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3 years ago

Example 31: S borrows 5,00,000 to buy a house. If he pays equal instalments for 20 years

Business

1 answer:

Veronika [31]3 years ago

7 0

Answer:

$58.729

Explanation:

To find the answer, we need to use the present value of an annuity formula.

The formula is:

P = X [(1 - (1 + i)^-n) / i ]

Where X is the annual instalment

P is the present value of the investment (500,000 in this case)(

i is the interest rate (10% in this case)

and n is the number of periods (20 years in this case)

We now plug the amounts into the formula:

500,000 = X [ (1 - (1 + 0.10)^-20) / 0.10 ]

500,000 = X [8.51356]

500,000 / 8.51356 = X

58,729 = X

So the value of the equal annual instalment will be $58.729

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The Outlet needs to raise $3.2 million for an expansion project. The firm wants to raise this money by selling zero coupon bonds

Pani-rosa [81]

Answer:

14,783.33 bonds

Explanation:

Given

Par value FV = $1000

n =20 * 2 =40

R= 7.80/2 = 3.90%

Price per bond:

price per bond : $PV = \frac{FV/}{(1+r)^n}$

$= \frac{000}{(1+0.039)^{40}}$

$= \frac{1000}{4.619786467}$

= 216.46

No. of bonds to be issued = $\frac{amount to raise}{ price per bond}$

$= \frac{3,200,000}{216.46}$

= 14,783.33 bonds

3 0

3 years ago

Badgersize Company has the following information for its Forming Department for the month of August.

sergiy2304 [10]

Question Completion:

Costs incurred in August:

Direct materials $154,000

Conversion costs $264,000

Answer:

Badgersize Company

Materials Conversion

a. Equivalent units 74,000 69,500

b. Cost per equivalent unit $3.162 $4.144

Explanation:

a) Data and Calculations:

Units Materials Conversion Total

Beginning WIP inventory 20,000 100% 20%

Units started August 54,000

Total units available 74,000

Transferred out 59,000

Ending WIP inventory 15,000 100% 70%

Cost of beginning WIP $80,000 $24,000 $104,000

Costs incurred in August 154,000 264,000 418,000

Total production costs $234,000 $288,000 $522,000

Equivalent unit Units Materials Conversion

Units transferred out 59,000 59,000 59,000

Ending WIP inventory 15,000 15,000 10,500

Equivalent units 74,000 69,500

Cost per equivalent unit

Total production costs $234,000 $288,000

Equivalent units 74,000 69,500

Cost per equivalent unit $3.162 $4.144

8 0

3 years ago

Kant Corporation retires its $500,000 face value bonds at 102 on January 1, following the payment of interest. The carrying valu

9966 [12]

Answer and Explanation:

The Journal entry is shown below:-

Bonds payable Dr, $500,000

Loss on retirement of bonds Dr, $28,750

($510,000 + $18,750 - $500,000 )

To Cash $510,000 ($500,000 × 1.02)

To discount on bonds payable $18,750 ($500,000 - $481,250)

(Being redemption is recorded)

Here we debited the bonds payable and loss on retirement of bonds as it decreased the liabilities and increased the loss and we credited the cash and discount on bonds payable as it decreased the assets and increased the liabilities

8 0

3 years ago

Suppose that the residents of Colgateville play golf incessantly. In fact, golf is the only thing they spend their money on. The

olchik [2.2K]

Answer:

CPI in 2020 =142.7

CPI in 2019 = 100

Inflation rate = 42.7%

Explanation:

Inflation is the increase in the general price level. Inflation erodes the value of money.

Consumer Price Index(CPI ): This is the weighted average price of a basket of goods and services consumed by a typical consumer. It is used to measure the rate of inflation.

The increase in the CPI is taken to be the rate of inflation. For example, the CPI rose to 1.09 from 1.00, this implies an inflation rate of 9% within the time period in focus.

The CPI =

The price of a basket of goods in a current year ÷ Divided by the price of a basket of goods in a base year

The consumer price

Value of basket of goods in 2019 = (1000× $2) + (100× $50) + ( 500× $0.10)= 7050

Value of basket of goods in 2020= (1000× $2.50) + (100× $75) + ( 500× $$0.12)=10,060

CPI in 2020 = 10,060/7050× 100 =142.7

CPI in 2019 = 100

CPI in 2020 =142.7

CPI in 2019 = 100

The inflation rate =(142.7/100-1 ) × 100 = 42.7%

Note , we assume the CPI for 2019 is 100, since we were not provided with data to compute the price of a basket of good in 2018

CPI in 2020 =142.7

CPI in 2019 = 100

Inflation rate = 42.7%

6 0

2 years ago

How much total interest will Molly pay using this plan?

aleksandrvk [35]

Theres no equation sorryy

8 0

2 years ago