Answer and Explanation:
The computation of the return on investment is shown below:
For location A, it is
= $80,000 ÷ $500,000
= 16%
And, for location B it is
= $44,000 ÷ $200,000
= 23%
On the basis of the return on investment, the company should prefer for location B as it contains high return on investment
Therefore the same is to be considered
P&R Company is an all-equity company. Its stock has a beta of .82. The market risk premium is 6.9 percent and the risk-free rate is 4.5 percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of 1.7 percent to the project's discount rate. What should the firm set as the required rate of return for the project?
Answer:
11.86%
Explanation:
Project's discount rate = Rf rate + Beta*risk premium
Project's discount rate = 4.5% + 0.82*6.9%
Project's discount rate = 4.5% + 5.658%
Project's discount rate = 10.158%
Required rate = Project's discount rate + Adjustment rate
Required rate = 10.158% + 1.7%
Required rate = 11.86%
Thus, the firm set 11.86% as the required rate of return for the project.
Suppose the cross-price elasticity of demand between goods X and Y is -5. How much would the price of good Y have to change in order to change the consumption of good X by 50 percent
Answer:
-2.5%
Explanation:
The computation is given below:
We know that
Cross price elasticity of demand = Percentage change in the price of y ÷ percentage change in the price of x
And, the same is given i.e. -5
So here the percentage of change in the price of y is
= -5 × 50%
= -2.5%
The fundamental role of strategy is to: a. Determine how the firm will make a profit in its industry environment b. Determine how the firm will deploy its resources to satisfy its short-term financial goals c. Determine how the firm will deploy its resources to satisfy its long-term goals, given the conditions in the competitive environment d. Determine how the firm can organize its own activities and achieve dominance
Answer:
c. Determine how the firm will deploy its resources to satisfy its long-term goals, given the conditions in the competitive environment
Explanation:
The main role of the organization strategy is to implement the plan with respective to the development and deploying of the resources of the organization in order to attain the long term goals. It involved the word class quality of product or services that satisfy the customer needs as compared with the competitor. So here only long term goals option is considered
Barbara's Baskets Company expects to manufacture and sell 30,000 baskets in 2019 for $5 each. There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 9,000 baskets. The company keeps no work-in-process inventory. What amount of sales revenue will be reported on the 2019 budgeted income statement
Answer:
Sales revenue= $150,000
Explanation:
Giving the following information:
Barbara's Baskets Company expects to manufacture and sell 30,000 baskets in 2019 for $5 each.
The sales revenue is calculated as follow:
Sales revenue= number of units sold*selling price per unit
Sales revenue= 30,000*5
Sales revenue= $150,000
A mixed economic system incorporates aspects of both centralized command and control and a decentralized pricing mechanism. Does the United States have a mixed economic system? Explain your answer.
Answer: Yes. The United States has a mixed economic system.
Explanation:
A mixed economic system has the features of both capitalism and socialism. It consists of both the private enterprises as well as the public enterprises.
The United States has a mixed economic system. Most of the industries that can be found in the United States are privately owned while some are owned by the government. Also, the government regulates the private companies.
The private companies have some freedom which enables them to make profit but their activities are still checkmated by the government.
Write a paragraph of at least six sentences to discuss how the use of Cut, Copy, and/or Paste would be beneficial when creating each worksheet.
Answer:- Cut(also known as Ctrl X) is used to cut an information you no longer need or that which you need to transfer to somewhere else.
- Copy(also known as Ctrl C) is used to copy an item item to be placed somewhere without dislodging the original item, unlike cut, copy can take an item, leaving the existing there.
- Paste(also known as Ctrl V) is used to post items that were either copied or cut.
Explanation:
When writing or carrying a practice on a worksheet, using shortcut makes your work easier and faster. Some of those shortcut are cut, copy and paste.
- Cut(also known as Ctrl X) is used to cut an information you no longer need or that which you need to transfer to somewhere else.
- Copy(also known as Ctrl C) is used to copy an item item to be placed somewhere without dislodging the original item, unlike cut, copy can take an item, leaving the existing there.
- Paste(also known as Ctrl V) is used to post items that were either copied or cut.
