Answer:
$6,225.08
Explanation:
The computation of the future value of these cash flows in year 4 is shown below:
= Year 1 cash flow × (1 + interest rate)^year + Year 2 cash flow × (1 + interest rate)^year + Year 3 cash flow × (1 + interest rate)^year + Year 4 cash flow × (1 + interest rate)^year
= $950 × 1.08^3 + $1,180 × 1.08^2 + $1,400 × 1.08^1 + $2,140
= $950 × 1.259712 + $1,180 × 1.1664 + $1,400 × 1.08 + $2,140
= $1,196.7264 + $1,376.352 + $1,512 + $2,140
= $6,225.08
In this scenario, there is a high degree of social risk for Weston.
<h3><u>
Explanation:</u></h3>
That act that has impacts on the people surrounding a person refers to social risk. The adverse effects that are caused as a result of actions of a particular person refer to social risk. Some of the examples of social risks include issues associated with labours, corruptions, etc. Most important things that are the result of social risk is the health related hazards.
Social risk also associates with the way the people treats the other based on certain criteria’s. In the given example Weston is driving a car that was presented as a gift by his father a long time ago. But as a partner of a law firm he thinks that others will disrespect him because of the car he drives. In this scenario, Weston has high degree of social risk.
<h3>
<u>Answer -</u></h3>
If one has been running a successful art and framing shop for three years and has decided to allow others to use his/her business name materials and methods in operating their own business for a fee. It may be called as a franchise agreement.
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<u>Explanation -</u></h3>
A franchise agreement allows the business owner to use the licensor's brand and method of doing business. The franchisor is the original or existing business owner who allows the other one to use his/her business name materials and methods in operating their own business.
A certain amount of fees is to be paid by the franchisee that may be called in the layman’s language as the licensee, who is supposed to pay the fee to the licensor (franchisor) are exchanged for the rights to use the franchisor's name is for a specific number of years.
Answer:
Option 1 is more convenient.
Explanation:
Giving the following information:
The annual salary is $100,000. You are offered two options for a severance package. Option 1 pays you 6 months' salary now. Option 2 pays you and your heirs $6,000 per year forever
The present value of option 1 is:
PV= 6*100,000= $600,000
To calculate the present value of option 2 we need to use the present value formula of a perpetual annuity:
PV= Cash flow/i
PV= 6,000/0.11= $54,545
There is no doubt that option 1 is better.
