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seropon [69]
3 years ago
11

Julie has just retired. Her company's retirement program has two options as to how retirement benefits can be received. Under th

e first option, Julie would receive a lump sum of $150,000 immediately as her full retirement benefit. Under the second option, she would receive $14,000 each year for 20 years plus a lump-sum payment of $60,000 at the end of the 20-year period. Page 553 Required: If she can invest money at 12%, which option would you recommend that she accept? Use present value analysis.
Business
1 answer:
olchik [2.2K]3 years ago
8 0

Answer:

First option will be recommended.

Explanation:

To determine which option to be taken, we calculate the net present value each option generates. The option generating higher NPV should be recommended.

- Net present value of first option = Lump sum receipt = $150,000.

- Net present value of second option will be found by discounting cash flows at investing rate 12% and calculated as followed:

 +  Present value of 20 equal annual payment of $14,000 + Present value of $60,000 paid in 20 years = (14,000/12%) x [ 1 - 1.12^(-20)] + 60,000/1.12^20 = $110,792.

As net present value of the first option is higher than the second option, first option will be recommended.

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Answer:

A) To be more conservative in planning for an individual's retirement, decrease the individuals life expectancy.==>TRUE

B) A sensitivity analysis helps the advisor determine the single most effective factor in a retirement plan. ==> FALSE

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8 0
3 years ago
predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently complete
Papessa [141]

Answer:

Total overhead rate =  $34.17  per machine hour

Explanation:

The total overhead rate would  the sum of the variable overhead rate and the fixed overhead rate

<em>The pre-determined fixed overhead absorption rate = Estimated fixed overhead /Estimated machine hours </em>

<em>DATA:</em>

<em>Estimated overhead       - $256,500.</em>

<em>Estimated machine hours -  10,000 machine hours</em>

The pre-determined fixed overhead absorption rate =

$256,500/ 10,000 machine hours = 25.65  per hour

<em>The pre-determined overhead absorption rate = $25.65  per hour</em>

Total overhead rate = Variable rate + Fixed rate

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Total overhead rate =  $34.17  per machine hour

3 0
2 years ago
Kite Sales. Wendy is president of ABC Kites, a business that manufactures kites. Her company’s kites are sold to large toy store
atroni [7]

Answer:

She was involved in objectionable self-dealing.

Explanation:

Wendy was the president of a business, which made the product she started to make individually at her home, after learning it from the business.

That clearly reflects that the business might have provided the knowledge to Wendy, but using that knowledge in benefit of the self and not of the company, is a unethical act on the part of the individual.

Here Wendy the president of company, rather than promoting the products of the company promoted the products she manufactured individually at her home. This clearly proves that she is self oriented in a negative manner which is a loss for the company.

Her acts are objectionable.

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2 years ago
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Answer:

33

Explanation:

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