From 2009 to 2010, nominal gross domestic product (GDP) in the United States grew by 3.8%. Given that prices increased by 1% and the population grew by 1%, we know that per capita real GDP grew by: g
Answer:
the per capital real GDP would be grew by 2.8%
Explanation:
The computation of the per capital real GDP would be grew by
= Growth of gross domestic product - increase in prices = growth in population
= 3.8% - 1% - 1%
= 2.8%
Hence, the per capital real GDP would be grew by 2.8%
So , the same should be considered
A defense contractor has been able to summarize its total annual fixed costs as $100,000 and the total variable cost per unit of production as $33/unit. If only 5000 units is all that is expected to sell to the government this year what should the per
Answer: $66.25
Explanation:
What should the per unit selling price be to make a 25% profit this year?
First, we'll calculate the total cost which will be:
= $100,000 + $5000(33)
= $100,000 + $165,000
= $265000
%profit = 100(revenue - cost)/ cost
25% = 100(revenue - 265000)/265000
Therefore, revenue will be:
265000(1 + 25%) = 331250
265000(1.25) = 331250
Revenue = $331250
Selling price per unit will be:
= $331250/5000
= $66.25/unit
If the French bank Société Générale reported its 2019 net income was 23,561 million euros and its operating expenses totaled 16,016
million euros, what was its gross profit? (Enter your answer in millions of euros.)
Gross Profit
million euros
Answer:
39,577 million euros
Explanation:
Calculation to determine the what was its gross profit
Using this formula
Gross profit=Net income+Operating expenses
Let plug in the formula
Gross profit=23,561 million +16,016 million
Gross profit=39,577 million euros
Therefore gross profit will be 39,577 million euros
You want to have $66,000 in your savings account 9 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 6.9 percent interest, what amount must you deposit each year
Answer:
the amount that need to be deposited each year is $7,166.28
Explanation:
The computation of the amount that should be deposited each year is shown below:
Given that
FV is $66,000
NPER is 9
RATE is 6.9% ÷ 12 = 0.575%
PV is 0
The formula is shown below:
= PMT(RATE,NPER,PV,-FV,TYPE)
AFter applying the above formula, the amount that need to be deposited each year is $7,166.28
Marketing channels can achieve economies of scale through:a. overcoming spatial discrepanciesb. overcoming temporal discrepanciesc. overcoming discrepancies of quantityd. specialization and division of labor
Answer: D. specialization and division of labor
Explanation:
Economies of scale refers to the cost advantages that are reaped by companies when there is efficient production such that production increases and there's lowering of costs.
Economies of scale can be achieved by marketing channels through specialization and division of labor. This can be done by aiding the producers who doesn't have the finance and lacks motivation, or the expertise to market directly to the consumers.
Christopher is a cash-method, calendar-year taxpayer, and he made the following cash payments related to his business this year. Calculate the after-tax cost of each payment assuming he has a 30 percent marginal tax rate.
a. $500 fine for speeding while traveling to a client meeting.
b. $900 of interest on a short-term loan incurred in September and repaid in November. Half of the loan proceeds were used immediately to pay salaries and the other half was invested in municipal bonds until November.
c. $600 for office supplies in May of this year. He used half of the supplies this year and he will use the remaining half by February of next year.
d. $450 for several pair of work boots. Christopher expects to use the boots about 80 percent of the time in his business and the remainder of the time for hiking. Consider the boots to be a form of clothing.
Solution :
It is given that Christopher is the cash method and a calendar year taxpayer. He also made the cash payments that is related to the business for this year.
We have to assume marginal tax rate = 30 %
Therefore, the after tax cost for the payments are :
a). $ 500 - not deductible as it was a penalty for the violation.
b). 765 - half of the interest is not deductible. i.e. 900 x (1 - (0.5 x 0.3))
c). 420 - fully deductible, i.e. 600 x (1 - 0.3)
d). 450 - not deductible
Crane Company has 900 shares of 4%, $100 par cumulative preferred stock outstanding at December 31, 2018. No dividends have been paid on this stock for 2017 or 2018. Dividends in arrears at December 31, 2018 totala) $400.b) $3600.c) $7200.d) $0.
Answer:
c) $7200
Explanation:
Preference dividends have preference when it comes to payment of dividends.
