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Trava [24]
2 years ago
6

Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $3,500 under each of the fol

lowing situations:
a. The first payment is received at the end of the first year, and interest is compounded annually.
b. The first payment is received at the beginning of the first year, and interest is compounded annually.
c. The first payment is received at the end of the first year, and interest is compounded quarterly.
Business
1 answer:
Katena32 [7]2 years ago
7 0

Answer:

a. The first payment is received at the end of the first year, and interest is compounded annually.

present value = annual payment x PVIFA

annual payment = $3,500

PVIFA, 12%, 5 periods = 3.6048

present value = $12,616.80

b. The first payment is received at the beginning of the first year, and interest is compounded annually.

annual payment = $3,500

PVIF annuity due, 12%, 5 periods = 4.0373

present value = $14,130.55

c. The first payment is received at the end of the first year, and interest is compounded quarterly.

present value = annual payment x PVIFA

annual payment = $3,500

effective interest rate = 1.03⁴ - 1 = 12.55%

PVIFA, 12.55%, 5 periods = 3.5562

present value = $12,446.70

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The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summ
gavmur [86]

Answer:

A) It is a use of cash, and will be shown in the investing section as a subtraction.

B) Depreciation Expense

C) Chester’s long-term debt will rise by $10,000,000

D) Broad differentiation

E) Andrews ROE will increase.

Explanation:

A) As the company will do a cash dibursement will be considered cash use and because is investing on it to increase future cash flow

B) A period cost is a cost which cannot be capitalized into an asset. As cost which occur as the time passes over the years Which is the case for depreciation expense

C) bonds payable for 10,000,000 will be recorded

the leverage is a ratio to analize the firm it does not influence the accounting

D) The company differenciate his products from the rest of their competitors in a great variety of products rather than a single buyer segment.

E) ROE will increase as the leverage makes the debt weight increase while the equity weight (proportion of the company owned by the stockholders)

For the rest ofthe options the information provided is insufficient please do another question with the information

8 0
2 years ago
A disadvantage of the free cash flow valuation method is A. The free cash flow method is not used widely in practice. B. The ter
SSSSS [86.1K]

The main disadvantage of the valuation method is that the terminal value tends to dominate the total value in many cases.

In a free cash flow valuation, the intrinsic value equals present value of its free cash flow and thus, the net cash flow is left over for distribution to stockholders and debt-holders in each period.

  • So, the disadvantage of the free cash flow valuation method is that the terminal value tends to dominate the total value in many cases.

Hence, the Option B is correct.

Read more about this here

<em>brainly.com/question/22593826</em>

7 0
2 years ago
How did the shift to steam power lead to the growth of cities?
MA_775_DIABLO [31]
The shift to steam power contributed to the growth of cities in many way. Firstly, it provides a continuous source of power to industries, which leads to high level of productivity. The availability of jobs in the industries makes the people in the rural areas to migrate to the cities in search of greener pastures. Steam power also created a new and efficient means of transportation which make it possible to move people and goods over long distances in record time.
7 0
3 years ago
A bond with a $1,000 par value sells for $895. The coupon rate is 7%, the bonds mature in 20 years, and coupon interest is paid
LuckyWell [14K]

Answer:

After tax cost of debt is 5.239%

Explanation:

Given:

Face value = $1,000

Bond price = $895

Coupon payments = 0.035×1,000 = $35 (coupon payment is paid semi-annually so 7% is divided by 2)

Maturity = 20×2 = 40 periods

Using bond price formula:

Bond price = Present value of face value + present value of coupon payments

Use excel function =RATE(nper,pmt,PV,FV) to calculate cost of debt.

substituting the values:

=RATE(40,35,-895,1000)

we get Pre-Tax cost of debt = 4.03% semi- annual

Annual rate is 4.03%×2 = 8.06%

Note: PV is negative as bond price is cash outflow.

After tax cost of debt = 8.06(1 - 0.35)

                                     = 5.239%

3 0
3 years ago
During the current month, Grey Company sold 60,000 units for $10 each. Each unit had an equivalent cost of $6 each. The journal
Romashka [77]

Answer:

The sale entry would be:

Dr Trade Receivable  $ 600,000

Cr                     Sale            $600,000

And the inventory sent out of warehouse to customer would be recorded as:

Dr Cost of goods sold $360,000

Cr Finished Goods account  $360,000

Explanation:

As we know the sale is credit in nature and inventory sold on credit increases the trade receivable which is debit in nature.

So the entry would be:

Dr Trade Receivable  $ 600,000

Cr                     Sale            $600,000

And the inventory sent out of warehouse to customer would be recorded as:

The reason is that once the product is sold then the cost of finished goods is eliminated from the inventory account and would be charged to the cost of goods sold. So the entry would be posted by the cost of equivalent that the company has incurred to manufacture the product. Here the cost of equivalent is given and is $6 per unit.

So for the sale of 60,000 units the total cost of equivalent will be:

Total equivalent cost = 60,000 units * $6 per unit = $360,000

And the entry would be:

Dr Cost of goods sold $360,000

Cr Finished Goods account  $360,000

3 0
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