To answer this item, we should be able to calculate for the present worth of the item that is expected to give an annuity of $4,000.
The equation that would allow us to calculate for the present worth from simple annuity is,
P = A x ((1 + i)^n - 1) / i(1 + i)^n))
Substituting the known value for A, i and n.
P = ($4000) x ((1 + 0.12)^5 - 1)/ 0.12(1 + 0.12)^5))
P = 14,419
Thus, Peter would have to be willing to pay for the computer for $14,419.
Answer:
<em>In theory, both are riskless but in practicality they aren't completely risk free.</em>
Explanation:
<em>In investment theory</em>, the investment in government bonds is <em>riskless </em>, irrespective of the investment maturity period because they are backed by the government.
However, <em>in practicality</em> every investment involves risk whether it's a short term or long term. However, a short term investment like the one specified in <em>statement 2</em> involves lower time frame and thereby lower volatility, hence it implies <em>lower risk</em>. The investment specified in <em>statement 1</em> is of longer term and hence can involve higher volatility, hence it implies <em>higher risk.</em>
<em><u>Note</u></em><em>- All the governments are prone to risk practically</em> because they are also part of the global financial and economic system and hence, they have to manage their budget balances prudently. Every investment thereby involves <em>risk</em>, it's just the <em>financial backing</em> of the <em>government financial</em> <em>instruments</em> which makes them less risky as compared to the other financial instruments.
Answer
Price of bond = 17.96825
Explanation:
Bond price = ∑(C / 
)+ P /
where
n = no. of years
C = Coupon payments
YTM = interest rate or required yield
P = Par Value of the bond
put values in above equation
price = (5.66%/2) × 2000 × (0.31746) + ( 2000 ÷ 4.595×
)
= 17.96825
Answer:
1. Cash will increase by $18,700 for the services to be rendered over the 12 months.
2. Cash will reduce by $64,000 for the legal service acquired.
3. No effect on cash as the transaction is on accounts.
4. Cash will decrease by $1,250 for the supplies purchased.
5. Cash will decrease by $6,000 for the dividends paid.
6. Cash will decrease by $20,000 due to operating expenses
7. no effect on cash
8. no effect on cash.
Explanation:
The business transactions recorded by Hart, Attorney at Law, These transactions have impact on the cash. The inflow and outflow of cash is recorded in the cash flow statement. Transaction no. 3, 7 and 8 will have no effects on cash balance of the company.
Answer:
$20 million
Explanation:
The computation of the ending inventory if FIFO is used
= LIFO reserve + Ending inventory based on LIFO inventory
= $3 million + $17 million
= $20 million
We simply added the LIFO reserve and LIFO ending inventory so that FIFO ending inventory can be computed. Hence, we take all the items for the computation part.
