Answer:
$2,500
Explanation:
Elaine can deduct the first $2,000 and then [($4,000 - $2,000) x 25%] = $2,500 (maximum available deduction). Since Elaine files her taxes with her husband and their combined AGI is less than $160,000, then she can claim the full annual credit. The AOTC starts to phase out when the combined AGI is higher than $160,000 and phases out completed when it reaches $180,000.
Hunter is the founder and CEO of a Web site development firm. Clients are typically small to midsized companies that are seeking an offbeat, innovative approach to their online design, as well as functionality that offers customers surprising ways to interact with the site. What is the more appropriate style of leadership, given the type of work Hunter wants his Web site designers to do
Answer:
The right solution would be "Transformational ".
Explanation:
The required leadership style throughout this situation, considering the sort of job Hunter requires his application or website developers or designers to be doing, is Transformative. The objective was to design or create an unexpected as well as creative approach is to develop or construct various websites.You have just moved to San Diego, and in your new job you get $1000 a month in disposable income. Suppose you wish to purchase new Oakley sunglasses. Online, they cost $200. But, you hear a rumor that the same glasses can be bought in Tijuana for $20. However, it costs you $50 to make the trip to and from Tijuana. Suppose your utility is given by: Utility = ln(Y), where Y is your income after buying the sunglasses.
Required:
a. What is your utility if you buy them online?
b. What is your utility if you can get them in Tijuana?
c. The probability that the sunglasses can be purchased in Tijuana is p. At what probability are you indifferent between buying them online and checking out Tijuana?
d. At a probability of 0.6, if you doubt the rumor and think that in Tijuana the glasses actually will cost $60, will you buy them online or check out Tijuana?
Answer:
All requirements solved
Explanation:
Utility if you buy them online or if you can get them in Tijuana can be calculated as follows
Requirement a. Buy online
Y=1000-200=800
U=ln(800)=2.90
Requirement b. Buy from Tijuana
Y=1000-20-50=930
U=ln(930)=2.97
Requirement c.
p(1000-20-50)=(1-p)(1000-200)
930p=800-800p
p=0.46
Requirement d. expected income from buying in tijuana:
=0.6(1000-60-50)+0.4(1000-20-50)
=534+372
=906 > 800(income from buying online)
So buy from tijuana
Which phrase best describes a country's monetary base?
Answer: all money in circulation throughout the economy
Explanation: apex
Answer:
all money in circulation throughout the economy
Explanation:
Haskell Corp. is comparing two different capital structures. Plan I would result in 12,000 shares of stock and $100,000 in debt. Plan II would result in 8,700 shares of stock and $155,000 in debt. The interest rate on the debt is 5 percent. Compare both of these plans to an all-equity plan assuming that EBIT will be $80,000. The all-equity plan would result in 18,000 shares of stock outstanding. Assuming that the corporate tax rate is 40 percent, what is the EPS for each of these plans? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Assuming that the corporate tax rate is 40 percent, what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan? (Do not round intermediate calculations.)
Answer:
Please find attached detailed solution to the above question.
Explanation:
Please as attached detailed solution.
Rode Company estimates bad debt expense at 1% of credit sales. The company reported accounts receivable of $100,000 and a pre-adjustment credit balance in its allowance for uncollectible accounts account of $2,000 at the end of the current year. During the current year, Rode’s credit sales were $2,000,000. What is the amount of the company’s bad debt expense for the current year?
Answer:
$20,000
Explanation:
Calculation for the amount of the company’s bad debt expense for the current year
Using this formula
Bad debt expense = Credit Sales Amount × Estimated percentage uncollectible
Let plug in the formula
Bad debt expense = $2,000,000 × 1%
Bad debt expense =$20,000
Therefore the amount of the company’s bad debt expense for the current year will be $20,000
Depending on the type of hotel, housekeeping associates typically service between _____________ rooms per day: a. 10 and 15 b. 15 and 20 c. 20 and 25 d. 25 and 30
Answer:
b. 15 and 20
Explanation:
Given that an average housekeeper needs about fifteen to thirty minutes to clean a room during a shift. And the work time always happen when hotel visitors are out of their rooms for activities, or they elapsed their duration. Also, noting that a shift for housekeeper is at average of eight to ten hours.
Hence, depending on the type of hotel, housekeeping associates typically service between fifteen to twenty rooms per day which equates to average of 5 - 6 hours full of work.
