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OLEGan [10]
3 years ago
12

You are ready to retire. A glance at your 401K statement indicates that you have $750,000. If the funds remain in an account ear

ning 9%, how much could you withdraw at the beginning of each year for the next 25 years
Business
1 answer:
Bumek [7]3 years ago
8 0

Answer:

Using the compounding formula we can calculate the amount that I will earn by calculating the difference between the Future value of the investment and the amount invested.

Step 1 Find Future Value

FV = Present Value * (1+r)^n

So

Future Value = $750,000 * (1+9%)^1

FV = $817,500

Step 2 Find the Difference between he Future value of the investment and the amount investment

And the amount invested is $750,000

The amount I can withdraw = FV less The amount invested

The amount I can withdraw = $817,500 - $750,000 = $67,500

So the amount that I will earn and I can withdraw annualy is $67,500.

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A series of five payments in constant dollars, beginning with $6,000 at the end of the first year, are increasing at the rate of
beks73 [17]

Answer:

The equivalent present worth of the series is $27,714.

Explanation:

We have a series of five payments (n=5), paid at the end of the year, starting with $6,000 and increasing at a rate of 5% per year.

The inflation rate is 4% and the market interest rate is 11%.

The equivalent present worth of the series, where we take into account yearly increments and discount the value by inflation and interest rate, is:

PV=\sum_{k=1}^5\frac{C_0(1+h)^{n-1}}{(1+i)^n(1+r)^n} \\\\PV=\frac{C_0}{(1+h)} \sum_{k=1}^5(\frac{(1+h)}{(1+i)(1+r)})^n

Where:

h: increment in the payments (5%)

i: rate of inflation (4%)

r: market interest rate (11%)

Then,

\frac{(1+h)}{(1+i)(1+r)}=\frac{1.05}{1.04*1.11}=\frac{1}{1.10} =0.91 \\\\\\PV=\frac{C_0}{(1+h)} \sum_{k=1}^5(\frac{(1+h)}{(1+i)(1+r)})^n\\\\PV=\frac{6,000}{1.05} \sum_{k=1}^50.91^n\\\\PV=5,714.3*(0.91+0.83+0.75+0.68+0.62)\\\\PV=5,714.3*3.8\\\\PV=21,714.3

7 0
3 years ago
he sale price of a spring break vacation package was $194.99, and the travelagent said by booking early, you saved $30. Find the
Vinvika [58]

Answer:

The answer is 13.33%

Explanation:

Sales price of a spring break vacation package = $194.99

Amount saved for booking early = $30

The original sale price(price before the saved amount) = 224.99

Percentage decrease in price is:

Saved amount ÷ original sale price 30/224.99

=0.1333

Expressed as a percentage:

13.33%

The percent decrease in price is therefore 13.33%

7 0
3 years ago
Clark corporation has an average collection period of 7​ days, an inventory conversion period of 30​ days, and a payables deferr
Mamont248 [21]

Clark's cash conversion cycle is 37 days.

4 0
3 years ago
Sheridan Company received $135000 in cash and a used computer with a fair value of $318000 from Carla Vista Co. for Sheridan Com
sammy [17]

Answer:

The gain that  Sheridan should recognize on this exchange is $135000

Explanation:

Where Exchange Transaction lacks commercial substance, the asset that is acquired is measured at the <em>Carrying Amount or Undepreciated Cost </em> of the asset given up.

The gain will then include an <em>further consideration acquired</em> on the exchange of an asset.

<u>Entries to record the exchange are as follows :</u>

Cash $135000 (debit)

New Asset at undepreciated cost $420300 (debit)

Cost of Old asset given up $420300 (credit)

Gain on exchange $135000 (credit)

Conclusion :

The gain that  Sheridan should recognize on this exchange is $135000

6 0
3 years ago
24. The Milham Corporation has two divisions—North and South. The divisions have the following revenues and expenses: North Sout
Artyom0805 [142]

Answer:

The elimination of the North division would result in an increase to net operating income of $100,000 for the South division.

Explanation:

Please see computation of the company's overall net profit

= South sales - South variable costs - South traceable fixed costs - South allocated common corporate cost - North allocated common corporate cost

= $880,000 - $550,000 - $80,000 - $50,000 - $100,000

= $100,000 profit.

N.B

Since the North division has been eliminated, all the items for North division would all be ignored except its allocated common corporate cost.

8 0
3 years ago
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