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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.

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Two months ago, Air-tite Corporation purchased 5,500 pounds of Hydrol, paying $18,700. The demand for this product has been very
butalik [34]

Answer:

A, B.  

Explanation:

A is relevant as the 400-pound remaining can be sold at market price after the special order

B is relevant as the whole 5,500 can be sold at market price instead of the special order

C is irrelevant as the cost has already been uncured

D is irrelevant

4 0
3 years ago
Which of the following statements about applying organizational socialization research is true? Multiple Choice Organizations ca
Talja [164]

Answer:

Multiple choice organizations can use socialisation tactics to promote ethical behavior.

Explanation:

Among the options enlisted, using socialisation tactics to promote ethical behavior is the most correct as a basis for establishing organizational socialization research.

Organizational socialization basically involves the procedures an organization and/or individual undergo to acquire necessary skills, attitudes, right conducts and behaviors to become in order to become more productive. Going by the foregoing, it can be established that the singular objective of organizational socialization is on how an organization will be the best of itself ethically and/or otherwise. The procedures ensure an all rounded look into organizational and/or individuals experience from the kick off to the eventual exit. The socialization aspect is critical as organization well being is a function of how ethically and morally sound the environment.

Hence, promoting ethical behavior using multiple choice organizations is the most critical and true about applying organization socialization research.

6 0
3 years ago
The following cost data pertain to the operations of Montgomery Department Stores, Inc., for the month of July. Corporate legal
deff fn [24]

Answer:

1.$134,000

2.$183,800

3.$124,050

Explanation:

1. Computation for the total amount of the costs that are direct costs of the Apparel Department

Apparel Department cost of sales - Evendale store $116,100

Apparel Department sales commission-Evendale store $7,950

Apparel Department manager's salary-Evendale store $9,950

Total direct costs for the Apparel Department

$134,000

2. Computation for the total amount of the costs that are direct costs of the Evendale Store

Apparel Department cost of sales - Evendale store $116,100

Store managers salary - Evendale store $18,300

Apparel Department sales commission-Evendale store $7,950

Store utilities - Evendale store $17,800

Janitorial costs - Evendale store $13,700

Apparel Department manager's salary-Evendale store $9,950

Total direct cost for the Evendale store $183,800

3. Computation for the total amount of the Apparel Department's direct costs that are variable costs with respect to total departmental sales

Apparel Department cost of sales - Evendale store $116,100

Apparel Department sales commission-Evendale store $7,950

Total variable cost-Apparel department $124,050

6 0
3 years ago
Leno Company sells goods to the Fallon Company for​ $10,000. It offers credit terms of​ 2/10, n/30. If Fallon Company pays the i
Zinaida [17]

Answer:

Leno Company will record a debit to Cash in the amount​ of: D. ​$9,800

Explanation:

The terms of 2/10, n/30 means 2% discount for the payment within 10 days and the full amount to be paid within 30 days.

Fallon Company pays the invoice within the discount​ period - early enough to receive a 2% discount. The discount amount is 2% x $10,000 = $200.

On the other hand, Leno Company has to offer a 2% discount to Fallon Company. Cash amount Leno Company receives = $10,000 - 2% x $10,000 = $9,800

Leno Company will record a debit to Cash in the amount​ of $9,800

6 0
3 years ago
True or false: forecasts are set on the marketing budget detail spreadsheet.
Sladkaya [172]
The statement above is true. Forecasting is the utilization of notable information to decide the heading of future patterns. Organizations use estimating to decide how to apportion their financial plans or plan for expected costs for an up and coming timeframe. This is regularly in view of the anticipated interest in the products and ventures they offer.
4 0
3 years ago
Read 2 more answers
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