A small business decides to upgrade its aging phone system. the business will probably place a straight rebuy order.

You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make 25 deposits in your bank, w

Rom4ik [11]

Answer:

First deposit will be $11,213.87

Explanation:

To derive how much the first deposit must be, the deposit can be derived by using payment formula for growing annuity

P = FV x (r - g) / [(1 + r)^n - (1 + g)^n]

When FV = $1,000,000

r = 7%

g = 3%

n = 25

Hence, First payment will be:

P = 1,000,000 * (7% - 3%) / (1.07^25 - 1.03^25)

P = 1,000,000 * 4% / 5.427433 - 2.093778

P = 40,000 / 3.333655

P = 11998.842

P = $11,998.84

However, this formula is applicable when the payments are made at the end of the year. In this case the payments are upfront, occurring today. We need to adjust this first payment to reflect the early payment.

Hence, first payment = $11,998.84 / (1 + 7%)

First payment = $11,998.84 / (1 + 0.07)

First payment = $11,998.84 / 1.07

First payment = 11213.8691588785

First payment = $11,213.87

7 0

3 years ago

To determine whether an item is being passed by value or by reference, you must examine either the _____ or the _____.

morpeh [17]

A parameter or the <span>the procedure header. I think that is what you are looking for.</span>

7 0

3 years ago

The underground economy refers to used product sellers who sell in secondary markets. It is thought to make up ________ of the U

hammer [34]

The underground economy refers to used product sellers who sell in secondary markets. It is thought to make up 3-30% of the US gross national product.

Explanation:

Household production refers to goods and services people produce for themselves.

Underground economy refers to buying and selling of goods and services that are concealed from the government to avoid taxes or regulations or because the goods and services are illegal.

If you know how much the economy works for a brief time, it doesn't matter.

If one knows how goods and services are produced for a decade or further, it might be more important to omit domestic production and development in the underground economy.

7 0

3 years ago

Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and

Burka [1]

Answer:

Debit : Cash $44,000

Debit : Inventory $76,000

Debit : Land $109,000

Debit : Buildings $249,000

Debit : Equipment $121,000

Credit : Accounts Payable $63,000

Credit : Shares (30,000 x $6) $180,000

Credit ; Gain on Bargain Purchase $356,000

Explanation:

Assets and liabilities are acquired at their Fair Value Amounts instead of Cost or Book Value.

A transfer of some of the asset of a Company is referred as a Asset acquisition transaction instead of Business Combination (Acquirer obtains control of one or more businesses).

This is an asset Acquisition Transaction and no consolidated Financial Statements will be prepared.

The excess of Net Assets Acquired over the consideration is called Gain on Bargain Purchase and this amounts to $356,000.

8 0

3 years ago

Which of the following statements does correctly explain the effect of additional debt on the weighted average cost of capital (

Aleksandr-060686 [28]

Answer: The net effect of additional debt on WACC is uncertain.

Explanation:

Weighted Average Cost of Capital (WACC) refers to the rate of return that a company is paying it's capital providers on average be it debt holders or shareholders.

Adding additional debt to the mix effects the WACC in an uncertain way due to the different ways the WACC could react. For example, adding additional debt decreases the after-tax cost of debt because debt is tax deductible which means that more money can flow to shareholders so that reduces the cost of equity. At the same time however, Additional debt can increase the risk of bankruptcy meaning that the before tax cost of debt rises which also increase the WACC.

The effect can swing either way thereby making it uncertain.

5 0

3 years ago