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trapecia [35]
3 years ago
7

Your grandfather has promised to give you​ $500 a year at the end of each of the next four years if you earn Cs or better in all

of your courses each year. Using a discount rate of​ 7%, which of the following is correct for determining the present value of the​ gift?
a. PV = $500x7%x4
b. PV = $500x(PV factor, i=4%, n =7)
c. PV = $500x(Annuity PV factor, i=7%, n=4)
d. PV = $500x(Annuity PV factor, i=7%, n=4)
Business
2 answers:
aleksandr82 [10.1K]3 years ago
7 0

Answer:

d. PV = $500x(Annuity PV factor, i=7%, n=4)

Explanation:

A fix Payment for a specified period of time is called annuity. The discounting of these payment on a specified rate is known as present value of annuity.

Formula for Present value of annuity is as follow

PV of annuity = P x Present value factor

PV of annuity = P x [ ( 1- ( 1+ i )^-n ) / i ]

As discount rate is 7%, so

i = 7%

Number of payments is 4

n = 4

Bezzdna [24]3 years ago
5 0

Answer:

The correct answer is option (d) PV = $500x(Annuity PV factor, i=7%, n=4)

Explanation:

Given data;

P = $500

rate (r) = 7%

years (n)= 4

The present value of goods is determined using the formula;

PV of annuity = P x Annuity present value factor----------------1

But,

<h3>Annuity present value factor =  [1-(1+i)⁻ⁿ)]/i ------------2</h3>

Putting equation 2 into equation 2, we have

PV of annuity = P x Annuity present value factor

<h3>PV of annuity = P * [1-(1+i)⁻ⁿ)]/i -----------------------3</h3>

where;

PV = present value

i = rate

n = number of years

P = price

To calculate PV using equation 3, option (d) is the appropriate option

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Answer:

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Explanation:

Given the following :

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Social security tax = 6.2% upto maximum base amount

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4 0
3 years ago
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kherson [118]

Answer: c. greater because interest rate changes have a greater impact on distant cash flows than near-term cash flows.

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Interest rate changes have a greater impact on distant cashflows because those cashflows will be exposed to the interest rates for longer. This means that they will be subjected to more discounting than a cashflow that is due in one year which would be subject to only a single year of discounting.

For instance, assume the required rate of return for two investments is 10%. One investment yields $10,000 in 20 years and another yields $10,000 in 2 years .

The present value of both are:

= 10,000 / (1 + 10%)²⁰                                                  = 10,000 / ( 1 + 10%)²

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<em>Notice the difference. The longer term investment was more exposed to interest rate effects. </em>

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The correct option is B.
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Percentage of sales budgeting can also be called _____.
nika2105 [10]

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Explanation:

<h3>so I would have to say arbitrary budgeting </h3>
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Harlamova29_29 [7]

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One of the most typical methods used to commit financial statement fraud is the recording of false revenues. Due to their understanding of accounting and unrestricted access to accounts, the controller or chief financial officer (CFO) of a corporation is frequently the perpetrator of financial statement fraud.

By purposefully making false assertions, fraudsters may be after either monetary or non-monetary assets. Fraudulent conduct could include, for instance, knowingly lying about one's age to gain a driver's license, criminal past to get a job, or income to get a loan.

To learn more about financial statement fraud refer to:

brainly.com/question/28240425

#SPJ4

3 0
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