The future value of the annuity due as $5,355.70.
To find the future value of an annuity due, we can use the formula:
FV = P * ((1 + r)^n - 1) / r
where:
FV = future value
P = periodic payment
r = interest rate per compounding period
n = number of compounding periods
In this case, the periodic payment is $180, the interest rate is 0.22% (or 0.0022 as a decimal), and the compounding period is quarterly. We need to find the future value after 7 years.
First, we need to find the number of compounding periods. Since the compounding period is quarterly and we are looking at 7 years, we have:
n = 7 * 4 = 28
Next, we can plug the values into the formula:
FV = 180 * ((1 + 0.0022)^28 - 1) / 0.0022
Now, we can calculate the future value using a calculator:
FV = 180 * ((1.0022)^28 - 1) / 0.0022
After evaluating the expression, we get the future value of the annuity due as $5,355.70.
For more such questions on interest rate
https://brainly.com/question/29451175
#SPJ8
Supposedly energy providers’ prices have risen due to
interruptions and cost increases on the supply side. So how are
they are posting record profits? What conclusions may we draw from
this fact?
These are based on general observations and may not apply to every energy provider or situation. The specific circumstances and strategies of each company need to be considered to understand their record profits despite the challenges in the supply side of the industry.
1. Demand and Market Power: Energy providers may have a strong market position, allowing them to increase prices and still make significant profits. When demand for energy is high and supply is limited, companies can take advantage of their market power to raise prices.
2. Efficiency and Cost Management: Even though there are interruptions and cost increases on the supply side, energy providers may have implemented efficient cost management strategies to mitigate these challenges. They might be finding ways to optimize their operations, reduce expenses, and improve their overall efficiency.
3. Diversification and Revenue Streams: Energy providers may have diversified their operations and revenue streams beyond the supply side of the business. They could be involved in other sectors, such as renewable energy, energy trading, or offering additional services. These additional revenue streams can contribute to their record profits despite supply-side challenges.
4. Government Policies and Regulations: Government policies and regulations play a crucial role in the energy market. Certain policies or regulations may have provided favorable conditions for energy providers to increase their profits. For example, subsidies or tax incentives may have helped offset the impact of rising costs.
5. Long-Term Contracts: Energy providers often enter into long-term contracts with customers, which can provide stability and predictability in their revenue streams. These contracts may include price adjustments based on market conditions, allowing the companies to pass on any cost increases to the customers.
Learn more about energy providers from the link below
brainly.com/question/33028726
#SPJ11
You are planning to create a portfolio of two stocks: Amazon and Tesla. The Amazon beta is 1.16 and Tesla is 1.89. Using the US 10yr. treasury bond rate as a proxy of the risk free rate of return, we know that it is 1.70%. As a proxy for market average rate of return we use S&P 500 etf which is 15.40%. a) calculate the mean return of the portfolios consisting of: 50% of Amazon and 50% of Tesla. b) Calculate also the beta of the portfolio.
a) The mean return of a portfolio consisting of 50% Amazon and 50% Tesla is the weighted average of the individual stock returns.
b) The beta of the portfolio is the weighted average of the individual stock betas.
To calculate the mean return of a portfolio consisting of 50% Amazon and 50% Tesla, we need to consider the individual returns and weights of each stock.
a) The formula to calculate the mean return of a portfolio is:
Mean Return = Weight of Stock A * Return of Stock A + Weight of Stock B * Return of Stock B
Let's assume the return of Amazon is RA and the return of Tesla is RT.
The weights of Amazon and Tesla in the portfolio are 0.5 each.
Mean Return = 0.5 * RA + 0.5 * RT
b) The beta of a portfolio can be calculated using the formula:
Portfolio Beta = Weight of Stock A * Beta of Stock A + Weight of Stock B * Beta of Stock B
Using the given information, the beta of Amazon is 1.16, and the beta of Tesla is 1.89. The weights of Amazon and Tesla in the portfolio are 0.5 each.
Portfolio Beta = 0.5 * 1.16 + 0.5 * 1.89
Learn more about mean return in the link:
https://brainly.com/question/33604974
#SPJ11
1. Suppose that each of two investments has a 0.9% chance of a loss of $10 million and a 99.1% chance of a loss of $1 million. The investments are independent of each other.
(a) What is the VaR and the expected shortfall (ES) for one of the investments when the confidence level is 99% and the time horizon is one year? (b) What is the VaR and the expected shortfall (ES) for a portfolio consisting of the two investments when the confidence level is 99% and the time horizon is one year? (c) Check whether VaR or expected shortfall satisfies the subadditivity condition for a coherent risk measure for the investments.
(a) VaR for one investment at a 99% confidence level and a one-year time horizon is the loss amount corresponding to the 1% quantile of the loss distribution. In this case, there is a 0.9% chance of a loss of $10 million and a 99.1% chance of a loss of $1 million. Therefore, the VaR is $10 million.
Expected Shortfall (ES) is the average of losses exceeding the VaR. Since the VaR is $10 million, we need to calculate the average of losses exceeding this amount. The probability of a loss exceeding the VaR is 0.9%, and the loss exceeding the VaR is $10 million. Therefore, the ES is 0.9% * $10 million = $90,000.
(b) To calculate the VaR and ES for the portfolio consisting of the two investments, we need to consider the joint distribution of the investments. Since the investments are independent, we can simply sum their individual probabilities and losses.
For VaR, at a 99% confidence level, the loss amount corresponding to the 1% quantile of the joint loss distribution is the sum of the individual VaRs. Therefore, the VaR for the portfolio is $10 million + $10 million = $20 million.
For ES, we need to calculate the average of losses exceeding the VaR. The probability of a loss exceeding the VaR is 0.9% for each investment. Therefore, the ES for the portfolio is 0.9% * ($10 million + $10 million) = $180,000.
(c) The subadditivity condition for a coherent risk measure states that the risk measure for a portfolio should be less than or equal to the sum of risk measures for individual investments. In this case, the VaR and ES for the portfolio are greater than the sum of the individual VaRs and ESs.
