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Hunter-Best [27]
2 years ago
10

You wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $24,000

for 25 years after retirement. During the period before retirement you can earn 10 percent annually, while after retirement you can earn 12 percent on your money. What annual contributions to the retirement fund will allow you to receive the $24,000 annuity
Business
1 answer:
den301095 [7]2 years ago
5 0

Answer:

$3,286.52

Explanation:

Interest rate per annum = 12.00%

Number of years = 25

Number of compounding per per annum = 1

Interest rate per period (r) = 12.00%

Number of periods (n) = 25

Payment per period (P) = $24,000

PV of $24,000 payments after 20 years = P * [1 - (1/(1+r)^n)]/ r

PV of $24,000 payments after 20 years = 24000*[1-(1/(1+12%)^25]/12%

PV of $24,000 payments after 20 years = $188,235.34

Interest rate per annum = 10.00%

Number of years= 20

Number of payments per per annum = 1

Interest rate per period (r) = 10.00%

Number of periods (n) = 20

Future value of annuity (FVA) = $188,235

Annual contribution (P) = FVA/ ([ (1+r)^n - 1] / r)

Annual contribution (P) = 188235/(((1+10%)^20-1)/10%)

Annual contribution (P) = $3,286.52

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Answer:

Net advantage (disadvantage) ($5,400)

Explanation:

Product QI

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3 0
3 years ago
Read 2 more answers
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Answer:

A) ROA = 28%

B) ROE = 20%

Explanation:

Requirement A

We know,

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If we break the ROA formula, we can get,

ROA = \frac{Net Income}{Net Sales} × \frac{Net Sales}{Average total assets}

We know, Profit margin = Net Income ÷ Net Sales; and

Asset Turnover ratio = Net sales ÷ Average total assets

Therefore, ROA = Profit margin × Asset Turnover

Given,

Profit Margin = 7% = 0.07

Asset Turnover = 4.0

Hence, Return on Asset = 0.07 × 4 = 0.28 = 28%

It shows how assets generate income over a period.

Requirement B

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Return on Equity = \frac{Net Income}{Stockholders' Equity}

If we break the formula, ROE = (Asset ÷ Equity) × (Debt Burden) × ROA

Given,

Debt-Equity ratio = 1

We know, Debt-equity ratio = \frac{Total Debt}{Total Stockholders' Equity}

As debt-equity ratio is 1, debt = equity

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Debt Burden = Net Income ÷ (EBIT - Interest)

Debt Burden = (EBIT - Interest - Tax) ÷ (EBIT - Interest)

Debt Burden = $(21,000 - 8,200 - 8,200) ÷ $(21,000 - 8,200)

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Debt Burden = 0.359375

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Hence, ROE = (2 ÷ 1) × 0.359375 × 0.28

ROE = 0.20125

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Jones Company issued $500,000 of 5%, 10-year bonds payable at a price of 92. The market interest rate on the date of issuance wa
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Answer:

Date                     Account Title                                       Debit              Credit

XX-XX-XXXX       Interest expense                               $13,800

                            Discount on bond payable                                        $1,300

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Working      

The bonds were issued at a price of 92 which means they were issued at:

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Answer:

The correct answer is A.

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