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Zolol [24]
3 years ago
6

Allyson Gomez invests $8,000 today in an investment that earns 6 percent per year (compounded annually) for 25 years. The averag

e inflation rate is expected to be 1.8 percent per year. She will have much more than $8,000 in 25 years BUT what would this future amount be if expressed in today’s dollars? a. $34,335 b. $21,981 c. $52,306 d. $12,496 e. $21,839
Business
1 answer:
REY [17]3 years ago
5 0

Answer:

B

Explanation:

The first thing to do here is to calculate what the amount of money invested would be in 25 years given the interest rate.

Mathematically, that can be written as;

V = P(1 + r)^n

Where V is the future value

P is the present value which is $8,000

r is interest rate which is 6% (6/100 = 0.06)

n is the number of years which is 25 years

Now plugging these values into the equation, we have

V = 8,000(1 + 0.06)^25

V = 8,000(1.06)^25

V = $34,334.97 which is approximately $34,335

We can now proceed to get what this future value would be today if we take the inflation rate into consideration

Mathematically, this can work as follows

P = V(1 + i)^n

Where P is the present value of the money when the inflation is taken into consideration

V is the future value of the money which was calculated from above as $34,335

i is the inflation rate which is 1.8% per annum = (1.8/100 = 0.018)

n is the number of years which is 25

Substituting these values, we have;

P = 34,335/(1 + 0.018)^25

P = 34,335/(1.018)^25

P = 21,980.75

Which is approximately P = $21,981

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After hearing a knock at your front door, you are surprised to see the Prize Patrol from your state’s online lottery agency. Upo
Helga [31]

Answer:

Option 2 is best option on the basis of present value analysis of all the options available.

Explanation:

Option 1  NPV = ($2.21 Annual Inflow * 6.814 Annuity Factor 12 year @10%)  = $15.06m

Option 2 NPV = $19.5m

Option 3 NPV = $5.4m + ($1.7m Annual Inflow * 6.145 Annuity Factor for next 10 years @10%) = $15.85m

From the above options the best option available is option 2 which is worth more in todays prices than other options available.

5 0
3 years ago
Which of the following events will directly cause the U.S. money supply to rise by $400 million?
sammy [17]

Answer:

b. The Federal Reserve purchases $400 million of T bills from dealers

Explanation:

The money supply is the amount of money in circulation measured by narrow money (MO) and broad money (M4). This is related with the increase in the money supply in the economy.

8 0
2 years ago
At the end of its first year, the trial balance of Ivanhoe Company shows Equipment $30,600 and zero balances in Accumulated Depr
Bas_tet [7]

Answer:

Dr Depreciation Expense $3,620

Cr Accumulated Depreciation-Equipment $3,620

Explanation:

Based on the information given we were told that the company had zero balances in both Accumulated Depreciation -Equipment as well as the Depreciation Expense in which the Depreciation amount for the year is estimated to be $3,620 which means that the adjusting entry for depreciation at December 31 will be recorded as:

Preparation of Journal entry

Dec. 31

Dr Depreciation Expense $3,620

Cr Accumulated Depreciation-Equipment $3,620

5 0
3 years ago
If Project Repat were to acquire another firm that makes or sells similar products in similar markets, it would be an example of
SVEN [57.7K]

Answer:

b. Horizontal merger.

Explanation:

Project Repat is merging with a company that produces similar products to its own markets them in similar markets as well, this is an example of a horizontal merger that results in increased synergies between the similar firms and a greater market share opportunity.

Vertical mergers are usually not in the same industry. They would either be with the suppliers of Project Repat or customers who retail Project Repat's products.

Conglomerate is an example of diversification and usually the merging firms have different operations.

There are no information of clashes of any sort within the two  merging companies so it is uncertain whether this is a hostile takeover.

Hope that helps.

3 0
3 years ago
Which service will a c-snp or d-snp member in the high risk care management category receive?.
Thepotemich [5.8K]

The  service a  c-snp or d-snp member in the high risk care management category receive is: Case Management such as telephonic, digital and/or face-to-face according to a person needs.

<h3>What is CSNP?</h3>

CSNP which full meaning is chronic condition special needs plan  is a plan that  that enables people that has been diagnosed with chronic health condition to enroll for and this people must be a beneficiary of  Medicare plan.

Medicare is an health insurance coverage that help to cover the medical cost of those that enroll under the plan.

Therefore the service a  c-snp or d-snp member in the high risk care management category receive is: Case Management such as telephonic, digital and/or face-to-face based on individual needs.

Learn more about CSNP here:brainly.com/question/25075356

#SPJ1

7 0
1 year ago
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