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noname [10]
3 years ago
7

7. The local electronics store is offering a promotion "1-year: same as cash," meaning that you can buy a TV now, and wait a yea

r to pay (with no interest). So, if you take home a $1000 TV today, you will owe them $1000 in one year. If your bank is offering 4% interest, what is the true cost of the TV to you today?
Business
1 answer:
ElenaW [278]3 years ago
7 0

Answer:

$961.54

Explanation:

we need to find out the present value of $1,000 in one year:

present value = future value / (1 + interest rate)ⁿ

  • future value = $1,000
  • interest rate = 4%
  • n = 1

present value = $1,000 / (1 + 4%) = $1,000 / 1.04 = $961.54

this is an example of the financial principle of time value of money, i.e. one dollar today is worth more than one dollar tomorrow

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Answer:

1 -- A, 2 -- B, 3 -- C, 4 -- E, 5 -- D

Explanation:

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3 years ago
Assume that potential projects X, Y and Z will each pay a total of $100,000 over 20 years. X pays $8,000 per year for 10 years a
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Answer:

The answer is Project X is the most attractive to an investor.

Explanation:

We can use the definition of Net Present Value (NPV) to solve this problem and figure out which would be the best investment.

Net present value is the present value of future money. In other words, over certain period of time, how much is your investment worth today. It takes into consideration cash inflow and outflow over that period of time as well as interest that could be earned on alternative investments if you had the money today. See attachment to see the NPV formula.

In the attachment, we calculate the NPV for each one of the projects using a rate of return i=3% for all of them. Any rate of return could be used as long as they are the same for all projects.

A positive NPV value means a good investment and the higher that number is the better the investment. In this case, we can see that Project X has the higher NPV of all the projects. Therefore, project X is the most attractive for an investor.

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2 years ago
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1. Private and public

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7 0
3 years ago
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You expect a share of EconNews.Com to sell for $65 a year from now. If you are willing to pay $65.74 for one share of the stock
iogann1982 [59]

Answer:

dividend payment = $6

Explanation:

given data

sell = $65

pay = $65.74

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solution

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here d is dividend

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d = $6.00

so dividend payment = $6

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3 years ago
TRUE or FALSE??? HELP!!
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