VaR: $20 million (portfolio) > $10 million (investment 1) + $10 million (investment 2)
ES: $180,000 (portfolio) > $90,000 (investment 1) + $90,000 (investment 2)
Therefore, the VaR and ES do not satisfy the subadditivity condition for a coherent risk measure in this scenario.
To know more about Expected Shortfall, visit
https://brainly.com/question/32517865
#SPJ11
Most states have laws mandating certain benefits (e.g., mental health benefits, substance abuse benefits, infertility benefits, and so forth). If a benefit has been mandated, all MCOs and health insurance companies must offer that benefit in their insured products.
True
False
True. Most states have laws mandating certain benefits (e.g., mental health benefits, substance abuse benefits, infertility benefits, and so forth). If a benefit has been mandated, all MCOs and health insurance companies must offer that benefit in their insured products.
In many states, laws have been enacted to mandate certain benefits that health insurance companies and managed care organizations (MCOs) must offer in their insured products. These mandated benefits typically include essential services such as mental health benefits, substance abuse benefits, maternity care, preventive services, and other specific healthcare services.
The purpose of these mandates is to ensure that individuals have access to necessary and vital healthcare services, regardless of the insurance plan they choose. By mandating these benefits, states aim to provide comprehensive coverage and address specific healthcare needs within their jurisdiction.
Learn more about managed care organizations here:
https://brainly.com/question/15995189
#SPJ11
39. Which one of the following statements on the causes of the energy efficiency gap is
correct?
a. The likelihood of buying an energy-efficient refrigerator is higher if a consumer
perceives a discount rate that is much higher than the market discount rate.
b. Bounded rationality implies that consumers make decisions by comparing benefits
and costs.
c. The principal/agent issue points out the possibility that a tenant is likely to use more
energy if the utilities are covered in the rent.
d. If energy markets are not competitive there will be an energy-efficient gap.
40. Which one of the following statements on the rebound effect is correct?
a. It is only due to an increase in income.
b. It is the reduction in energy savings due to the implicit energy price decrease that
occurs with an increase in energy efficiency.
c. It has no effect on energy use.
d. It increases savings in energy
41. Firms that benefit from economies of scale:
a. Performs more efficiently when output is small.
b. Would not be considered natural monopolies because MC = MR
c. Prefer to operate under marginal cost pricing.
d. Face declining marginal cost.
Explanations for the energy efficiency gap's reasons include the following: Consumer decision-making is based on benefit-cost comparisons, according to the theory of bounded rationality.
Because of our cognitive limitations, the knowledge that is available to us, and the passage of time, bounded rationality depicts how human decision-making deviates from perfect economic rationality. We frequently make decisions that are satisfactory rather than the 'optimal' decisions.
American political scientist Herbert A. Simon put out the idea of bounded rationality in his 1957 book "Models of Man." It claims that because of their limited knowledge and cognitive abilities, people make decisions.
As an illustration, people tend to take more risks when they are joyful and less risks when they are afraid. People tend to base decisions on emotion rather than information and reasoning, which might result in less than ideal choices.
To learn more about bounded rationality, visit:
https://brainly.com/question/32632403
#SPJ4
Which stock can be described as a defensive stock? Tesla Apple Alphabet Walmart
A defensive stock can be defined as a security that maintains or increases its value during an economic downturn. These types of shares are often less sensitive to economic changes and tend to pay higher dividends. Defensive stocks are usually from industries like utilities, healthcare, consumer staples, etc.
Among the four stocks mentioned in the question, the company that can be described as a defensive stock is Walmart. Walmart is an American multinational retail corporation that operates a chain of discount department stores, hypermarkets, and grocery stores.Walmart is a defensive stock because it is in the retail sector, which tends to be less affected by economic downturns since people will always need to buy goods and services. Walmart has been known to perform well during recessions because of the demand for discount stores.
Walmart has a solid record of paying dividends, which makes it an attractive investment option during economic uncertainties. The company has a diverse range of products, with many being daily essentials like groceries, which tend to remain in demand even during a recession. Furthermore, its online presence has enabled it to compete more effectively with e-commerce companies such as Amazon. In conclusion, Walmart can be described as a defensive stock because it is in the retail sector and is known for paying dividends.
To know more about defensive visit:
https://brainly.com/question/32371572
#SPJ11
The Walt Disney Company: Its Diversification Strategy in 2020
John E. Gamble Texas A&M University-Corpus Christi
If you are Bob Chapek, what would be your primary concerns and
how would you strategise the future?
As Bob Chapek, the CEO of The Walt Disney Company, my primary concerns would revolve around addressing the challenges and leveraging opportunities in the ever-evolving entertainment industry.
Here are some key concerns and strategic considerations I would focus on:
1. Streaming Dominance: One of the primary concerns would be the growing competition in the streaming market. Companies like Netflix, Amazon Prime Video, and new entrants like Apple TV+ and HBO Max pose a significant threat. To strategize the future, I would focus on expanding and strengthening Disney's streaming service, Disney+.
2. Content Creation and Acquisition: The ability to consistently produce compelling and high-quality content across various platforms is crucial. I would emphasize investing in a diverse range of content, including movies, TV shows, and exclusive franchises. This can be achieved through both internal production capabilities and strategic acquisitions, such as the acquisition of 21st Century Fox assets. .
3. Theme Parks and Experiences: The theme parks division has always been a significant revenue generator for Disney. However, concerns arise due to the impact of the COVID-19 pandemic and changing consumer preferences. To strategize the future, I would focus on enhancing the visitor experience by integrating technology, introducing new attractions, and incorporating immersive and interactive elements.
4. International Expansion: The global market offers significant growth opportunities. As Disney already has a strong brand presence worldwide, I would focus on expanding further into emerging markets, particularly in Asia, where there is a growing middle class and increasing demand for entertainment.
5. Sustainability and Corporate Social Responsibility: In today's world, environmental sustainability and corporate social responsibility are crucial considerations. I would prioritize initiatives that reduce Disney's environmental footprint, promote diversity and inclusion, and support local communities.
for more questions on Disney
https://brainly.com/question/15585155
#SPJ8
Increasingly larger numbers of people in the baby boomer population entering retirement age is an example of which macro environmental trend? O Demographic changes O Political and legal changes O Technological changes O Economic changes
The demographic changes is the macro-environmental trend that can be exemplified by increasingly larger numbers of people in the baby boomer population entering retirement age. Here's a more detailed explanation:Demographic changes refer to the changes in the size, composition, and distribution of populations over time.
