Answer:
Following are the solution to the given questions:
Explanation:
Please find the complete question in the attached file.
In this question, the Stinsons would prefer the most profitable alternative
Formula:
In point A:
In point B:
In point C:
Answer: The incorrect statement regarding relevant revenues is "past or future revenues may be relevant-"
Explanation:
Relevant revenue is one that differ between the options that are relevant to a decision. If an income will be the same regardless of the option selected, the decision has no effect on the income.
<u>So The relevant revenue is future.</u>
A past income has already happened and will be the same regardless of the decision that is made, therefore it is not relevant when making a decision.
Answer:
$7,372.99
Explanation:
Discounting is the method used to determine the present worth of a future amount which compounding is used to determine the future worth of a present amount. The relationship between both is such that;
Fv = Pv(1 + r)^n
where
Fv = future amount
Pv = present amount
r = interest rate and
n = time
The future amount = $11,700
time = 6 years
rate = 8%
$11,700 = Pv(1 + 0.08)^6
Pv = $11,700(1 + 0.08)^-6
Pv = $7,372.99
You need to deposit $7,372.99 today to reach your $11,700 goal in 6 years.
Answer:
Solution is given in the attached diagram:
They are in debt meaning they owe money. That does not mean there is no income coming in.
