1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
stira [4]
3 years ago
15

Jose wants to cash in his winning lottery ticket. He can either receive five $5,000 annual payments starting today, or he can re

ceive a lump-sum payment now based on a 3% annual interest rate. What would be the lump-sum payment?
Business
1 answer:
ExtremeBDS [4]3 years ago
7 0

Answer:

The lump sum payment =  $23,585.49

                                 

Explanation:

The winning lottery is an example of an advanced annuity. <em>An advanced annuity is a series of cash flows that occurs for a certain number of years with the first cash flow occurring now.</em>

The first cash flow is represents one out of the five, so the balance is a four-year annuity.

So we can work out the present value of the annuity for the last four years as follows:

PV = (1 - (1+r)^(-n)/r )   ×  Annual cash flow

r = 3%=0.03, n = 4, Annual cash flow = 5000

PV = (1- ((1+0.03)^(-4))/0.03)  × 5,000

    = 3.7170 × 5,000

   =$ 18,585.49

The lump sum payment = PV of the first payment + PV of the four year annuity

The lump sum payment = $5000 + $ 18,585.49

                                       =  $23,585.49

You might be interested in
John Fare purchased $6,000 worth of equipment by making a $1000 down payment and promising to pay the remainder of the cost in s
vesna_86 [32]

Answer:

C $ 596.39

total payment          7,156.68

Interest expense     2,156.68

Explanation:

6,000  -  1,000 = 5,000 amount to finance

We will calcualte the cuota of an annuity of 6 years with semianual payment at 12% annual rate.

PV \div \frac{1-(1+r)^{-time} }{rate} = C\\

PV  $5,000.00

time   12 (6 years times 2 payment per year)

rate            0.06 (12% annual we divide by 2 to get semiannual)

5000 \times \frac{1-(1+0.06)^{-12} }{0.06} = C\\

C $ 596.39

The total amount paid will be the cuota times the time of the loan:

Total amount paid

596.39 x 12 = 7,156.68‬

The interest will be the difference between the total amount paid and the principal of the loan

Interest paid

total payment          7,156.68

principal                 (5,000)

Interest expense     2,156.68

7 0
3 years ago
Chip used the local yellow pages to compile a random sample of 100 small businesses to take part in his experiment about hiring
mel-nik [20]

From the given description, Chip is using an experimental design called (A) matching.

Matching <u>is a type of experimental design where the researcher divide his or her samples into two groups of treatment conditions, which serves to ensure that before the treatment, both groups have the samples with the same characteristics, thus ensuring that the results of the experiment would not be influenced by any confounding variables that the samples have.</u>

Chip is doing this to ensure that samples that have been influenced by other variables which determine their decision to hire are distributed evenly in both the experimental and control group.

5 0
3 years ago
The Warren Watch Company sells watches for $21, fixed costs are $180,000, and variable costs are $15 per watch.
enyata [817]

Answer:

  • 5,000 watches : $150,000  loss
  • 20,000 watches:  $60,000  (Loss)
  • Break-even point = 30,000  units
  • if the selling price rises to 32  = break even points descends to 10,588 units
  • If the selling price rises to $32 but variable costs rises to $26  , the break even point goes back to 30,000units.

Explanation:

Hi, to answer this question we have to apply the next formula:

Profit = Revenue -cost

Where the revenue is equal to the units sold (x) multiplied by the selling price,

R = 21 x  

And cost is equal to the sum of the fixed and variable costs.

C = 15x + 1800

So:

P = 21x-(15x +180,000)

P = x ( 21-15)- 180,000

  • For 5,000 watches:

P = 5000(21-15)-180,000

P = 5000(6) -180,000

P= 30,000-180,000

P=-$150,000  (loss , since is negative )

  • For 20,000 watches:

P = 20,000(6) -180,000

P = 120,000-180,000

P=-$60,000  (Loss)

  • To find the break even point:

R = C

21x = 15x + 180,000

21x-15x =180,000

6 x = 180,000

x = 180,000/6

x =30,000  units

  • if the selling price rises to 32

32x = 15x + 180,000

32x-15x = 180,000

17x =180,000

x = 180,000/17

x = 10,588 units

It descends,

  • If the selling price rises to $32 but variable costs rises to $26  

32x = 26x+180,000

32x-26x = 180,000

6x = 180,000

x = 180,000/6

x =30,000

The break-even point comes back to 30,000 units.

6 0
3 years ago
In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 90,000 uni
fgiga [73]

Answer:

100,000 units

Explanation:

The computation of the transferred out units of the process is shown below:

= Transferred units × percentage of completion + ending work in process inventory units × percentage of completion

= 90,000 units × 100% + 10,000 units × 100%

= 90,000 units + 10,000 units

= 100,000 units

All other information which is given is not considered. Hence, ignored it

3 0
3 years ago
Changes in property, plant and equipment relate to the ______ activities on the statement of cash flows. Multiple choice questio
inysia [295]

Changes in property, plant, and equipment related to the investing activities on the statement of cash flows.

The cash flow statement reveals how much money is made or spent on operating, investing, and financing activities during a certain time period, bridging the gap between the income statement and the balance sheet.

The cash generated or spent in relation to investment activities is shown in the cash flow from investing activities portion of the cash flow statement.

Buying tangible assets, investing in securities, or selling securities or assets are all examples of investing activity.

If management is investing in the long-term health of the company, negative cash flow from investing operations could not be a bad indicator.

Hence, Changes in property, plant, and equipment related to the investing activities on the statement of cash flows.

Learn more about Cash flow statement:

brainly.com/question/735261

#SPJ1

4 0
2 years ago
Other questions:
  • Hillside issues $2900000 of 9% 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. T
    13·1 answer
  • Which of the following is not a prohibited escrow-related activity? An escrow agent cannot disburse a real estate broker's commi
    5·1 answer
  • Hurricane katrina damaged a large portion of refining and pipeline capacity when it swept through the gulf coast states in augus
    12·1 answer
  • Randy agreed to join a biology study group. When the study group leader gave him her phone number, he had nothing on which to re
    10·1 answer
  • What is the typical relationship between time and interest rate
    11·1 answer
  • Mention three reasons for depreciation​
    14·1 answer
  • Compute the direct materials price variance and the direct materials quantity variance. (Indicate the effect of each variance by
    8·1 answer
  • Daniel was surprised his store ran out of marshmallows so quickly. This typically does not happen during the spring, so he runs
    12·1 answer
  • The important point(s) to remember while estimating the cash flows of a project Group of answer choices is that only cash flow i
    11·1 answer
  • Select the correct answer. a computer store decides to increase the prices of all the items it sells by 15%. the store manager u
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!