I'm going full have to go with 2, 3, & 4
Answer:
the client should wait 10 more years until the contract is worth $180,000 since he will earn a slightly higher interest rate
Explanation:
we must determine the effective interest earned by the client if he accepts the company's proposal:
future value = present value x (1 + r)ⁿ
121,000 = 100,000 x (1 + r)⁵
(1 + r)⁵ = 121,000 / 100,000 = 1.21
⁵√(1 + r)⁵ = ⁵√1.21
1 + r = 1.0389
r = 0.0389 = 3.89%
if the client waits 10 more years until he is able to annuitize the account, he should earn:
180,000 = 100,000 x (1 + r)¹⁵
(1 + r)¹⁵ = 180,000 / 100,000 = 1.80
¹⁵√(1 + r)¹⁵ = ¹⁵√1.80
1 + r = 1.03996
r = 0.03996 = 4%
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Your goal is to have $15,000 in your bank account by the end of four years. The interest rate remains constant at 4% and you want to make annual identical deposits.
<u>End of the year:</u>
To calculate the annual deposit, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (15,000*0.04) / [(1.04^4) - 1]= $3,532.35
<u>Beginning of the year:</u>
A= {(FV*i)/ {[(1+i)^n] - 1]} / (1+i)
A= 3,532.35/ 1.04= $3,396.49
The difference resides in the interest compounded. At the beginning of the year the interest compound for one more period.
<u>Answer: </u>
Benefits are amplified at a point where the minor income efficiency (MRP) is equivalent to the expense of employing a security watch. In this way, a benefit expanding firm will enlist as long as the MRP is more noteworthy than the wages or the expense of recruiting a security monitor.
On the off chance that I need to amplify benefit, at that point I won't enlist the security monitor at a compensation pace of $20 in light of the fact that the expense of recruiting is more noteworthy than the expansion to the complete income or MRP, which is equivalent to $15 (expecting that the security watchman will kill shoplifting).
The above examination shows that a security watchman will be paid a compensation rate for every hour, which is equivalent to the sum spared every hour by the security monitor for wiping out the normal shoplifting every hour.
The sum spared is an expansion to the all out income, and no benefit boosting firm would pay a compensation rate higher than the augmentations to the complete income.
Addition to Retained Earnings will be the amount will be Net Income as calculated using the above information:
Net income will be calculated as below:
Sales...........................................................$680000
Less: Cost of Sales.................................$342000
Less: Depreciation..................................$86000
Less: Interest Expense.........................$53000
Earnings Before Tax...............................$199000
Less [email protected] 23%.........................................$45770
Net Income..............................................$153230
Thus Income of $153230 will be added to Retained earnings and Cash dividend of $40000 will be reduced from therein.