Newman Consulting Company maintains its records on a cash basis. During 2021 the following cash flows were recorded: cash received for services rendered to clients, $420,000; and cash paid for salaries, utilities, and advertising, $240,000, $35,000, and $12,000, respectively. You also determine that customers owed the company $52,000 and $60,000 at the beginning and end of the year, respectively, and that the company owed the utility company $6,000 and $4,000 at the beginning and end of the year, respectively. Determine accrual net income for the year
Answer: $143,000
Explanation:
Accrual Income for the year = Cash from clients + Closing receivable balance - Opening receivable balance - Salaries - (Utilities - Opening utilities owed + closing utilities owed) - Advertising
= 420,000 + 60,000 - 52,000 - 240,000 - (35,000 - 6,000 + 4,000) - 12,000
= $143,000
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $96,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $32,000 or will be entitled to an additional $32,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $32,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $32,000.
Answer:
the journal entries:
to record the contract
Dr Accounts receivable 96,000
Dr Bonus receivable 2,400
Cr Service revenue 98,400
to record adjustment of bonus receivable at month 5:
Dr Service revenue 6,400
Cr Bonus receivable 6,400
to record service revenue for the fifth month:
Dr Accounts receivable 96,000
Dr Bonus receivable 800
Cr Service revenue 96,800
to record getting the bonus:
Dr Cash 32,000
Cr Bonus receivable 6,400
Cr Service revenue 25,600
Explanation:
total value of the contract:
[($96,000 x 8) + $32,000] x 0.8 = $640,000
[($96,000 x 8) - $32,000] x 0.2 = $147,200
total expected value = $787,200
expected value of the bonus = $787,200 - ($96,000 x 8) = $19,200, monthly bonus receivable $19,200 / 8 = $2,400
the adjustments required during the fifth month:
[($96,000 x 8) + $32,000] x 0.6 = $480,000
[($96,000 x 8) - $32,000] x 0.4 = $294,400
total expected value = $774,400
expected value of the bonus = $774,400 - ($96,000 x 8) = $6,400, monthly bonus receivable $6,400 / 8 = $800
What are also known as restrictive covenants or Covenants, Conditions and Restrictions and are constraints that run with the land?
a. Licenses
b. Liens
c. Deed restrictions
d. A bundle of rights
Answer:
Option c (Deed restrictions) is the correct alternative.
Explanation:
Deed limitations or restrictions are personal agreements anything in any way regulate use of such property development and therefore are stated in the deed. The purchaser can add a limitation to something like the subject property. Sometimes, in something like development, architects limit the parcels of land to ensure a certain degree of uniformity.Some other three considerations do not apply to the condition given. So, the solution is indeed the right one.
10. What do companies do to try to market to teenagers?
A Place newspaper ads for their products
B try to establish their brand as "cool"
C place their product on the bottom shelf in the grocery store
D use musicians from the 1960s in their commercials
Answer:
the answer is B. try to establish their brand as cool
Bryant Company has a factory machine with a book value of $88,100 and a remaining useful life of 7 years. It can be sold for $30,900. A new machine is available at a cost of $413,300. This machine will have a 7-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $579,100 to $505,700. Prepare an analysis showing whether the old machine should be retained or replaced.
Answer: The old factory machine should be replaced as from computation below will lead to a lower cost for Bryant Company
Explanation:
Particulars Retain Equipment Replace Equipment Net Income
Increase/Decrease
Variable manufacturing costs
$4,053,700 $3,539,900 $513,800
$579,100 x 7 $505,700 x 7
New machine cost $413,300 -$410,300.
Sale of old machine -$30,900 $30,900.
Total $4,053,700 $3,922,300 $134,400
The old factory machine should be replaced as from computation will lead to a lower cost of $3,922,300 instead of $4,053,700 for Bryant Company
For most consumers, maximizing utility through consumption generally means finding good deals in order to maximize the utility received for each dollar spent. However, some makers of luxury goods believe that their customers actually achieve utility by paying high prices. As a result, lowering prices may lead to reduced sales for the makers of luxury goods. How is this counterintuitive concept rationalized by analysis of consumer behavior and the utility maximization rule
Answer:
The explanation of that situation is below.