This means that we pay the Preference Stock holders their dividend (which is fixed) and there after the remainder is paid up to the Common Stockholders
Preference dividend = 900 shares x $100 x 4 % = $3600
When Preference Stock is Cumulative, it means that all previous dividends in arrears have to be paid up before any current year distributions are made.
2018
Cumulative Preference dividend = $3600 (2017) + $3600 (2018) = $7200
therefore,
Dividends in arrears at December 31, 2018 total $7200
Suppose a government has no debt and a balanced budget. Suddenly it decides to spend $5 trillion while raising only $4.5 trillion worth of taxes.
Instructions:
a. What will be the government's deficit?
b. If the government finances the deficit by issuing bonds, what amount of bonds will it issue?
c. At a 4 percent rate of interest, how much interest will the government pay each year?
d. Add the interest payment to the government $5 trillion expenditures for the next year, and assume that tax revenues remain at $4.5 trillion. In the second year, compute the
(i) Deficit: $____billion.
(ii) Amount of new debt (bonds) issued to finance the deficit in the second year: $____billion.
(iii) Total debt at the end of the second year: $___billion.
(iv) Debt service requirement: $____billion
Answer:
a. The government's deficit is $0.5 trillion or $500 billion.
b. The amount of bonds issued = $0.5 trillion or $500 billion.
c. At a 4 percent rate of interest, the interest the government will pay each year = $20 billion.
d. i) Deficit: $__520__billion.
(ii) Amount of new debt (bonds) issued to finance the deficit in the second year: $_520___billion.
(iii) Total debt at the end of the second year: $_1,020__billion.
(iv) Debt service requirement: $__40.8__billion
Explanation:
a) Data and Calculations:
Government spending = $5 trillion
Income from taxes = $4.5 trillion
Deficit = $0.5 trillion
Bonds issued = $0.5 trillion
Interest rate = 4%
Annual interest expense = $20 billion ($0.5 trillion * 4%)
Expenditure next year = $5 trillion
Interest payment = $0.02 trillion
Total governmental spending = $5.02 trillion
Tax revenue = 4.50 trillion
Deficit = $0.52 trillion
Select the behavior that does NOT represent an example of a speaker effectively preparing for a lecture.
a. John types up a copy of his speech in case he has an unexpected moment of stage fright.
b. Eva memorizes her entire speech because she wants to avoid the rigidity of reading off of a piece of paper.
c. Matt has anxiety about giving his speech, so he works on his linguistics homework to distract himself.
d. Molly records herself giving her speech and plays it back to be sure that she is speaking clearly.
Answer:
c. Matt has anxiety about giving his speech, so he works on his linguistics homework to distract himself.
Explanation:
The behavior that represent the examples with respect to the speaker effectively preparing for the lecture are as follows:
a. The john types a copy of his speech where there is non expected moment comes
b. Eva remember her total speech as she want to neglect the rigidity
c, The molly records her speech and she plays it back so to be sure that she speaks clearly or not
So as per the given situation, the option c should be considered
How much must he save during each of the next 10 years (with equal deposits being made at the end of each year, beginning a year from today) to meet his retirement goal
Question Completion:
Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires - that is, until he is 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $40,000 has today. He wants all his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes that the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 10 years from today, and he will then get 24 additional annual payments. Inflation is expected to be 5% per year from today forward. He currently has $100,000 saved up; and he expects to earn a return on his savings of 8% per year with annual compounding.
Answer:
He must save $57,326.75 yearly for 10 years to meet his retirement goal.
Explanation:
a) Data and Calculations:
The future value of the first retirement payment of $40,000 = $86,360 ($40,000 * 2.159)
Future value factor = 2.159 at 8% for 10 years
Amount to be paid over 24 years = $960,000 ($40,000 * 24)
Total amount to be paid in 25 years of retirement = $1,046,360 ($960,000 +$86,360)
Future value of initial savings of $100,000 = $215,892.50
Amount expected to be saved in ten years = $830,467.50 ($1,046,360 - $215,892.50)
N (# of periods) 10
I/Y (Interest per year) 8
PV (Present Value) 0
FV (Future Value) 830467.50
Results
PMT = $57,326.75
Sum of all periodic payments $573,267.47
Total Interest $257,200.03
During fiscal year 2012, Dioubate Cie earned $10,000 of interest revenue on an investment in a tax-free municipal bond. Which of the following items would be increased by the municipal bond revenue?
