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Zanzabum
3 years ago
9

Present value computation kerry bales won the state lottery and was given four choices for receiving her winnings. receive $400,

000 right now. receive $432,000 in one year. receive $40,000 at the end of each year for 20 years. receive $36,000 at the end of each year for 30 years. assuming kerry can earn interest of 8% compounded annually, which option should kerry choose?
Business
1 answer:
Mekhanik [1.2K]3 years ago
4 0
Option 1: PV = $400,000
Option 2: Receive (FV) $432,000 in one year

PV = FV(1/(1+i)^n), where i= 8% = 0.08, n = 1 year

PV = 432,000(1/(1+0.08)^1) = $400,000

Option 3: Receive (A) $40,000 each year fro 20 years

PV= A{[1-(1+i)^-n]/i} where, n = 20 years

PV = 40,000{[1-(1+0.08)^-20]/0.08} = $392,725.90

Option 4: Receive (A) $36,000 each year from 30 years
PV = 36,000{[1-(1+0.08)^-30]/0.08} = $405,280.20

On the basis of present value computations above, option 4 is the best option for Kerry Blales. This option has the highest present value of $405,280.20

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Read 2 more answers
Presented below is information related to Splish Company at December 31, 2020, the end of its first year of operations.
elena-s [515]

Answer:

a. $131,880

b. $167,310

c. $156,050

d. $151,390

Explanation:

(a) Income from operations

Income from Operations is Income resulting from Primary Trading Activities of the Company.

Income from Operations = Gross Profit + Operating Income - Operating Expenses

where,

Gross Profit = Sales - Cost of Goods Sold

                    = $334,910 - $149,030

                    = $185,880

thus,

Income from Operations = $185,880 - $54,000 = $131,880

(b) Net income

Income resulting from Primary and Secondary Trading Activities of the the Company.

Net income = Income from Operations + Non Operating Income - Non Operating Expenses

                   = $131,880 + $32,710 + $9,080 - $6,360

                   = $167,310

(c) Comprehensive income

Income from both Continuing and Non - Continuing Activities.

Comprehensive income = Net income + Non - Continuing Activities

                                         = $167,310 - $11,260

                                         = $156,050

(d) Retained earnings balance at December 31, 2020

The Income remaining after distributions to shareholders have been made.

Retained earnings = Comprehensive income  - Dividends

                               = $156,050 - $4,660

                               = $151,390

8 0
3 years ago
A manager checked production records and found that a worker produced 160 units while working 40 hours. In the previous week, th
alukav5142 [94]

Answer:

A. 4; 3.83 units per hour

B. Increases by 4.44%.

Explanation:

Given that,

Current period:

Output = 160 units

Input = 40 hours

Previous period:

Output = 138 units

Input = 36 hours

A. Current period productivity:

= Current period output ÷ Current period input

= 160 units ÷ 40 hours

= 4 units per hour

Previous period productivity:

= Previous period output ÷ Previous period input

= 138 units ÷ 36 hours

= 3.83 units per hour

B. Percentage change in worker's productivity:

= [(change in productivity) ÷ Previous period productivity] × 100

= [(4 - 3.83) ÷ 3.83] × 100

= (0.17 ÷ 3.83) × 100

= 0.0444 × 100

= 4.44%

Therefore, the worker's productivity increases by 4.44%.

3 0
3 years ago
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