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7nadin3 [17]
3 years ago
6

Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations. Enter your answers as

a percent rounded to 2 decimal places, e.g., 32.16.): Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) 9.3% Quarterly % 18.3 Monthly 14.3 Daily 11.3 Infinite
Business
1 answer:
Ierofanga [76]3 years ago
7 0

Answer and Explanation:

The formula to calculate the effective annual rates under the following scenarios is as follows:

As we know that

Effective annual rate = (1 + Annual percentage rate ÷  compounding period)^compounding period - 1

1. For Quartely

EAR = (1 + 0.093 ÷ 4)^4 - 1

= 9.63%

2. For monthly

EAR = (1 + 0.183 ÷ 12)^12 - 1

= 19.92%

3. For daily

EAR  = (1 + 0.143 ÷ 365)^365 - 1

= 15.37%

4. For daily

EAR = (e)^APR - 1

Here

e = 2.71828

EAR = (2.71828)^0.113 - 1

= 11.96%

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The question is incomplete as the figures are missing. The complete question is,

Fosnight Enterprises prepared the following sales​ budget:

Month       Budgeted Sales

March         $6,000

April            $13,000

May             $11,000

June            $20,000

The expected gross profit rate is  20​% and the inventory at the end of February was  $7,000.  Desired inventory levels at the end of the month are  30​%  of the next ​month's cost of goods sold.  What are the total purchases budgeted for May?

Answer:

Purchases - May = $10960

Explanation:

To calculate the total value of purchases that are budgeted for May, we first need to calculate the cost of goods sold and the opening and closing inventory for May.

As the gross profit margin is 20%, the cost of goods sold will be 80% of sales.

Cost of goods sold for May = 0.8 * 11000 = $8800

Cost of goods sold for June = 0.8 * 20000 = $16000

Opening inventory - May = 8800 * 0.3  = $2640

Closing Inventory - May = 16000 * 0.3  = $4800

Purchases = Closing Inventory + Cost of Goods Sold for the month - Opening Inventory

Purchases - May = 4800 + 8800 - 2640

Purchases - May = $10960

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