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Darya [45]
3 years ago
15

7. Alice has $15,000 for investment purposes and suppose Alice’s MARR is 18% compounded monthly. Her bank has offered the follow

ing three choices: a. A special savings certificate that will pay $200 each month for 5 years and a lump sum payment at the end of 5 years of $17,000. b. Buy a share of a racehorse for $15,000 that will be worth $35,000 in 5 years. c. Put the money, today, in a savings account that will have Alice’s interest rate. Calculate the annual worth of all options and make a recommendation to Alice.
Business
1 answer:
stepladder [879]3 years ago
8 0

Answer:

a) Annual Worth of net gain is  $6793.0184

b) Annual Worth of net gain is  $6395.557

c) Annual Worth of net gain is  $6922.65

Recommendation: Option C is the best option for Alice

Explanation:

a) Alice will get $200 per month for 5 years which means for 60 months at the rate of 18% compounded monthly.

So FV of that cash flow

= FV(18%/12,60,-200)

= 19242.9303

A lump sum amount of $17000 at the end of 5th year

Total Worth = 19242.9303 + 17000

                    = $36242.9303

Annual worth = $36242.9303 / 3.1271

                      = $11589.94

Net Gain = $36242 - $15000

               = $21242.9303

Annual Worth of net gain = $21242.9303 / 3.1271

                                          = $6793.0184

b) Racehorse share will be worth $35000 on 5 years.

Annual Worth = $35000 / 3.1271

                       = $11192.48

Net Gain = $35000 - $15000

               = $20000

Annual Worth of net gain = $20000 / 3.1271

                                          = $6395.557

c) Saving account will generate funds after 5 years

= FV(18%/12,60,,-15000)

= $36648.30

Net Gain = $36648.30 - $15000

               = $21648.30

Annual Worth = $36348.30 / 3.1271

                       = $11719.58

Annual Worth of net gain = $21648.30 / 3.1271

                                          = $6922.65

Therefore, Option c is best for Alice.

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A conventional peg refers to when a country formally pegs its currency at a fixed rate to another currency or basket of currencies where the basket reflects the geographic distribution of trade, services, or capital flows.

for better understanding lets explain what conventional peg means

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3 years ago
Zoe Corporation has the following information for the month of March: Purchases $92,000 Materials inventory, March 1 6,000 Mater
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,Answer:

                                               Zoe Corporation

Statement of Cost of Good Manufactured For the Month Ended March 31

Work in Process Inventory                                                                     22,000

Direct Materials:

Materials inventory, March 1                               6,000  

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Less Materials inventory, March 31              <u>   ( 8,000)</u>

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Direct Labor                                                                        25,000

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Total Manufacturing Cost                                                                      174,000

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Answer:

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Explanation:

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F=P(e^it)

F=future value

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