Explanation:
To begin with, the most important factor to have in mind in the situation explained above is the fact that we are talking about a "luxury good" and therefore that when it comes to this type of goods is better when the majority of the people do not possess or at least they must represent the fact that they are exclusive for only some part of the population. That is why that those goods use the strategy of increase always the price because that will means that they are not affordable for the majority of the society but only for a few and that will give to the owner of the good a sense of uniqueness and with that it also comes the sense of superiority. That is why that when it comes to this type of good the analysis change and it collides with the other theory of utility maximation.
to beter take into account the differential impact of fixed and variable costs, marketing managers canuse ____ pricing
Answer:
target return pricing
Explanation:
Target return pricing is a pricing method that uses a very simple formula:
target price = [unit cost + (desired return x capital)] /unit salesThe price is based on the ROI that the company expects from a certain product (or project).
Even though this is a fairly simple method for pricing a good or service, it can also have serious negative consequences:
it doesn't take in account consumers' tastes or preferenceswhat happens if the expected ROI is too high, that could kill a project that could have been successful otherwisethe time frames are not always exact, e.g. you believed that a project would last 5 years, but due to a technological breakthrough it only lasts 4In order to successfully apply this type of pricing strategy, a company must be able to achieve or exceed their sales goals.
Identify each of the following accounts as a component of asset (A), liabilities (L), or equity (E). Account Balance sheet section
a. Cash and cash equivalents
b. Wages payable
c. Common stock
d. Equipment
e. Long-term debt
f. Retained earnings
g. Additional paid-in capital
h. Taxes payable
Answer:
a. asset (A)
b. liabilities (L)
c. equity (E)
d. asset (A)
e. liabilities (L)
f. equity (E)
g. equity (E)
h. liabilities (L)
Explanation:
A Balance sheet shows the balance of assets, liabilities and equity at the reporting date.
Assets are economic resources controlled by the entity such as equipment and cash.
Liabilities are obligation that arise such as wages payable and tax payable.
Equity is the residue after deducting liabilities from assets. it represents the owners contribution through equity and retained income.
A farmer grows wheat and sells it to a miller for $200; the miller turns the wheat into flour and sells it to a baker for $500; the baker uses the flour to make bread and sells the bread for $900. The total GDP for this economy is:_______
Answer:
The right solution is "$900".
Explanation:
GDP seems to be the cash value of all finished goods products as well as services produced in something like a single year throughout a region. The farmer develops wheat here though and markets these for $200 to such a miller. The miller transforms the wheat into flour which offers something for $500 to something like a baker. After that, the final good becomes bread.Thus, the GDP seems to be $900.
Diego Corporation values its inventory at the lower of cost or net realizable value as required by IFRS. Diego has the following information regarding its inventory. Historical cost $100,000 Estimated selling price 98,000 Estimated costs to complete and sell 3,000 Replacement cost 90,000 What is the amount for inventory that Diego should report on the balance sheet under the lower of cost or net realizable value method
Answer:
$95,000
Explanation:
When a company reports its ending inventory at lower of cost or net realizable value (LCNRV), it must value its inventory at whichever is lower:
historical cost = $100,000net realizable value = selling price - estimated costs to complete and sell = $98,000 - $3,000 = $95,000since $95,000 is lower, then the company will report its inventory at net realizable value.
Princetown Inc. has a $4.82 million basis in 68% of the outstanding stock of Merryvale Corporation. Merryvale manufactures Christmas decorations, cards, and wrapping paper. Princetown's board of directors recently learned that Merryvale is bankrupt. The board voted unanimously to dissolve the corporation and distribute all assets to Merryvale's creditors. What is the tax consequence to Princetown of the board's actions?
Answer:
$4.82 million ordinary loss
Explanation:
Note: The option to the question is attached
Merryvale is an affiliated corporation, so Princetown is allowed an ordinary loss in the worthlessness of the stock
How do you think Alden, from Situation 2, found out about Revinate? Given all the online companies that might help your business connect you with customers, how would you choose one?
The correct answer to this open question is the following.
Although you forgot to include the proper context of the question or further references, we can comment on the following.
Alden found out about Revinate by searching on the web trying to find the best software options that could help the company to identify the customer's reviews so Gregory E. Alden could make the best decisions for his company.
