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stepan [7]
3 years ago
10

Shelton Enterprises is expecting tremendous growth from its newest boutique store. Next year the store is expected to bring in n

et cash flows of $675,000. The company expects its earnings to grow annually at a rate of 13 percent for the next 15 years. What is the present value of this growing annuity if the firm uses a discount rate of 18 percent on its investments? (Round to the nearest dollar.)
A. $5,478,320
B. $6,448,519
C. $6,750,000
D. $7,115,449
Business
1 answer:
Sedaia [141]3 years ago
4 0

Answer:

B. $6,448,519

Explanation:

The computation of the present value of this growing annuity is given below:

PVA = [Cash flow at year 1 ÷ (interest rate - growth rate)] × {1 - [(1 + growth rate) ÷ (1 + interest rate)^number of years}

= [$675,000 ÷ (0.18 - 0.13)] × [1 - (1.13 ÷ 1.18)^15]

= $6,448,519

Hence, the correct option is b.

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1 year ago
MacKenzie Company sold $620 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 5.0% serv
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Answer:

DR Cash $589  

DR Credit Card expense $31

CR Sales  $620

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<u>Working</u>

Cash

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4 0
3 years ago
A case study in the chapter analyzed purchasing-power parity for several countries using the price of Big Macs. Here are data fo
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Answer:

Predicted exchange rate = Country price of Big Mac/ US price of Big Mac

Predicted exchange rate:

Chile = 2,050 / 4.37

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Hungary = 830 / 4.37

= 189.93 Forints / USD

Czech Republic = 70 / 4.37

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Brazil = 11.25 / 4.37

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<em>According to purchasing power parity, the predicted exchange rate between the Hungarian forint and the Canadian dollar is </em><em><u>153.42 Forint per C$</u></em><em>. However, the actual exchange rate is </em><em><u>217 Forint per Canadian Dollar</u></em><em>. </em>

Predicted exchange rate = 830 / 5.41 = 153.42 Forint per C$

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3 years ago
Assume that a firm hires an additional employee. If the marginal product for that employee is greater than for the previous empl
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If the marginal product for that employee is greater than for the previous employee hired, it must be that there are gains from specialization

<h3>What is marginal product ?</h3>
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8 0
1 year ago
Other things the same, when the price level rises, interest rates select one:
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I think its number c, i hope it is
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3 years ago
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