What are the answer things? (A, B, C and D)
Answer:
D. General Office Administrative Costs
Explanation:
A Profit Center
A profit center represents a business unit or department in an organisation that generates revenue, profits or losses.
A Direct Fixed Cost
A direct fixed cost represents a cost that is directly traceable to a product, a service or to a center. In this question, the consideration is to identify the option that does not represent a cost directly traceable or directly incurred by the profit center.
General Office Administrative Costs
In accounting, the rule of the thumb is that general office administrative costs are not directly attributable to the production of goods or services. This cost represents the costs incurred to carry out a business' day to day operations including building rent, office supplies and subscriptions among others. The right option is therefore, the General Office Administrative Costs. Put differently, it represents costs that the business will incur even without the profit center, department or unit.
The other options from are costs that are directly related to the profit center and should not be incurred if the profit center does not exist. For instance, the Manager's salary will not be incurred if there is no center and there will be no depreciation on center's equipment if the center does not exist in the first place.
The short-term would be as such; keep the income flowing, satisfy customers and have products to supply demand
Medium-term could be anything
Long-term is as such; get a bigger domain than your competition, have great income than your competition and become the best in the business by average standards
Answer:
a. How much will you have in your retirement account on the day you retire?
- future value of the annuity = annual payment x (FV annuity factor, 11%, 40 periods) = $5,000 x 581.826 = $2,909,130
b. If, instead of investing $5,000 per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be?
- present value = future value / (1 + interest rate)ⁿ = $2,909,130 / 1.11⁴¹ = $40,320.04
c. If you hope to live for 28 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 28th withdrawal (assume your savings will continue to earn 11.0% in retirement)?
- payment = present value / annuity factor (PV annuity factor, 11%, 28 years) = $2,909,130 / 8.60162 = $338,207.22
d. If, instead, you decide to withdraw $647,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings?
- We can first try to get an approximate answer. The annuity factor = $2,909,130 / $647,000 = 4.49633694. Now looking at an annuity table we can look at the closest amount for 11%. The answer is between 6 years (annuity factor 4.2305) and 7 years (annuity factor 4.7122). This means that in less than 7 years you will have no more money left.
e. Assuming the most you can afford to save is $ 1 comma 000$1,000 per year, but you want to retire with $1,000,000 in your investment account, how high of a return do you need to earn on your investments?
- Again we must use the future value to determine the annuity factor. Annuity factor = $1,000,000 / $1,000 = 1,000. Using an annuity calculator to determine the closest rate (for 40 periods) = 12.9515% ≈ 12.95%