Answer:
PV= $2,106.18
Explanation:
Giving the following information:
Annual payment= $500
Number of periods= 5 years
Interest rate= 6%
To calculate the present value, first, we need to determine the future value:
FV= {A*[(1+i)^n-1]}/i
A= annual payment
FV= {500*[(1.06^5) - 1]} / 0.06
FV= $2,818.55
Now, the present value:
PV= FV/(1+i)^n
PV= 2,818.55/1.06^5
PV= $2,106.18
The present value of a $500 payment received at the end of each of the next five years at an appropriate discount rate of 6 percent is approximately $2,106.
The question you asked involves the concept of calculating the present value of a series of future payments, also known as an annuity. The present value of an annuity can be determined using the formula:
PV = PMT * [(1 - (1 + r)^-n)/r]
where 'PV' is the present value, 'PMT' is the periodic payment, 'r' is the discount rate (as a decimal), and 'n' is the number of periods.
Plugging in the values from your question we get:
PV = 500 * [(1 - (1 + 0.06)^-5) /0.06]
This will give us the present value of the cash flows. Thus, the present value for a $500 payment received at the end of each of the next five years, worth to you today at the appropriate discount rate of 6 percent is $2,106.
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Answer:
out-of-pocket
Explanation:
In Accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.
Cost pool is simply the amount of money spent by a firm on a particular activity.
Generally, an activity-based costing uses numerous cost pools such as manufacturing cost or customer services and numerous cost drivers such as direct labor hours worked, number of changes used in engineering department, etc.
Generally, an out-of-pocket cost requires that an individual or business outlay their future cash-flow and it must be relevant for current and future decision making.
Answer:
In year 1 the warranty expense reported is $450 ($9,000 x 5%)
Explanation:
The journal entries would be:
Sales journal entry - August 16 - Year 1
Account Debit Credit
Cash $9,000
Cost of goods sold $4,500
Revenue $9,000
Inventory $4,500
Accrued Warranty Expense - December 31 - Year 1
Account Debit Credit
Warranty Expense $450
Estimated Warranty
Liability $450
By the end of Year 1, the company has recognized an accrued expense (an accrued expense is recognized before cash is actually paid out) for $450.
B. The Aggregate Demand curve shifts to the left.
C. The Aggregate Demand curve shifts to the right.
D. The Short Run Aggregate Supply curve shifts to the left.
Answer:
A - The Short Run Aggregate Supply curve shifts to the right.
Explanation:
The Short Run Aggregate Supply curve plots aggreagrate price against aggreagrate quantity.
If producers believe a recession is imminent and they reduce the amount of machinery purchased, the quantity supplied would reduce shifting the Short Run Aggregate Supply curve to the left.
I hope I was able to help you.
Demand of ice-cream must increase in the summer.
There is no free lunch.
One must give up something in order to obtain something else.
Answer:
D
Explanation:
A trade-off occurs when we make a choice that benefits us, but to acquire that benefit, we also have to give up something of value. Further explore the definition of trade-offs in economics, understand the concepts of opportunity costs and sacrifices, and recognize the importance of making trade-offs in a strategic manner that uses resources wisely.
Answer:
Depreciation expense in 2019 is $144,050
Explanation:
O’Dell Vegetables uses the straight-line method of depreciation, Depreciation Expense each year is calculated by following formula:
Depreciation Expense = (Cost of machine − Salvage Value )/Useful Life
From July 1, 2016 to 2018:
Annual Depreciation Expense = ($984,000 - $140,000)/8 = $105,500
Depreciation Expense in 2016 = $105,500x6/12 = $52,750
Accumulated Depreciation (end 2018) = $52,750 + $105,500 + $105,500 = $263,750
From 2019, the machine would become uneconomical after December 31, 2023:
Salvage Value = 0 and Remaining useful life = 5 year
Depreciation Expense = (Historical Cost - Accumulated Depreciation - Salvage Value)/Remaining Useful Life = ($984,000-$263,750-0)/5 = $144,050
Depreciation in 2019 is $144,050
Answer:13.74%
No
Explanation:
The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
Using a financial calculator to find the IRR :
Cash flow for year zero = $-38,000.
Cash flow for year one = $ 19,000
Cash flow for year two = $17,000
Cash flow for year three = $12,000
IRR = 13. 74%
If the cost of capital is 14%, the equipment shouldn't be purchased because the IRR is less than the cost of capital.
I hope my answer helps you.