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SOVA2 [1]
2 years ago
15

A small business has determined that the machinery they currently use will wear out in 17 years. To replace the new machine when

it wears out, the company wants to establish a savings account today. If the interest rate on the account is 1.1 percent compounded quarterly and the cost of the machinery will be $255,000, how much will the company have to deposit today
Business
1 answer:
garik1379 [7]2 years ago
8 0

Answer:

The amount to be deposited today is: $211, 562.44

Explanation:

Compound interest is interest that is reinvested to the initial amount that was loaned or deposited in a bank account. This means that the next interest will be calculated using the principal amount (initial amount deposited) plus the interest that is reinvested in the current period. Compound interest is calculated as follows:

FV =  PV/ ((1 + (i/n))^(nT)

FV = Future value

PV = Present Value

i = interest rate

n = number of times interest rate is applied per period

T = number of periods

In this question, PV is required to determine how much money we need to deposit today. Therefore, PV is made the subject of the formula as follows:

PV = FV/((1 + (i/n))^(nT)

PV = $255,000/ (1+(0.011/4))^(4*17)

     = $255000/(1.00275)^68

     =$211,562.4443

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Answer: Henry should purchase this plant as it pays back in less than the 6 years it will have to be replaced in.

Payback period = 3.7 years

Explanation:

Payback period is a capital budgeting strategy that shows how long it will take for cash inflow to pay off the original investment.

The formula is;

= Year before payback + Cashflow remaining till payback/ Cash inflow in year of Payback

Year before payback

= 1,200,000/ 325,000

= 3.69

= 3 years

Cashflow remaining

= 1,2000,000 - (325,000 * 3)

= $225,000

= Year before payback + Cashflow remaining till payback/ Cash inflow in year of Payback

= 3 + 225,000/325,000

= 3.69

= 3.7 years

5 0
2 years ago
If assets total 45,000, expenses total 10,000, revenues total 35000, and stockholders' equity equals 30,000 what is the amount o
salantis [7]

Answer:

$25,000

Explanation:

Calculation for the what is the amount of net income

Using this formula

Net income= Total Revenues-Total expenses

Let plug in the formula

Net income= 35,000+10,000

Net income=$25,000

Therefore the amount of net income will be $25,000

7 0
3 years ago
For a comesmetics company which external factors will be particularly important to study?
WITCHER [35]

For a cosmetics company, external factors which will be particularly important to study is the social factor.

<h3>What is an external factor of business?</h3>

External factor of business refers to factors that affect the operations of the business from outside sources. These factors are uncontrollable in nature which can create both positive and negative impacts on success.

A cosmetics company should study the social factors which include the buying habits of customers regarding products, advancement of technology, and the response of the customers towards change.

Income level and education are also considered social factors which can impact the success of any cosmetics company.

Learn more about social factors, here:

brainly.com/question/12249460

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4 0
2 years ago
Which of the following costs are most likely to be classified as variable?
Salsk061 [2.6K]

Answer:

Correct answer is D. Direct materials

Explanation:

Among the given choices, direct materials is most likely to be classified as variable cost. Direct materials are the supplies used in manufacturing products which can be directly identified in the output production. It is a main component which is traceable to create or produce products. Basically, all manufacturing industries used direct materials as their variable cost in their production.

6 0
3 years ago
A buyer entered into a written contract with a seller to purchase his commercial property for $100,000. The contract did not spe
sukhopar [10]

Answer:

Im pretty sure that the seller would prevail.

Explanation:

If not than I apologize so sorry <3

3 0
2 years ago
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