They are the outcome of various factors, including birth rates, death rates, migration, and aging. These changes can have significant implications for society, the economy, and the environment.A key demographic trend that has been occurring in many countries in recent years is the aging of the population. This is due in part to declining birth rates and increasing life expectancy. The baby boomer generation, which is the cohort born between 1946 and 1964, is now reaching retirement age in large numbers.
This means that there are more people leaving the workforce and entering retirement than ever before.This demographic trend has significant implications for the economy, as it will likely lead to increased demand for healthcare services and retirement income support. It also has implications for the labor force, as there will be fewer workers available to replace those who are retiring. Furthermore, this trend will put pressure on government programs, such as Social Security, which are designed to provide retirement income to seniors.
To know more about demographic visit:
https://brainly.com/question/32805670
#SPJ11
How did Peter the Great attempt to transform Russia into a more "Western" country through his many edicts and decrees? Which specific changes did he enforce? Which aspects of Russian society was he most determined to change? What are your thoughts on his methods? In which sense was he a "great" ruler?
Peter the Great attempted to transform Russia into a more "Western" country through various edicts and decrees.
He enforced changes in multiple aspects, including modernizing the military, promoting education and science, introducing Western customs and fashion, and establishing a new capital, St. Petersburg. Peter was determined to change the rigid social structure, promote secularization, and enhance Russia's global standing.
Peter's methods were characterized by authoritarianism and forceful implementation. He imposed Western practices through strict regulations and punishments. While his measures were effective in modernizing Russia, they often disregarded individul freedom and caused hardships for the population.
Peter the Great was considered a "great" ruler due to his transformative impact on Russia. He expanded its territory, strengthened the military, and initiated significant reforms that propelled Russia towards becoming a major European power. His dedication to modernization and his vision for a Westernized Russia are recognized as pivotal in shaping the country's future.
Peter the Great pursued a comprehensive modernization agenda to transform Russia into a Westernized country. He aimed to catch up with the advanced nations of Europe and secure Russia's status as a major power. Through various edicts and decrees, he introduced substantial changes in multiple areas.
One of the significant changes Peter enforced was the modernization of the military. He reorganized the army and navy, adopting Western military tactics, equipment, and training methods. This was crucial in enhancing Russia's defense capabilities and expanding its influence.
Peter also focused on promoting education and science. He established the first Russian state universities, introduced a system of secular education, and invited foreign scholars to educate the Russian population. These measures aimed to cultivate a more educated and enlightened society.
To instill Western customs and fashion, Peter implemented strict dress codes that required Russian nobility to adopt Western-style clothing. He imposed a tax on beards, encouraging men to shave and follow Western grooming practices. These measures were part of his broader effort to modernize Russian society and break away from traditional norms.
Another significant change was the establishment of a new capital, St. Petersburg. This city was designed to reflect European architectural styles and became a symbol of Peter's vision for a Westernized Russia. It served as a gateway for trade and cultural exchange with Europe.
Peter's methods were often characterized by autocratic rule and the use of force. He enforced his reforms through strict regulations and punishments, frequently resorting to harsh measures. For example, those who resisted shaving their beards could face fines or even forcibly having their beards shaved off. This authoritarian approach resulted in the suppression of individual freedoms and caused hardships for many Russians.
However, Peter's impact on Russia was undeniably transformative. His reforms laid the foundation for the modernization and Westernization of the country. His vision and determination to bring Russia closer to European standards are considered pivotal in shaping its future trajectory.
In conclusion, while Peter the Great's methods were often controversial and oppressive, his legacy as a "great" ruler stems from his instrumental role in modernizing Russia and positioning it as a significant European power.
Learn more about freedom here:
https://brainly.com/question/7723076
#SPJ11
Planned change can differ greatly from one organization to
another. Discuss how planned change efforts might differ in
domestic vs. international settings.
PLEASE EXPLAIN IN GREAT DETAIL!!! NOT JUST 2
Planned change efforts can indeed differ significantly between domestic and international settings due to various factors such as cultural differences, legal and regulatory frameworks, economic conditions, and social norms. Let's delve into the detailed differences in planned change efforts in domestic and international contexts.
1. Cultural Factors:
Cultural differences play a significant role in planned change efforts. In international settings, organizations must consider the cultural norms, values, and beliefs of the target country. Different cultures may have diverse attitudes towards change, risk-taking, and decision-making processes. For instance, some cultures may be more open to change and innovation, while others may be more resistant and prefer stability. Organizations must adapt their change strategies to align with the cultural context, ensuring effective communication and stakeholder engagement.
2. Legal and Regulatory Frameworks:
International planned change efforts are influenced by the legal and regulatory frameworks of the target country. Organizations must navigate through different legal systems, labor laws, and regulations, which can impact the implementation of change initiatives. Compliance with local laws and regulations becomes crucial when introducing changes related to organizational structure, human resources, or operational processes. Understanding and adhering to legal requirements and engaging with relevant authorities becomes essential for successful change implementation.
3. Economic Conditions:
Economic factors also shape planned change efforts. In international settings, organizations need to consider the economic conditions of the target country, including GDP, income levels, and market dynamics. Economic disparities and varying levels of development can influence the feasibility and pace of change initiatives. Organizations may need to tailor their strategies to accommodate different economic realities, such as adjusting pricing strategies, considering local market dynamics, or adapting to specific industry structures.
4. Stakeholder Engagement:
Engaging stakeholders in planned change efforts can differ in domestic and international settings. In international settings, organizations may need to establish relationships with local stakeholders, such as government agencies, community leaders, or non-governmental organizations. These stakeholders can have a significant influence on the success of change initiatives. Building trust, understanding local power dynamics, and effectively communicating the benefits of the proposed changes become critical components of the change process.
