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Whitepunk [10]
3 years ago
15

Method A assumes simple interest over final fractional periods, while Method B assumes simple discount over final fractional per

iods. The annual effective rate of interest is 20%. Find the ratio of the present value of a payment to be made in 1.5 years computed under method A to that computed under Method B.
Business
1 answer:
Marina86 [1]3 years ago
4 0

Answer:

The answer is "1.1"

Explanation:

In the case of a single Interest, the principal value is determined as follows:

\ I = Prt \\\ A = P + I\\A = P(1+rt) \\\\A = amount \\P= principle\\r = rate\\t= time

In case of discount:

D = Mrt \\P = M - D \\P = M(1-rt)\\\\Where,  D= discount \\M =\  Maturity  \ value \\

Let income amount = 100, time = 1.5 years, and rate =20 %.

Formula:

A = P(1+rt)  

A =P+I

by putting vale in the above formula we get the value that is = 76.92, thus method A will give 76.92  value.

If we calculate discount then the formula is:

P = M(1-rt)

M = 100  rate and time is same as above.

P = 100(1-0.2 \times 1.5) \\P = 100 \times \frac{70}{100} \\P = 70

Thus Method B will give the value that is 70  

calculating ratio value:

ratio = \frac{\ method\  A \ value} {\ method \ B \ value}\\\\\Rightarrow ratio = \frac{76.92}{70}\\\\\Rightarrow ratio = \frac{7692}{7000}\\\\\Rightarrow ratio = 1.098 \ \ \ \  or \ \ \ \  1.

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Pontchartrain Company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and De
solmaris [256]

Answer:

$1,568,498

Explanation:

First calculate the Amont of discount

Discount on the bond = Face value - Proceeds from the bond = $20,000,000 - $19,604,145 = $395,855  

Now prepare the bond amortization

The Bond Amortization schedule is attached with this answer, please find it.

Now calculate the interest expense for 2017

Interest Expense 2017 = $784,165.80  + $784,332.43

Interest Expense 2017 = $1,568,498.23

Interest Expense 2017 = $1,568,498

3 0
2 years ago
You are asked to recommend whether a firm should make or purchase product A. The following are data concerning the two options.
Alexxandr [17]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

For the purchase​ option:

Buying price= ​$22 per unit.

For the make​ option:

Weekly rental payment of ​$30,800

The firm also has to hire five operators to help make product A. Each operator works eight hours per​ day, five days per week at the rate of ​$14 per hour.

The material cost for the make option is ​$15 per unit of product A.

A) We need to find the number of units that makes the unitary fixed costs= $7

Weekly rental= 30800

Direct labor= ($14*8 hours*5workes)*5 days= 2800

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7=33600/Q

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B) Now Q= 6600

Buy= 6600*22= $145,200

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3 0
3 years ago
Adjusting Entries Journalize the adjusting entry needed at December 31 for each situation. Record debits first, then credits. Ch
vladimir2022 [97]

Answer:

Date       Accounts Titles                Debit         Credit

Dec-31    Salaries expense              $2,300  

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Dec-31    Depreciation expense     $200

               (Furniture )

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                       (Furniture)

Dec-31    Insurance expense          $450

                       Prepaid Insurance                   $450

Dec-31    Supplies expense             $80

                        Supplies                                   $80

7 0
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Pavel [41]

Answer: Option D              

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Hence from the above we can conclude that the correct option is D.  

6 0
3 years ago
The fed can increase the federal funds rate by
Stella [2.4K]

The answer is selling Treasury bills, which decreases bank reserves. The government securities that are used in open market processes are Treasury bills, notes or bonds. If the FOMC needs to grow the money supply in the economy it will acquire securities. On the other hand, if the FOMC wants to decrease the money supply, it will vend its securities.

5 0
3 years ago
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