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Jet001 [13]
2 years ago
15

Lang Warehouses borrowed $178,960 from a bank and signed a note requiring 8 annual payments of $28,819 beginning one year from t

he date of the agreement. (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.) Required: Determine the interest rate implicit in this agreement. (
Business
1 answer:
yan [13]2 years ago
4 0

Answer: 6%

Explanation:

The annual payments can be considered to be annuity payments as they are constant. The amount borrowed can be considered the present value of the annuity.

Present value of annuity = Annuity * Present value interest factor of annuity, 8 years, %?

178,960 = 28,819 * Annuity factor

Annuity factor = 178,960 / 28,819

= 6.20979

To find out the interest rate, look at the Present Value of Annuity table and go to the 8 period column. Look for 6.20979. The interest rate that intersects with this factor is the interest rate implicit in this agreement.

That rate is 6%.

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You want to have $3 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is
sasho [114]

Answer: $25078

Explanation:

Firstly, we'll find the real interest rate which will be:

(1 + R) = (1 + r)(1 + h)

(1 + 10%) = (1 + r)(1 + 4.8%)

(1 + 0.1) = (1 + r)(1 + 0.048)

1.1 = (1 + r)(1.048)

r = 4.96%.

Now the annual deposit will be gotten by using the annuity future value which will be:

3 million = C(1.0496^40-1) / 0.0496

3 million = C(5.3995) / 0.0496

3 million = 119.627C

C = 3 million/119.627

C = 25078

Therefore, the real amount that must be deposited each year to achieve the goal is $25078

8 0
3 years ago
Patrick Corporation is authorized to issue 1,000,000 shares of $1 par value common stock. During 2014, the company has the follo
gavmur [86]

Answer:

cash   4,900,000 debit

   common stock              700,000 credit

   additional paid-in        4,200,000 credit

   in excess of Par-value

treasury stock:   360,000 debit

      cash                      360,000 credit

dividends     340,000 debit

   dividends payable        340,000 credit

Explanation:

cash proceeds: 700,000  x 7 = 4,900,000

common stock: 700,000  x 1  =    700,000

additional paid-in:  (difference)           4,200,00

treasury stock: 20,000 x 18 = 360,000

outstanding shares: 700,000 - 20,000 = 680,000

cash dividends: 680,000 x 0.50 = 340,000

6 0
3 years ago
Assume that Bolton Company will pay a $2.00 dividend per share next year, an increase from the current dividend of $1.50 per sha
Gwar [14]

Answer:

None of the options are correct as the price today will be $26.786

Explanation:

The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach (DDM). The DDM bases the value of a stock on the present value of the future expected dividends from the stock.

The formula for price under constant growth model is,

P0 = D1 / (r - g)

Where,

  • D1 is the dividend expected for the next period
  • r is the required rate of return or cost of equity
  • g is the growth rate in dividends

However, as the constant growth rate in dividends is to be applied from Year 2 onwards, we will use the D2 to calculate the price at Year 1 and we will then discount this further for one year to calculate the price today.

P1 or Year1 price  =  2 * (1+0.05) / (0.12 - 0.05)

P1 or Year 1 price = $30

The price of the stock today or P0 will be,

P0 = 30 / (1+0.12)

P0 = $26.786

3 0
3 years ago
It is the process of enabling people to increase control and to improve their health.​
Rashid [163]

Answer:

Health Promotion

Explanation:

Health promotion is the process of enabling people to increase control over, and to improve, their health. This is accomplished by building healthy public policies, creating supportive environments, and strengthening community action and personal skills. ...

Hope this helps!

4 0
2 years ago
Read 2 more answers
Last year you purchased a new car for $18,500. Today you sold the car for $14,750. If the car's value is measured by what someon
vodka [1.7K]

Answer:

-20.27%

Explanation:

Value = ($14,750 / $18,500) - 1 = -20.27%

5 0
2 years ago
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