5. Communication and Language:
Effective communication is vital in planned change efforts, and it becomes even more crucial in international settings. Language barriers, cultural nuances, and communication styles can impact the clarity and understanding of change initiatives. Organizations need to invest in language translation, cross-cultural training, and localization of communication materials to ensure effective communication with diverse audiences.
In summary, planned change efforts in domestic and international settings differ due to cultural factors, legal and regulatory frameworks, economic conditions, stakeholder engagement, and communication considerations. Adapting change strategies to align with the specific context of the target country enhances the likelihood of successful change implementation in international settings.
Learn more about the challenges and considerations in planned change efforts in international settings here:
https://brainly.com/question/27495055
#SPJ11
Compute the present value of $200,000 to be received 7 years from today if the annual interest rate is 8% compounded annually. (Use the present value tables with six decimal places at the end of your Unit 5 notes. Round your answer to the nearest whole dollar. Do not include the $ sign in your answer
Present value is the worth today of an amount of money or stream of payments to be received in the future, taking into consideration a specified interest rate.
The formula for computing the present value (PV) is: PV = FV/ (1+r)n, where: FV represents the future value of an investment, n represents the number of years the investment is being made to the future, r is the interest rate. The present value (PV) can also be calculated using a present value table. A present value table is a table that is used to help in determining the present value of future cash flows. For instance, to calculate the present value of an amount of money to be received in 7 years, first, identify the interest rate being applied and locate it in the table. Then locate the number of years of the investment on the table. Compute the present value of $200,000 to be received 7 years from today if the annual interest rate is 8% compounded annually. (Use the present value tables with six decimal places at the end of your Unit 5 notes. Round your answer to the nearest whole dollar. Using the formula
PV = FV/ (1+r)n, we have: FV = $200,000n = 7 years r = 8% compounded annually
Thus, PV = 200000/ (1+0.08)7 = 108225.21 dollars Rounding the answer to the nearest whole dollar, the present value of $200,000 to be received in 7 years at an annual interest rate of 8% compounded annually is $108,225.
to know about present value visit:
https://brainly.com/question/28304447
#SPJ11
Consider a $200,000 30-year mortgage with monthly payments. If the interest is 7.5% with monthly compounding, what portion of the mortgage payments during the first year will go toward interest?
a.89%
b.100%
c.75%
d.65%
e.95%
Consider a $200,000 30-year mortgage with monthly payments. The answer to the above-given question is option d) 65%.
Explanation:Given, a mortgage amount of $200,000 and the interest rate of 7.5% with monthly compounding.
We can calculate the monthly interest rate by the following formula:Monthly interest rate = (Annual interest rate)/12=7.5/12=0.625%
Using the formula of the monthly mortgage payment,M = P(r(1 + r)^n)/((1 + r)^n - 1)
where,P = mortgage amount = $200,000r = monthly interest rate = 0.625%/100% = 0.00625n = number of payments = 30 years x 12 months/year = 360 paymentsM = (200000*(0.00625*(1+0.00625)^360))/((1+0.00625)^360-1)
After solving the above equation, we get the value of the monthly payment (M) as $1,398.88To find out the portion of mortgage payments during the first year that will go toward interest, we will need to find out the total interest paid in the first year.Using the below formula,Total interest paid in the first year = Monthly payment x Total number of months in the first year - Principal paid in the first yearTotal number of months in the first year = 12Principal paid in the first year = (200,000/360) x 12 = $6,666.67Monthly payment = $1,398.88Total interest paid in the first year = 1,398.88 x 12 - 6,666.67= $11,965.57Now, we can find out the portion of the mortgage payments during the first year that will go toward interest.Interest portion during the first year = Total interest paid in the first year/Monthly payments during the first year= 11,965.57/(1,398.88 x 12)= 0.7175 or 71.75%Hence, the answer is option d) 65%.
To know more about mortgage visit:
https://brainly.com/question/20688650
#SPJ11
If you deposit $3,000 every year for 15 years at an APR of 9% compounded monthly, what would be the future value at the end of this series? $98,393.95
$49,360.46
$90,757.36
$39,360.46
QUESTION 12 In case you deposit $5,000 every year for 5 years a savings account that earns 10% yearly. What is the present value of this series? $20,000.54
$30,525.55
$18,953.93
$35,253.72
The future value of the series would be $98,393.95.
To calculate the future value of the series, we can use the formula for the future value of an ordinary annuity:
FV = P * [(1 + r/n)^(nt) - 1] / (r/n)
Where:
FV = Future value
P = Annual deposit amount
r = Annual interest rate (as a decimal)
n = Number of compounding periods per year
t = Number of years
Given:
P = $3,000
r = 9% = 0.09 (converted to decimal)
n = 12 (compounded monthly)
t = 15 years
Plugging the values into the formula, we get:
FV = 3000 * [(1 + 0.09/12)^(12*15) - 1] / (0.09/12)
= 3000 * [(1.0075)^(180) - 1] / (0.0075)
≈ $98,393.95
Therefore, the future value of the series would be approximately $98,393.95.
Learn more about future value
brainly.com/question/31935207
#SPJ11
You have been offered a unique investment opportunity. If you invest $10000 today, you will receive $500 one year from now, $1500 two years from now, and $10000 nine years from now.What is the NPV of the opportunity if the cost of capital is 6% per year?
Investing $10,000 with cash flows of $500, $1,500, and $10,000 has an NPV of $8,057.16 at a 6% cost of capital.
To calculate the NPV, we can use the formula:
NPV = CF1 / (1 + r)^1 + CF2 / (1 + r)^2 + CF3 / (1 + r)^3 - Initial Investment
where CF is the cash flow in each year, r is the cost of capital, and the superscripts denote the year.
Plugging in the values, we get:
NPV = 500 / (1 + 0.06)^1 + 1500 / (1 + 0.06)^2 + 10000 / (1 + 0.06)^3 - 10000\
NPV = 500 / 1.06 + 1500 / 1.1236 + 10000 / 1.191016 - 10000\
NPV = 471.70 + 1228.19 + 8057.16 - 10000\
NPV = $8,057.16
Therefore, the NPV of the investment opportunity is $8,057.16 at a 6% cost of capital. Since the NPV is positive, the investment is expected to generate a return greater than the cost of capital and would be considered a good investment.
