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Art [367]
3 years ago
8

What is the value today of a money machine that will pay $4,010.00 per year for 13.00 years?

Business
1 answer:
Maurinko [17]3 years ago
3 0

Answer:

The present value of the machine is $35499

Explanation:

The annual amount or annuity amount = $4010 per year.

Total number of years = 13 years

Here, the interest rate is not given so we just assume the interest rate = 6% per annum.

Since we have a total number of years and annual payment that occurs for 13 years. We are required to find the present value of the machine. So use the formula to find the present value of the annuity.

The present value of machine = (Annuity amount x (1 – (1+r)^-n) ) / r

The present value of machine = (4010(1 – (1+6%)^-13) ) / 6%

The present value of machine = $35499

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Semmy [17]

This is actually false, Don't believe the guy who said true.

8 0
2 years ago
Read 2 more answers
Your sister just deposited $13,000 into an investment account. She believes that she will earn an annual return of 10.3 percent
omeli [17]

Answer:

146,640

13,000×9.4%=1,222

1,222×120=146,640

6 0
3 years ago
Super Carpeting Inc. just paid a dividend of $2.64 and its dividend is expected to grow at a constant rate of 5.50% per year. If
TiliK225 [7]

Answer:

1. C. $33.76 per share

2. B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return

3. 8.25% ; $35.62 ; 5.5%

Explanation:

1. Using the Constant Growth Model to calculate the intrinsic value would be best given the above values.

The formula is;

Value = Next Dividend / (Required Return - Growth rate)

Value = (2.64 * ( 1 + 5.5%)) / ( 13.75% - 5.5%)

Value = 2.7852/8.25%

Value = $33.76

2. Going by the formula, if the expected growth rate is more than the required return, the intrinsic value would be a negative number and a stock's price cannot go below 0. The growth rate has to be less than the required return for this to work.

3. At Equilibrium, the stock dividend is growing as it should.

Dividend Yield should therefore be;

= Next Dividend / Stock Value * 100

= (2.7852 / 33.76) * 100

= 8.25%

Stock Price should grow at the growth rate so;

= 33.76 * ( 1 + 0.055)

= $35.62

Gains yield refers to what rate the stock will change in value. Growth rate is 5.5% so that will be the answer.

5 0
2 years ago
A metallurgical engineer decides to set aside money for his newborn daughter's college education. He estimates that her needs wi
erastova [34]

Answer:

what should be the size of each deposit, if the account earns interest at a rate of 8% per year?

$2477,81

Explanation:

% N Monthly          % VF

1,08 0 2477,81117 1,00 2.477,81

1,08 1 2477,81117 1,08 2.676,04

1,08 2 2477,81117 1,17 2.890,12

1,08 3 2477,81117 1,26 3.121,33

1,08 4 2477,81117 1,36 3.371,03

1,08 5 2477,81117 1,47 3.640,72

1,08 6 2477,81117 1,59 3.931,97

1,08 7 2477,81117 1,71 4.246,53

1,08 8 2477,81117 1,85 4.586,26

1,08 9 2477,81117 2,0 4.953,16

1,08 10 2477,81117 2,16 5.349,41

1,08 11 2477,81117 2,33 5.777,36

1,08 12 2477,81117 2,52 6.239,55

1,08 13 2477,81117 2,72 6.738,71

                 -20.000,00

                 -20.000,00

                 -20.000,00

                 

4 0
3 years ago
DS Unlimited has the following transactions during August.
m_a_m_a [10]

Answer:

See the journal entries below.

Explanation:

The journal entry will look as follows:

<u>Date      Account and explanation                 Debit ($)         Credit ($)   </u>

Aug 6     Inventory (50 * $100)                           5,000  

               Account payable                                                           5,000

<u><em>               (To record inventory purchased on account.)                            </em></u>

Aug 7      Inventory                                                 300

               Cash                                                                                  300

<em><u>                (To record payment of freight charges associated with the August 6 purchase.)</u></em>

Aug 10    Account payable (5 * $100)                   500

               Inventory                                                                           500

<u><em>                (To record the returns of defective five game devices to GameGirl.)</em></u>

Aug 14     Account payable (w.1)                        4,500

               Cash (balancing figure)                                                 4,455

                Inventory (w.2)                                                                   45

<u><em>                 (To record the payment of the full amount due to GameGirl.)   </em></u>

Aug 23    Account receivable (30 * $120)         3,600  

               Sales revenue                                                              3,600

                Cost of goods sold                             3,170

                Inventory                                                                       3170

<u><em>                 (To record the Sales and cost of 30 game devices purchased on August 6.) </em></u>

<u>Workings:</u>

w.1. Account payable = Purchases on account on August 6 - Defective inventory returned on August 10 = $5,000 - $500 = $4,500

w.2. Inventory = Discount received on account payable for paying within 10 days = w.1 * 1% = $4,500 * 1% =$45

7 0
2 years ago
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