Which phrase best completes the diagram?

You deposit $5,000 per year at the end of each of the next 25 years into an account that pays 8% compounded annually. How much

Volgvan

Answer:

The correct answer is A. $18,276

Explanation:

First you have to calculate how much you'd end up having at the end of the 25 years period in your savings account.

You calculate the total amount saved for each year, using the formula:

$S_{n} = S_{n-1} *(1+r)+D$

Where

$S_{n}$ is the total amount in the savings account for this period.

$S_{n-1}$ is the total amount in the savings account from the previous period.

$r$ is the interest rate.

$D$ are the annual deposits being made into the savings account.

Therefore for the first year you'd do:

$S_{1} = S_{0} *(1+r)+D$

$S_{1} = 0*(1+0.08)+5000=5000$

For the second year:

$S_{2} = S_{1} *(1+r)+D$

$S_{2} = 5000*(1+0.08)+5000=10400$

And so on. You can help yourself calculate the value of this series using programs like Excel.

I have attached an Excel file that has a table with the savings values for each of the 25 years.

So, the 25th year you’ll have $365,529.70 in your savings account. Now you simply divide this number by 20 (that will be the number of years you’ll be withdrawing the same dollar amount from your savings account):

$Withdrawals = 365,529.70/20=18,276.485$

In conclusion, you’d be able to withdraw $18,276.485 each year for the following 20 years after the 25th deposit, if all withdrawals are the same dollar amount.

Download xlsx

3 0

3 years ago

During 2020, Stellar Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Stellar for a

Ber [7]

Answer:

What is the amount of gross profit realized during 2020?

(460 x $33.30) + (230 x $29.60) + (276 x $18.50) = $27,232

What is the amount of inventory of unsold straight chairs on December 31, 2020?

[(920 - 460) x $56.70] + [(690 - 230) x $50.40] + [(1,610 - 276) x $31.50] = $26,082 + $23,184 + $42,021 = $91,287

Explanation:

lump sum cost of chairs = $137,655

Type Chairs Selling Price Each Total

Lounge chairs 920 $90 $82,800

Armchairs 690 $80 $55,20

<u>Straight chairs 1,610 $50 $80,500</u>

total 3,220 $218,500

if we allocate costs based on resale, then each chair should cost:

Lounge chairs $90 x ($137,655 / $218,500) = $56.70

Armchairs $80 x ($137,655 / $218,500) = $50.40

Straight chairs $50 x ($137,655 / $218,500) = $31.50

contribution margin per chair:

Lounge chairs $90 - $56.70 = $33.30

Armchairs $80 - $50.40 = $29.60

Straight chairs $50 - $31.50 = $18.50

7 0

4 years ago

Smith buys and sells equity securities. On December 15, 2021, Smith purchased $542,000 of Jones shares and elected the fair valu

zimovet [89]

Answer:

$46,000

Explanation:

We can find out the the revaluation gain that need to be reported at the year end by just deducting the the cost of the investment by its current fair value .

DATA

Fair value = 588,000

Cost = 542,000

Revaluation gain = Current fair value - Cost

Revaluation gain = 588,000 - 542,000

Revaluation gain = $46,000

The revaluation gain of $46,000 will be reported in other compreensive income of smith's financial statements.

4 0

3 years ago

Juan recently completed 20 years of service in the army. during this time, he managed to save a little money and is entitled to

malfutka [58]

The suggestion suitable for Juan’s situation is for Juan to check out the enterprises zones in the Colorado. Having to check this out will help him to know where to locate his small business and to have a solution in terms of limiting his tax liability in his business.

4 0

3 years ago

Equipment was purchased for $60,000. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation

Sholpan [36]

Answer:

a. $11,760.

Explanation:

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

Cost of asset = $60,000 + $8,000 + $2,800 = $70,800

($78,800 - $12,000) / 5 = $11,760.

I hope my answer helps you

6 0

3 years ago