To know more about cash flows, click here:
brainly.com/question/27994727
#SPJ11
What type of algorithm would you use to segment your customers into multiple groups?
The K-means clustering algorithm is a frequently employed algorithm for categorising clients into various groups. Unsupervised machine learning algorithm known as "K-means clustering" seeks to divide a dataset into K unique clusters based on similarity or distance metrics.
The technique starts by initialising K cluster centroids at random, allocates data points iteratively to the closest centroid, and then updates the centroids using the newly allocated points. Up until convergence, when the centroids stabilise and the clusters form, this process continues.
By grouping clients according to their characteristics or behaviours, K-means clustering enables the discovery of patterns and commonalities. To increase customer happiness and promote corporate growth, it enables organisations to target particular client groups with specialised marketing strategies and individualised interactions.
To know more about employed
https://brainly.com/question/27404382
#SPJ4
You Have Been Offered A Very Long-Term Investment Opportunity To Increase Your Money One Hundredfold. You Can Invest $900 Today And Expect To Receive $90,000 In 40 Years. Your Cost Of Capital For This (Very Risky) Opportunity Is 16%. What Does The IRR Rule Say About Whether The Investment Should Be Undertaken? What About The NPV Rule? Do They Agree?
Both the IRR rule and the NPV rule agree on whether the investment should be undertaken. If the NPV is positive, indicating that the investment is expected to generate a return greater than the cost of capital, then the IRR will also be greater than the cost of capital, indicating that the investment should be undertaken.
The Internal Rate of Return (IRR) rule and the Net Present Value (NPV) rule are both commonly used methods to evaluate investment opportunities.
The IRR rule states that an investment should be undertaken if the internal rate of return is greater than the required rate of return or cost of capital. In this case, the cost of capital for the investment is 16%.
To determine the IRR, we need to calculate the rate of return that will make the net present value (NPV) of the investment equal to zero. Using the given information, we can calculate the NPV of the investment by discounting the expected cash flows back to the present value.
Using the formula NPV = C0 + C1/(1+r) + C2/(1+r)^2 + ... + Cn/(1+r)^n, where C0 is the initial investment, C1 to Cn are the expected cash flows, r is the discount rate, and n is the number of years, we can calculate the NPV.
In this case, the initial investment is $900, the expected cash flow in 40 years is $90,000, and the discount rate is 16%.
After calculating the NPV, if it is positive, it means that the investment is expected to generate a return greater than the cost of capital and should be undertaken.
The NPV rule states that an investment should be undertaken if the net present value is positive.
Learn more about investment
https://brainly.com/question/14921083
#SPJ11
Discussion
1. What is compounding? What is discounting?
2. Would you be willing to pay $24,099 today in exchange for
100,000 in 30 years? What would be the key considerations in
answering yes or no? W
1.Compounding refers to the process of earning interest or returns on an initial investment or principal, where the accumulated interest is reinvested to generate additional earnings.2.The decision would depend on comparing the present value of the future cash flow with the cost and assessing the opportunity cost and financial considerations involved.
1.Compounding refers to the process of earning interest or returns on an initial investment or principal, where the accumulated interest is reinvested to generate additional earnings. In other words, compounding involves the growth of an investment over time as both the initial amount and the accumulated interest or returns increase.
On the other hand, discounting is the process of determining the present value of future cash flows or returns. It involves calculating the current worth of future amounts by applying a discount rate, which accounts for the time value of money. Discounting is used to assess the value of future cash flows in today's terms, considering the potential loss of value due to the passage of time.
2.The decision to pay $24,099 today in exchange for $100,000 in 30 years would depend on several key considerations. Firstly, the discount rate or rate of return that can be earned on alternative investments is crucial. If the discount rate is higher than the expected rate of return on the investment, it may not be advisable to pay the amount upfront.
Additionally, the time value of money should be considered. Money received in the future is worth less than the same amount received today due to inflation and the potential for alternative investment opportunities. Evaluating the present value of the future cash flow using an appropriate discount rate will help determine if the current cost is justified.
Lastly, personal financial circumstances, risk tolerance, and alternative uses for the funds should be taken into account. If the present cost can be invested in other ventures with higher potential returns or if there are pressing financial needs, it might not be prudent to make the payment.
Overall, the decision would depend on comparing the present value of the future cash flow with the cost and assessing the opportunity cost and financial considerations involved.
To know more about investment, visit:
https://brainly.com/question/15105766
#SPJ11
consider a company that is projected to cost $40000 today and
another $20000 in one year. it is then forecasted to generate
annual cash inflows of $15000 for a total of 9 years starting at
the end of
The answer is , the Net Present Value (NPV) of the company is $8,391.50.
How to find?To calculate the NPV (Net Present Value), we have to use the following formula:
[tex]NPV = -Initial Cost + (Annual Cash Inflows / (1+r)1) + (Annual Cash Inflows / (1+r)2) + ... + (Annual Cash Inflows / (1+r)n)[/tex]
Here,
r = Discount Rate, which can be assumed to be the rate of return that the company would have earned had they invested in some other project instead of this one.
NPV = -40000 + (15000 / (1+r)1) + (15000 / (1+r)2) + ... + (15000 / (1+r)9)
NPV = -40000 + (15000 / (1+r)) + (15000 / (1+r)^2) + ... + (15000 / (1+r)^9)
Let's assume the Discount Rate, r to be 6%.
NPV = -40000 + (15000 / (1+6%)^1) + (15000 / (1+6%)^2) + ... + (15000 / (1+6%)^9)
NPV = -40000 + 14127.36 + 13297.72 + 12491.25 + 11706.55 + 10942.36 + 10297.63 + 9661.45 + 9082.01 + 8550.63
NPV = $8,391.50.
Therefore, the Net Present Value (NPV) of the company is $8,391.50.
To know more on NPV visit:
https://brainly.com/question/32153010
#SPJ11
Eaton tool company has fixed costs of $232,400, sells its units for $62, and has variable costs of $34 per unit. compute the break-even point
a. The break-even point for Eaton Tool Company is 8,300 units. b. With the new plan, the break-even point is 6,957 units c. To profitability at very high volume levels is Profitability will be less Option a is correct .
a. The break-even point is calculated by dividing the fixed costs by the contribution margin per unit, which is the difference between the selling price per unit and the variable cost per unit.
