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olchik [2.2K]
2 years ago
8

You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million dollars. Your plan is to deposit

$15,000 at the end of each year for the next 10 years. You expect to earn 8 percent each year.a. Determine how much you will have saved after 10 years.b. Determine the amount saved if you were able to deposit $17, 500 each year.c. Determine the amount saved if you deposit $15,000 each year, but with 10 percent interest.
Business
1 answer:
nordsb [41]2 years ago
7 0

Answer:

a.) $217,298.44

b.) $253,514.84.

c.) $239,061.37 .

Explanation:

<u>a. Determine how much you will have saved after 10 years</u>

This is an ordinary annuity question and you are required to find the Future value (FV) at year 10. Using a financial calculator, key in the following inputs;

Total duration of investment; N = 10

Recurring payment; PMT = -15,000

Interest rate ; I/Y = 8%

PV = 0

then compute Future value;  CPT FV = 217,298.437

Therefore, in 10 years, you will have saved $217,298.44 which does not meet your goal of half a million dollars.

<u>b. Determine the amount saved if you were able to deposit $17, 500 each year.</u>

With the recurring payment increasing to 17,500 per year and the interest rate remaining at 8%, find the new Future value by keying in the following inputs;

Recurring payment; PMT = - 17,500

Interest rate ; I/Y = 8%

Total duration of investment; N = 10

PV = 0

then compute Future value;  CPT FV = 253,514.843

Therefore, in 10 years, you will have saved $253,514.84.

<u>c. Determine the amount saved if you deposit $15,000 each year, but with 10 percent interest.</u>

It is still an ordinary annuity question , however, the recurring payment(PMT) will be 15,000 as before but with an annual interest rate(I/Y) of 10%.  Using a financial calculator, key in the following inputs;

Total duration of investment; N = 10

Recurring payment; PMT = -15,000

Interest rate ; I/Y = 10%

PV = 0

then compute Future value;  CPT FV = 239,061.369

Therefore, in 10 years, you will have saved $239,061.37 .

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7 0
3 years ago
Jeanie acquires an apartment building in 2008 for $280,000 and sells it for $480,000 in 2019. At the time of sale there is $60,0
Evgen [1.6K]

Answer:

$60,000

Explanation:

According to section 1250 of the Internal Revenue Service, the depreciation previously allowed as a deduction would now be taxed in the case of ordinary income at the highest tax level.

And,  For this, the asset should be depreciated real property.

In the question, there is depreciation charged for apartment building so the same is eligible

The eligibility is allowed up to $60,000 and the same is to be considered

8 0
3 years ago
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received
aleksley [76]

Answer:

A. $11,970

B. $11,890

C. January

Explanation:

a. Calculation for the after-tax cost if Isabel pays the $19,000 bill in December

After-tax cost=$19,000 - ($19,000 x 37%)

After-tax cost= $19,000 - $7,030

After-tax cost= $11,970

Therefore the after-tax cost if Isabel pays the $19,000 bill in December will be $11,970

b. Calculation for the after-tax cost if Isabel pays the $19,000 bill in January

First step is to calculate the cost before taxes

Cost before taxes = $19,000 - ($19,000 x 8%/12) Cost before taxes= $19,000 - $127

Cost before taxes= $18,873

Now let calculate the After-tax cost

After-tax cost = $18,873 - ($18,873 x 37%)

After-tax cost= $18,873 - $6,983

After-tax cost = $11,890

Therefore the after-tax cost if Isabel pays the $19,000 bill in January will be $11,890

c. Based on the above calculation for both a and b, Isabel should pay the amount of $19,000 bill in January reason that it has the lowest cost of debt of the amount of $11,890 compare to December which has the cost of debt of the amount of $11,970.

5 0
2 years ago
"The objective of external auditing is to provide opinions on the reliability of the financial statements and provide opinions o
muminat

Answer:

A. True

Explanation:

4 0
3 years ago
2. Liquidity Consider the relative liquidity of the following assets: Assets 1. The funds in a savings account 2. A bond issued
Alina [70]

Answer:

The answer is,

Asset

Most Liquid :  $5 bill

Second-Most Liquid : The funds in a savings account

Third-Most Liquid :  A bond issued by a publicly traded company

Least Liquid : Your house

The liquidity simply measures the ability to turn in to cash in a relatively short period of time. Cash at hand is the most liquid while property and other movable and immovable assets tends to be a bit difficult to be turned into cash quickly.

Explanation:

6 0
3 years ago
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