Gregory E. Alden is the manager of the company Woodside Hotels, located in Northern California. He was trying to monitor the comments of his high-class clients because Woodside Hotels is in the luxurious hotel business. So knowing that constantly monitoring client's comments on social media pages such as TripAdvisor or Yelp can be an arduous and difficult task, Gregory searched for the best software company to monitor client's comments on social media. That is how he found Revinate, a company that helps managers to track reviews so they can make the best business decisions once they have learned what their customers desire. And that is exactly what I would do to choose the kind of company to know about the preferences of my customers.
An office building with an adjusted basis of $320,000 was destroyed by fire on December 30, 2020. On January 11, 2021, the insurance company paid the owner $450,000. The fair market value of the building was $500,000, but under the co-insurance clause, the insurance company is responsible for only 90 percent of the loss. The owner reinvested $410,000 in a new office building on February 12, 2021, that was smaller than the original office building. What is the recognized gain and the basis of the new building if § 1033 (nonrecognition of gain from an involuntary conversion) is elected?
Answer:
Recognized gain or loss = $40,000
Basis of the new building = $320,000
Explanation:
Total gain = Insurance Claim - Adjusted Basis of destroyed Building
Total gain = $450,000-$320,000 = $130,000
if Section 1033 (nonrecognition of gain from an involuntary conversion) is elected
Recognized Gain = Insurance Claim – the Greater of Replacement Cost or the Adjusted Basis of Building
Recognized gain or loss = $450,000-$410,000
Recognized gain or loss = $40,000
Deferred Gain = Total gain - Recognized gain or loss
Deferred Gain= $130,000-$40,000
Deferred Gain = $90,000
Basis of the new building if Section 1033 (nonrecognition of gain from an involuntary conversion) is elected
Basis of the new building = Investment - Deferred Gain
Basis of the new building = $410,000 - $90,000
Basis of the new building = $320,000
Category of cost not associated from the extension of credit and accounts receivable is
A: Capital costs
B: Delinquency costs
C: Direct costs
D: Default costs
Answer:
A.Capital costs
Explanation:
please make me as brainlist
Which of the following statements is most correct? Select one: a. Other things equal, the interest rate in an area with young population would likely be lower than that in an area with old population. b. If the Fed maintains a policy to expand money supply for several years, the entire yield curve will fall due to a higher expected future inflation. c. Short-term interest rates are less volatile than long-term interest rates because the Fed operates mainly in the long-term sector. d. Immediately after the Fed announces to expand the money supply, the long-term interest rate will drop while the short-term interest rates will raise due to a higher expected future inflation. e. An upward-sloping Treasury yield curve suggests that long-term interest rates are higher than short-term interest rates.
Answer: e. An upward-sloping Treasury yield curve suggests that long-term interest rates are higher than short-term interest rates.
Explanation:
The Yield curve is used to compare interest rates across different periods as it uses the yields of securities that have the same credit risk/ rating but different maturity periods.
A Treasury yield curve will therefore show treasury rates across different periods. If the yield curve is upward sloping, it means that long term rates are higher than short term rates because the curve starts by plotting short term rates and then moving long-term.
Cost of goods sold budget Pasadena Candle Inc. budgeted production of 785,000 candles for the year. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for the year. Wax is required to produce a candle. Assume 487,125 pounds of material will be purchased during the year. If candle wax costs $1.24 per pound, determine the direct materials purchases for the year. Prepare a cost of goods sold budget for Pasadena Candle Inc. using the information above. Assume the estimated inventories on January 1 for finished goods and work in process were $200,000 and $41,250, respectively and direct materials wax inventory of 16,000 pounds. Also assume the desired inventories on December 31 for finished goods and work in process were $120,000 and $28,500, respectively and direct materials wax inventory of 12,500 pounds. Factory overhead was budgeted at $300,000. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Answer:
$2,114,125
Explanation:
Firstly, we need to calculate direct materials purchased.
Direct materials purchased for the year = Candle wax [ 487,125 pounds × $1.24 per pound]
= $604,035
Also,
Direct labor cost budget for the year
= [ 785,000 candles × 6 minutes / 60 mins per hour × $18 per hour]
= $1,413,000
Therefore,
Costs of goods sold budget
Direct materials
Opening inventory on 1 January [16,000 pounds × $1.24 per pound] = $19,840
Add: purchases
$604,035
Less: closing inventory on 31 January [12,500 pounds × $1.24 per pound] = ($15,500)
Cost of direct materials in production = $608,375
Direct labor cost
$1,413,000
Fixed overheads cost
$300,000
Opening work in progress inventory on 1 January
$41,250
Less: closing work in progress inventory on 31, January
($28,500)
Total work in progress during the period
$12,750
Opening finished goods on 1 January
$200,000
Less closing finished goods
($120,000)
$80,000
Cost of goods sold = $608,375 + $1,413,000 + $300,000 - $80,000 - $12,750
= $2,114,125
What are the sources of brand equity?
