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Digiron [165]
3 years ago
8

You have an annuity which pays $1,200 every two years. The first payment is two years from now and the last payment is ten years

from now. You can trade that annuity for another annuity of equivalent present value, which pays $180 per quarter starting today. The interest rate for both annuities is 4% per annum convertible quarterly. If you took the second annuity, how many quarterly payments would you receive? The last payment may be less than $180 but not more than $180.
Business
1 answer:
kompoz [17]3 years ago
8 0

Answer:

31 payments

Explanation:

the present value of the first annuity is:

$1,200 / (1 + 1%)⁸ + $1,200 / (1 + 1%)¹⁶ + $1,200 / (1 + 1%)²⁴ + $1,200 / (1 + 1%)³² + $1,200 / (1 + 1%)⁴⁰ = $1,108.18 + $1,023.39 + $945.08 + $872.76 + $805.98 = $4,755.39

to determine the length of the second annuity:

PV = annuity payment x annuity factor

annuity factor = PV / annuity payment = $4,755.39 / $180 = 26.4188333

using an annuity table we must look for a present value annuity factor that corresponds to 1% interest rate and is close to 26.4188333

the annuity factor is between 30 and 31 payments. Since the final payment has to be less or equal to $180, we have to choose 31 payments.

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ANEK [815]

Answer:

Uhhh what type of statement is this, is this a question???????

8 0
2 years ago
Read 2 more answers
A small business produces a single product and reports the following​ data: Sales price ​$8.50 per unit Variable cost ​$5.25 per
ozzi

Answer:

The correct answer is Decrease by $5,500.

Explanation:

According to the scenario, the computation of the given data are as follows:

First we calculate the previous operating income, by using following formula:

Previous operating income = ($8.5 - $5.25) × 10,000 units - $22,000

= $10,500

Now, we will calculate the current operating income by using following formula:

New operating income = ($7.5 - $5.25) 12,000  units - $22,000

= $5,000

So, the change in operating income can be calculated as

Change in operating income = New operating income - Previous operating income

= $5,000 - $10,500

= -$5,500 ( Negative shows Decrease)

= Decrease by $5,500.

8 0
2 years ago
Ray's Pizzeria is considering the addition of a 5th worker if this increases profit. Pizza sales increased from 300 per day to 3
Anika [276]

Answer:

60 pizzas

40 pizzas

Explanation:

Marginal product measures the change in output as a result of a change in input by one unit

Marginal product = change in output / change in input

Marginal product for the 4th worker

Change in output = 360 - 300 = 60 pizzas

Change in input = 4 - 3 = 1 worker

Marginal product = 60 / 1 = 60

Marginal product for the 5th worker

Change in output = 400 - 360 = 40 pizzas

Change in input = 5 - 4 = 1

Marginal product = 40 / 1 = 40

It can be seen that marginal product decreased from 60 to 40 when the 5th worker was added. This illustrates diminishing marginal returns.

The law of diminishing returns says as more units of a variable input is added to a fixed income of production, output might increase at a point but after some time total output would increase at a decreasing rate and marginal product would be decreasing.

6 0
2 years ago
Brown Street Grocers has a cost of equity of 11.8 percent, a pre-tax cost of debt of 6.9 percent, and a tax rate of 35 percent.
Nastasia [14]

Answer:

The correct answer to the following question is option E) 9.06% .

Explanation:

Here the cost of equity given is  - 11.8%

Pre tax cost of debt- 6.9%

Tax rate- 35%

So the after tax cost of debt - 6.9% x 65%

= 4.485%

The debt to equity ratio - .6

So the weight of debt - .6 / ( 1 + .06 )

= .375

Weight of equity - 1 / ( 1 + .06 )

= .625

Weighted average cost of capital =

Debts cost x weight of debt + Equity cost x weight of equity

= 4.485 x .375 + 11.8 x .625

= 1.681875 + 7.735

= 9.06%

7 0
2 years ago
Barry has a medical plan with a $1,200 deductible, 20% coinsurance, and a $5,000 coinsurance cap. His allowable medical expenses
Trava [24]

Based on his deductible and coinsurance cap, the amount that Barry will pay is <u>$4,560.</u>

<h3>Amount Barry will pay </h3>

Barry will have to pay the entire deductible of $1,200. The expenses that are left will then be shared between him and the insurer in a 20% - 80% ratio but he will not pay more than $5,000.

Total he will pay out of pocket is therefore:

= Deductible + ( 20% x (Medical expenses - deductible))

Solving gives:

= 1,200 + ( 20% x (18,000 - 1,200))

= $4,560

In conclusion, he will pay $4,560.

Find out more on insurance payments at brainly.com/question/25973180.

4 0
2 years ago
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