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NemiM [27]
3 years ago
5

You sold a car and accepted a note with the following cash flow stream as your payment. What was the effective price you receive

d for the car assuming an interest rate of 6.0%?
Years: 0 1 2 3 4
Cash Flows: $0 $1,000 $2,000 $2,000 $2,000
Business
1 answer:
alexandr1967 [171]3 years ago
8 0

Answer:

The effective price you received for the car was $5,987

Explanation:

Effective price of the car can be calculated by the Net Present values of all the cash flows associated with the note.

Using following present value formula for each cash flows

Pv = FV  / ( 1 + r )^n

Net Present Value of all call flows = [ $1,000 / ( 1 + 6% )^1 ] + [ $2,000 / ( 1 + 6% )^2 ] +  [ $2,000 / ( 1 + 6% )^3 ] + [ $2,000 / ( 1 + 6% )^4 ]

NPV = $943.4 + 1,780 + $1,679.24 + $1,584.19 = $5,986.83 = $5,987

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When Elizabeth was asked to be the after-dinner speaker for the senior honors dinner, she responded with great enthusiasm. She v
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Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $70,000 and $3,600, r
tatyana61 [14]

Answer:

Uncollectible account expense  $8,600

Explanation:

The computation of the amount as the Uncollectible Accounts Expense on its Year 2 income statement is given below:

Allowance account - Beg year 2    $3,600 Credit

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6 0
3 years ago
Assume you had determined that John Firestone, vice president of Pierce Chemicals, was a prospect for your paper and metal conta
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Answer: Please refer to Explanation.

Explanation:

1. Honesty.

State the purpose of your call to the secretary and sell your product. For instance, " Hello, my name is Mr. Petal and I represent a fast rising Paper and Metal Container company. After researching about your company, I felt it most expedient to get in touch with Mr. Firestone as I believe this is business he will be interested in. We offer perks that are unmatched in the industry".

2. Persistence.

You can be persistent on the phone if you detect deceit in the secretary's tone.

For instance,

" Having been in the chemical industry myself, I know such an opportunity does not come often and I really do guarantee that we give the best benefits in the industry. If you can, just let me talk to Mr. Firestone, I promise that neither of you will regret it".

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4 0
3 years ago
Calculate the present value of the after tax net returns to land in the 7th year if thereal pre-tax net returns to land today ar
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Answer:

PV(after-tax net return in 7th year) = 70.55 (Approx)

Explanation:

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Number of year = 7

Pre-tax net returns (Fn) = $100

Growth rate = 4% = 0.04

Inflation = 3% = 0.03

Marginal tax rate = 30% = 0.3

Discount rate = 10% = 0.1

Computation:

Fn = Fo(1+g)ⁿ = 100(1.04)⁷

Fn = 131.6

Nominal net returns = 131.6(1.03)⁷

Nominal net returns = 161.85

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After-tax, risk adjusted discount rate = 0.1(1-0.3) = 7%

PV(after-tax net return in 7th year) = 113.30 (1+0.07)⁻⁷

PV(after-tax net return in 7th year) = 70.55 (Approx)

8 0
3 years ago
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