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Illusion [34]
3 years ago
10

A 16-year annuity pays $1,800 per month at the end of each month. If the discount rate is 8 percent compounded monthly for the f

irst seven years and 10 percent compounded monthly thereafter, what is the present value of the annuity?
Business
2 answers:
KengaRu [80]3 years ago
8 0

Answer:

PV = $188,653.22

Explanation:

Given the following information, firstly we need to calculate present value of cash flow for the last 9 years. The present value of cash flow therefore

PVA2= $1,800 {[1 – 1 / (1 + 0.10 / 12)^108] / (0.10 / 12)}

PVA2= $127,852.84

Thus, present value of Cashflow today

PV = $127,852.84 / [1 + (0.08 / 12)]^84+ $1,800{[1 – 1 / (1 + 0.08 / 12)^84] / (0.08 / 12)}

PV = $188,653.22

castortr0y [4]3 years ago
8 0

Answer:

The present value of annuity is $657,720

Explanation:

Present value of an annuity is the total cash value of all future annuity payments, given a determined rate of return or discount rate.

Present value of annuity = P[\frac{1 - (1 + r)^{-n} }{r}]

where: P is the periodic payment, r is the rate per period and n is the number of periods.

The discount rate is compounded for the first 7 years and thereafter.

The present value of annuity in the first 7 years can be calculated as:

P = $1800 × 12 = $21,600 per year, r = 8% and n = 7 years.

             PV_{7} = 21600[\frac{1 - (1 + 0.08)^{-7} }{0.08}]

                    = 21600[\frac{0.42}{0.08}]

           PV_{7}  = $113,400

Thus, the present value after the first 7 years = $113,400.

Therefore, the present value of the annuity = 113,400[\frac{1 - (1 + 0.1)^{-9} }{0.1}]

                   = 113,400[\frac{0.58}{0.1}]

                  = $657,720

The present value of annuity is $657,720.

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g The low cost of labor in other countries around the globe is a factor that business must consider because they are impacted by
postnew [5]

Answer:

The low cost of labor in other countries around the globe is a factor that business must consider because they are impacted by:

the high cost of domestic labor.

Explanation:

An entity's ability to be globally competitive in the face of foreign manufacturers with low cost of labor is not helped by the high cost of domestic labor.  The cost of direct labor forms part of the computations for the cost of a product and its pricing.  Cheaper imports are more affordable to consumers than local products, thus causing consumers to prefer imports to domestic products.

4 0
3 years ago
Noelle, assistant manager at Green Gardens Restaurant, is preparing a questionnaire to help her evaluate customer satisfaction.
wariber [46]

Hi there, i cannot find the complete question so that i can pick an option from so im going to do my best to answer your question.

Explanation:

Noelle can use the question: on a scale of 1 to 4, rate your level of satisfaction of the meal at Green Gardens Restaurant. 1 to 4 can be represented as shown below.

1- very bad

2- bad

3- good

4- very good

With this sort of question to customers, Noelle would be able to get an understanding of how bad or well the restaurant is doing in terms of customer satisfaction.

Cheers.  

7 0
3 years ago
Which of the following assumptions would cause the constant growth stock valuation model to be invalid? The growth rate is zero.
Svetlanka [38]

Answer:

e. None of the above assumptions would invalidate the model

Explanation:

Incomplete question <em>"The constant growth model is given below: P0 = [D0(1 + g)]/[(rs - g)]"</em>

<em />

According to dividend discount model,  

P0 = D1/(R-G)

D1 - Dividend at t =1

R - Required rate

G - Growth rate

This would be invalid if R < G. In other words, Dividend growth model will be invalid in only one situation, that is, when growth rate is more than require return. In this situation growth model cannot be used.

8 0
2 years ago
The inventory costing method that reports the earliest costs in ending inventory is:_______
nikdorinn [45]

Answer:

a. LIFO.

Explanation:

The LIFO method refers to an inventory method that means the item which is last purchased should be sold first during the period of time. So in this inventory method the earliest cost in the closing inventory should be recorded

Therefore the given situation, the correct option is a.

And, the other options are wrong

4 0
3 years ago
Murphy Inc., which produces a single product, has provided the following data for its most recent month of operation:
vfiekz [6]

Answer:

Part a. Compute the unit product cost under absorption costing.

Variable costs per unit:

        Direct materials                                                                         $ 165

         Direct labor                                                                                $ 72

         Variable manufacturing overhead                                            $ 8

Fixed Overheads per unit:

       Fixed manufacturing overhead ($535,500/10,500)                  $ 51

Unit product cost                                                                                $296

Part b. Compute the unit product cost under variable costing.

Variable costs per unit:

        Direct materials                                                                         $ 165

         Direct labor                                                                                $ 72

         Variable manufacturing overhead                                            $ 8

Unit product cost                                                                                $245

Explanation:

Part a. Compute the unit product cost under absorption costing.

Absorption costing treats fixed overheads as part of product cost and hence fixed manufacturing overheads are included in unit product cost at their absorption rate

Part b. Compute the unit product cost under variable costing.

Variable Costing System treats fixed overheads as a Period Cost and not part of product cost hence fixed manufacturing overheads are excluded in unit product cost

8 0
3 years ago
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