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kotegsom [21]
3 years ago
7

Jane receives a 10-year increasing annuity-immediate paying 100 the first year and increasing by 100 each year thereafter. Mary

receives a 10-year decreasing annuity-immediate paying X the first year and decreasing by X/10 each year thereafter. At an effective annual interest rate of 5%, both annuities have the same present value. Calculate X.
a. 860
b. 864
c. 868
d. 872
e. 876
Business
1 answer:
ss7ja [257]3 years ago
5 0

Answer:

b. 864

Explanation:

Jane; Pv = P.a 10? + Q[(a.10? - 10v^10)/i}]

Pv = 100(7.7217) + 100[(7.7217 - 6.1391)/0.05]

Pv = 3937.38

Mary; Pv = P.a 10? + Q[(a.10? - 10v^10)/i}]

Pv = x(7.7217) - (x/10)[(7.7217 - 6.1391)/0.05]

Pv = 7.7217x - (x/10)(31.6521) = 4.5565x

Equating Pv for both Jane and Mary

3937.38 = 4.5565x

x = 3937.38/4.5565 = 864.124

x = 864.124 = 864

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Tool Manufacturing has an expected EBIT of $ 39,000 in perpetuity and a tax rate of 33 percent. The firm has $ 80,000 in outstan
Thepotemich [5.8K]

Answer:

$208,530

Explanation:

The computation of value of levered firm is shown below:-

For computing the value of levered firm first we need to compute the Value of Unleavened firm

Value of unlevered firm = Earning before interest and tax × (1 - tax rate) ÷ Cost unlevered of Capital

= $39,000 × (1 - 33%) ÷ 15%

= $39,000 × 0.67 ÷ 15%

= $39,000 × 4.67

= $182,130

Now, the Value of levered firm = Value of unlevered firm + Outstanding debt × Tax rate

= $182,130  + $80,000 × 33%

= $182,130  + $26,400

= $208,530

3 0
3 years ago
A store accidentally priced an item at $20 instead of $30 and honored the mispricing. where should the $10 difference
dimulka [17.4K]

Answer:

The difference is attributed to sales.

Explanation:

The difference of $10 will be attributed to sales because $20 is charged instead of $30 which means selling price has been changed. However, it cannot be considered as a loss because the cost price is not given. It might be the actual cost price for the item is $15 and the store is selling at $20 instead of $30. So, in this case, the store is making a profit of $5. Thus, the difference is considered as the sale difference.

4 0
3 years ago
The table below describes the total and marginal benefit elvis gets from fried peanut butter and banana sandwiches. elvis' fried
ycow [4]
I looked up the question, since this one is incomplete. I've attached an image of the correct chart. Elvis' marginal benefit of the fourth sandwich is his total benefit of eating 4 sandwich minus his total benefit from eating 3 sandwiches.

Looking at the chart, we see that this gives us 81-75 = 6. 

Therefore, the Marginal Benefit of a fourth sandwich is 6. 

6 0
3 years ago
Carla Vista Company purchases Sandhill Company for $2470000 cash on January 1, 2021. The book value of Sandhill Company’s net as
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Answer: $214000

Explanation:

The amount of goodwill that should be recognized by Carla Vista Company when recording the purchase of Sandhill Company will go thus:

Book value of net assets = $1923000

Add: Excess fair value of tangible asset = $190500

Add: Excess fair value of intangible assets = $142500

Fair value of net assets = $1923000 + $190500 + $142500 = $2256000

Therefore, Goodwill will be:

=Cash paid for purchase - Fair value of net assets

= $2470000 - $2256000

= $214000

3 0
3 years ago
Dream Homes is an appliance store. It recently launched its own brand of freezers in order to build customer loyalty. The store
Alex787 [66]

The Pricing strategy which Dream Homes implemented is known as Price lining (Option A) which categorized the prices accordingly with the financial soundness of the customers.

Explanation:

The demand for more goods always plays a vital role in ensuring good sales. The likes of the customers towards particular products depend upon the nature of unique features and its fine quality. By capturing the pulse of the purchasing power of the customers, the business ventures fixed the prices according to the level of economical weaker sections, middle, and high-income groups.

In this case, Dream Homes fix the price of freezers by measuring the ability of customers' to buy them without compromising with the customers requirements. Dream Homes uses the price lining method to gain customers' reputation by selling the products accordingly with their status of income level.      

8 0
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