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MAVERICK [17]
3 years ago
7

Greenfield, Inc. agrees to make lease payments of $220 at the end of each month for 48 months for the use of a machine. Assuming

a borrowing rate of 12%, the present value of the lease payments is:
Business
1 answer:
Anna35 [415]3 years ago
8 0

Answer:

The Present value of the lease payment is  $ 6,713.28

Explanation:

Given as :

The payment amount at the end of every months = $ 220

The total months = 48 months , i.e 4 years

The rate of compounded yearly = 12 %

Let The present principal value =  P

∵ $ 220 is the payment at the end of 48 months

∴ Total amount in 48 months = $ 220 × 48 = $ 10,560

Now , <u>from compounded method</u>

The Amount after 48 months = Present value × (1+\frac{\textrm Rate}{100})^{\textrm Time}

So , $ 10,560 = P × (1+\frac{\textrm 12}{100})^{\textrm 4}

Or,  $ 10,560 = P × (1.12)^{4}

So , $ 10,560 = P × 1.573

∴ P = \frac{10560}{1.573} = $ 6,713.28

Hence The Present value of the lease payment is  $ 6,713.28  Answer

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$784,434 will be allocated to the Retail division

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8 0
3 years ago
If the expected rate of inflation was 3% and the actual rate was 6.2%; the systematic response coefficient from inflation, would
Semenov [28]

The systematic response coefficient from inflation, would result in a change in any security return of <u>3.2 βI</u>.

<u>Explanation</u>:

<em><u>Given</u></em>:

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Actual rate of inflation = 6.2%

The change in security return can be calculated by obtaining the differences between actual and expected levels of inflation.

Change in security return= Actual rate of inflation- Expected rate of inflation

                                                     = 6.2%-3%

                                                     = 3.2%

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7 0
3 years ago
Bramble Company uses the percentage of receivables method for recording bad debt expense. The accounts receivable balance is $59
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Answer and Explanation

Given:

Accounts receivable balance = $598,000

Percentage of receivables that are uncollectible = 5% or 0.05

Uncollectible receivables = 0.05 × 598,000 = $29,900

Adjusting journal entry to record bad debt expense is:

Particulars                                          Debit              Credit

Bad debts expense                            XXXXX

     Allowance for doubtful debts                               XXXXX

(Being bad debts incurred)

Noe, Allowance for doubtful debts has a credit balance of $4,800.

Bad debt incurred = 29,900 - 4,800 = $25,100

So adjusting entry :

Particulars                                          Debit              Credit

Bad debts expense                            $25,100

     Allowance for doubtful debts                             $25,100

(Being bad debts incurred)

7 0
3 years ago
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