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Serga [27]
3 years ago
10

How much more is a perpetuity of $1,000 worth than an annuity of the same amount for 20 years? Assume an interest rate of 10% an

d cash flows at the end of each period.
Business
2 answers:
oksian1 [2.3K]3 years ago
4 0

Answer:

$1,486.44

Explanation:

The additional value that the perpetuity will generate will be the difference between the perpetuity present value and annuity present value.

So here

PV of the Perpetuity = Cashflow / r

PV of the Perpetuity = $1,000/.10 = $10,000

PV of the Annuity = Annual Cash flow * Annuity factor at 20 years

PV of the Annuity = $1,000 * [1 - (1/1.10)^20] / 0.10

PV of the Annuity = $8,513.56

Difference between perpetuity and annuity = $10,000 - 8,513.56 = $1,486.44

Veronika [31]3 years ago
3 0

Answer:

The perpetuity is worth $1486.43 more than the ordinary annuity

Explanation:

A perpetuity that with an annual cash inflow or cash outflow payable for a foreseeable future - for an infinite number of period

The present value of a perpetual annuity is calculated as

PV= A/r

PV = 1000/0.1

PV =&10,000

On the other hand, an annuity with  annual cash inflows or cash outflows for certain number of years is called an ordinary annuity.

The present value of an ordinary annuity is determined as follows:

PV = (1 - (1+r)^n)/r   × A

     = (1-(1+0.1)^(-20))/0.1 × 1000

    = 8.5135  × 1000

   = 8513.56

Difference in PV =  10,000 - 8513.56

                            = $1486.43

The perpetuity is worth $ 1,486.43 more than the ordinary annuity

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Answer:

The factors that cause the failure of project management to achieve its goals include the following:

1. The scope of some projects are not well-defined and detailed.

2. Some project managers lack the required project and administrative experience, exposure, and training needed for successful project planning and implementation.

3. Some project managers do not identify the critical project risks from the beginning.

4. Projects that lack formal methods and strategies often fail.

5. It has been established that some project managers and their teams are not well-motivated to deliver their projects, leading to key staff abandoning the company and the projects mid-way.

6. Successful projects require detailed documentation and planning, the setting of deadlines, and the tracking of progress.

7. Leadership is key to effective project management.  Without senior management or politicians' buy-in, some projects face massive failure.

Explanation:

Project management starts from the home to the larger society.  It involves a fundamental application of process knowledge, management skills, technical tools and key deliverables, and various techniques to project activities in order to meet project goals and requirements.  Project managers and organizations that must achieve success should understand the causes of project failure.

7 0
2 years ago
Adham is interested to buy a pair of shoes, at Lazzado.com as follows:
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I think it could either be the first or third option, but I thinking the correct one should be the first option. Hope this helped :)
7 0
2 years ago
Multiple Choice Question 121 The following information pertains to Ortiz Company. Assume that all balance sheet amounts represen
olasank [31]

Answer:

Inventory TO 5.5

This means Ortiz sales his inventory 5.5 times per year.

Explanation:

Inventory turnover for Ortiz

\frac{COGS}{Average Inventory} = $Inventory Turnover

​where:

$$Average Inventory=(Beginning Inventory + Ending Inventory)/2

COGS:     66,000

In this case the average inventory is provided already: 12,000

\frac{66000}{12000} = $Inventory Turnover

Inventory TO 5.5

This means Ortiz sales his inventory 5.5 times per year.

5 0
3 years ago
Stephen Thublin invests $1,000,000 in a 45-day certificate of deposit with 6.55% interest. What is the total interest income fro
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Answer:

$8187

The CD has a rate of 6.55%. This rate is always annual. then, the interest paid for a year is $65.500. (360 days)

As the CD has a term of 45 days only the final interest paid is $8187

6 0
3 years ago
A company issued 6%, 10-year bonds with a face amount of $90 million. The market yield for bonds of similar risk and maturity is
Leviafan [203]

Answer:

The bonds sold at: $122,106,600 dollars

Explanation:

We will calculate the present value of the coupon payment and the maturirty at market rate of 7%

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C         2.7(90 millions x 6% / 2 payment per year)

time 20  10 years and 2 payment per year

discounted at market rate: 7% divide by 2 payment per year:  0.035

2.7 \times \frac{1-(1+0.035)^{-20} }{0.035} = PV\\

PV 76.3551

Then present value of maturity:

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   90.00

time            10 years

rate             0.07

\frac{90}{(1 + 0.07)^{10} } = PV  

PV   45.75

PV coupon  $76.3551

PV maturity  $45.7514

Total  $122.1066

7 0
3 years ago
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