Question 3

Determine the amount of money that must be invested now (time 0) at 10% nominal interest, compounded monthly, to provide an

Veseljchak [2.6K]

Answer:

the amount of money that must be invested now is $21068.87

Explanation:

Given that:

Nominal interest = 10%

Annuity = 7000

n = 8 years

The Effective interest rate is calculated by using the formula:

Effective interest rate = $( 1 + \dfrac{r}{100 \times n})^n-1$

Effective interest rate = $( 1 + \dfrac{10}{100 \times 8})^8-1$

Effective interest rate = 0.1045

Effective interest rate = 10.45 %

Thus ; the the amount of money that must be invested now is the present value with the annuity of $7, 000 per year for 12 years, starting eight years from now.

$PV = 7000(\dfrac{(1+ 0.1045)^{12}-1}{0.1045(1 + 0.1045)^{12}})( \dfrac{1}{(1+ 0.1045)^8})$

PV = 7000 × 6.666056912 × 0.4515171371

PV = $21068.87

Thus; the amount of money that must be invested now is $21068.87

4 0

3 years ago

In 1–3 sentences, explain the role of entrepreneurs in the economy.

jenyasd209 [6]

ANSWER: There are many ways how entrepreneurs benefit the economy. Few of them are

1) Create Jobs: Entrepreneurs create jobs in the community. When someone opens a new business or expands his new business, he will need human resource to help him to do his works.

2) Wealth Creation: Entrepreneurs pool in their own money and attract investment from lenders, banks and other investors. This mobilizes public wealth.

3) Exports: Entrepreneurs after growing in their businesses will want to export their products as a part of extending their market. This will help gain foreign currency in the country.

4 0

3 years ago

Read 2 more answers

A good experiment should include as many variables as possible at the same time. true or false?

Serggg [28]

True, because the more variables the better

3 0

3 years ago

Read 2 more answers

"If Lazer Co. desires to lock in the maximum it would have to pay for its net payables in euros but wants to be able to capitali

Crazy boy [7]

Answer:

D) purchasing euro call options.

Explanation:

If Lazer purchased euro call options it would be basically buying the right to purchase euros at a specified currency exchange rate. This way Lazer would know what is the maximum amount it will have to pay for the euros it needs to cover its debts. The call option give the buyer the right to purchase the euros but not the obligation, so if the euro depreciates, then Lazer can simply decide to not use the call option.

5 0

3 years ago

Lee Financial Services pays employees monthly. Payroll information is listed below for January 2018, the first month of Lee's fi

solniwko [45]

Answer and Explanation:

1. The computation is shown below:

As we know that employee taxes involved the social security tax, medicare tax and the income tax

Social security tax

= Gross pay × 6.2%

= $470,000 × 6.2%

= $29,140

Medicare tax

= Gross pay × 1.45%

= $470,000 × 1.45%

= $6,815

And,

Income tax withheld = $94,000

Now payroll taxes involved social security tax, Medicare tax, Federal unemployment tax, and state unemployment tax.

Social security tax

= Gross pay × 6.2%

= $470,000 × 6.2%

= $29,140

Medicare tax

= Gross pay × 1.45%

= $470,000 × 1.45%

= $6,815

Federal unemployment tax is

= Gross pay × 0.6%

= $470,000 × 0.6%

= $2,820

State unemployment tax

= Gross pay × 5.40%

= $470,000 × 5.40%

= $25,380

2. Now the journal entries are

On January, 2018

Salaries wages expense $470,000

To Withholding income tax payable $94,000

To Social security tax payable $29,140

To Medicare tax payable $6,815

to Salaries and wages payable $340,045

(being salaries and wages expense is recorded)

On Jan 2018

Payroll tax expense $64,155

To Social security tax payable $29,140

To Medicare tax payable $6,815

To Federal unemployment tax payable $2,820

To State unemployment tax payable $25,380

(being tax liabilities is recorded)

8 0

2 years ago