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Art [367]
3 years ago
15

Our newly constructed retail space is projected to need a face lift in 7 years to keep up with changing tastes. Our projections

are that the cost will be $2.5 mil. If we set aside a reserve for replacement our best return prospects for a safe investment (i.e. little risk to principle) suggest a 3% annual interest rate. How much should we deposit annually into that reserve account (sinking fund problem)
Business
1 answer:
Rudiy273 years ago
4 0

Answer:

Annual deposit = $326,265.88  

Explanation:

<em>The amount to be set aside annually to accumulate $2.5 million in 7 years time ca n be worked out using the future value of an ordinary annuity formula.</em>

The formula is given as follows:

FV = A×( (1+r)^n - 1)/r).

A= FV/ ((1+r)^n - 1)/r

FV - Future value

A- annual deposit

n- number of years

r- rate of return

FV - $2.5 million

A- ?

n- 7

A=2,500,000 ÷ (1.03^7 - 1)/0.03 =  326,265.88  

Annual deposit = $326,265.88  

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How does organizational structure affect communication? Provide an example of how a sales associate might communicate an idea fo
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The communication channels created by the organizational structure serve specific functions through downward, upward and lateral communication. Thus an organization's structure must facilitate this effective flow of communication.

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3 years ago
When the price of pencils increases from $1.50 to $2.50, there is an increase in quantity demanded of pens from 100 to 150. the
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Answer:

0.75

Explanation:

The cross price elasticity measures how a change in price of one good affects the quantity demanded of another good

Cross price elasticity = percentage change in quantity demanded of pens / percentage change in the price of pencils

percentage change in quantity demanded of good A = (150 -100) / 100 = 0.5 = 50%

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I hope my answer helps you

3 0
3 years ago
The purchasing power of the dollar would fall by 20% if the price index rises by:A. 44 percentB. 12.5 percentC. 25 percentD. 10
Afina-wow [57]

Answer:

correct answer is C. 25 percent

Explanation:

solution

we relate purchasing power to the purchasing of product by consumer to investor for the prosperity of economy

so we consider here price index that is  = 100

and it is rise to =  125

so that  purchasing power will be decrease by  x to the \frac{100x}{125}

and money value will be lead to %change as

money value  = \frac{x-\frac{100x}{125} }{x}    .................1

money value  = 1 - 0.8

money value  = 0.2

money value  = 20%

so we can say that when we buy with 20% than purchase power will be fall as 25% increase in the price

so correct answer is C. 25 percent

7 0
3 years ago
Peterkin Inc needs to arrange financing for its expansion program. Sandy Bank offers to lend Peterkin the required funds on a lo
kodGreya [7K]

Answer:

Sandy Bank

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the bank with the lower effective annual interest rate would be preferred

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M = number of compounding

Sandy Bank : (1 + 0.06/12)^12 - 1 = 0.062 = 6.2%

Money Plus Bank = 6.8

Sandy bank has a lower effective annual interest rate and would be preferred for the loan

4 0
3 years ago
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