Shareholders are always stakeholders in a corporation, but stakeholders are not always shareholders. A shareholder owns part of a public company through shares of stock and a stakeholder has an interest in the performance of any type of company for reasons other than stock performance or appreciation
<span>This is known as the law of demand. As price of a product rises, the quantity demanded decreases. Conversely, if the price of a good or service decreases, then the quantity demanded will rise. When producers raise prices of their goods or services, consumers may find other products, called substitute goods to use in place of the normal goods.</span>
Answer:
The present value or the worth of the contract today is 3.48 million
Explanation:
The present value of the contract can be calculated using the following formula where we will dicount back the cash flows to calculate the present value.
The present value = CF1 / 1+discount rate + CF2 / (1+discount rate)² +...
The present value = 1100000 + 1300000 / 1.087 + 1400000 / 1.087² = $3480817.37 or 3.48 million
The present value or the worth of the contract today is 3.48 million
Answer:
Option 1 PV lumpsum = $200000
Option2 PV of Annuity = $195413.08035 rounded off to $195413.08
Based on the present value of both the options, Option 1 should be chosen as it has a higher present value than option 2.
Explanation:
To decide on the best option to choose among the given two, we need to find the present value of both the options.
As the first option is to receive a lumpsum payment of $200000 today, the present value of this option is also equal to $200000 as it will be received today.
Option two, on the other hand, is an annuity as fixed payments will be received after equal intervals of time and for a limited time period and at the end of the period which satisfies the criteria of annuity ordinary. We will use the formula for the present value of annuity which is,
PV of Annuity = C * [( 1 - (1+r)^-n) / r]
Where,
- C is the periodic payment
- r is the rate of return of discount rate
- n is the number of periods
The periodic payment is provided as $1400. We are also provided with and APR of 6% which is the Annual rate. We will have to convert it into monthly rate by dividing it by 12. We are also provided with the number of years which we will need to convert into number of months by multiplying it by 12.
Monthly r = 6%/12 = 0.5%
Number of periods = 20 * 12 = 240
PV of Annuity = 1400 * [( 1 - (1+0.5%)^-240) / 0.5%]
PV of Annuity = $195413.08035 rounded off to $195413.08
Answer:
An employee is terminated.
Explanation:
All the transactions, in a company or organisation are recorded in financial statements of the company.
For this each transaction having some numerical value, that has a monetary effect on the organisation is identified.
In the given case,
- purchase of equipment will involve direct monetary effect as cash will be paid, asset will be increased, etc:
- cash investment made, will again require cash outflow, and is presented as monetary in nature.
- Declaration of cash dividends gives existence to a liability called dividend payable, or scrips payable, and is thus, recorded in books.
- The termination of employee does not itself involve any direct monetary effect. As, the payment made or realized from such termination will be recorded in financial statements.