Break-even point = Fixed costs / (Selling price per unit - Variable cost per unit)
= $232,400 / ($62 - $34)
= $232,400 / $28
≈ 8,300 units
b. With the new plan, the fixed costs are reduced to $160,000, and the variable cost per unit increases to $35. The break-even point can be calculated as follows:
New break-even point = Revised fixed costs / (Selling price per unit - New variable cost per unit)
= $160,000 / ($58 - $35)
= $160,000 / $23
≈ 6,957 units (rounded to the nearest whole number)
c. Under the new plan, the break-even point decreases, indicating that fewer units need to be sold to cover costs. This implies that profitability at very high volume levels is likely to be more compared to the old plan since the company has reduced its fixed costs and maintained the same selling price per unit. By reducing fixed costs, the company can achieve profitability at lower sales levels and potentially increase profits as sales volume increases.
Learn more about break-even point here
https://brainly.com/question/33080471
#SPJ11
Eaton tool company has fixed costs of $232,400, sells its units for $62, and has variable costs of $34 per unit.
a. compute the break-even point
b. Ms. Eaton comes up with a new plan to cut fixed costs to $160,000. However, more labor will now be required, which will increase variable costs per unit to $35. The sales price will remain at $58. What is the new break-even point? (Round your answer to the nearest whole number.)
c. Under the new plan, what is likely to happen to profitability at very high volume levels (compared to the old plan)?
a. Profitability will be less
b. Profitability will be more
1. In your textbook there is the definition of quality. In your own words define what the quality is and what it means to you.2. In your textbook there is a list of the Nine Dimensions of Quality, which is typicallywhere the quality of a product is judged. Select 3 of these dimensions to help define what is important to you pertaining to quality.3. Who is W. Edwards Deming? Thoroughly define 3 (you chose) of his 14 points (Demings 14 points) and explain how following your 3 points (of the 14) strengthen a supply chain.
The W. Edwards Deming was an American engineer, statistician, professor, author, and consultant who is credited with helping to develop Japan's industrial economy after World War II.
1. Quality is a measure of how well a product or service meets customer expectations. It means that the product or service is designed, manufactured, and delivered to meet the needs of the customer. To me, quality means providing a product or service that is reliable, durable, and delivers value to the customer.
2. The three dimensions of quality that are important to me are:
a) Reliability: This refers to the consistency of a product or service's performance over time. A reliable product or service is one that can be depended on to work consistently and as expected.
b) Durability: This refers to the ability of a product to withstand wear and tear over time. A durable product is one that can last a long time without breaking down or requiring significant repairs.
c) Responsiveness: This refers to a company's ability to respond quickly to customer needs and concerns. A responsive company is one that listens to customer feedback and takes action to address any issues or concerns.
3. W. Edwards Deming was an American engineer, statistician, professor, author, and consultant who is credited with helping to develop Japan's industrial economy after World War II. He is best known for his work on Total Quality Management (TQM), a management philosophy that focuses on continuous improvement and customer satisfaction.
The three points from Deming's 14 points that strengthen a supply chain are:
a) Create constancy of purpose for improving products and services: This point emphasizes the need for organizations to focus on continuous improvement in order to meet the changing needs of customers. By maintaining a focus on quality, organizations can create a competitive advantage and strengthen their supply chain.
b) Adopt a new philosophy: This point emphasizes the need for organizations to adopt a customer-focused philosophy that prioritizes quality and continuous improvement. By adopting this philosophy, organizations can create a culture of quality that permeates throughout the entire supply chain.
c) Drive out fear: This point emphasizes the need for organizations to create a culture that encourages open communication and feedback. By eliminating fear, organizations can foster an environment of trust and collaboration that leads to better quality and stronger supply chain relationships.
Learn more about economy with the given link,
https://brainly.com/question/28210218
#SPJ11
You have the following information about means and standard deviations of several investment options:
Investment
Mean
StDev
A
8
24
B
11
23
C
13
16
Your client wants to minimize the chance of having a less than 0% return. What is the safety first ratio of the optimal investment for the client?
Enter answer accurate to three decimal places.
The Safety first ratio of the optimal investment for the client when considering investment option C is 0.813 (approx).
Given the following information about means and standard deviations of several investment options, we are to determine the safety-first ratio of the optimal investment for the client.
The Safety First ratio of the optimal investment for the client can be calculated as;
SFR = (Mean of investment – Minimum acceptable return) / Standard deviation of investment
Where Mean of investment is the mean value given for each investment option
Minimum acceptable return = 0%
StDev is the standard deviation value given for each investment
The safety first ratio of the optimal investment for the client when considering investment option A is;
SFR = (8 - 0) / 24
= 0.333
The safety first ratio of the optimal investment for the client when considering investment option B is;
SFR = (11 - 0) / 23
= 0.478
The safety first ratio of the optimal investment for the client when considering investment option C is;
SFR = (13 - 0) / 16
= 0.813
Therefore, the safety first ratio of the optimal investment for the client is greatest when considering investment option C.
Know more about the optimal investment
https://brainly.com/question/30160319
#SPJ11
Paragraph A housing developer, Dumars Development has constructed a 20-unit townhouse complex in Hope Pastures. The 20 Purchasers of the units are upset and distraught that they were told they could have moved in some two months ago. Some purchasers have sold the dwelling they owned and are now staying with friends and family, awaiting the time when they can move into the complex. They have come together and have threatening to sue the developer. The developer has not handed over the 20 units because of a faulty sewage infrastructure which must be remedied before anyone can move in. The developer has contracted out these works to Balcar and Associates Ltd. a reputable civil engineering company with over 25 years of experience in water and sewage infrastructure works. The developer and Balcar are looking to sign a contract stating that if these works were not completed in 52 days, Balcar would have to pay the developer $40,000.00 for each day the project is unfinished after the 52nd day. It is expected that purchasers will be able to move in one day after the sewage works have been remedied. If their lawsuit is successful, the developer would have to pay each purchaser $7,000.00 for each day they are unable moved into the complex. They were told the project would be completed 52 days after the start. Balcar's project manager has reviewed the project and developed the following activities, predecessors activities and activity time in days for the project. ACTIVITY PREDECESSOR A B C D E E F G H I J K A.B C B D,F E.F E,F HI J ACTIVITY TIME (days) 30 15 25 3 7 1 5 2 4 10 8 a) Draw the network for the sewage project b) Identify the critical path c) What is the completion time of the project 12 marks 10 marks 5 marks d) Which activity(s) can be delayed the longest and for how long without delaying the completion of the project. 5 marks e) Develop the activity schedule for project 11 marks f) How much if any do you recommend Balcar add to his bill to compensate for not completing the project in the required time 4 marks g) What is the total sum Dumars Development may have to pay to purchasers. 3 marks
Previous question
b) Critical Path: The critical path in the network diagram is A - B - C - E - F - H - J.
