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
grandymaker [24]
3 years ago
15

Obviously, the lifetime membership isn’t a good deal if you only remain a member for a couple of years, but if you remain a memb

er for 40 years, it’s a great deal. Suppose that the appropriate annual interest rate is 7.9%. What is the minimum number of years that Lloyd must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value basis) than paying $750 in annual membership dues? (Note: Round your answer up to the nearest year.)
Business
1 answer:
earnstyle [38]3 years ago
7 0

Question:

Lloyd is a divorce attorney who practices law in Florida. He wants to join the American Divorce Lawyers Association (ADLA), a professional organization for divorce attorneys. The membership dues for the ADLA are $800 per year and must be paid at the beginning of each year. For instance, membership dues for the first year are paid today, and dues for the second year are payable one year from today. However, the ADLA also has an option for members to buy a lifetime membership today for $8,500 and never have to pay annual membership dues.

Obviously, the lifetime membership isn't a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it's a great deal. Suppose that the appropriate annual interest rate is 7.9%. What is the minimum number of years that Lloyd must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value basis) than paying $800 in annual membership dues?

A. 14 years

B. 13 years

C. 19 years

D. 23 years

Answer:

19 years (Kindly note the above question is bit different in numbers because I was unable to find the remainder part of your question. But it provides excellent understanding of the question).

Explanation:

Here, we have four options and we will start finding "Advance Annuity" from the least number which is 13% and then we move to a greater number.

<u></u>

<u>Best Choice:</u>

The best choice will be the one which is almost equal to or smaller than the value of the lifetime membership $8,500 and takes least time.

<u></u>

<u>For 13 Years</u>

Annuity = Cashflow * (1 + Annuity Factor at 7.6%)

Annuity at 7.6% for 13 years = (1 -  (1 + 7.6%)^-(13 - 1) / 7.6% = 7.6948

Annuity = $800 * (1 + 7.6948) =  $6,956

<u>Similarly for 14 Years:</u>

Advance Annuity = Cashflow * (1 + Annuity Factor at 7.6%)

Advance Annuity at 7.6% for 14 years = (1 -  (1 + 7.9%)^-(14 - 1) / 7.6% = 8.0807

Advance Annuity = $800 * (1 + 8.0807) = $7265

<u>Similarly for 19 Years:</u>

Advance Annuity = Cashflow * (1 + Annuity Factor at 7.6%)

Advance Annuity at 7.6% for 19 years = (1 -  (1 + 7.9%)^-(19 - 1) / 7.6% = 9.6377

Advance Annuity = $800 * (1 + 9.6377) = $8510.16

As the annuity value slightly crosses $8500, hence it is somewhat between 18 to 19 years. Thatswhy we will not consider the last option with 23 years as the nearest option is 19 years.

You might be interested in
Suppose a banking system has $100,000 in deposits, a required reserve ratio of 25 percent, and total bank reserves for the whole
scoundrel [369]

Answer:

$0

Explanation:

Given that,

Deposits = $100,000

Required reserve ratio = 25 percent

Total bank reserves = $25,000

Required reserve ratio refers to the ratio of deposits that are kept with the federal reserve.

Required reserves:

= Deposits × Required reserve ratio

= $100,000 × 0.25

= $25,000

Excess reserves:

= Total reserves - Required reserves

= $25,000 - $25,000

= $0

So, there is no excess reserves in this economy.

Money multiplier:

= 1/Required reserve ratio

= 1/0.25

= 4

Therefore, the total money creation potential of this deposit is zero.

8 0
3 years ago
The 100% rule does not imply that the optimal solution will necessarily change if the percentage exceeds 100%
kondor19780726 [428]

The truth is 100% Rule doesn’t imply that the optimal solution will automatically change if the percentage exceeds 100%.  The 100% Rule compares, proposed changes to allowed changes. The value of the objective function will change, but the values of the decision variables and the dual prices will stay the same.

<span> </span>

3 0
3 years ago
The normal rate of return on equity capital is also known as
exis [7]
The normal rate of return on equity capital is also known as the opportunity cost of capital
8 0
3 years ago
Under the Securities Act of 1933, if damages were incurred and there was a material misstatement or omission in the financial st
dedylja [7]

Answer:

The CPA rebuts the allegations

Explanation:

The Securities Act of 1933 requires that investors receive financial and other significant information regarding any and all securities being sold publicly and prohibits deceit, misrepresentations, and other fraud in the sale of securities. Therefore, since there was material misstatement or omission in the financial statements, the only chance the CPA has is if they rebut the allegations. Meaning that they provide actual evidence, such as physical statements or witnesses that contradict or nullify the evidence that is being presented against them regarding the material misstatement or omission

3 0
3 years ago
Lulzbot sells 6,000 units of its product for $500 each. The selling price includes a one-year warranty on parts. It is expected
Olin [163]

Answer:

$3,000

Explanation:

Warranty expense is an obligation on the business because business is liable to accept the claims of warranty. A estimated percentage of warranty expense is charges as an expense in each period.

Total Sales = $500 x 6,000 units = $3,000,000

Warranty Expense for the year = Sales units x 3% x warranty cost per unit

Warranty Expense for the year = 6,000 x 3% x $50 = $9,000

Recognised warranty cost in the year = 120 units x $50 = $6,000

Accrued Warranty expense = $9,000 - $6,000 = $3,000

5 0
3 years ago
Other questions:
  • Carla Vista Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sale
    13·1 answer
  • Some of the money that people deposit into a bank eventually becomes an injection into the economy when the bank:
    11·2 answers
  • One of the most important economic resources is money. <br> a. True <br> b. False
    10·1 answer
  • If the marginal propensity to consume (mpc) is 0.75, a $50 decrease in government spending, other things being equal, would caus
    13·1 answer
  • Spence wants to have $176,000 in 7 years. He plans to make regular savings contributions of $13,100 per year for 7 years, with t
    5·1 answer
  • Ironhorse Tools has used $700,000 from its total annual earnings of $1,650,000 to invest in upgrading its manufacturing faciliti
    10·1 answer
  • The original scope of a project has cost assumptions to ensure project success. Provide a specific example from your experience
    13·1 answer
  • is considering permanently shiutting down a department that has an annual contribution margin of $25,000 and $75,000 in annual f
    9·1 answer
  • Ellie's Deli offers good sandwiches and fast service to its lunchtime customers from a nearby university. It also delivers the s
    11·1 answer
  • Last year, baldwin corp paid their workers $26. 81 per hour. how much will they be paying them 2 rounds from then?
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!