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3 years ago

Which cash flow would you rather pay, $425 today or $500 in two years if interest rates are 10 percent? Why?

Business

1 answer:

DerKrebs [107]3 years ago

7 0

Answer:

Explanation:

The main goal is to compare these two based on the same terms; present values. Find the present value of $500 today by discounting it using 10% interest rate over two years.

PV = FV/ (1+r)^n

where FV = Future value = $500

r = discount rate = 10% or 0.10 as a decimal

n = total duration of investment = 2

PV = $500/(1+0.10)^2

PV = $500/1.21

PV = $413.22

Since you are basing the decision on what you would rather pay, you would want a lower pay amount. The $425 is already in its present value terms and it is more expensive. Therefore, you would prefer to pay $500 in two years.

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1 year ago

Exercise 8-07 At December 31, 2019, Pharoah Company Company had a credit balance of $18,100 in Allowance for Doubtful Accounts.

Alja [10]

Answer:

Entries are given below

Explanation:

DATA:

Opening Balance in the allowance for doubtful debt = $18,100

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Entry DEBIT CREDIT

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3 years ago

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Kazeer [188]

Answer:

I believe the answer is reductions

Explanation:

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