a. Pre-Tax Income
b. Income Tax Expense
c. Taxable Income
d. Income Tax Payable
e. Deferred Tax Liabilities
Answer:
a. Pre-Tax Income
Explanation:
Given that
The interest revenue earned is $10,000
So in the case when there is the municipal bond revenue so the pre tax income should be increased as there is an interest revenue so only this account should be increased
Therefore the correct option is a
Hence, the other options would be wrong
Weighted-average method, spoilage, equivalent units. (CMA, adapted)
Consider the following data for November 2017 from MacLean Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the beginning of the process and conversion costs are added evenly during the process. Spoilage is detected upon inspection at the completion of the process. Spoiled units are disposed of at zero net disposal value MacLean Manufacturing Company uses the weighted-average method of process costing
Physical Units Direct Materials
Pennants
Work in process, November 1 1,350 $ 966
Started in November 2017 ?
Good units completed and transferred 8,800
out during November 2017
Normal spoilage 80
Abnormal spoilage 50
Work in process, November 30 1700
Total costs added during November 2017 $10,302
aDegree of completion: direct materials, 100%, conversion costs, 45%
bDegree of completion: direct materials, 100%, conversion costs, 35%
Compute equivalent units for direct materials and conversion costs.
Answer:
Equivalent Units: Materials = 10630
Equivalent Units : Conversion = 9525
Explanation:
MacLean Manufacturing Company
Weighted-Average Method
Process Costing
Particulars Units % Of Completion Equivalent Units
Materials Conversion Materials Conversion
Units completed
and transferred 8,800 100 100 8800 8800
Add
Ending Inventory 1700 100 35 1700 595
Normal Spoilage 80 100 100 80 80
Abnormal Spoilage 50 100 100 50 50
Equivalent Units 10630 9525
The weighted average method equivalent unit production implies that the units completed and the ending inventory completed plus any spoilage normal or abnormal is taken is accounted for.
The weighted average method EUP can also be determined by adding the beginning units and units started
The normal and abnormal spoilage are taken 100 % because all the spoilage is evident once the goods are completed.
Waterway Industries reported the following data: 2020 2021 Sales $2980000 $4850000 Net Income 293000 391000 Assets at year end 1810000 2460000 Liabilities at year end 1000000 1520000 What is Waterway’s asset turnover for 2021?
Answer:
See
Explanation:
Given the above information, asset turnover ratio for 2021 is computed as seen below.
Asset turnover = Net sales / Average total assets
Net sales 2021 = $4,850,000
Average total assets = $2,135,000
Therefore, asset turnover ratio for 2021
= $4,850,000 / $2,135,000
= 2.27 times
A firm's current profits are $400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent. If the firm's opportunity cost of funds is 6 percent, determine the value of the firm: Instructions: Enter your responses rounded to one decimal place. a. The instant before it pays out current profits as dividends. $ million b. The instant after it pays out current profits as dividends. $ million
Answer:
A. $21,200,000
B. $20,800,000
Explanation:
A. Calculation to determine The instant before it pays out current profits as dividends
Value of the firm =[(Current profits) × (1 +Opportunity cost of funds)} ÷ (Opportunity cost of funds - Constant growth annual rate)
Let plug in the formula
Value of the firm= [($400,000) × (1 + 0.06)]÷ (0.06 - 0.04)
Value of the firm= [($400,000) × (1.06)]÷0.02
Value of the firm= $424,000 ÷ 0.02
Value of the firm= $21,200,000
Therefore The instant before it pays out current profits as dividends will be $21,200,000
B. Calculation to determine The instant after it pays out current profits as dividends
Using this formula
Value of the firm =[(Current profits) × (1 +Constant growth annual rate)} ÷ (Opportunity cost of funds - Constant growth annual rate)
Let plug in the formula
Value of the firm= [($400,000) × (1 + 0.04)] ÷ (0.06 - 0.04)
Value of the firm= [($400,000) × (1.04)] ÷ (0.06 - 0.04)
Value of the firm= $416,000 ÷ 0.02
Value of the firm= $20,800,000
Therefore The instant after it pays out current profits as dividends will be $20,800,000
Three categories of activities (operating, investing, and financing) generate or use the cash flow in a company. In the following table, identify which type of activity is described by each statement
Operating Activity Investing Activity Financing Activity A company records a loss of $70,000 on the sale of its outdated inventory D and W Co. sells its last season's inventory to a discount store. Digiink Printing co. buys new machinery to ramp up its production capacity. Yum Brands distributes dividends to its common stockholders for the first
During the last year, Globo-Chem Co. generated $1,053.00 million in cash flow from operating activities and had negative cash flow generated from investing activities (-576.00 million). At the end of the first year, Globo-Chem Co. had $180 million in cash on its balance sheet, and the firm had $280 million in cash at the end of the second year. What was the firm's cash flow (CF) due to financing activities in the second year?
