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wolverine [178]
3 years ago
7

Alfredo has two offers for his grocery shop. The first offer is a cash payment of $60,000, and the second is a down payment of $

10,000 with payments of $6,000 at the end of each semiannual period for 5 years. Assuming an interest rate of 6% compounded semiannually, find the difference between the two present values. State the answer as an absolute value.
Business
1 answer:
lara [203]3 years ago
7 0

Answer:

First Offer  

Present value = $60,000

Second Offer  

PV = Down payment + A<u>(1 -(1 + r/m)</u>-nm

                                                 r/m

PV = $10,000 + $6,000(<u>1- (1+ 0.06/2</u>))-5x2

                                                0.06/2

PV = $10,000 + $6,000(<u>1 - (1 + 0.03</u>))-10

                                                 0.03

PV = $10,000 + 6,000<u>(1 - (1.03)</u>)-10

                                             0.03

PV = $10,000 + 6,000(8.5302)

PV = $61,181

The difference between the two present values

= $61,181 - $60,000

= $1,181

Explanation:

The present value of the cash payment is $60,000. The present value of the second offer is the down payment plus the present value of semi-annual payments. We need to use the present value of annuity formula so as to determine the present value of semi-annual payments. Then. we will deduct the present value of the first offer from the present value of the second offer in order to obtain difference in present values.

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boyakko [2]

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1 year ago
The following information relates to last year's operations at the Legumes Division of Gervani Corporation:
yanalaym [24]

Answer:

The Legume Division's net operating income last year was d. $45,000

Explanation:

Turnover (on operating assets) = Total Sales/ Operating assets

From the formula,

Operating assets = Total Sales/Turnover (on operating assets) = $900,000/3 = $300,000

Return on investment (ROI) is calculated by using following formula:

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At the Legumes Division of Gervani Corporation, Total investment  = Operating assets = $300,000

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7 0
2 years ago
Franklin Corporation issues $50,000, 10%, 5-year bonds on January 1, for $52,100. Interest is paid semiannually on January 1 and
Karo-lina-s [1.5K]

Answer:

Bond interest expense = $2,290

so correct option is b. $2,290

Explanation:

given data

Bond issued = $50,000

Interest rate  = 10%

interest semi-annually = 5%

time period = 5 year

to find out

amount of bond interest expense

solution

we get first Cash interest payment that is here

Cash interest payment = $50,000 × 5%

Cash interest payment = $2,500     ....................1

and Bond premium will be

Bond premium = $52,100 – $50,000

Bond premium = $2,100      .......................2

we know interest paid semi annually so time period will be  = 10

so Amortization of bond premium will be here as

Amortization of bond premium = \frac{2100}{10}

Amortization of bond premium = $210      .................3

so  Bond interest expense will be calculate as

Bond interest expense = Cash interest payment - Amortization of bond premium     .......................4

put here value

Bond interest expense = $2,500 - $210

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so correct option is b. $2,290

8 0
3 years ago
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olga_2 [115]

Answer:

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I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

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3 years ago
if china’s economy maintains a 7% annual growth rate over the next 20 years, about how large will its economy be in 20 years if
grin007 [14]

Answer:

If an economy grows at 7% per year, it will take 70 / 7 = 10 years for the size of that economy to double, and so on.

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