Answer:
Ello, Imposter here
Explanation:
Brand equity is the commercial value that derives from consumer perception of the brand name of a particular product or service, rather than from the product or service itself.
hope this helps :P
Answer: According to Keller (2003) and his CBBE model, brand equity emerges from two sources namely brand awareness and brand image. According to this model, consumers build associations in their minds around a brand as the result of the marketing programs companies develop for their brands.
Explanation: None.
Assume the following (1) variable expenses = $300,000, (2) unit sales = 10,000, (3) the contribution margin ratio = 25%, and (4) net operating income = $10,000. Given these four assumptions, which of the following is true? Multiple Choice The total contribution margin = $225,000 The variable expense ratio is 300% The total sales = $400,000 The total fixed expenses = $75,000
Answer:
The total sales = $400,000
Explanation:
Given the information below,
Total sales = $10,000
Variable expenses = $300,000
Contribution margin = 25%
Net operating income = $10,000
Total sales
[300,000 / (1-25%)].
$400,000
Less: Variable expenses
($300,000)
Contribution margin
($100,000)
Less: Fixed cost
[400,000 - 300,000 - 10,000]
($90,000)
Net Operating income
$10,000
The correct answer is ; The total sales = $400,000
General Electric issued 8%, 15-year bonds with a par value of $500,000 that pay interest semiannually. The market rate on the date of issuance was 8%. The journal entry to record each semiannual interest payment is:_____________
Answer:
Interest Charge $20,000 (debit)
Cash $20,000 (credit)
Explanation:
Find the Issue Price (PV) so as to construct the amortization schedule.
Pmt= ($500,000 × 8%) ÷ 2 = $20,000
i = 8%
Fv = $500,000
P/yr = 2
N= 15 × 2 = 30
Pv = ?
Using a Financial calculator to enter the data as above, Pv would be $500,000.
Answer:
Explanation:
Date Journal Entry Debit Credit
Bond Interest Expense $20,000
Cash $20,000
(Being semi-annual interest payment on bonds)
Workings:
The semi-interest payment = Coupon rate × par Value × 1/2
Semi-annual interest payment = 8% * $500,000 * 1/2
Semi- annual payment = $20,000
During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $216,400 instead of the correct amount of $170,399. The effect on the balance sheet and income statement would be
Answer:
Asset and retained earnings overstated by $46,001
Net income overstated by $46,001
Explanation:
Given the data below;
Correct amount of inventory = $170,399
Inventory incorrectly recorded = $216,400
Inventory over stated by = $216,400 - $170,399
= $46,001
Because the ending inventory is overstated, the net income would also be overstated by $46,001
In the balance sheet, the retained earnings would be overstated by $46,001 as a result of the overstated net income.
We know that ending inventory forms part of the current asset in the balance sheet, hence current asset would be overstated by $46,001 due to the over stated ending inventory.
Which of the following is an example of an automatic stabilizer? Governments debate implementing tax cuts when the economy is in a recession. Spending on unemployment benefits falls when the economy enters a recession. Low-income households lose their food stamp benefits when unemployment rises. The amount of tax revenues collected rises when an economy is booming.
Answer:
D. The amount of tax revenues collected rises when an economy is booming.
Explanation:
Automatic stabilizers can be defined as changes in government spending or taxes and consequently, raises aggregate demand without the intervention of policy makers when an economy falls into recession.
In Economics, it is also referred to as built-in stability and this means that with given tax rates and expenditures policies such as fiscal and monetary policy; an increase in domestic income will reduce a budget deficit or produce a budget surplus, while a decline in income will result in a deficit or a lower budget surplus.
Hence, an automatic stabilizer is an economic system or policies that automatically shore up or strengthen the Gross Domestic Products (GDP) without specific government intervention for sustenance or creation of stability in the economic cycle of a country.
