Answer:
The annual difference between Option 1 (15 years) and Option 2 (20 years) is $7,211.19 in favor of the first one.
Explanation:
Giving the following information:
Option 1:
Number of years= 15
FV= 450,000
i= 0.0525
Option 2:
Number of years= 20
FV= 450,000
i= 0.0525
To calculate the annual cash flow, we will use the following formula on each option:
A= (FV*i)/{[(1+i)^n]-1}
A= annual cash flow
<u>Option 1:</u>
A= (450,000*0.0525) / [(1.0525^15) - 1]
A= $20,464.72
<u>Option 2:</u>
A= (450,000*0.0525) / [(1.0525^20) - 1]
A= $13,253.53
The annual difference between Option 1 (15 years) and Option 2 (20 years) is $7,211.19 in favor of the first one.
Answer:
maturity
Explanation:
Based on the information provided within the question it can be said that the tires are in the maturity stage of their product life cycle. This is the longest stage in the product life cycle in which the introduction and growth stages has already passed and the product advertisements have minimal impact on sales since people have already seen the product. This seems to be the case since Goodrich has sold it's tires for more than a hundred years and only focuses on short term marketing.
Answer:
$700
Explanation:
If a bond is issued at a lower price than the face value of the bond, then the bond is issued on the discount. This discount is amortized over the bond's life. This amortization will be expensed as Interest Expense.
Discount = Face value - Issuance price = $15,000 - $14,700 = $300
Bond's Life = 6 years
Amortization of discount = $300 / 6 = $50 annually = $25 semiannually
Coupon Payment = Face Value x coupon Rate = $15,000 x 9% = $1.350 annually = $675 semiannually
Interest Expense Includes both the coupon payment and discount amortization for the period.
Interest Expense = $675 + $25 = $700