A. $471.25 million
B. $5.189.50 million
C. $282.75 million
D. $-377.00 million
Answer:
1. a. A company records a loss of $70,000 on the sale of its outdated inventory. OPERATING ACTIVITY.
Operating activities have to do with the day to day operations of the business.
b. D and W Co. sells its last season's inventory to a discount store. OPERATING ACTIVITY.
This is also a day-to-day operation of the business so it falls under operating activities.
c. DigiIink Printing co. buys new machinery to ramp up its production capacity. INVESTING ACTIVITY.
Investing activities have to do with the purchase and sale of capital assets such as financial assets in other companies or fixed assets. The machinery purchased here is a fixed asset so this will count as an investing activity.
d. Yum Brands distributes dividends to its common stockholders for the first. FINANCING ACTIVITY.
Financing activities have to do with the long term debt and equity of a company and this includes dividends so this falls under her.
2. Cashflow due to financing activities:
Cash Balance second year = Cash Balance first year + Cash Flows From Operating Activities + Cash Flows From Investing Activities + Cash Flows From Financing Activities
280 = 180 + 1,053 - 576 + Financing activities
280 = 657 + Financing activities
Financing cashflow = 280 - 657
= -$377 million
The appropriate discount rate for the following cash flows is 8 percent compounded quarterly. YearCash Flow 1 $800 2 800 3 0 4 1,200 What is the present value of the cash flows
Answer:
Total PV= $2,298.24
Explanation:
First, we need to determine the effective annual rate:
EAR= [1 + (i/n)]^n - 1
EAR= [1 + (0.08/4)]^4 - 1
EAR= 0.082
Now, we can determine the present value of the cash flow, using the following formula:
PV= ∑[Cf/(1+i)^n]
Cf1= 800 / 1.082= 739.37
Cf2= 800 / 1.082^2= 683.34
Cf3= 0
Cf4= 1,200 / 1.082^4= 875.53
Total PV= $2,298.24
The trading securities portfolio of Jerome, Inc., had a total cost of $3,000 and a fair value of $2,800 on December 31, which is the first year it held trading securities. Complete the necessary adjusting entry.
Answer:
Dr Unrealized Loss - Income $200
Cr Fair value adjustment - trading $200
Explanation
Preparation of the necessary adjusting entry
Based on the information given the appropriate adjusting journal entry is :
Dr Unrealized Loss - Income $200
($3,000 - $2,800)
Cr Fair value adjustment - trading $200
(To recrod adjustment to fair value for trading securities )
The following expenditures relating to plant assets were made by Adam Company during the first 2 months of 2020.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck
Required:
a. Explain the application of the cost principle in determining the acquisition cost of plant assets.
b. List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.
Explanation:
a.)
In terms of the cost principle, the cost of acquiring a plant asset involves all of the expenditures required to get this asset and also to get ready to serve it's purpose.
