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Sidana [21]
3 years ago
5

Suppose you get for free one of following two securities: (a) an annuity that pays $10,000 at the end of each of the next 6 year

s; or (b) a perpetuity that pays $10,000 forever, but payments do not begin until 10 years from now (the first cash payment from this security is 11 years from today). Which security would you choose if the annual interest rate is 5%? Does your answer change if the interest rate is 10%? Explain why or why not.
Business
1 answer:
USPshnik [31]3 years ago
5 0

Answer:

if the interest rate is 5%, I would choose security (b), but if the interest is 10%, then security (a) is a better option

Explanation:

security a:

the present value (5%) = $10,000 x 7.7217 (PV annuity factor, 5%, 10 years) = $77,217

the present value (10%) = $10,000 x 6.1446 (PV annuity factor, 10%, 10 years) = $61,446

security b:

terminal value in 10 years, 5% = $10,000 / 5% = $200,000

present value = $200,000 / 1.05¹⁰ = $122,782.65

terminal value in 10 years, 10% = $10,000 / 10% = $100,000

present value = $100,000 / 1.1¹⁰ = $38,554.33

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Johnson, Inc. a builder enters into an agreement to construct a commercial building in a residential area in violation of zoning
lubasha [3.4K]

None of the alternatives are correct.

Explanation:

When a builder enters into an agreement to construct a commercial building in the residential areas that violates the laws , as a result the government stops construction. If such a scenario occurs the workers will not be paid as the construction process has stopped, so no productivity will take place and thus the workers will have to face the scenario.

While signing a contract the contractor must have proper knowledge regarding the property. Otherwise the workers will not be able to earn their daily wage.

7 0
3 years ago
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermin
const2013 [10]

Question not complete

Direct Labour Cost is missing

Direct Labor Cost ----- $50,000.00 $270,000.00

Answer:

a.

Overhead Rate (Cutting Department) = $5.5 per machine hour = $5.5 per machine hour

Overhead Rate (Finishing Department) = $12.2 per labour hour

b. Total Manufacturing Cost = $644

c. Yes

Explanation:

a. Compute the predetermined overhead rate to be used in each department.

Given

Cutting Department

The Cutting Department bases its rate on machine-hours

Manufacturing Overhead Costs = $264,000

Machine Hours = 48,000

Finishing Department

The Finishing Department bases its rate on direct labor-hours.

Manufacturing Overhead Costs = $366,000

Direct Labour Cost = $270,000

Overhead Rate (Cutting Department) = Manufacturing Overhead Cost/Machine Hours

Overhead Rate (Cutting Department) = $264,000/48,000

Overhead Rate (Cutting Department) = $5.5 per machine hour

Overhead Rate (Finishing Department) = Manufacturing Overhead Cost/Machine Hours

Overhead Rate (Finishing Department) = $366,000/$270,000

Overhead Rate (Finishing Department) = 1.36

Overhead Rate (Finishing Department) = 136% direct labour cost

b.

The Cutting Department bases its rate on machine-hours

Given

Machine hours = 80 machine hours

Overhead Rate = $5.5 per machine hours ------ Calculated

The Finishing Department bases its rate on direct labor-hours.

Given

Direct Labour Cost = 150

Overhead Rate = 136% labour cost ------ Calculated

Overhead Applied (Cutting Department) = 80 * 5.5

Overhead Applied = 440

Overhead Applied (Finishing Department) = 136% * 150

Overhead Applied = $204

Total Overhead Applied = $440 + $204

Total = $644

c. Yes

If they use a plantwide rate based on direct labor cost and if the jobs has longer machine hours and small amount of labor cost they will be charged less overhead cost.

6 0
3 years ago
Deferral adjustments are needed when the business:_______
Mnenie [13.5K]

Answer: b. pays cash before the expense has been incurred.checked

d. receives cash before the revenue has been generated

Explanation:

Here is the complete question:

Deferral adjustments are needed when the business:

a. pays cash after the expense has been incurred.unchecked

b. pays cash before the expense has been incurred.checked

c. receives cash after the revenue has been generated.unchecked

d. receives cash before the revenue has been generated.

Adjustments are made during the end of every accounting period in order to report the revenues and the expenses in proper period at which they occur and also in order to report the assets and the liabilities at their appropriate amounts.

Deferral adjustment is when the revenue or the expense has been deferred or postponed and will therefore be reported on the income statement at a later period.

Previously deferred amounts will show on the balance sheet when a company pays cash before having to incur the expense or in a case whereby the company gets and collects cash before earning the revenue.

When revenues are made or when expenses are incurred, the previously deferred amounts will have to be adjusted and then, the amounts will be transferred to income statement through the use of the deferral adjustment.

5 0
3 years ago
Craig is a salesperson for an industrial equipment company. Craig calls on factories and spends most of his time talking with eq
julsineya [31]

Answer:

Identify managers and people with authority to decide the purchase.

Explanation:

When you work with an opportunity to sell an important part of your work, to be able to advance until closing, it is to be able to interview the person or people with the power to decide the purchase.

If you discover during your first interviews that the person with whom you initially contacted does not have the authority or influence over the purchase decision, then you need this person to promote your access to the person with the true power to decide. In many cases this is very easy to achieve, but in other cases, you will need to negotiate access to the sphere of power. The most powerful tool at your disposal to negotiate this access is to have created a vision of the solution to your problems in the mind of your interlocutor. Once you have created a vision of the solution, we can say that this person already has a clear idea about how to solve their problems and improve the current situation of the company. You must become a promoter of your solution within your company and serve as an engine to promote your offer in front of the decision group.

5 0
3 years ago
Help me to answer thi Q! Thanks!
cestrela7 [59]
Divide the numbers on the first graph by 1’s and you get your answer
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