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sweet-ann [11.9K]
3 years ago
9

The Smiths are saving money for a down payment on a house. The Smiths have $25,000 in cash, and they estimate that in 5 years th

ey will have approximately $31,000 if they deposit their cash in a savings account that compounds interest yearly. To calculate the $31,000 amount, the Smiths determined
Business
1 answer:
s2008m [1.1K]3 years ago
8 0

Options :

A)net present value of the $25,000.

B)future value of the $25,000.

C)internal rate of the return on the $25,000.

D)present value of $25,000.

Answer: B)future value of the $25,000.

Explanation: The Smith's calculation and subsequent result which yielded $31,000 refers to the future value of $25,000. The initial $25000 is the present value of the amount held. If the initial amount is saved or deposited over a certain number of years in an account which yields a certain rate of interest per annum and is compounded either on a monthly, yearly, quarterly or semiannual basis as the case may be, in this scenario above, the interest is called mounded annually. This initial amount will grow and yield an amount which is greater than the present deposit. This is called the future value of the initial deposit.

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Answer:

$115.20

Explanation:

Missing part is <em>"Assume that securitization combined with borrowing and irrational exuberance in Hyperville have driven up the value of existing financial securities at a geometric rate, specifically from $4 to $8 to $16 to $32 to $64 to $128 over a six-year time period. Over the same period, the value of the assets underlying the securities rose at an arithmetic rate from $4 to $6 to $8 to $10 to $12 to $14."</em>

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3 years ago
Why are costs and benefits weighed when determining whether something gets produced
katrin2010 [14]

Answer:

Costs and benefits are weighed to determine if producing the good will be profitable.

Explanation:

Production of goods refers to the process through which raw material and resources are converted to a finished product. In most economies, production of goods are services is necessary to meet the demand for these goods. Companies and firms utilize resources like labor and materials to produce finished products. This is usually a costly activity that needs to be planned and organized for it to be successful. Since most businesses is for profit making, the production process has to be done in such a way that in the end, profits are made. Production processes requires financial strategies to be applied and assessed to ensure that the process is profitable in the long run.

An example of a financial analysis that can be used is the cost benefit analysis. The cost benefit analysis involves determination of all the resources that will be needed as input. The input is then convert into monetary terms, then summed together. The total amount of input in monetary terms is the cost, since that i the total amount needed to process the raw materials to finished goods. The future benefits are also forecasted and converted into monetary terms. The comparison of the costs versus the benefits forms what is collectively termed as the cost and benefits analysis.

When the costs outweigh the benefits, then the good should not be produced. When the costs are equal to the benefits, it means the business will break-even, so there will be no profits, it is advisable not to produce the good. Finally, when the benefits outweigh the costs, it is advisable to produce the good.

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Composed of 5 central and connected sectors (input, production, processing, distribution, and consumption)

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