We can calculate the total inflation rate in an easily understandable manner. The total inflation rate is the total rate of change of the consumer price index (CPI) over a certain given period of time.
<h3>What is inflation?</h3>
A general increase in the prices of goods and services in an economy can be called Inflation. Whenever the general price level rises, each unit of currency purchases fewer goods and services; simultaneously, inflation accords to a reduction in the purchasing power of money.
The total inflation is calculated using this given formula:
((Target Year – Base Year) ÷ Base Year) x 100
Thus, the Total inflation rate refers to the total rate of change of the consumer price index (CPI) over a certain given period of time.
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Answer:
D. $30,000
Explanation:
The bond is issued on discount when the issuance price is less than the face value of the bond. The discount is expensed over the bond period until maturity. It is added to the interest expense value to expense it.
This discount will be amortized using Effective Interest method as below
Interest Payment = $5,000,000 x 8% x 6/12 = $200,000
Interest Expense = $4,600,000 x 10% x 6/12 = $230,000
Discount amortization = $230,000 - $200,000 = $30,000
Answer:
Instructions are listed below
Explanation:
Giving the following information:
A company is considering a project which requires a $2 million capital investment.
The project can bring in annual revenue of $170k for the next 25 years.
The annual operation cost is $10k.
Starting from year 20, the equipment will need major maintenance and this cost starts at $5k and increases by 5k each year until the end of the project lifetime (25 years). The equipment has a salvage value of $100k at the end of the project.
The interest rate is 6%
n
<h3>NFV= Io - ∑[Ct*(1+i)^n] </h3>
t-1
Io= initial investment
Ct= cashflow of the period
i= interest rate
n= number of period until the end
NFV= -2,010,000 + [170000* (1.06^25)] + [170000*(1.06^24)] + .... +
NFV= $2,067,453.755
Answer:
GAPV = $7,000 ×({1 - [(1 + .035) / (1 + .065)]^5} / (.065 - .035)) = $31,063.79.
Explanation:
