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3 years ago

The present value of a lump sum future amount:__________

Business

1 answer:

SVEN [57.7K]3 years ago

6 0

Answer:

d) increases as the interest rate decreases.

Explanation:

Present value is the value today; future value is the value some time in the future.

The mere notion of the value of money in time should tell you that, further away in time (towards the future) a sum of money is found, the lower its value today.

Then, you should be able to rule out some propositions that are contrary to that intuition:

a) decreases as the time period decreases ↔ clearly false: the present value increases as the time period decreases

e) is directly related to the time period. ↔ clearly false: the present value is inversely related to the time period.

How is the present value related to the future value?

They are directly related: the higher a lump sum in the future the higher the value of it in the present; more money is more money always. More money in the future has more value in the present; less money in the future has less value in the present. Thus, the option b). is inversely related to the future value is false

How is the present value related to the interest rate?. Which one is true?

c) is directly related to the interest rate, or

d) increases as the interest rate decreases

The present value is calculated discounted the future value at the interest rate. The interest rate is in the denominator of the equation to pass from future value to present value. Thus, they are inversely related (c is false); the less the interest rate, the higher the present value of a future amount (confirm d is true).

Therefore, the correct answer is that the present of a lump sum future amount: d) increases as the interest rate decreases.

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2 years ago

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Answer:

A) TRUE

Explanation:

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3 years ago

Planned investment spending will decrease if: the interest rate rises. consumer expectations about wealth grow more optimistic.

Dima020 [189]

Answer:

the interest rate rises.

Explanation:

When interest rate increase, borrowing money from the banks become expensive. Individuals and companies will not be able to borrow money to finance investments as the interest rates would be discouraging. When the interest rates are high, saving with banks becomes more attractive. Interests earned of deposits become more appealing than the rate of return of an investment project.

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2 years ago

: Vance Enterprises makes computer components. The company uses direct labor hours as its application base. The predetermined ov

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Answer:

The budgeted direct labor hours is 2,551.83 direct labor hours

Explanation:

The computation of the budgeted number of direct labour hours is shown below:

= Total estimated manufacturing overhead for the year ÷ predetermined overhead rate

= $47,362 ÷ $18.56

= 2,551.83 direct labor hours

Hence, the budgeted direct labor hours is 2,551.83 direct labor hours

Hence, the same is to be considered

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3 years ago

When an employee reaches a $200,000 income level, they are required to pay a supplementary percentage to their _________________

Free_Kalibri [48]

Answer:

B. Medicare

Explanation:

given data

employee reaches income level = $200,000

so they are require to pay a supplementary percentage to their Medicare tax because at an income level above than the each and every employee are required to pay their additional percentage of income as FICA Medicare tax.

and current rate for Medicare is approx 1.45% for the employee and employer.

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3 years ago