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Olenka [21]
3 years ago
14

A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compo

unding. Which of the following statements is CORRECT?
a. The present value of the $1,000 would be larger if interest were compounded monthly rather than semiannually.
b. The periodic interest rate is greater than 3%.
c. The present value would be greater if the lump sum were discounted back for more periods.
d. The PV of the $1,000 lump sum has a smaller present value than the PV of a 3-year, $333.33 ordinary annuity.
e. The periodic rate is less than 3%.
Business
1 answer:
Pachacha [2.7K]3 years ago
5 0

Answer:

d. The PV of the $1,000 lump sum has a smaller present value than the PV of a 3-year, $333.33 ordinary annuity.

Explanation:

Since discounting will be more on lump sum $1000 at the end of 3 years than that for a 3-year $333.33 annuity.

The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually. The PV of the $1,000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity .

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What is the normal journal entry when writing-off an account as uncollectible under the allowance method?.
kherson [118]

The journal entry when writing off an account as uncollectible under the allowance method is:

Allowance for Doubtful Debts     ( Dr.)              xxxxx

Accounts Receivable       ( Cr.)                                                 xxxxx

The allowance technique involves putting aside a reserve for terrible debts that are expected in the future. The reserve is based on a percent of the income generated in a reporting length, possibly adjusted for the danger associated with positive clients.

The allowance technique is used to determine how an awful lot of money a commercial enterprise needs to set apart for future awful or unrecoverable customer debt. It factors in the price of the losses an organization expects from extending patron credit.

The allowance approach requires a small commercial enterprise to estimate at the cease of the 12 months how an awful lot awful debt they have got, while the direct write-off method we could owners write off horrific debt whenever they determine a patron might not pay an invoice.

Learn more about the allowance method here brainly.com/question/4636062

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5 0
2 years ago
Suppose that the current value of all of a mutual fund's holdings is determined to be $750 million. The fund's liabilities are $
rusak2 [61]

Answer: B) $13.89 per share

Explanation:

In order to find the net asset value or NAV of a mutual fund we have to know the liabilities and assets that fund has as of the date that we want to calculate the NAV. Then we will subtract its total liabilities from its total assets. Then we will divide that number by the number of shares to find the net asset value.

Total assets = 750 million

Total liabilities = 125 million

Current shares outstanding = 45 million

(750 million - 125 million)/45 million =13.89

3 0
3 years ago
The U.S. and European countries do not need trade agreements because they have always freely traded without duties or quotas. tr
Mrrafil [7]
I think the answer is false!
4 0
3 years ago
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year
Anna71 [15]

Answer:

18.49%

Explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

The IRR can be calculated using a financial calculator:

Cash flow in year 0 = –$28,500

Cash flow in year 1 = $12,500

Cash flow in year 2 = 15,500

Cash flow for year 3 = $11,500

IRR = 18.49%

To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.

I hope my answer helps you

5 0
3 years ago
Read 2 more answers
9. A bank loaned York Construction Company $35,000 on a 1-year, 6% note, but deducted the interest in advance. The journal entry
Rudiy27

Answer: The correct answer is c. increase in Discount on Notes Payable for $2,100.

Explanation: 6% of $35,000 for a year is $2,100. From the facts in the question, the Bank deducted the interest in advance, this means the net cash York Construction Company got was $35,000 - 2,100 = $32,900 but note that this does not change the principal amount obligation the Company is obliged to pay the bank, which remains $35,000. What the Company needs to do is to recognize the $35,000 as Notes Payable (Debit Cash and Credit Notes Payable) and recognize a Discount on Notes Payable of $2100 (Debit Discount on Notes Payable and Credit to Cash). Subsequently, based on the 1-year tenor, the Company would unwind the discount to finance charge / interest expense as $2,100 / 12 = $175 monthly (Debit Interest expense; Credit Discount on Notes Payable).

4 0
3 years ago
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