1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
mojhsa [17]
3 years ago
15

You are considering two equally risky annuities, each of which pays $5,000 per year for 10 years. Investment ORD is an ordinary

(or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT? Group of answer choices The present value of ORD exceeds the present value of DUE, and the future value of ORD also exceeds the future value of DUE. If the going rate of interest decreases from 10% to 0%, the difference between the present value of ORD and the present value of DUE would remain constant. A rational investor would be willing to pay more for DUE than for ORD, so their market prices should differ. The present value of DUE exceeds the present value of ORD, while the future value of DUE is less than the future value of ORD. The present value of ORD exceeds the present value of DUE, while the future value of DUE exceeds the future value of ORD.
Business
1 answer:
liubo4ka [24]3 years ago
4 0

Answer:

A rational investor would be willing to pay more for DUE than for ORD, so their market prices should differ.

Explanation:

If both annuities pay the same amount ($5,000 per year), then the present value of the annuity due will always be higher than the present value of the ordinary annuity. Therefore, an investor will always be willing to pay more (at equal risk) for the annuity due than the ordinary annuity.

E.g. let say that both annuities carry a 10% interest rate.

The present value of the annuity due is:

PV = $5,000 + [$5,000 x 5.7590 (PV annuity factor, 10%, 9 periods)] = $33,795

The present value of the ordinary annuity is:

PV = $5,000 x 6.1446 (PV annuity factor, 10%, 10 periods) = $30,723

The logic behind this is that $1 today is worth more than $1 tomorrow, and the annuity due's first payment is today, while the ordinary annuity's first payment is in 1 year.

You might be interested in
Marcelino Co.'s March 31 inventory of raw materials is $90,000. Raw materials purchases in April are $560,000, and factory payro
melisa1 [442]

Answer:

Marcelino Co.

1. Assignment of underapplied or overapplied overhead to the Cost of Goods Sold account:

a. Materials purchases (on credit) = $560,000

b. Direct materials used in production = $450,000

c. Direct labor paid and assigned to Work in Process Inventory =  $359,000

d. Indirect labor paid and assigned to Factory Overhead = $23,000

e. Overhead costs applied to Work in Process Inventory = $179,500

f. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.) = $196,000

g. Transfer of Jobs 306 and 307 to Finished Goods Inventory = $844,000

h. Cost of goods sold for Job 306 = $350,500

i. Revenue from the sale of Job 306 = $655,000

j. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.) = $16,500

2. Journal Entries:

Debit Cost of Goods Sold $16,500

Credit Manufacturing Overhead $16,500

To assign underapplied overhead to the cost of goods sold.

Journal Entries to record April Transactions:

a. Debit Raw materials inventory $560,000

   Credit Accounts payable $560,000

To record the purchase of raw materials on account.

b. Debit Work in process inventory $450,000

   Credit Raw materials inventory $450,000

To record the materials used in production.

c. Debit Work in process inventory $359,000

  Credit Cash 359,000

To record payment for direct labor costs.

d. Debit Factory overhead $23,000

  Credit Cash $23,000

To record payment for indirect labor costs.

e. Debit Work in process inventory $179,500

   Credit Factory overhead $179,500

To record overhead assigned to WIP.

f(1). Debit Factory overhead $54,000

      Credit Raw materials inventory $54,000

To record indirect materials used in production.

f(2). Debit Factory overhead $24,000

      Credit Cash $24,000

To record payment for factory utilities.

f(3). Debit Factory overhead $56,000

      Credit Accumulated depreciation-factory equipment $56,000

To record factory equipment depreciation.

f(4). Debit Factory overhead $39,000

      Credit Cash $39,000

To record payment for factory rent.

g. Debit Finished Goods Inventory $844,000

   Credit Work in process inventory $844,000

To record the transfer of Jobs 306 and 307 to Finished Goods Inventory.

h. Debit Cost of goods sold $350,500

   Credit Finished goods inventory $350,500

To record the cost of Job 306 sold.

 

i.  Debit Cash $655,000

   Credit Sales Revenue $655,000

To record the sale of Job 306.

j. Debit Cost of goods sold  $16,500

  Credit Factory overhead $16,500

To assign the underapplied overhead.

Explanation:

a) Data and Calculations:

March 31 Inventory of raw materials = $90,000

Raw materials purchases in April = $560,000

Factory payroll cost in April = $368,000

Overhead costs incurred in April:

Indirect materials,                           $54,000

Indirect labor,                                  $23,000

Factory rent,                                   $39,000

Factory utilities,                              $24,000

Factory equipment depreciation, $56,000

Total overhead costs                  $196,000

Predetermined overhead rate = 50% of direct labor costs

Sale of Job 306 = $655,000

Cost Sheet:

                                             Job 306      Job 307        Job 308

Balances on March 31

Direct materials                     $31,000      $37,000       $68,000

Direct labor                              21,000         18,000         39,000

Applied overhead                   10,500          9,000          19,500

Beginning work in process $62,500     $64,000      $126,500   $253,000                        

Costs during April

Direct materials                   135,000      200,000        $115,000    450,000

Direct labor                         102,000        153,000         104,000    359,000

Applied overhead                 51,000         76,500          52,000      179,500

Total cost of production $350,500     $493,500     $397,500  $1,241,500

Status on April 30   Finished (sold)  Finished (unsold)  In process  Total

Underapplied or Overapplied Overhead:

Actual overhead costs = $196,000

Overhead assigned =        179,500

Underapplied overhead   $16,500

4 0
2 years ago
The following transactions relate to the City of Middleton, which has a fiscal year end of December 31. The city adopts budgets
scoundrel [369]

Answer:

See explaination

Explanation:

1.

