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expeople1 [14]
3 years ago
6

Freida Farmer, 78 years young, from Karnak, IL has the winning Powerball lottery numbers which will pay out $7 million at the be

ginning of each of the next 30 years (reported prize of $210 million). Before claiming her prize, Dependable Insurance Company offers Frieda $100 million today in exchange for her winning lottery ticket and prize payout. What rate of return would Dependable Insurance earn if Frieda accepts their offer
Business
1 answer:
emmasim [6.3K]3 years ago
6 0

Answer:

6.218%

Explanation:

we can use the present value of an annuity due formula:

present value = annual payment x annuity due factor

  • present value = 100
  • annual payment = 7
  • PV annuity due factor, %, 30 periods = ?

100 = 7 x annuity factor

annuity factor = 100 / 7 = 14.28571429 ≈ 14.286

using an annuity calculator, the interest rate for a PV annuity factor, 30 periods and equal to 14.286 is 6.218%

You might be interested in
ABC, Inc.'s income statement shows Service Revenue of $40,000, Wages Expense of $25,000 and Net Income of $1,000. The other expe
Temka [501]

Answer:

A) $14,000.

Explanation:

In the profit or loss statement, the key elements are sales and expenses and the net of these two gives the net income.

Given

Service Revenue = $40,000,

Wages Expense = $25,000

Net Income = $1,000

Total expense = $40,000 - $1,000 = $39,000

The total expense is made of the wage expense and other expenses.

Therefore, other expenses = $39,000 - $25,000

= $14,000

3 0
3 years ago
Item 3Item 3 Cutter Enterprises purchased equipment for $87,000 on January 1, 2018. The equipment is expected to have a five-yea
Rus_ich [418]

Answer:

$27,400 and $59,600

Explanation:

The computation of the depreciation expense and the book value using the sum of-the-years'-digits method is shown below:

Depreciation expense is

= (Purchase cost - residual value) × useful life ÷ sum of years

= ($87,000 - $4,800) × 5 years ÷ (5 + 4 + 3 + 2 + 1)

= $27,400

And, the book value is

= Purchase cost - depreciation expense

= $87,000 - $27,400

= $59,600

8 0
3 years ago
Ribosomal subunits are manufactured by the _____.
e-lub [12.9K]
Proteins.............
3 0
3 years ago
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $
tia_tia [17]

Answer:

After tax salvage value $1,278,852.8‬

Explanation:

MARCS five years class:

after four years we will have depreicate:

0.2 + 0.32 + 0.192 + 0.1152 = 0,8272‬

(Data from the attached MACRS)

tax basis of the asset:

6,170,000 x ( 1 - 0.8272) = 1.066.176‬

We will be taxed for the difference between the basis and the salvage value:

1,370,000 - 1,066,176 = 303,824‬ taxable gain:

303,824 x 30% = 91,147.2

After tax salvage value:

salvage valeu - income tax expense

1,370,000 - 91,147.2 = 1,278,852.8‬

3 0
3 years ago
Beech Soda, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases
bagirrra123 [75]

Answer:

the cost of goods sold to be recorded at January 14 is: $230 .

Explanation:

LIFO (Last in First out) method, assumes that the last goods purchased are the <em>first ones</em> to be issued to the final customer.

This means that valuation of inventory will begin using the value of the <em>earliest</em> goods purchased.

The Cost of goods sold is calculated as follows :

Cost of goods sold : 9 units × $14 = $126

                                  13 units × $8 = $104

                                  Total              = $230

8 0
3 years ago
Read 2 more answers
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