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3 years ago

10

A graduating high school student decides to take a year off and work to save money for college. The student plans to invest all

money earned in a savings account earning 6% interest, compounded quarterly. The student hopes to have $6000 by the time school starts in 12 months. How much money will the student have to save each month?

1 answer:

Oliga [24]3 years ago

4 0

Answer:

$488.89

Explanation:

Data provided in the question:

Interest rate = 6% = 0.06

Since the interest is compounded quarterly, n = 4

Interest rate per period = 0.06 ÷ 4 = 0.015

Time = 12 months i.e 1 year

Future value = $6,000

Therefore,

Annuity per quarter = Future value × $[\frac{r}{(1+r)^n-1}]$

or

Annuity per quarter = $6,000 × $[\frac{0.015}{(1+0.015)^4-1}]$

or

Annuity per quarter = $6,000 × 0.244

or

Annuity per quarter = $1466.67

Therefore,

Deposits per quarter = Annuity per quarter ÷ Number of months per quarter

= $1466.67 ÷ 3

= $488.89

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Lincoln Park Co. has a bond outstanding with a coupon rate of 6.04 percent and semiannual payments. The yield to maturity is 6.1

Reil [10]

Answer:

value of the bond = $2,033.33

Explanation:

We know,

Value of the bond, $B_{0} = [I * \frac{1 - (1 + i)^{-n}}{i}] + \frac{FV}{(1 + i)^n}$

Here,

Face value of par value, FV = $2,000

Coupon payment, I = Face value or Par value × coupon rate

Coupon payment, I = $2,000 × 6.04%

Coupon payment, I = $128

yield to maturity, i = 6.1% = 0.061

number of years, n = 15

Therefore, putting the value in the formula, we can get,

$B_{0} = [128 * \frac{1 - (1 + 0.061)^{-7}}{0.061}] + [\frac{2,000}{(1 + 0.061)^7}]$

or, $B_{0} = [128 * \frac{1 - (1.061)^{-7}}{0.061}] + [\frac{2,000}{(1.061)^7}]$

or, $B_{0} = [128 * \frac{0.3393}{0.061}] + 1,321.3635$

or, $B_{0} = [128 * 5.5623] + 1,321.3635$

or, $B_{0} =$ $711.9738 + 1,321.3635

Therefore, value of the bond = $2,033.33

3 0

4 years ago

Suppose trade between the United States and Canada results in a $100 billion increase in production of agricultural goods. This

MissTica

Answer:

D

Explanation:

The gain from the trade will be split between the two countries but the division may not be equal because the division of gain depend on several factors such demand and supply for goods as well as the price which we don't have the information about.

4 0

3 years ago

Under its executive stock option plan, N Corporation granted options on January 1, 2021, that permit executives to purchase 12.0

AveGali [126]

Answer:

N. Corporation

The effect on earnings in the year after the options are granted to executives is a reduction in the net income by $16 million because of the Compensation Expense that will be recorded.

The journal entry on December 31, 2021 (a year after) is:

Debit Compensation Expense $16,000,000

Credit Stock Options $16,000,000

To record compensation expense.

Explanation:

a) Data and Calculations:

Options grant date = January 1, 2021

Options granted = 12.0 million shares

Options vesting date = December 31, 2023

There are 3 years before the vesting date

Fair value of the options = $4

Therefore, Total Compensation Expense = Options granted*Fair value per option

= 12,000,000 * $4

= $48,000,000

Annual compensation expense from 2021 to 2023 = $48,000,000/3

= $16,000,000

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4 years ago

Many economists are worried that a high level of budget deficits may lead to inflationary monetary policies in the future. Could

castortr0y [4]

Answer: Yes, the budget deficit will have on the current rate of inflation.

Explanation:

If the budget deficits have inflated the monetary policy, therefore, the monetary policy will affect the short run of aggregate supply curve. In this scenario, large budget deficits will shift the curve upward due to the increase in expected inflation, which will surely make the current inflation rate to be higher.

3 0

3 years ago

A monopolist’s inverse demand function is P = 150 – 3Q. The company produces output at two facilities; the marginal cost of prod

Setler [38]

Answer:

Given : Inverse demand function : P = 150 - 3Q

Marginal cost of producing at facility 1: MC1(Q1) = 6Q1

Marginal cost of producing at facility 2: MC2(Q2) = 2Q2

Here we will first find Total Revenue.

i.e. Total Revenue(T.R) = P*Q

T.R(Q) = (150 - 3Q)*Q = $150Q - 3Q^{2}$

Where $Q = Q_{1} + Q_{2}$

$MR = \frac{\delta T.R}{\delta (Q_{1}+ Q_{2})}$

(a) MR = 150 - 6Q

$MR = 150 - 6(Q_{1} + Q_{2})$

(b) Since we know that profit maximizing condition is given as :

MR = MC

Therefore , profit maximizing condition for facility 1 is

$150 - 6(Q_{1} + Q_{2})$ = $6Q_{1}$

$150 - 12Q_{1} - 6Q_{2}$

Similary profit maximizing condition for facility 2 is

$150 - 6(Q_{1} + Q_{2})$ = $2Q_{2}$

$150 - 6Q_{1} - 8Q_{2}$

Now, evaluating these two equations. We get ;

$150 - 12Q_{1} - 6Q_{2}$ - $150 - 6Q_{1} - 8Q_{2}$

$Q_{2} = 3Q_{1}$

Therefore, the profit maximizing level of output for facility 1 is

$Q_{1} = 5$

$Q_{2} = 15$

(c)The profit maximizing price is

P = 150 - 3Q

$P = 150 - 3(Q_{1}+Q_{2})$

$P = 150 - 3(5 + 15)$

$P = 150 - 60$

P = 90

7 0

3 years ago