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Arlecino [84]
3 years ago
15

Your neighbor Bob has two annuities. The first annuity will pay him $10,000 per month for the next 10 years. The second annuity

will pay him $15,000 per month for the following 10 years (years 11 through 20). Assuming a discount rate of 6%, what is the present value of the annuities?
Business
1 answer:
german3 years ago
6 0

Answer:

$1,643,344.308

Explanation:

These are Ordinary annuities because if it is not mentioned that the payments are made at the <em>beginning </em>of the year which is the case for Annuity Due.

You can use a financial calculator to find the Present value of these two ordinary annuities.

<u> PV of Annuity 1 from (yr1-yr10)</u>

Recurring payment; PMT = 10,000

Total duration ; N = 10 *12 = 120 months

Monthly interest rate in this case ; I/Y = 6%/12 = 0.50%

Future value ; FV = 0 (use 0 if annuity variable is not given )

then CPT PV= $900,734.533

<u>PV of Annuity 1 from (yr11-yr20)</u>

This will happen in 2 steps sice it is a forward-starting annuity;

Recurring payment; PMT = 15,000

Total duration ; N = 10 *12 = 120 months

Monthly interest rate in this case ; I/Y = 6%/12 = 0.50%

Future value ; FV = 0 (use 0 if annuity variable is not given )

then CPT PV( at t=10)= $1,351,101.80

Next find the PV of $1,351,101.80  at t=0;

$1,351,101.80 /(1.005^120) = $742,609.7754

Next, find the sum of these two PVs to find the answer;

=$900,734.533 + $742,609.7754

PV = $1,643,344.308

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Answer: Option A -- Choosing low is a weakly dominant strategy for Apple.

Explanation: Dominant strategy in a game theory can be defined as the course of action that occurs when one strategy/player is better than the other strategy/player regardless of what the other player does or how well the other player may play. dominant strategy is all about a player who has the highest favours in a game. Considering the above matrix, we know that Apple has the dominant strategy. And for apple to choose low is a weakly dominant strategy for it.

7 0
3 years ago
Kroger decided to introduce a new product that appeals to Hispanic consumers. While the product is highly successful among Hispa
Leto [7]

Answer: Target market

Explanation: The target markets refers to the group of customers at which an organisation aims its marketing efforts. In simple words, it is that market in which the organisation intends to make it sale for the generation of profits.

In the given case, Kroger is introducing a product that satisfies needs and preferences of Hispanic customers specially. So we can conclude that Hispanic consumers are the target market for Kroger.

4 0
3 years ago
Cannonier, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,040 2 1,270 3 1,490 4
Zolol [24]

Answer:

Total FV= $7,313.7

Explanation:

Giving the following information:

Year Cash Flow 1 $ 1,040 2 1,270 3 1,490 4 2,230

Discount rate= 9% = 0.09

<u>To calculate the future value, we need to use the following formula on each cash flow</u>:

FV= Cf*(1+i)^n

FV1= 1,040*(1.09^4)= 1,468.04

FV2= 1,270*(1.09^3)= 1.644.69

FV3= 1,490*(1.09^2)= 1,770.27

FV4= 2,230*1.09= 2,430.7

Total FV= $7,313.7

4 0
3 years ago
Sold clothing manufacturing equipment for $31,000. originally purchased the equipment for $95,000, and depreciation through the
Andreas93 [3]

Answer:

Gain= $14,500

Explanation:

<u>First, we need to calculate the book value of the equipment:</u>

Book value= purchase price - accumulated depreciation

Book value= 95,000 - 78,500

Book value= $16,500

<u>If the selling price is higher than the book value, the company made a profit by selling the equipment.</u>

Gain/loss= selling price - book value

Gain/loss= 31,000 - 16,500

Gain= $14,500

7 0
3 years ago
Minden, Mel, and Montana decide to liquidate their partnership. All assets are sold, and the liabilities are paid. Following the
Leto [7]

<u>Answer:</u>

The amount of cash that will be received by Montana is $37000.

<u>Explanation:</u><u> </u>  

                                                 Minden           Mel       Montana

Profit sharing ratio                                 30%             40%            30%

Balances                                                 27000       -12000    43000

Deficiency distrubuted                           -6000      12000    -6000

Cash received by partners                    21000           0            37000    

Minden and Montana have to contribute in their

profit sharing ratio (30% and 30%), i.e., equally.

Therefore, the amount of cash that will be received by Montana is $37000.

4 0
3 years ago
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