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shepuryov [24]
2 years ago
14

You just signed a business consulting contract with one of your clients. The client will pay you $50,000 a year for five years f

or the service you will provide over this period. You anticipate the general inflation rate over this period to be 6%. If your desired inflation-free interest rate (real interest rate) is to be 4%, what is the worth of the fifth payment in present dollars? The client will pay the consulting fee at the end of each year.
Business
1 answer:
My name is Ann [436]2 years ago
4 0

Answer:

$31,046

Explanation:

real interest rate = nominal interest rate - inflation

4% = nominal interest rate - 6% ⇒ nominal interest rate = 10%

if you want to determine the present value of the fifth payment, and you require a 4% real interest rate, the you must use a discount value = nominal interest rate

present value = payment / (1 + rate)⁵ = $50,000 / (1 + 10%)⁵ = $50,000 / 1.1⁵ = $50,000 / 1.61051‬ = $31,046

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John's friend just gave him a pair of concert tickets to see his favorite rock group perform this weekend. Each ticket sells for
Len [333]

Answer:

$80 lost for not working

Explanation:

Opportunity cost refers to the sacrificed benefits as a result of preferring on a particular option over another. As people make choices, the forfeit one option in favor of another. Opportunity cost is the missed value of the next best alternative.

For John, he has a choice between working or going to the concert.  He has two tickets worth $50. Working would mean her twice her regular income, which is $20 per hour. If he works for four hours, his total earning will be $80. If John chooses to go to the concert, he will miss the opportunity to earn $80. The opportunity cost will be the missed $80 that he would have received from working.

6 0
3 years ago
Olivia’s employer deducts an amount from her paycheck for the medicare program. What type of withholding is being deducted from
hjlf
If your choices are:
A) tax exemption
B) local withholding
C) state withholding
D) Social Security

Then the answer is D) Social Security. It is from the government which gives the citizens to have the right to be admitted or to give insurance for the health.
6 0
2 years ago
Read 2 more answers
According to the bond-yield-plus-risk-premium approach, a firm's cost of retained earnings, r s , can be estimated by adding a r
Masja [62]

The approach suggest that a firm's cost of retained earnings can be estimated by adding a risk premium of 3% to 5% points to the before-tax interest rate on the firm's own long-term debt.

The bond-yield-plus-risk-premium approach does assumes that cost of equity is closely related to the firm's cost of debt.

  • The premium approach does help to determine the value of an assetof a company's such as its traded equity.

However, the approach suggest that a firm's cost of retained earnings can be estimated by adding a risk premium of 3% to 5% points to the before-tax interest rate on the firm's own long-term debt.

Read more about the premium approach:

<em>brainly.com/question/20354983</em>

7 0
2 years ago
During August, Salinger Company accumulated 580 hours of direct labor costs on Job 40 and 630 hours on Job 42. The total direct
Inga [223]

Answer:

Dr Work in process $13,210

Cr Wages payable $13,210

Explanation:

Based on the information given the appropriate journal entry to record the flow of labor costs into production during August is:

Dr Work in process $13,210

Cr Wages payable $13,210

(580*$13)+(630*$9)

($7540+$5670)

(To record the flow of labor costs into production during August)

6 0
3 years ago
The management dilemma is always a problem, not an opportunity. Group startsTrue or FalseTrue, unselectedFalse, selected
Otrada [13]

Answer:

False

Explanation:

Management dilemma can be regarded as complicated issue that is been developed when more than a goal is set to be accomplished by manager at a time, and at that present time no right answer. It should be noted that management dilemma can aw well be regarded as either a problem or opportunity that needs a business decision.

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3 years ago
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