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jeyben [28]
2 years ago
7

Peter wishes to create a retirement fund from which he can draw when he retires and the same amount at each anniversary of his r

etirement for years. He plans to retire years from now. What investment need he make today if he can get a return of per year, compounded annually
Business
1 answer:
uranmaximum [27]2 years ago
3 0

Answer:

$65,742.60

Explanation:

Note: The full question is <em>"Peter wishes to create a retirement fund from which he can draw $20,000 when he retires and the same amount at each anniversary of his retirement for 10 years. He plans to retire 20 years from now. What investment need he make today if he can get a return of 5% per year, com- pounded annually?"</em>

At first, we need to find the PV of withdrawals and there are 11 withdrawals starting 20 years from now.  

PV = PMT/r * 1 - 1/(1+r)^n. This formula gives the PV one period before the first withdrawal. That is 19 years from now because the first withdrawal is 20 years from now.

PMT = 20,000, n = 11,  

r = 0.05

PV19 = 20,000/0.05 * [1 - 1/(1+0.05)^11]

PV19 = 400,000 * 0.4153207109

PV19 = 166,128.28436

Now, we need to discount this back to toda

PV0 = PV19/(1 + r)^n; n = 19, r = 0.05

PV0 = 166,128.28436/(1 + 0.05)^1

PV0 = $65,742.6033421702

PV0 = $65,742.60

So, Peter needs to make $65,742.60 today.

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Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances
user100 [1]

Answer:

The DDM tells us that share price = D*(1+G)/R-G

Dividend = 4.00

G= 0.05

R= 0.15

Price = 4*(1.05)/0.15-0.05

Price= $42

Explanation:

We use the dividend discount method to estimate the current price. We use the growth rate and required return to figure out the current price by using the DDM formula.

5 0
3 years ago
Read 2 more answers
The five-dollar Burger Joint gift card that your friend gave you for your birthday expires today. You can either use the gift ca
Radda [10]

Answer:

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

We know that if a person stay at home and eat delicious home-cooked then he must use some ingredients to cook food.

Therefore, the opportunity cost of eating the home-cooked meal is five-dollar Burger Joint gift card and the value of ingredients that are use in the home-cooked food.

4 0
3 years ago
Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislo
Vladimir79 [104]

Answer:

Cost of purchase= $1,014,300

Explanation:

Giving the following formula:

Production:

August= 22,600

September= 21,300

Ending inventory= 20% of the following month's production needs.

Beginning inventory= 10,800 kg

The cost of Jurislon is $18.00 per kilogram.

One Miniwarp requires 2.5 kilograms of the raw material Jurislon.

<u>First, we need to calculate the purchases in kg required using the following formula:</u>

Purchases= production + desired ending inventory - beginning inventory

Purchases= (2.5*22,600) + (2.5*21,300)*0.2 - 10,800

Purchases= 56,350kg

<u>Now, the total cost of purchase:</u>

Cost of purchase= 56,350*18= $1,014,300

7 0
2 years ago
The cost of merchandise sold during the year was $45,000. Merchandise inventories were $13,500 and $10,500 at the beginning and
GenaCL600 [577]

Answer:

cash payments for merchandise total is $44,000

Explanation:

purchase for the year

Beginning Investment + Purchases - Ending Investment = Cost of Merchandise sold

13,500 + Purchases - 10,500 = 45,000

Purchases = 42,000

Therefore, the total cash paid  for merchandise

Beg. A/P + Purchases - End. A/P = Cash Paid

7,000 + 42,000 - 5,000 = $44,000

4 0
3 years ago
Robert??? I need to ask you something ​
ELEN [110]

Answer:

i'm not sure this is the right place to ask him if you want to ask him in private

Explanation:

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2 years ago
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