Answer:
1. Future value:
2. Present value:
The goal is to find the present value of the business: $198,254.33. The future value is calculated as an intermediate step to calculate the present value.
Explanation:
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<u>1. Future value in three years</u>
- Value today: $160,000
- Value in one year with grow at 16% ⇒ multiply by 1.16
- Value in two years with grow at 16% ⇒ multiply by 1.16²
- Value in three years with grow at 16% ⇒ multiply by 1.16³
- Future value in three years: $160,000 × 1.16³ = $249,743.36
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<u>2. Present value at rate of 8% compounded annually</u>
The present value is calculated discounting the future value at the given rate:
- Present value = $249,743.36 / (1.08)³ = $198,254.33
Less environmental destruction
Answer:
The manufactured overhead was under-estimated.
Explanation:
Giving the following information:
The actual manufacturing overhead costs incurred were $515,000.
Estimated Manufacturing overhead was $500,000.
Overhead allocation is the distribution of indirect costs to produced goods. When the administration has undervalued and under-funded the amount of money needed for non-production costs, they have under-allocated overhead.
<u>Over applied manufacturing overhead:</u>
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Applied overhead>Actual overhead
<u>Under applied manufacturing overhead:</u>
Applied overhead<Actual overhead
In this exercise:
Actual manufacturing overhead - Estimated Manufacturing overhead= 515000- 500000= 15000
The manufactured overhead was under-estimated.
