Suppose you have a choice of two equally risky annuities, each paying $1,000 per year for 20 years with similar interest rates. One is an annuity due, while the other is an ordinary annuity. Which annuity would you choose

Answers

Answer 1
Answer:

Answer:

Annuity due would be be chosen.

Explanation:

Let us assume the similar annual interest rate is 10%.

To decide which to choose, the present values of the two annuities are calculated and compared as follows:

1. For annuity due

Under an annuity due, payments are made to investors at the beginning of each time period. The present value of an annuity due can be calculated as follows:

PVd = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] × (1+r) .................. (1)

Where;

PVd = Present value of an annuity due = ?

P = Annual payment = $1,000

r = interest rate = 10%, or 0.10

n = number of years = 20

Substituting the values into equation (1) above, we have:

PVd = $1,000 × [{1 - [1 ÷ (1 + 0.10)]^20} ÷ 0.10] × (1 + 0.10) = $9,364.92

2. For ordinary annuity

Under an ordinary annuity, payments are made to investors at the end of each time period. The present value of an ordinary annuity can be calculated as follows:

PVd = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] .................. (2)

Where

PVo = Present value of an ordinary annuity = ?

P = Annual payment = $1,000

r = interest rate = 10%, or 0.10

n = number of years = 20

Substituting the values into equation (1) above, we have:

PVo = $1,000 × [{1 - [1 ÷ (1 + 0.10)]^20} ÷ 0.10] = $8,513.56

3. Decision

Since the present value (PV) of the annuity due of $9,364.92 is greater than the PV of ordinary annuity of $8,513.56, annuity due would be be chosen.


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Answers

Answer: resources  

                                                                                             

Explanation:  In simple words, resources refers to assets that are owned and used by a company to operate efficiently in the market.

In the given case, Carl scheduled safety training for the employees and took care that the injured employee gets his insurance. He performed all these decisions by using the money of the company.

Thus, he had been using the resources to tackle the situation.

The following trial balance of Reese Corp. at December 31, 2017 has been properly adjusted except for the income tax expense adjustment.Reese Corp.Trial BalanceDecember 31, 2017Dr. Cr.Cash $ 875,000 Accounts receivable (net) 2,695,000 Inventory 2,085,000 Property, plant, and equipment (net) 7,566,000 Accounts payable and accrued liabilities $ 1,761,000Income taxes payable 654,000Deferred income tax liability 85,000Common stock 2,350,000Additional paid-in capital 3,680,000Retained earnings, 1/1/17 3,490,000Net sales and other revenues 13,560,000Costs and expenses 11,180,000 Income tax expenses 1,179,000 $25,480,000 $25,480,000Other financial data for the year ended December 31, 2017:• Included in accounts receivable is $1,200,000 due from a customer and payable in quarterly installments of $150,000. The last payment is due December 29, 2019.• The balance in the Deferred Income Tax Liability account pertains to a temporary difference that arose in a prior year, of which $20,000 is classified as a current liability.• During the year, estimated tax payments of $525,000 were charged to income tax expense. The current and future tax rate on all types of income is 30%.In Reese's December 31, 2017 balance sheet,The current assets total is: ????The current liabilities total is: ????The final retained earnings balance is: ????

Answers

Answer:

$5,055,000  TOTAL CURRENT ASSETS  

$2,435,000  TOTAL CURRENT LIABILITIES  

$4,691,000  Retained Earnings  

Explanation:

2017 Balance Sheet

$875,000 Cash

$2,095,000 Accounts Receivable

$2,085,000 Inventories

$5,055,000  TOTAL CURRENT ASSETS  

$7,566,000 Property, plant, and equipment

$600,000 Accounts Receivable

$8,166,000  TOTAL NONCURRENT ASSETS  

$13,221,000  TOTAL ASSETS  

$1,761,000  Accounts Payable  

$20,000  Deferred Income Tax Liability  

$654,000  Income Tax Payable  

$2,435,000  TOTAL CURRENT LIABILITIES  

$65,000  Deferred Income Tax Liability  

$65,000  TOTAL NONCURRENT LIABILITIES  

$2,500,000  TOTAL LIABILITIES  

$2,350,000  Common Stock  

$3,680,000  Paid in Capital  

$4,691,000  Retained Earnings  

$10,721,000  TOTAL EQUITY  

$13,221,000  TOTAL EQUITY + LIABILITIES  

Income Statement 2021

Sales $13.560,000

Cost and Expenses -$11.180,000

Net Income Before Taxes and Int $2.380,000

Interest Expenses -$1.179,000

Net Income Before Taxes $1.201,000

Describe some strategic differences between these firms. What type of trade-off decisions have these firms made

Answers

Please find full question attached

Answer and Explanation:

I will use Apple and HP in this comparison.Here I would compare Apple's laptop to that of Hewlet Packard as this is where they meet in the industry. Apple employs a strategy of differentiation and standing out in competition through their products. They aim to create products that are quite different and unique/innovative from other products in the market, and yet what the customer wants. In doing this, Apple has a trade-off for cost as they charge alot higher for their products than their competitors. HP on the other hand focus on making the best possible products that get the job done/meet the needs of customers while also being affordable. HP is more focused on affordable devices for their market and therefore have a different market segment for laptops from that of Apple. There is a trade-off for cost and market segment in this comparison

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the maturity value of the note on March 1

Answers

Answer:

$9,236.71

Explanation:

The computation of the maturity value of the note is shown below:-

Interest Amount = ($9000 × 8%) × 120 ÷ 365

= $720 × 120 ÷ 365

= $236.71

So, the Maturity Value is

= Face value + Interest amount

= $9,000 + $236.71

= $9,236.71

Therefore for computing the maturity value we simply applied the above formula.

At DEC computers, according to the master schedule, the product mix for three different computers will be as follows: 50% product A, 30% product B, and 20% product C. For the coming year aggregate production quantity according to the aggregate plan is 10,400 units. The production will take place evenly throughout the year. Assuming 52 weeks per year, what is the weekly planned production for product Aa. 400
b. 200
c. 50
d. 100
e. 1000

Answers

Answer: 100

Explanation: Its 100

Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $10,000 not due for three years. The interest rate on the note is 7%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What amount did Canliss borrow? (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

Answers

Canliss Mining Company borrowed $41,006.

To find out how much Canliss Mining Company borrowed, we'll work step by step.

Future Value of $1 (FV): This factor calculates the future value of a present sum after a certain number of periods.

Given that the annual installment payments of $10,000 are not due for three years, we'll find the future value of this annuity.

The FV factor for 7% over three years is approximately 1.225.

So, the future value of the annuity is

10,000 * 1.225 = $12,250

Present Value of $1 (PV): This factor calculates the present value of a future sum. In this case, we want to find out how much the $12,250 due in three years is worth in present terms.

Using the PV factor for 7% over three years, we find it's approximately 0.816.

So, the present value is

12,250 * 0.816 \approx $10,002

This means that Canliss Mining Company borrowed approximately $10,002 from the local bank.

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