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Rudiy27
3 years ago
14

The impact of interest rate changes in the PV of $100 due in 20 years compared to the PV of $100 due in one year are:

Business
1 answer:
kherson [118]3 years ago
8 0

Answer: c. greater because interest rate changes have a greater impact on distant cash flows than near-term cash flows.

Explanation:

Interest rate changes have a greater impact on distant cashflows because those cashflows will be exposed to the interest rates for longer. This means that they will be subjected to more discounting than a cashflow that is due in one year which would be subject to only a single year of discounting.

For instance, assume the required rate of return for two investments is 10%. One investment yields $10,000 in 20 years and another yields $10,000 in 2 years .

The present value of both are:

= 10,000 / (1 + 10%)²⁰                                                  = 10,000 / ( 1 + 10%)²

= $1,486.43                                                                  = $8,264.46

<em>Notice the difference. The longer term investment was more exposed to interest rate effects. </em>

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Because of marketing, we have more choices, better products, and lower prices.
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Answer:

True

Explanation:

That  is true for any product but luxury products.

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3 years ago
Ch14 C1: Explain the purpose and nature of, and the role of ethics in, managerial accounting.
Wittaler [7]

Answer and Explanation:

Purpose of Ethics- Ethical codes are the fundamental principles that accounting professionals choose to abide by to enhance their profession, maintain public trust, and demonstrate honesty and fairness.

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2 years ago
Read 2 more answers
Capital structure decisions include determining:
xenn [34]

Answer:

4. how much debt should be assumed to fund a project.

Explanation:

The capital structure is a mix of the debt and equity

In equation form, it is

Capital structure = Debt + equity

These two items should be taken for financing the assets of the company

And, the other options that are mentioned are related to the techniques of the capital budgeting  

Therefore, the correct option is 4.

5 0
3 years ago
When did the ringling brothers organize their first small circus?
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3 years ago
Exercise 25-08 Pierre’s Hair Salon is considering opening a new location in French Lick, California. The cost of building a new
Bas_tet [7]

Answer: 14%

Explanation:

To calculate the Annual Rate of Return on such a project, you divide the Average net profit that the project is expected to make by the Average investment value.

This in effect compares future income to the investment in the project and so is a very useful tool in analysis.

Annual Rate of Return = Average Net Profit / Average Investment

Average Net Profit.

A new salon will normally generate annual revenues of $64,160, with annual expenses (including depreciation) of $40,500.

The net profit is revenue less expenses so,

= 64,160 - 40,500

= $23,660

Average Investment

The Average Investment is calculated by taking the average of the Initial Value of the project and it's ending value.

Initial value is $262,000 as that was the cost.

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= 23,660 / 169,000

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3 years ago
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