year 7)

= ($74,000 × 0.9324 ) + ($74,000 × 0.8694  ) + ($74,000 × 0.8106 )  + ($74,000 ×  0.7558 )  + ($74,000 × 0.7047  ) + ($74,000 × 0.6571 )  + ($74,000 × 0.6127  )

= $68,997.67  + $64,333.49  + $59,984.61  + $55,929.70  + $52,148.91  + $48,623.69  + $45,336.77

= $395,354.84

We take the first four digits of the discount factor.  

You might be interested in
A basic principle of economics is that a country’s standard of living depends on its a. Quantity of physical capital. b. Abundan
Nookie1986 [14]
This answer should be C
7 0
3 years ago
Income elasticity of demand is
coldgirl [10]

Answer: Option (a) is correct.

Explanation:

Income elasticity of demand measures the responsiveness of quantity demanded with change in the income level of an individual.

Income\ elasticity\ of\ demand=\frac{percentage\ in\ quantity\ demanded}{percentage\ change\ in\ income}

Income of an individual has a positive relationship with the demand for normal goods and has a negative relationship with the demand for inferior goods.

3 0
3 years ago
Read 2 more answers
King Company issued bonds with a face amount of $1,600,000 in 2015. As of January 1, 2020, the balance in Discount on Bonds Paya
zimovet [89]

Answer:

January 1, 2020

Bonds Payable                                          1600000 Dr

Loss on Redemption of bonds                 36800 Cr

     Discount on Bonds Payable                        4800 Cr

     Cash                                                              1632000 Cr

Explanation:

The redemption of bonds before the maturity usually requires a payment for redemption which is a certain percentage of its face value. It is usually higher than the face value. The above bonds are redeemed at 102 which means at 102% of the face value of the bonds. Thus, the cash paid to redeem the bonds is,

Cash = 1600000 * 102%  =  1632000

The bonds have a carrying value, which is the face value less discount or add premium, of,

Carrying value = 1600000 - 4800  =  $1595200

If they are redeemed for an amount in excess of the carrying value, they are redeemed at a loss.

The loss on redemption is,

Loss = 1595200 - 1632000 = $36800

5 0
3 years ago
Assume that Wizard Internet is operating as a general partnership, what is Caleb's personal tort liability for Anna's actions wi
shutvik [7]

Answer: The correct answer is "D. Caleb is personally jointly and severally liable along with Anna.".

Explanation: Caleb is personally jointly and severally liable along with Anna. When there is joint and several liability, a person has the right to claim payment of a debt or compensation for damage to any of those responsible or even all of them, without anyone being able to excuse themselves to evade their responsibility.

6 0
3 years ago
In the event a firm goes bankrupt, an investment grade senior debenture bond is more likely to receive liquidation proceeds than
Elina [12.6K]
The answer that best fits the blank provided above is A SUBORDINATED DEBENTURE. Subordinated debenture is also known as subordinated debt. This kind of debt that ranks just below other loans whenever the company files bankruptcy. This is what is received instead of the liquidation proceeds.
3 0
3 years ago
Other questions:
  • Listed options on U.S. exchanges are available on all of the following currencies except:_________.A) Canadian dollar. B) Japane
    10·1 answer
  • Billingsley, inc. is borrowing $60,000 for five years at an apr of 8 percent. the principal is to be repaid in equal annual paym
    9·1 answer
  • A major shift for personnel management arrived in the 1930's with the emergence of:
    10·1 answer
  • White Company manufactures furniture. Assume the following information: Manufacturing overhead is allocated based on machine hou
    10·1 answer
  • Laramie Company has acquired a property that included both land and a building for​ $500,000. The company hired an appraiser who
    12·1 answer
  • The Howell Corporation has the following account balances (in millions):
    13·1 answer
  • You can invest $100,000 into either project A or B. You estimate that A would succeed with a probability of 0.6 in which case it
    7·1 answer
  • Some economists say that economic growth involves a​ trade-off between current generations and future generations. If a current
    8·1 answer
  • Your company is building a new office site in a different state. You want to show your board members the progress of constructio
    13·1 answer
  • Solving for the sales level needed to achieve a profit of zero is the same process as solving for the sales level needed to ____
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!