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valina [46]
4 years ago
6

Peter Lynchpin wants to sell you an investment contract that pays equal $13,200 amounts at the end of each of the next 22 years.

If you require an effective annual return of 9 percent on this investment, how much will you pay for the contract today?
Business
1 answer:
marissa [1.9K]4 years ago
8 0

Answer:

$124,640.02

Explanation:

To find how much one would pay for the contract today, one has to calculate the present value.

Present value is the sum of discounted cash flows.

Present value can be calculated using a financial calculator:

Cash flow each year from year one to twenty two = $13,200

Discount rate = 9%

Present value = $124,640.02

I hope my answer helps you

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Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savi
yawa3891 [41]

Answer:

d. $1,000

Explanation:

Implicit cost is the cost which has been incurred, and cannot be avoided. It is best described as an opportunity cost that has been foregone, here the funds have been borrowed specially for coffee shop. Interest expense of $8,000 is the cost for such borrowing, also the amount withdrawn from savings account have been used for coffee shop but the interest income foregone is the opportunity cost = $50,000.00 \times 2% = $1,000 is implicit cost.

Therefore, correct option is d. $1,000

6 0
3 years ago
Consider the following information about menu costs. Menu costsLOADING... are
brilliants [131]

Answer:

The correct answer is option A.

Explanation:

Menu costs can be defined as the cost which is incurred by the firms because of changing prices. The size of the menu costs depends upon the type of firm.  

There are some costs involved in printing menus, price lists, brochures, catalogs, and price tags, etc.  

The concept of menu costs was given by Eytan Sheshinski and Yoram Weiss in 1977. It is used to explain price stickiness in a market.

In case the current price differs from the equilibrium price, the firms will change their price only if the additional revenue from a price change is able to cover menu costs incurred due to price  change

7 0
3 years ago
Floral Shoppes has a new project in mind that will increase the accounts receivable by $19000, decrease accounts payable by $400
evablogger [386]

Answer:

D. $21000

Explanation:

Calculation for the amount the firm should use as the initial cash flow attributable

Using this formula

Initial cash flow attributable to net working capital = Change in current assets - Change in current liabilities

Let plug in the formula

Initial cash flow attributable to net working capital=[(Increase in Account Receivable $19,000 + Decrease in inventory $2,000)] - ( Decrease accounts payable $4000)

Initial cash flow attributable to net working capital= (19,000 - 2,000) - [-4,000]

Initial cash flow attributable to net working capital=17,000 + 4000

Initial cash flow attributable to net working capital=$21,000

Therefore the amount the firm should use as the initial cash flow attributable to net working capital when it analyzes this project will be $21,000

8 0
3 years ago
Why do so many people borrow money for large purchases instead of using sinking fund?
yawa3891 [41]

I think that most of the people borrow money for large purchases instead of using a sinking fund because if you need money immediately borrowing money is a simple and easy thing, it takes less time whereas if you use sinking fund, it will take more time because for this you have to make plans earlier but it is a safe and protected method for clearing the debts.
4 0
4 years ago
The selling price of houses would be most likely to decrease if there were first a decrease in which of the following? A. New-ho
Maurinko [17]

Answer: I would have to guess option c the unemployment rate.

Explanation:

4 0
3 years ago
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