Cost is measurable by the cash amount paid for a transaction that has to do with money or the money equivalent paid when assets that are not cash are used as a means of payment.
the cash equivalent is the same as the fair market value of the assets that were given or received..
b )
the account title that expenditure should be debited
1. 5000 paid for land
2. 200 paid is for factory machine equipment
3. 850 paid for delivery truck is for equipment
4. 17500 paid for parking lot is for land improvement
5. 250 paid for companies name to be printed on truck is equipment
6. 8000 paid for installation is for equipment
7. 900 paid for insurance policy on truck is prepaid insurance
8. 75 paid as license fee is for license insurance
Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. Group of answer choices To find a project's IRR, we must find a discount rate that is equal to the WACC. A project's IRR is found by discounting the cash inflows at the WACC to find the present value (PV), then compounding this PV to find the IRR. None of these Answers To find a project's MIRR, we must solve for the discount rate that causes the PV of the inflows to equal the PV of the project's costs. A project's MIRR is found by compounding the cash inflows at the WACC to find the terminal value (TV), then discounting this TV at the WACC
XYZ Company operates on a remote interstate highway. It provides premium services to truckers en route to remote locations. It has numerous competitors that offer lower prices, but it meets the demands of discerning clients with its high-quality services. Therefore, XYZ Company can be characterized as a firm with a: a. narrow market appeal to a price-sensitive niche that demands quality, service, and value. b. broadly targeted scope and price points aimed for the masses. c. value proposition based on differentiation and a niche clientele that is willing to pay for added value. d. niche clientele and business model that meets the needs of truckers in general.
Answer:
c. value proposition based on differentiation and a niche clientele that is willing to pay for added value.
Explanation:
Since in the question it is mentioned that XYZ company provides the premium service also they have various number of competitors that offered the customer at less prices but at the same time this company meet the customer demand having the high quality service so here the value should be proportioned that depend upon on the differentiation also it would be pay for adding the value
Hence, the option c is correct
Thoren has the following items for the year: $4,000 of short-term capital gain, $5,000 of 0%/15%/20% long-term capital gain, and $1,500 of 28% capital loss. Which of the following is correct?
a. The $1,500 loss will first be offset by the $4,000 short-term gain.
b. The $4,000 short-term gain will first be offset by the $5,000 long-term gain.
c. The $1,500 loss will first be offset by the $5,000 long-term gain.
d. The taxpayer will have a net short-term capital loss.
e. None of these choices are correct.
Answer:
The answer is "Choice c".
Explanation:
Initially, reimbursement would be achieved inside the long-term grouping of profits and losses as well as the short-term grouping of losses and gains. When these networks' results exhibit opposing values (it only is again and one a loss), their group outcomes were netted. There is still a net STCG of 4,000 USD as well as a net LTCG of 3,500 USD.
During a job interview, Dario was unable to answer the interviewer's final question because it was slightly technical and he did not know the answer. He is worried that this one answer may cost him the job even though the rest of the interview went well. To possibly salvage his situation, Dario should
Answer:
He should restate a positive point that he would like the interviewer to know.
Explanation:
In an interview it is very important to create an impression that one can recover from a negative situation and stay positive.
In the given scenario where Dario was unable to answer the interviewer's final question because it was slightly technical and he did not know the answer, the way to express positivity is to restate a positive point that he will like the interveiwer to know.
In the interviewer's mind the conversation will now end on a positive note.
If an investor buys a T-bill with a 90-day maturity and $50,000 par value for $48,500 and holds it to maturity, what is the annualized yield
Answer:
12.55%
Explanation:
Note that the T-bill rate of return is annualized based on 360-day count convention, hence, to begin with, let us determine the rate of return over a 90-day maturity period as shown thus:
rate of return over 90 days=(FV-PV)/FV
FV=face value=$50,000
PV=purchase price=$48,500
rate of return over 90 days=($50,000-$48,500)/$50,000
rate of return over 90 days=3.00%
annualized rate of return=(1+90day return)^(360/90)-1
the annualized rate of return=(1+3.00%)^(360/90)-1
the annualized rate of return=12.55%
17. Calculating Future Values Streamsong Credit Bank is offering 4.7 percent compounded daily on its savings accounts. If you deposit $4,750 today, how much will you have in the account in 5 years
Answer:
Future value = $5912.87
Explanation:
Below is the calculation:
Interest rate = 4.7%
Present value of deposit = $4750
Time period, n = 5 years
Future value = Present value ( 1 + interest rate)^n
Future value = 4750 ( 1 + (4.7%/365)^5*365
Future value = 4750 (1 + 0.00012)^1825
Future value = $5912.87