--Capital projects fund journal

Dr. Cash $2,000,000

Cr. Other Financing Source—Proceeds of Bonds $2,000,000

--Governmental activities journal

Dr. Cash $2,000,000

Cr. Bonds Payable $2,000,000

2.

--Debt service fund journal

Dr. Estimated Other Financing Sources—Inter fund Transfers In $ 30,000

Cr. Appropriations $ 30,000

--General Fund journal

Dr. Budgetary Fund Balance $ 30,000

Cr. Estimated Other Financing Uses—Inter fund Transfers Out $ 30,000

3.

--Capital projects fund journal

Dr. Investments $1,000,000

Cr. Cash $1,000,000

--Governmental activities journal

Dr. Investments $1,000,000

Cr. Cash $1,000,000

4.

4.

--General Fund journal

Dr. Other Financing Uses—Inter fund Transfer out $ 30,000

Cr. Cash $ 30,000

--Debt service fund journal

a) Dr. Cash $ 30,000

Cr. Other Financing Sources—Inter fund Transfer In $ 30,000

b) Dr. Expenditures—Interest $ 30,000

Cr. Cash $ 30,000

--Governmental activities journal

Dr. Expenses—Interest on Long-term Debt $ 30,000

Cr. Cash $ 30,000

5.

--Capital projects fund

Dr. Interest Receivable $ 11,555

Cr. Revenues—(optional to put source, Interest) $ 11,555

--Governmental activities journal

a) Dr. Interest Receivable $ 11,555

Cr. General Revenues—Investment Earnings—(optional to indicate restriction, Restricted for Capital Projects) $ 11,555

b) Expenses—Interest on Long-term Debt $ 30,000

Interest Payable $ 30,000

Debt service fund

Note that there is no accrual of interest expenditure since the expenditure is not legally due until after the first of the year.

4 0
3 years ago
If there is a high demand for a product, then production will be__.
Cloud [144]

Answer:

the answer is b. increased

6 0
3 years ago
Read 2 more answers
Harrison Company maintains a checking account at the First National City Bank. The bank provides a bank statement along with can
oksano4ka [1.4K]

Answer:

Harrison company

Step 1.

Preparation of adjusted Cash Book

Balance as at July 31, 2016 = $40,293

Add: bal. of Deposit by credit customer = ($3,100 - $310) = $2,790

Deduct: Bank Service charge = -$30

Deduct: NSF checks = -$1,750

Deduct: loan repayment plus interest = -$3,870

Adjusted Balance =$37,433

Step 2. Bank reconciliation statement

As at 31st July 2016

Balance as per Bank Statement = $38,293

Deduct: uncleared Cheques = -$8,530

Add: Deposits outstanding = $7,400

Add: over disbursement by bank due for recovery = $270

Adjusted Bank Statement = $37,433

Compared to Adjusted Cash Book = $37,433

Difference = $0.

Step 3.

Journal entries required

Debit Cash Account with $2,790

Credit Account Receivables with $2,790

(Under recorded Customer deposit on sales)

Debit NSF expense = $1,750

Debit Loan Account with $2,900

Debit interest on Loan Account with $970

Debit Bank Charges expense a account with $30

Credit Cash Account with $5,650

(Direct debits to bank account on sundry transactions)

Explanation:

A bank reconciliation statement is presented to reconcile a 3rd party (Bank) statement of our Account and the Account maintained by the business in house.

The objective of the Bank reconciliation statement includes:

1. Identify the missing entries in either records

2. Flag the corrections the Bank needs to do to bring our balance to a correct state

3. Pass Journals to capture entries we have missed out or captured incorrectly

4. Identify unassigned entries for investigation

5 0
3 years ago
The secret to effective sales is to have a
melamori03 [73]

Answer:

Unique selling proposition (USP)

Explanation:

USP stands for Unique selling proposition, which is defined as the concept of marketing first, proposed as a theory for explaining a pattern in a successful campaigns of advertising.

It defines or means that such kind of campaigns should be made unique or distinctive propositions to the customer or clients in order to convinced them for switching or shifting the brands.

So, the secret for having a effectives sales, to have a USP (Unique Selling Propositions).

5 0
3 years ago
Other questions:
  • Austin borrowed $700 from a lender that charged simple interest at a rate of 9% for 6
    13·1 answer
  • Which ocean resource is currently not economically profitable to mine? gravel sand manganese nodules salt?
    7·2 answers
  • The Huffington Post generates revenue by providing​ ad-supported content such as​ news, blogs,​ entertainment, and commentaries.
    7·1 answer
  • Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2016. The note, along with interest at 6%, is
    12·1 answer
  • Suppose Amy currently allocates 25% of her portfolio to a diversified group of stocks and 75% of her portfolio to risk-free bond
    15·1 answer
  • Do you think it is easy or difficult for
    10·1 answer
  • Which of the following is the most profitable investment for a candy shop that earns $1 profit per pound of candy? (5 points) Gr
    9·1 answer
  • A small foundry agrees to pay $420,000 three years from now to a supplier for a given amount of coking coal. The foundry plans t
    14·1 answer
  • The weekly demand for an item in a retail store follows a uniform distribution over the range 70 to 83. What would be the weekly
    7·1 answer
  • The opportunity cost of buying a ticket to a major league baseball game and then going to the game is:________
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!