An example of an automatic stabilizer is the amount of tax revenues collected rises when an economy is booming. Also, personal and corporate income tax usually decline in the event of recession in a country because individuals and business owners or entities make less, thus leading to unemployment and an increase in social security funds or welfare.
Big Box Store has operated with a 30% average gross profit ratio for a number of years. It had $107,000 in sales during the second quarter of this year. If it began the quarter with $18,700 of inventory at cost and purchased $72,700 of inventory during the quarter, its estimated ending inventory by the gross profit method is:
Answer:
$16,500
Explanation:
The computation of the estimated ending inventory is given below:
As We know that
Cost of goods sold = Beginning inventory + purchase made - ending inventory
And, the
Sales - gross profit = Cost of goods sold
So,
$107,000 - $107,000 × 30% = Cost of goods sold
Therefore, the cost of goods sold is
= $107,000 - $32,100
= $74,900
And, finally the ending inventory is
$74,900 = $18,700 + $72,700 - ending inventory
$74,900 = $91,400 - ending inventory
So, the ending inventory is
= $91,400 - $74,900
= $16,500
The risk-free rate is 4.2%, and the expected return on the market is 10%. A publicly-traded bond promises to return 8%. The expected return on the bond investment is 5.5%. What is the bond's implied beta?
a) 0.45
b) 0.22
c) 0.73
d) 1.38
Answer: the bond's implied beta= 0.22-b
Explanation:
According to Capital Asset Pricing Model CAPM, we have that
Expected return =Rf + β(Rm - Rf)
Rm is expected return on market
β= beta of bond
Rf=risk free return
therefore
Expected return =Rf + β(Rm - Rf)
5.5 = 4.2 + β(10-4.2)
5.5=4.2+ β5.8
5.5-4.2= β5.8
1.3=β5.8
β= 1.3/5.8=0.22
Present value concept
1. What single investment made today, earning 5% annual interest, will be worth $4,400 at the end of 5 years?
2. What is the present value of $4,400 to be received at the end of 5 years if the discount rate is 5%?
3. What is the most you would pay today for a promise to repay you $4,400 at the end of 5 years ifyour opportunity cost is 5%?
4. Compare, contrast, and discuss your findings in part a through c.
A. A single investment made today, earning 5% annual interest, worth $4,400 at the end of 5 years is $______.
B. The present value of $4,400 to be received at the end of 5 years, the discount rate is 5% is______.
C. The most you would pay today for a promise to repay you $4,400 at the end of 5 years if your opportunity cost is 5% is $_____.
D. Compare, contrast, and discuss your findings in part a through c.
A. The annual interest rate is also called the discount rate or the opportunity cost.
B. In all three cases, you are solving for the present value, PV, which is $3,447.52.
C. In all three cases, the answer is $$3,447.52. In part a, it is the payment, PMT. In part b, it is the present value, PV. In part c, it is the future value, FV.
D. In parts a and c, $4,400 is the future value, FV. In part b, $4,400 is the present value, PV. Therefore, parts a and c have the same answer, while part b has a different answer.
Answer:
The present value concept
1. The single investment made today, earning 5% annual interest that will be worth $4,400 at the end of 5 years is:
$3,447.52
2. The present value of $4,400 to be received at the end of 5 years if the discount rate is 4% is:
$3,447.52
3. The most I would pay today for a promise to repay me $4,400 at the end of 5 years if my opportunity cost is 5% is:
$3,447.52
4. A. A single investment made today, earning 5% annual interest, worth $4,400 at the end of 5 years is $__3,447.52____.
B. The present value of $4,400 to be received at the end of 5 years, the discount rate is 5% is__$3,447.52____.
C. The most you would pay today for a promise to repay you $4,400 at the end of 5 years if your opportunity cost is 5% is $__3,447.52___.
5.
A. The annual interest rate is also called the discount rate or the opportunity cost.
B. In all three cases, you are solving for the present value, PV, which is $3,447.52.
Explanation:
You will need to invest $3,447.52 at the beginning to reach the future value of $4,400.00.
FV (Future Value) $4,400.00
PV (Present Value) $3,447.512
N (Number of Periods) 5.000
I/Y (Interest Rate) 5.000%
PMT (Periodic Payment) $0.00
Starting Investment $3,447.52
Total Principal $3,447.52
Total Interest $952.48