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bija089 [108]
3 years ago
14

You just inherited a trust that will pay you $100,000 per year in perpetuity. However, the first payment will not occur for exac

tly five more years. Assuming a 10% annual interest rate, what is the value of this trust?
Business
1 answer:
allsm [11]3 years ago
8 0

Answer:

PV= $620,921.32

Explanation:

Giving the following information:

Cash flow (Cf)= $100,000

Interest rate (i)= 7.25%

<u>First, we need to calculate the value of the investment at the moment of the first payment (five years from now). </u>To calculate the present value we need to use the following formula:

PV= Cf / i

PV= 100,000 / 0.1

PV= $1,000,000

<u>Now, the value today:</u>

PV= FV / (1 + i)^n

PV= 1,000,000 / (1.1^5)

PV= $620,921.32

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If the reserve requirement of a bank is 33%, then $100 of MO will lead to how much of M1?
lesantik [10]

If the reserve requirement of a bank is 33%, then $100 of MO will lead to  $300 of M1. Thus, option (a) is correct.

What is bank?

The term bank refers to the financial institution offering the services related to the term money. The bank is manage financial system to handling accounts and manage the cash.

The bank is 33%

Money Multiplier= \frac{1}{Reserve Requirement}

Money Multiplier= 1/33%

Money Multiplier = 3.03

Money Multiplier = 3 (Approximately)

M1= Money Multiplier×M0

M1= 3×100

M1 = $300

$100 of M0 will lead to $300 of M1.

As a result, the MO of the bank can lead to the $300. Therefore, option (a) is correct.

Learn more about on bank, here:

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Your question is incomplete, but most probably the full question was

O $300

O $33

O $1000

O $330

5 0
1 year ago
Which of the following is not correct? a. The consumer price index gives economists a way of turning dollar figures into meaning
Marina CMI [18]

Answer:

The consumer price index is used to measure the quantity of goods and services that the economy is producing.

Explanation:

CPI  or consumer price index is a measure of changes in the average prices of a basket of products and services in a given time. The selected goods and services are a fair representation of consumption expenditure in the economy. Economists use the CPI as a Macroeconomic indicator of inflation.

As a measure of inflation, the CPI statistics communicate increases or decreases in the prices of goods and services in the economy. It forms a basis for policy decisions by the government that aid in the prevention of reduced purchasing power of the dollar.  CPI is all about changes in prices and nothing to do with the production of goods and services.

5 0
3 years ago
pre-writing is important for all of the following reasons except: a. it is where the ideas are generated. b. it gets ideas down
evablogger [386]

Answer: C it forces the writer to be specific early in the process

Explanation:

just did it

3 0
3 years ago
Read 2 more answers
Internet comparison shopping sites like shopping.com and pricegrabber.com allow consumers to compare prices of substitute produc
Komok [63]
The answer is; "these sites have <span>increased the cross-price elasticity for substitute products".
</span>
When we evaluate the responsiveness of the demand for any good towards the change in the price of a related good is known as cross price elasticity of demand and it is always measured in terms of percentage. 
5 0
3 years ago
On January 1, Puckett Company paid $2.97 million for 99,000 shares of Harrison’s voting common stock, which represents a 40 perc
Ira Lisetskai [31]

Answer:

Balance of Harrison's Investment in Puckett's Financial Records

= $2,905,000

Explanation:

To calculate the balance of Harrison's account in Puckett's financial records the following steps are applied.

Step 1: Calculate the percentage of reported Income that accruees to Harrsion in Puckett

=Reported Net Profit x Percent Investement of Harrison in Puckett

= $580,000 x 0.40= $232,000

Step 2: Calculate the Dividend Accrued to Harrison's Common Stok basd on the $3 dividend per share declared

= Total Number of Shares for Harrison x $3

=99,000 Shares x $3= $297,000

Final Step: Calcuate the balance of Harrision's Investment in Puckett

= Amount paid for 99,000 stock + Percentage of Reported Income Accrued to Harrison- Harrison's portion of Dividend declared

= $2,970,000 + $232,000- $297,000

= $2,905,000

7 0
3 years ago
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