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
Nataly [62]
3 years ago
15

Perpetuities are also called annuities with an extended, or unlimited, life. Based on your understanding of perpetuities, answer

the following questions. Which of the following are characteristics of a perpetuity?
a. The value of a perpetuity cannot be determined.
b. The current value of a perpetuity is based more on the discounted value of its nearer (in time) cash flows and less by the discounted value of its more distant (in the future) cash flows.
c. The value of a perpetuity is equal to the sum of the present value of its expected future cash flows.
d. A perpetuity is a stream of regularly timed, equal cash flows that continues forever.
Business
1 answer:
Oduvanchick [21]3 years ago
3 0

Answer:

d. A perpetuity is a stream of regularly timed, equal cash flows that continues forever.

Explanation:

A perpetuity refers to a future stream of cash flows, paying a constant amount regularly till forever. Such stream is never ending.

The present value of a perpetuity is computed by dividing the constant amount receivable till forever, by required rate of return/cost of capital.

Present value of a growing perpetuity is given by

= \frac{Cash\ Flow(1\ +\ g)}{r\ -\ g}

wherein cash flows represent cash flows receivable growing at g% rate till forever

r = required rate of return or cost of capital

g= growth rate of cash flows

Where the cash flows are of constant amount i.e non growing nature, the present value of such a perpetuity is given by,

= \frac{Cash\ Flows}{Required\ rate\ of\ return}

You might be interested in
Let’s examine how the goals of the Fed influence its response to shocks. Suppose that in scenario A the Fed cares only about kee
dolphi86 [110]

Answer

The answer and procedures of the exercise are attached in the following archives.

Explanation  

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

6 0
3 years ago
Mr. Smith put his laptop up for sale. He is aware of the fact that the laptop malfunctions frequently. However, none of the pote
zaharov [31]

Answer: The presence of asymmetric information

                                               

Explanation:  In simple words, asymmetric information refers to the situation when one party to a contract have extra information regarding a subject than the other party of the contract.

Asymmetric information creates the potential of misconduct from the leading party as they can easily cheat the other party by concealing that important information.

In the given case, Mr. Smith was aware that his laptop is not working properly but still he sold its to a customer who was not aware of it. Thus, we can conclude that the correct option is C.

5 0
3 years ago
If a company spends $20 million to install new footwear-making equipment with capacity to produce 1 million pairs of athletic fo
labwork [276]

Answer: 10% or $2,000,000

Explanation:

Seeing as no figures were produced, we will have to do this ourselves.

We will make assumptions which include the following,

Life of the equipment = 10 Years

Salvage value = 0

Those are our 2 assumptions.

In that case then,

The Annual Depreciation will be,

Depreciation = (Cost of equipment - Estimated salvage value) / Estimated useful life

= (20 - 0) / 10

= $2 million

Seeing as 2 million is,

= 2/20 * 100

= 10%

That would mean that annual depreciation costs at that facility will rise by $2 million or 10%.

If you need any clarification do react or comment.

3 0
3 years ago
You have your choice of two investment accounts. Investment A is a five-year annuity that features end-of-month $2,500 payments
oee [108]

Answer:

$119,176.06

Explanation:

Calculation for How much would you need to invest in B today

First step is to calculate the Future value of annuity (FVA)

FVA =$2,500 * ({[1 + (.115 / 12)](5 × 12) - 1} / (.115 / 12))

FVA = $201,462.23

Since we have known the FVA Second Step will be to calculate the Present value (PV)

PV = $201,462.23 × e-1 × .105 × 5

PV= $119,176.06

Therefore the amount that you would need to invest in B today will be $119,176.06

5 0
3 years ago
Downtown Coffee Roasters is a premium cafe that is reputed for its superior customer service. The coffee shop also serves gourme
77julia77 [94]

Answer:

D.  C

Explanation:

As Downtown Coffee Roasters is a premium cafe which is reputed for its superior customer service. The coffee shop also serves gourmet food to its customers, which allows it to charge a premium price. Whereas, Budget Beans is a chain of coffee shops that charges the lowest price in the industry due to its self-service policy. However, Perky's Coffee Inc. has found a balance between these two strategic groups by using automated ordering to free up its employees to work as master baristas and bakers, thus focusing on creating excellent products. It charges a price slightly above that of Budget Beans. In this scenario, Perky's Coffee is following a  blue ocean strategy. In blue ocean strategy, organizations pursuit differentiation and low cost at the same time simultaneously which Perky's Coffee Inc. is doing here in this case. Perky's has created a totally new demand by following this strategy quite successfully and has made the competition totally and almost irrelevant.

8 0
3 years ago
Other questions:
  • Economist george stigler once wrote that, according to consumer theory, “if consumers do not buy less of a commodity when their
    10·2 answers
  • Negacho, a food and beverage company, introduced a new flavor of potato chips called South Indian Chillis. It received a positiv
    10·1 answer
  • Credit unions are not subject to federal regulations.<br> T/F
    10·2 answers
  • A best-seller novel sells for $28 in hardback edition and $12 in a paperback edition. a book store's sales of both editions tota
    12·1 answer
  • Autopitch devices are made for both​ major- and​ minor-league teams to help them improve their batting averages. When set at the
    13·1 answer
  • Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of .75%. Economy Fund charges a front-end load of 2%, bu
    5·1 answer
  • This Venn diagram compares two career pathways in the Marketing, Sales, and Service career cluster.
    15·2 answers
  • A company had a budgeted production of 12000 units and actual production of 13200 units. Two types of raw material, P and Q are
    5·1 answer
  • If you were a manager, which management style do you think you would use most often?
    14·1 answer
  • the best reason for investing company resources in vertical integration (either forward or backward) is to
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!