Answer:
Total PV= $31,448.87
Explanation:
Giving the following information:
Cash flows:
Cf1= $12,500
Cf2= $10,000
Cf3= $7,500
Cf4= $5,000
Cf5= $0
Rate of return= 0.05/12= 0.0042
To calculate the present value of the investment, we need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf1= 12,500/ (1.0042^12)= 11,886.87
Cf2= 10,000/(1.0042^24)= 9,043.05
Cf3= 7,500/(1.0042^36)= 6,449.61
Cf4= 5,000/(1.0042^48)= 4,069.34
Cf5= $0
Total PV= $31,448.87
A bond has a coupon rate of 8.2 percent, a $1,000 par value, matures in 11 years, has a yield to maturity of 7.67 percent, and pays interest annually. What is the current yield
Answer:
a. 7.89%
Explanation:
Options includes "A. 7.89% , B. 8.21% , C. 8.43% , D. 7.67% , E. 8.52%"
Face value = -1000
PMT = -8.2%
n = 11.5
Market rate = 7.67%
Bond value = PV(7.76%, 11.5, -8.2%, -1000)
Bond value = $1.039.56
Current yield = 82/1,039.56
Current yield = 0.0788795259532879
Current yield = 7.89%
Imprudential, Inc., has an unfunded pension liability of $415 million that must be paid in 20 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 5.2 percent, what is the present value of this liability?
Answer:
PV= $150,568,214.5
Explanation:
Giving the following information:
Future value (FV)= $415,000,000
Number of periods (n)= 20 years
Discount rate (i)= 5.2%
To calculate the present value, we need to use the following formula:
PV= FV/(1+i)^n
PV= 415,000,000 / (1.052^20)
PV= $150,568,214.5
Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $111,500 and $126,000, respectively. During the year, actual overhead was $108,400 and actual direct labor cost was $124,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include
Answer:
Credit to cost of goods sold for $5,680
Explanation:
Overhead rate = Estimated overheads/estimated labor cost.
= $115,500/$126,000
= 0.9166
= 92%
Overhead applied = Actual direct labor cost × overhead rate
= $124,000 × 92%
= $114,080
Over applied overhead = $114,080 - $108,400
= $5,680
The closing entry would therefore be to debit factory overhead and credit cost of goods sold
Iron Works International is considering a project that will produce annual cash flows of $36,900, $45,600, $56,300, and $21,800 over the next four years, respectively. What is the internal rate of return if the project has an initial cost of $114,100?
Answer:
15.87%
Explanation:
Internal rate of return is a method of calculating an investment’s rate of return. The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk.
Let IRR be x%
IRR, present value of inflows=present value of outflows.
114100=36900/1.0x+45600/1.0x^2+56300/1.0x^3+21800/1.0x^4
Hence
x = IRR = 15.87%
Bill Converse of Rexburg, Idaho, recently had his truck slide off a gravel road and strike a tree. Bill's vehicle suffered $17,800 in damage. The truck has a book value of $45,000. Bill carried collision insurance with a $400 deductible. How much will Bill be reimbursed by his policy
Answer:
$17,400
Explanation:
Deductible in Insurance is the level of an amount of which the loss payable must reach before the insurance company will participate in compensating for the full sum assured. Any loss payable (claim) below the Deductible amount will not be compensated by the Insurance company and if it exceeds the deductible, deductible amount will be deducted from the claim amount
Here, there is $400 deductible. Amount to be reimbursed = Damages -Deductible amount = $17,800 - $400 = $17,400
Total cost is the amount a firm receives for its output, and total revenue is the market value of the inputs a firm uses in production. Group of answer choices True False
Answer:
False.
Explanation:
Total cost is the market value of the inputs a firm uses in production while total revenue is the amount a firm receives for its output.
Basically, all the amount of money spent in the production of a particular product is known as the total cost while the revenue refers to the total amount the product generates when sold.
Total cost is equal to the sum of total fixed costs and the total variable costs.
In Financial accounting, fixed cost can be defined as predetermined expenses in a business that remain constant for a specific period of time regardless of the quantity of production or level of outputs. Some examples of fixed costs in business are loan payments, employee salary, depreciation, rent, insurance, lease, utilities etc.
On the other hand, variable costs can be defined as expenses that are not constant and as such usually change directly and are proportional to various changes in business activities. Some examples of variable costs are taxes, direct labor, sales commissions, raw materials, operational expenses etc.
On April 1st, Bob the Builder entered into a contract of one-month duration to build a barn for Nolan. Bob is guaranteed to receive a base fee of $5,400 for his services in addition to a bonus depending on when the project is completed. Nolan created incentives for Bob to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Nolan offered to pay an additional 20% of the base fee if the project finished 2 weeks early and 15% if the project finished a week early. The probability of finishing 2 weeks early is 20% and the probability of finishing a week early is 65%. What is the expected transaction price with variable consideration estimated as the most likely amount
Answer:
$6,210
Explanation:
The expected transaction price with variable consideration estimated as the expected value:
original cost $5,400 if job is finished in one month (15% probability) bonus price for finishing 2 weeks earlier $5,400 x 1.2 = $6,480 (20% probability) bonus price for finishing 1 week earlier $5,400 x 1.15 = $6,210 (65% probability)expected transaction price = ($5,400 x 15%) + ($6,480 x 20%) + ($6,210 x 65%) = $6,142.50
The expected transaction price with variable consideration as the most likely amount?
$6,210, since it has a 65% probability
If the total annual expense for this car is deposited at the end of each year into an IRA paying % compounded yearly, how much will be saved at the end of years? Use the formula
Answer:
Explanation:
Find the table attached below:
a) According to the table, total average cost = $0.96/mile
If 20,000miles was driven in a year, the total annual expense for the car will be:
20,000×0.96 = $19,200
b) In order to know how much will be saved for 5 years at IRA of 8.2% compounded annually, we will use the formula
A = [P(1+r/n)^nt - 1]/r/n
P = $19200
r = 8.2%
n = 1 (annual compounding)
t = 5
Substitute
A = [19200((1+0.082/1)^1(5)- 1)/0.082
A = [19200{(1.082)^5 - 1}]/0.082
A = 19200(1.4829-1)/0.082
A = 19200(0.4829)/0.082
A = 9273.28/0.082
A = 113,088.8
Hence the amount after 5 years compounded annually is $113,088.8
What is the application of demand and supply in relation to housing shortage?
Answer:
House prices will increase
Explanation:
A shortage in the market supply occurs when sellers are unable to match the demand for a product. It is a situation where many buyers are chasing a few goods or services supplied in the market.
The price at which supply and demand match is the equilibrium price. Both sellers and buyers are happy at the equilibrium price. The housing sector is known for responding to the forces of supply and demand. In case of a shortage, the prices of houses will go up. As the many buyers compete for the few houses, suppliers will hike prices to make profits.
Scott plans to retire in 30 years when he has enough money to buy a perpetuity. Suppose the perpetuity pays $50,000 per year with an interest rate of 12%. How much must Scott save in order to retire if the perpetuity makes its first payment in 31 years.
Answer:
Scott must save 416,666.67 at the moment of retirement.
Explanation:
Giving the following information:
Cash flow (Cf)= $50,000
Interest rate= 12%
To calculate the value of the perpetuity at the moment of retirement, we need to use the following formula:
PV= Cf/ (i - g)
Cf= 50,000
i= 0.12
g= 0
PV= 50,000 / 0.12
PV= $416,666.67
Scott must save 416,666.67 at the moment of retirement.