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TEA [102]
3 years ago
13

Determine the future value of $21,000 under each of the following sets of assumptions (FV of $1, PV of $1, FVA of $1, PVA of $1,

FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) (Round your final answers to nearest whole dollar amount.):
Annual Rate Period Invested Interest Compounded Future Value
(a) 10% 8 years Semiannually $ _____
(b) 12% 4 years Quarterly $ _____
(c) 36% 25 months Monthly $ _____
Business
1 answer:
Marat540 [252]3 years ago
7 0

Answer:

(a) $43,656.90

(b) $33,698.70

(c) $43,967.70

Explanation:

Future Value of annuity shall be:

(a) 10% for 8 years, Semiannually compounded

In this since the interest is compounded semiannually, the effective interest rate = 10/2 = 5%

Future Value of $1 in 8 years with 10% interest compounded semiannually = 2.0789

Value of $21,000 = $21,000 \times 2.0789 = $43,656.90

(b) 12% for 4 years, Quarterly Compounded

In this since the interest is compounded quarterly, that is 4 times in a year, effective interest rate = 12/4 = 3%

Future value of $1 in 4 years with 12% interest compounded quarterly = 1.6047

Value of $21,000 = $21,000 \times 1.6047 = $33,698.70

(c) 36% 25 months, Monthly

In this since the interest is compounded monthly effective interest rate = 36/12 = 3%

Therefore, Future Value of $1 in 25 months @36% compounded monthly = $2.0937

Value of $21,000 = $21,000 \times 2.0937 = $43,967.70

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Net Present Value and Competing Projects For discount factors use Exhibit 12B.1 and Exhibit 12B.2. Spiro Hospital is investigati
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Answer:

1. Assuming a discount rate of 14%, compute the net present value of each piece of equipment.

  • Puro equipment: $255,203
  • Briggs equipment: $318,944

2. A third option has surfaced for equipment purchased from an out-of-state supplier. The cost is also $560,000, but this equipment will produce even cash flows over its 5-year life. What must the annual cash flow be for this equipment to be selected over the other two

  • $256,021

Explanation:

Year      Puro Equipment       Briggs Equipment

0             -$560,000                    -$560,000

1               $320,000                      $120,000

2              $280,000                      $120,000

3              $240,000                      $320,000

4               $160,000                      $400,000

5               $120,000                      $440,000

I used an excel spreadsheet to calculate the NPVs

the PV of the third equipment's annual cash flow should be higher than $878,944  (PV of Brigg's cash flows = $560,000 + $318,944)

now I used a annuity table: annuity factor for 5 years and 14% is 3.4331

cash flow x 3.4331 ≥ $878,944

cash flow ≥ $878,944 / 3.4331 = $256,021

Download pdf
5 0
3 years ago
The following items are reported on a company's balance sheet: Cash $210,000 Marketable securities 120,000 Accounts receivable (
valkas [14]

Answer:

See below

Explanation:

1. Current ration

= Current asset/Current liabilities

Current assets = Cash + Marketable securities + Accounts receivables + Inventory

= $210,000 + $120,000 + $110,000 + $160,000

= $600,000

Current liabilities = Accounts payable = $200,000

Current ratio = $600,000/$200,000

Current ratio = 3:1

2. Quick ratio

= Current assets - Inventory / Current liabilities

= ($600,000 - $160,000) / $200,000

= 2.2 : 1

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2 years ago
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Explanation:

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3 years ago
Suppose a monopoly can separate its customers into two groups. If the monopoly practices price discrimination, it will charge th
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Answer:

the higher price elasticity of demand

Explanation:

A monopoly is when there is only one firm operating in an industry.

Price discrimination is when a producer sells the same good for different prices in different markets.

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Demand is elastic when a change in price has greater effect on the quantity demanded.

A monopoly would charge the lower price for customers with a higher elasticity of demand because if price is high consumers would reduce the quantity demanded and the revenue of the monopoly firm would fall.

I hope my answer helps you.

4 0
3 years ago
Read 2 more answers
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