c) Completion Time: The completion time of the project is the sum of the durations on the critical path, which is 30 + 15 + 25 + 7 + 1 + 2 + 10 = 90 days.
d) The activity that can be delayed the longest without delaying the completion of the project is activity D. Activity D has a duration of 3 days, but it is not on the critical path. Therefore, it can be delayed by any amount without affecting the project's completion time.
e) Activity Schedule:
| Activity | Predecessor | Duration (days) |
|----------|-------------|-----------------|
| A | - | 30 |
| B | A | 15 |
| C | B | 25 |
| D | B | 3 |
| E | C, D | 7 |
| F | E | 1 |
| G | E | 5 |
| H | F, G | 2 |
| I | H | 4 |
| J | I | 10 |
| K | J | 8 |
f) It is recommended that Balcar adds a compensation amount of $40,000.00 for each day beyond the 52nd day to account for not completing the project in the required time.
g) The total sum Dumars Development may have to pay to purchasers depends on the number of days the purchasers are unable to move into the complex. If the lawsuit is successful, Dumars Development would have to pay each purchaser $7,000.00 for each day of delay.
To know more about sum Dumars Development : https://brainly.com/question/24115937
#SPJ11
Suggest three strategies by name a store can undertake to
maintain a competitive advantage in the market and provide a brief
explanation of what each strategy means.
A store can undertake three strategies to maintain a competitive advantage in the market which are discussed below:Product differentiation: The store can differentiate its products from those of its competitors.
A store can differentiate its products by features, design, packaging, quality, or any other factor that distinguishes its products from those of its competitors. This strategy helps the store to attract customers to its products who prefer to buy products that are different from those of its competitors. Thus, it increases the store's sales and profitability.Customer service: A store can provide excellent customer service to its customers. This strategy involves training employees to provide superior customer service. The store can offer services such as free home delivery, a customer helpline, after-sales service, and so on.
This strategy helps the store to attract price-sensitive customers who prefer to buy products at a lower cost. Thus, it increases the store's sales and profitability.Overall, these three strategies are effective ways for a store to maintain a competitive advantage in the market.
To know more about Competitive Advantage visit-
https://brainly.com/question/28539808
#SPJ11
draw total revenue curve representing the following
total revenue function;TR=100-10Q2,where Q stand for
ourput
The total revenue curve can be plotted by calculating total revenue for different output levels and connecting the points on a graph.
To draw the total revenue curve, we need to first understand that total revenue (TR) is the product of price (P) and quantity (Q). In this case, the total revenue function is given as TR = 100 - 10Q^2.
To find the price, we need to rearrange the equation as follows:
TR = P x Q
100 - 10Q^2 = P x Q
P = (100 - 10Q^2)/Q
P = 100/Q - 10Q
Now we can plot the total revenue curve by calculating the total revenue for different levels of output (Q) and plotting them on a graph.
Let's assume that the maximum output that can be produced is 10 units. We can then calculate the corresponding prices and total revenues for each level of output as shown in the table below:
Output (Q) Price (P) Total Revenue (TR)
0 - 0
1 90 90
2 80 160
3 70 210
4 60 240
5 50 250
6 40 240
7 30 210
8 20 160
9 10 90
10 0 0
We can now plot these points on a graph, with total revenue on the y-axis and output on the x-axis. Connecting the points with a smooth line gives us the total revenue curve.
The graph shows that the total revenue initially increases with output but then starts to decrease after a certain point. This is because the increase in output leads to a decrease in price, which offsets the increase in quantity and leads to a decrease in total revenue.
To know more about revenue, click here:
brainly.com/question/4051749
#SPJ11
Without resorting to arguments of morality, use your best marketing talents,
to explain to your customers why conserving water here in Canada where water
is abundant, can reduce water stress in other parts of the world where water is
scarce. (Hint: if you don't know exactly why, research it first!)
Conserving water in Canada, even with its abundant supply, can help address water scarcity globally and promote sustainable practices worldwide. By setting an example and reducing our water footprint, we contribute to the responsible management of this shared resource and support the well-being of communities and ecosystems in water-stressed regions.
At first glance, it may seem unnecessary to conserve water in Canada where water is abundant. However, there are important global implications that should encourage us to conserve water even in regions with plentiful supply.
Water scarcity is a pressing issue in many parts of the world, affecting billions of people. By conserving water here in Canada, we can contribute to reducing water stress in these regions. How does this work?
Firstly, water is a shared resource on our planet. The water cycle connects all regions, so the water we conserve can eventually replenish water sources elsewhere through natural processes like precipitation and groundwater recharge.
Secondly, by conserving water domestically, we can set an example for other countries facing water scarcity. Our efforts can inspire and promote a global culture of responsible water usage, encouraging sustainable practices worldwide.
Furthermore, saving water can have a positive environmental impact beyond just addressing water stress. It reduces the energy required for water treatment and distribution, lowers carbon emissions, and preserves aquatic ecosystems that depend on adequate water supply.
By conserving water in Canada, we demonstrate our commitment to being responsible global citizens. Our collective efforts, no matter how small, can make a significant difference in alleviating water stress and promoting sustainability worldwide.
