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loris [4]
4 years ago
14

alculate the difference between the present value of $200 per year cash payments for the next 40 years and the present value of

$200 per year cash payments in perpetuity. Assume in either case, the first payment occurs one year from today and that the appropriate discount rate is 8%/year. The difference in the present value of these two streams of future cash payments that you calculated equals the present value of cash payments over what period of time?
Business
1 answer:
Pani-rosa [81]4 years ago
8 0

Answer:

Present value of annuity = PV(8%,40,-200,0,0)

Present value of annuity = $2,384.93

Present value of Perpetuity = 200/ 8%

Present value of Perpetuity = 200 / 0.08

Present value of Perpetuity = 2500

The difference between the Present value = $2,500 - $2,384.93 = $115.07

However, both does not equal as time value has to be considered.

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The future value and present value equations also help in finding the interest rate and the number of years that correspond to p
Vilka [71]

Answer:

4%

Explanation:

Solution:

Calculation for the the implied interest rate the investor will earn on the security

Using this formula

Future value = Present Value (1+r)^t

Where,

Future value =$7,300

present value = $6,000

t= period = 5 years

r= interest implied = ??

Let plug in the formula

Future value = Present Value (1+r)^t

$7,300 = $6,000 (1+ r)^5

1+ r = ($7,300/$6,000 )^(1/5)

1+ r = 1.216666666^(1/5)

1+ r = 1.04

r= 1.04-1

r= 0.04*100

r= 4%

Therefore the implied interest rate the investor will earn on the security will be 4%

4 0
3 years ago
A receiving department compares inventory items received with copies of purchase orders. The purchase orders list the name of th
Amanda [17]

Answer:

The answer is Deliveries for which no purchase order was issued.

Explanation:

A receiving department compares inventory items received with copies of purchase orders. The purchase orders list the name of the vendor and do not list the quantities of the material ordered. Using the purchase orders, the receiving department is most likely to detect____Deliveries for which no purchase order was issued._____

5 0
4 years ago
When you are a shareholder (an owner of stock), you can vote on issues that affect that company. And you are allowed to attend m
sergey [27]
You can vote and attend these meetings. Shareholders have a right to vote on certain actions, elect members, and approve new securities or payment of dividends. In which shareholders can vote at the company’s annual meetings.
4 0
3 years ago
Boston, Inc. applies manufacturing overhead at the rate of $40 per machine hour. Budgeted machine hours for the current period w
Luda [366]

Answer:

$580,000 underapplied

Explanation:

The computation of the ending overhead is shown below:

The applied overhead is

= Predetermined overhead rate × actual machine hours

= $40 × 90,000

= $3,600,000

Now the underapplied overhead is

= $4,180,000 - $3,600,000

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So the ending overhead is $580,000 underapplied

5 0
3 years ago
GAAP specifies that for a seller to record revenue at time of sale when right of return exists the following conditions must be
Natasha2012 [34]

Answer:

The correct answer is (C) The buyer's obligation to the seller changes in the event of theft or physical destruction or damage of the product.

Explanation:

Unlike the loss incurred models contained in the existing US GAAP, the CECL model does not specify a threshold for the recognition of the provision for impairment. Moreover, the entity will recognize its estimate of expected credit losses for financial assets at the end of the reporting period. Credit impairment will be recognized as a provision - or against asset - rather than as a direct punishment of the base of the amortized cost of the financial asset. However, the carrying amount of the financial asset deemed uncollectible will be written off in a manner consistent with existing US GAAP.

7 0
4 years ago
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