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Mrrafil [7]
2 years ago
5

A first saving account pays 5% compounded annually. A second saving account pays 5% compounded continuously. Which of the two in

vestments is better in the long term?
Business
1 answer:
Marysya12 [62]2 years ago
3 0
The account that’s compounded continuously is the better investment long-term because you accrue interest on top of interest on a daily basis which grows exponentially.
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Toy Town is considering a new toy that will cost $49,100 in startup costs. The toy is expected to produce cash flows of $47,500
Tasya [4]

Answer:

NPV with a 14.9% discount rate: 6,329.06

The toy should be produced as the NPV is positive.

IRR = 26.65%

Explanation:

First we calculate for the NPV using the given discount rate of 14.9%

We will calculate the present value of each year cash inflow:

\frac{inflow}{(1 + rate)^{time} } = PV  

Year 1 cash inflow: 47,500.00

time   1.00

rate  0.149

\frac{47500}{(1 + 0.149)^{1} } = PV  

PV   41,340.30

Year 2 cash inflow:  18,600.00

time   2.00

rate  0.149

\frac{18600}{(1 + 0.149)^{2} } = PV  

PV   14,088.76

Then, we add them and subtract the investment to get NPV

NPV = 14,088.76 + 41,340.3 - 49,100 = 6,329.06

The toy should be produced as the NPV is positive.

Now for the IRR

That is the rate at which NPV equals zero we can solve for this using the quadratic equation as there are only two cash flow:

Year 1 will discount at (1+IRR)

Year 2 will be discount at (1+IRR )^2

So we can express and recreate the quadratic formula:

18,600 X^2 + 47,500 X - 49,500 = 0

A = 18,600

B = 47,500

C = -49,100

x_1 = \frac{-b+\sqrt{b^{2} -4ac}}{2a}\\x_2 = \frac{-b -\sqrt{b^{2} -4ac}}{2a}

We can solve and get:

x1 =  0.78957

x2 = -3.3433

We take the positive value.

and now solve for IRR

\frac{1}{1+ IRR} = 0.78957\\IRR = \frac{1}{0.78957} -1

IRR = 0,2665121 = 26.65%

This will be the IRR for the project.

4 0
3 years ago
Suppose you deposited $5,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year. How much would be
sleet_krkn [62]

Answer:

$5,175

Explanation:

The computation of the amount after 8 month is as follows

As we know that

Amount = Principal × (1 + interest rate × number of days ÷ total number of days)

where,

Principal = $5,000

Interest rate = 5.25%

Number of days = 30 days × 8 months = 240 days

And, the total number of days = 360 days

So, the amount after 8 months is

= $5,000 × (1 + 5.25% × 240 days ÷ 360 days)

= $5,000 × 1.035

= $5,175

8 0
3 years ago
A government's comprehensive annual financial report (CAFR) is divided into three main sections. The statements, schedules, tabl
Savatey [412]

Answer:

Step wise detailed solution is given in the attached diagram

3 0
2 years ago
Stockholders, employees and environmentalists are examples of stakeholders whose interests
Gelneren [198K]

Stockholders, employees and environmentalists are examples of stakeholders whose interests and needs often conflict.

<h3>Who is a stakeholder?</h3>

A stakeholder can be defined as an independent individual, organization or social group that has an interest in a particular business organization (company), and as such they can either affect or be affected by the decisions taken in the business.

This ultimately implies that, stockholders, employees, investors, and environmentalists are examples of stakeholders whose interests and needs often conflict.

Read more on stakeholders here: brainly.com/question/15532995

#SPJ1

7 0
2 years ago
WWhich of the following methods provides the easiest way to quickly share files and folders with other users on the network just
BlackZzzverrR [31]

Answer:

C. Public folders  

Explanation:

A public folder is a folder that is a way that information and files can be shared quickly and easily with multiple users and groups.

In using public folder,  the user simply has to move or copy a file into a public folder to make it accessible.  

It is designed for shared access and to provide an easy and effective way of  sharing information with other people especially in a workgroup.

6 0
3 years ago
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