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Sliva [168]
3 years ago
5

The CFO of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of

this uneven cash flow stream, rounded to the nearest whole dollar?
$1, 625,000
$1, 685, 335
$1, 975,000
$600,000
Identify whether the situations described in the following table are examples of uneven cash flows or annuity payments:
Description Uneven Cash Flows Annuity You recently moved to a new apartment and signed a contract to pay monthly rent to your landlord for a year.
SOE Corp. hires an average of 10 people every year and matches the contribution of each employee toward his or her retirement fund.
Franklinia Venture Capital (FVC) invested in a budding entrepreneur's restaurant. The restaurant owner promises to pay FVC 10% of the profit each month for the next 10 years.
You have committed to deposit $600 in a fixed interest-bearing account every quarter for four years.
Business
1 answer:
irinina [24]3 years ago
6 0

Answer:

Present value of the cash flows = $1,625,000 /1.04 + $1,685,335/1.04  + $1,975,000/1.04 + $600,000/1.04 = $5,389,337.27

You recently moved to a new apartment and signed a contract to pay monthly rent to your landlord for a year.  ⇒ ANNUITY

SOE Corp. hires an average of 10 people every year and matches the contribution of each employee toward his or her retirement fund.  ⇒ UNEVEN CASH FLOW (EACH EMPLOYEE'S SALARY VARIES, SO THE TOTAL EXPENSE ALSO VARIES)

Franklinia Venture Capital (FVC) invested in a budding entrepreneur's restaurant. The restaurant owner promises to pay FVC 10% of the profit each month for the next 10 years.  ⇒ UNEVEN CASH FLOW (PROFITS ARE NOT IDENTICAL FORM ONE PERIOD TO ANOTHER)

You have committed to deposit $600 in a fixed interest-bearing account every quarter for four years. ⇒ ANNUITY

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You can't tell the difference between a legit article and an ad

Explanation:

4 0
3 years ago
Sweet Dreams sells 15,000 pillows per year for $25 per unit. Variable cost per unit is $14. Sweet Dreams wants to improve custom
Radda [10]

Answer:  The answer is $27.25

Explanation:

Let x be the price Sweet dreams will charge to earn the profit of $75,000

New sales units = 20,000

New variable cost = $19

We know, Sales - Variable cost - Fixed cost = Profit

Now applying the equation,

 20,000x - (20,000*19) - 90,000 = $75000

 20,000x = $75,000 + 380,000 + 90,000

therefore, x = $27.25

So, Sweet Dreams will charge $27.25 to earn the same profit it is earning now i.e. $75000 per year.

4 0
3 years ago
An investment earns 35% the first year, earns 40% the second year, and loses 38% the third year. The total compound return over
Vladimir79 [104]

Answer:

17.18%

Explanation:

compound return = ( 1 + 0.35)x (1 + 0.40) x (1-0.38) - 1

1.35 x 1.40 x 0.62 - 1 = 17.18%

6 0
3 years ago
Total fixed costs for Taylor Incorporated are​ $260,000. Total​ costs, including both fixed and​ variable, are​ $500,000 if​ 156
kobusy [5.1K]

Answer:

The variable cost per unit is $1.54

Explanation:

Variable costs are those cost which vary with the change in production of units means higher the production higher cost and lower production will result in lower cost e.g Material cost, labor cost etc.

On the other hand fixed cost the cost which does not vary with the production of units. It is fixed no matter what is the level of production.

According to given data:

Total Cost = $500,000

Fixed Cost = $260,000

Variable cost = Total cost - fixed cost

Variable cost = $500,000  $260,000

Variable cost = $240,000

Number of units = 156,000

Variable cost per unit = $240,000 / 156,000 = $1.54 per unit

6 0
3 years ago
When he became the president of Jem Incorporated, John Smith changed the date of the weekly payday from the end of the day on Mo
vladimir2022 [97]

Answer: $1.3 million

Explanation:

Based on the information given in the question, if this change delayed check clearing by 1 week, then the annual savings that were realized will be:

= Weekly payroll × Cost of short term funds

= $10 million × 13%

= $10 million × 0.13

= $1.3 million

Annual savings realized is $1.3 million.

6 0
3 years ago
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