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Answer:
Ans. You withdraw each month from your account, for 300 months (25 years) $1,118.03 taking into account the expected inflation rate.
Explanation:
Hi, ok, first, we need to find out how much money will you have after saving in both accounts for 30 years, for that, we need to use the following equation and solve for FV (future value).
Where, A is the amount saved in the account, r is the interest rate that it pays, n are the yearly equal payments, in our case 30. Everything should look like this in the case of the stock account.
In the case of the bond account it should look like this.
This means that after 30 years you will have $197,001.02
Now, we need to find the amount of monthly withdraw that you can make given the money saved, but in order to take into account the time value of money, we need to use the real rate of return and not the nominal rate of return (9%, when you gather all your money and send it to another acoount). Therefore, we have to find out the real rate of return, like this.
This is 4.81% effective annual rate, but we need this rate to be effective monthly, that is:
That is 0.39% effective monthly, and we have to use the following equation with n=300 months, r=0.0039, PV= $197,001.02 and solve for A.
Best of luck
The difference in the ending inventory relates to a difference in the handling of fixed manufacturing overhead costs.
Under variable costing, these costs have been expensed in full as period costs.
Under absorption costing, these costs have been added to units of a product at the rate of $10 per unit ($100,000/10,000 units produced = $10 per unit).
Thus, under absorption costing a portion of the $100,000 fixed manufacturing overhead cost for the month has been added to the inventory account rather than expensed on the income statement:
Added to the ending inventory:
(2,000 units x $10 per unit) $ 20,000
Expensed as part of the cost of goods sold:
(8,000 units $10 per unit) $ 80,000
Total fixed manufacturing overhead cost for the month: $100,000
Because $20,000 of fixed manufacturing overhead cost has been deferred in inventory under absorption costing, the net operating income reported under that costing method is $20,000 higher than the net operating income under variable costing(refer to the first image)
And for question refer to the second image.
Hence, The difference in the ending inventory relates to a difference in the handling of fixed manufacturing overhead costs.
Learn more about absorption costing:
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