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agasfer [191]
3 years ago
15

Your father is about to retire, and he wants to buy an annuity that will provide him with $91,000 of income a year for 25 years,

with the first payment coming immediately. The going rate on such annuities is 5.15%. How much would it cost him to buy the annuity today
Business
1 answer:
Elena L [17]3 years ago
4 0

Answer:

Present Value of Annuity is $1,263,487

Explanation:

A fix Payment for a specified period of time is called annuity. The discounting of these payment on a specified rate is known as present value of annuity.

Formula for Present value of annuity is as follow

PV of annuity = P x [ ( 1- ( 1+ r )^-n ) / r ]

Where

P = Annual payment = $91,000

r = rate of return = 5.15%

n = number of years = 25 years

PV of annuity = $91,000 x [ ( 1- ( 1+ 0.0515 )^-25 ) / 0.0515 ]

PV of Annuity = $1,263,487

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​Let's assume that a carpenter borrowed ​$2 comma 000 to be paid off in a year to finance a machine that would make him work fas
Hoochie [10]

Answer:

The carpenter earned an extra $100.

Explanation:

Since this problem deals with a one-year loan with an yearly interest rate, it can be treated as a simple interest problem. For simple interests, the final value (Vf) can be found by multiplying the initial value (Vi) by one plus the interest rate (i) as shown below:

V_{f}= V_{i}*(1+i)\\V_{f}=2,000*(1+0,15)\\V_{f}=2,300

To find how much extra money the carpenter made in the first year, one should subtract the final value of loan from the $2,000 dollars down payment plus the extra $400 he collected for the year

Earnings = 2,000+400-2,300 = 100.

Therefore, the carpenter earned an extra $100.

6 0
3 years ago
On January ​1, 2018​, the Cook​'s Restaurant decides to invest in Lake Topsey bonds. The bonds mature on December​ 31, 2021​, an
charle [14.2K]

Answer and Explanation:

The Journal Entry is shown below:-

Investment in bonds is at face value, no question about discount or premium.

Investment is rendered from the time the bonds mature before 2023. Hence, it is an investment as Working for Profit "Held until maturity"

Jan 1, 2018

Bonds receivables  Dr, $140,000

      To Cash  $140,000

(Being Investment in bonds is recorded)

30 June 2018

Cash Dr, $2,400

       To interest income $2,400

(Being six months interest received is recorded)

31 Dec 2018

3. Cash Dr, $2,400

       To interest income $2,400

(Being six months interest received is recorded)

Working note:-

Bond Value                         $140,000

Interest rate                          4%  

Interest earned half

yearly, effective rate

(4% × 6 ÷ 12)                            2%

Half Yearly interest amount

($140,000 × 2%)                     $2,800

3 0
3 years ago
List three things you can do to improve job satisfaction
andrew-mc [135]

1. Respectful treatment of all employees at all levels

2. Trust between employees and senior management

3. Job security

Hope that helps :)

7 0
3 years ago
Read 2 more answers
Airlines utilize _____ because there is constant communication and back-and-forth between gate agents, ticket agents, baggage ha
solniwko [45]

Hey there!

Your answer is reciprocal independence.

In reciprocal independence, different areas of a company are constantly communicating with each other.

Sequential independence means that one area is dependent on the actions of another, which is not what this is describing.

In pooled independence, different parts of the business are very separate and don't really interact with others, which is definitely what this is describing.

Hope this helps!

4 0
3 years ago
Anna is willing to spend $500 for the bike she wants. if she finds a bike store where the price of the bike she wants is only $4
muminat
The answer is $100. The consumer surplus is $100 because that is the difference between what Anna has set as her ceiling for the purchase of the bicycle, $500, and then subtracted by the amount that she actually does pay, $400, that difference is what is referred to as consumer surplus. What the consumer is mentally committed to paying minus what the consumer actually pays.
8 0
3 years ago
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