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ziro4ka [17]
3 years ago
7

Suppose when you are 21 years old, you deposit $1,000 into a bank account that pays annual compound interest, and you do not wit

hdraw from the account until your retirement at the age of 65, 44 years later. How much more will be in your account if the interest rate is 6 percent rather than 4 percent
Business
2 answers:
yaroslaw [1]3 years ago
6 0

Answer:

$7368.96

Explanation:

For a Principal P invested at rate r over a period of n years.

Amount \: at \: Compound \: Interest= P(1+r)^n

In the case above,

P=$1000

n=44 years

At Rate,r=4%=0.04

Amount \: at \: Compound \: Interest= 1000(1+0.04)^{44}

= 1000(1.04)^{44}

= 5616.52 dollars

At Rate,r=6%=0.06

Amount \: at \: Compound \: Interest= 1000(1+0.06)^{44}

= 1000(1.06)^{44}

= 12985.48 dollars

The difference at 6% instead of 4%

=12985.48-5616.52

=$7368.96

Alekssandra [29.7K]3 years ago
3 0

Answer:

After 44year at interest rate of 6%

You will have $12,985.5 in your account

Explanation

Step one

Applying the compound interest formula we have A = P (1 + r/n)^nt

A = Final amount

r= nominal annual interest rate in percentage terms,

and n = number of compounding period

Where P = Principal

t= time in years

Given p=$1,000

n=44

r=6%

Step two

Inserting our given information

A=$1000 [(1 + 0.06/1)^44*1]

A=$1000 [(1.06)^44*1]

A=$1000*12.9854819127

A=$12,985.5

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B. index

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New investors may want to consider to invest in index funds because they focus on a particular sector of the market or a particular type of bond, or indexes may follow and try to reciprocate the market for eg the. The purpose of an index fund is to copy and reciprocate the performance of a market index .

3 0
3 years ago
Calculate the balance in Accumulated Depreciation at the end of the second year for all three methods
eimsori [14]

This is the full question:

At the beginning of 2016, Air Asia purchased a used airplane at a cost of $40,000,000. Air Asia expects the plane to remain useful for eight years (5,000,000 miles) and to have a residual value of $5,000,000. Air Asia expects the plane to be flow 1,200,000 the first year and 1,400,000 the second year.

1) Compute second-year (2017) depreciation expense using the following methods

a. Straight-line

b. Units-of-production

c. Double-declining-balance

2) Calculate the balance in Accumulated Depreciation at the end of the second year for all three methods:

Answer:

Explanation:

1)a) Straight-line

Depreciable base = Cost of the Asset - Residual Value

                              = $40,000,000 - $5,000,000

                              = $35,000,000

Depreciation expense per year = Depreciable base / years of useful life

                                                     = $35,000,000 / 8

                                                     = $4,375,000

The depreciation expense for the second year is = $4,375,000

                                                                                       

b) Units-of-production

Units of Production Rate = Depreciable Base / Units Over Useful Life

                                        = $35,000,000 / 5,000,000 miles

                                        = 7

Depreciation Expense = Units of Production Rate x Actual Units Produced

                                      = 7 x 1,400,000 miles in the second year

                                      = $9,800,000

c. Double-declining-balance

Double-declining balance = 2 x (Asset Cost - Residual Value ) / Useful Life of the Asset

                                           = 2 x ($40,000,000 - $5,000,000) / 8

                                           = $8,750,000

2) a) Straight-line Accumulated depreciation

We simply multiply the previous answer by two = $4,375,000 x 2

                                                                              = $8,750,000

2) b) Units-of-production Accumulated depreciation

First we find the depreciation expense for the first year using the same formula as above

= 7 x 1,200,000

= $8,400,000

Finally we simply add up depreciation expense for the two years

= $8,400,000 + $9,800,000

= $18,200,000

2) c) Double-declining-balance Accumulated depreciation

We simply multiply the first result by two = $8,750,000 x 2

                                                                    = $17,500,000

                                       

                           

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Explanation:

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When tax is reduced, there is a little more money for the people to spend and as such this affects the demand, consumption (of goods) as well as the gross domestic profit; GDP, of the country.

When the people have more money to spend, there is an increase in things they buy, wear, do, etc and so production in that country becomes high.

Tax decrease is most effective in a situations where there is high level of unemployment and slow paced economies.

cheers.

5 0
3 years ago
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