In this example, Sarah is actually paying interest, which is compounded monthly at the rate of 7.496%. So, the correct option that matches the above statement is B.
Compound interest can be easily calculated by the way of putting the values given in the formula for compound interest, which is compounded on a monthly basis.
<h3>Calculation of Compound Interest</h3>
- Compound interest is best defined with the terms as interest given on accrued interest or the accumulated interest in addition to the interest on the principal amount.
- In the example, the amount of loan is not given. Hence, we are assuming that Sarah took a loan of $10000. It is also not provided that the tenure of the loan taken by Sarah, so we are assuming the time period as one year.
- The formula to calculate Compound interest is as given below,
- In the formula above <em>r </em>is denoted as rate of interest,<em> </em><em>n </em>is the number of times such interest is paid throughout the tenure and<em> t </em>is the time. So putting the assumed values in the formula, we get,
- So the actual interest actually paid will be $749.58 for the period of 1 year from such calculation.
- If we calculate such interest paid, the effective rate of interest paid by Sarah will account to 7.496% (rounded off to three decimal places).
Hence, we can say that Sarah will be actually paying the interest at the rate of 7.496% and that the correct option is B.
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Answer:
A. 2 years
B. 86.96
C. 16.46%
Explanation:
Payback period calculates the amount of time taken to recoup the initial investment made on a project.
The net present value substracts the present value of tax adjusted cash flows from the amount invested in the project.
Using the financial calculator to find the NPV:
Cash flow for year 0 = -500
Cash flow for year 1 = 300
Cash flow for year 2 = 200
Cash flow for year 3 = 150
Interest rate = 6%
NPV = $86.96
Internal rate of return is the discount rate that equates the tax adjusted cash flows from a project to the original amount invested.
Using the financial calculator to find the NPV:
Cash flow for year 0 = -500
Cash flow for year 1 = 300
Cash flow for year 2 = 200
Cash flow for year 3 = 150
Interest rate = 6%
IRR = 16.46%
Two basic requirements to support the declaration of a cash dividend are:-
1) Retained earning accounts should have a positive balance greater than dividends, as dividend can be issued only from free reserves.
2) the cash account has a balance greater than the amount of dividend declared, as we have to pay cash for dividend in the near future
Cash dividends affect cash and equity on the balance sheet. Retained earnings and cash are deducted by the sum of dividends. Equity dividends do not affect a company's liquidity, only the equities section of the balance sheet.
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Answer:
b. It may be used to estimate inventories for interim statements.
Explanation:
As we know that
Gross profit = Sales - the cost of goods sold
By doing the inventory valuation through the gross profit method, it estimated inventories for interim statements as these statements are covering the financial information that is less than a year so that the proper analysis could be made and in this, no auditing is required.
Therefore, for interim statements, the gross profit method is required.
Answer:
b. Noise
Explanation:
Although there are other factors that may act as barriers to effective communication. However the most likely factor here is noise.
It is most likely that when Mary was stating that a dozen cookies cost $2.99, the newspaper staff was affected by noise coming from people or the printing press machines and thought he had heard $29.90.
