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lord [1]
2 years ago
8

Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 70.00. During these years of part

-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 70.0 when he fully retires, he will begin to make annual withdrawals of $195,078.00 from his retirement account until he turns 94.00. After this final withdrawal, he wants $1.37 million remaining in his account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his goal, what must the contributions be
Business
1 answer:
choli [55]2 years ago
7 0

Answer:

X = $25,717.13 is the contribution amount that Derek has to plan.

Explanation:

Solution:

Assumption = Interest rate = 4%

Amount required at the age of 70 = value of all withdrawals

So, he will be making withdrawals until 94 years of age.

94 - 70 = 24

Annual Withdrawals = $195,078.00

Interest Rate = 4%

Period = 24 years.

Putting these values into the PVAF function, you will get:

PVAF(4%,24 years) = 15.24

So,

Amount required at the age of 70 = $195,078 x 15.24

Amount required at the age of 70 = 2972988.72

And now, we need to find the amount needed at the age of 65.

Amount required at the age of 65 = Present Value at the age of 65

Amount required at the age of 65 = 2972988.72 x PVF (4%,5 years)

PVF (4%,5 years)  = 0.822

Amount required at the age of 65 = 2972988.72 x 0.822

Amount required at the age of 65 = $2443796.72

Let suppose, annual contribution = x

X*[{(1+0.04)40-1]}/0.04] = $2443796.72

95.026X = $2443796.72

X = $25,717.13 is the contribution amount that Derek has to plan.

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The Guitar Shoppe reports the following sales forecast: August, $150,000; September, $170,000. Cash sales are normally 30% of to
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Answer:

<u>Thus Calculation of September Cash Receipts is as follows:</u>

September Sales ( $170,000 × 30%)  = $51,000

August Sales ( $150,000 × 55%)        =  $82,500

Total                                                     =  $133,500

Explanation:

September cash receipts will include the following :

  1. 30% of September Sales
  2. 55% of August Sales

<u>Thus Calculation of September Cash Receipts is as follows:</u>

September Sales ( $170,000 × 30%)  = $51,000

August Sales ( $150,000 × 55%)        =  $82,500

Total                                                     =  $133,500

5 0
3 years ago
On June 30, 2018, the High Five Surfboard Company had outstanding accounts receivable of $600,000. On July 1, 2018, the company
attashe74 [19]

Answer:

The Journal entry is as follows:

On July 1,

Cash A/c                                  Dr. $439,200

Finance charge Expense A/c Dr. $10,800

To Financing arrangement A/c                       $450,000

(To record the amount of borrowings)

Workings:

Finance charge expense = ($600,000 × 1.8%)

                                          = $10,800

So, cash account = $450,000 - $10,800

                             = $439,200

4 0
2 years ago
In what category is the purchase of a computer by a person for household use in national income accounting, that is, in how we c
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Answer:

is counted in C, personal consumption

Explanation:

GDP = Consumption spending + Investment spending + Government Spending + Net Export

Consumption spending is all spending by households on services and goods which could be either durable or non durable goods.

Investment is spending by businesses.

I hope my answer helps you

6 0
3 years ago
positive economics ______ value judgments, tries to establish ______ statements about economic behavior, and deals with ______ e
lions [1.4K]

Positive economics avoids value judgments, tries to establish scientific statements about economic behavior, and deals with actual economic events.

<h3>What is positive economics?</h3>

This is an objective analysis that is done in the field of economics. This branch of economics is one that has to do with:

  • description
  • explanation
  • quantification of different phenomena in the field of economics.

It is more focused on facts and also on cause and effect relationships on economic behaviors.

Read more on positive economics here:

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7 0
2 years ago
A spirits manufacturer is considering two potential production investments: Option A costs an initial $2 billion and will involv
Bingel [31]

Answer:

$73.333

Explanation:

10% of the initial 2 billion = 200000000

getting the information from the promblem we have that...

initial cost is 2 billion. Total fixed cost 2200000000.

in this way the average fixed cost is calculated with this formula

AFC= average fixed cost

AFC = 2200000000 / 30000000

AFC= $73.333 for the option A facility

6 0
2 years ago
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