Remember, water is a precious resource, and every drop we save matters. Let's join hands in conserving water, not only for our own benefit but also for the well-being of people and ecosystems around the world. Together, we can create a more sustainable future for all.
To know more about , visit:
https://brainly.com/question/28073266
#SPJ11
Which of the following is not a required assumption in the Sharpe (1964) and Lintner (1965) version of the Capital Asset Pricing Model (CAPM)? Select all that apply.
A. Perfect knowledge of future asset prices
B. Investors’ expected distribution of returns is accurate
C. Investors agree on the joint distribution of returns for all assets
D. Unlimited borrowing and lending at the risk-free rate
A. Perfect knowledge of future asset prices
C. Investors agree on the joint distribution of returns for all assets
The Sharpe (1964) and Lintner (1965) version of the Capital Asset Pricing Model (CAPM) makes certain assumptions, but not all of them are required.
assumptions include:
A. Perfect knowledge of future asset prices: This assumption is not required in the CAPM. In reality, investors do not have perfect knowledge of future asset prices, and the CAPM does not require this assumption to hold.
B. Investors' expected distribution of returns is accurate: This assumption is required in the CAPM. It assumes that investors accurately estimate the expected returns and the risk associated with those returns. It forms the basis for the model's risk-return tradeoff.
C. Investors agree on the joint distribution of returns for all assets: This assumption is not required in the CAPM. It assumes that all investors agree on the joint distribution of returns for all assets, which may not be the case in real markets.
D. Unlimited borrowing and lending at the risk-free rate: This assumption is required in the CAPM. It assumes that investors can borrow and lend unlimited amounts at the risk-free rate. This allows for the creation of portfolios with varying levels of risk and return.The Capital Asset Pricing Model (CAPM), developed by Sharpe (1964) and Lintner (1965), is a widely used financial model that helps determine the expected return on an investment based on its risk. While the CAPM is based on several assumptions, not all of them are required for the model to be applicable.
Let's delve deeper into the assumptions:
A. Perfect knowledge of future asset prices: This assumption is not required in the CAPM. In practice, investors do not possess perfect knowledge about future asset prices. The CAPM assumes that investors have access to all relevant information and can make rational investment decisions based on that information, but it does not require perfect foresight.
B. Investors' expected distribution of returns is accurate: This assumption is required in the CAPM. It assumes that investors have accurate expectations regarding the distribution of returns for various assets. In other words, investors accurately estimate the expected returns and the associated risks of different investments. This assumption forms the foundation of the CAPM's risk-return tradeoff.
C. Investors agree on the joint distribution of returns for all assets: This assumption is not required in the CAPM. It suggests that all investors have the same beliefs about the joint distribution of returns for all assets in the market. In reality, investors may have diverse opinions, leading to variations in their expectations and judgments about asset returns.
D. Unlimited borrowing and lending at the risk-free rate: This assumption is required in the CAPM. It assumes that investors can borrow and lend unlimited amounts of money at a risk-free rate of interest. This assumption allows investors to construct portfolios with any desired risk-return combination, utilizing borrowing or lending to adjust their exposure to risky assets.
It is important to note that while the CAPM is a widely used model, its assumptions have been subject to critique and empirical challenges. Various extensions and modifications to the original model have been proposed to address some of these limitations and provide a more accurate representation of real-world financial markets.
In summary, the CAPM does not require perfect knowledge of future asset prices ( A) and does not assume that investors agree on the joint distribution of returns for all assets ( C). However, it does assume that investors accurately estimate the expected distribution of returns ( B) and have unlimited borrowing and lending at the risk-free rate ( D).
Learn more about investment here:
https://brainly.com/question/15105766
#SPJ11
Suppose you have the following information on Smartville's production possiblities frontier. Smartville has 10,000 labor hours available each year. Producing cars requires 50 hours. Producing tablets requires 5 hours. Which bundle falls on Smartville's production possibilities frontier? a. o cars and 200 tables , b. 150 cars and 500 tables , c. 1500 cars and 50 tables , d. 25 cars and 2000 tables
The bundle that falls on Smartville's production possibilities frontier is 25 cars and 2000 tablets. (Option D)
The production possibilities frontier represents the maximum combination of goods that can be produced with the available resources. Smartville has 10,000 labor hours available each year. Producing a car requires 50 labor hours, and producing a tablet requires 5 labor hours.
To determine which bundle falls on the production possibilities frontier, we need to calculate the total labor hours used for each option.
Option a: 0 cars and 200 tablets require 200 x 5 = 1000 labor hours.
Option b: 150 cars and 500 tablets require (150 x 50) + (500 x 5) = 7,500 + 2,500 = 10,000 labor hours.
Option c: 1500 cars and 50 tablets require (1500 x 50) + (50 x 5) = 75,000 + 250 = 75,250 labor hours.
Option d: 25 cars and 2000 tablets require (25 x 50) + (2000 x 5) = 1,250 + 10,000 = 11,250 labor hours.
Since Smartville has 10,000 labor hours available, only option d (25 cars and 2000 tablets) falls on the production possibilities frontier as it fully utilizes the available resources.
Learn more about production possibilities frontier here:
https://brainly.com/question/30159656
#SPJ11
A)The equilibrium market wage rate is at the intersection of the supply and demand for labour. Employees are hired up to the point where the extra cost of hiring an employee is equal to the extra sales revenue from selling their output.
Firms will hire more labor when the marginal revenue product of labor is greater than the wage rate, and stop hiring as soon as the two values are equal. The point at which the MRPL equals the prevailing wage rate is the labor market equilibrium.
To find the equilibrium real wage and level of labor use the labor demand and labor supply equations. Thus, 200 – 4L = 4L or L = 25. To find W, substitute L = 25 into either the labor demand or labor supply equation: thus, W = 4(25) = 100.24-Jun-2010
In model A, higher labor compensation causes a leftward shift in the supply curve, a decrease in the equilibrium quantity, and an increase in the equilibrium price.
In model A, higher labor compensation causes a leftward shift in the supply curve, a decrease in the equilibrium quantity, and an increase in the equilibrium price.
In labor market analysis, the equilibrium wage rate and quantity of labor are determined by the interaction of labor demand and labor supply. Model A suggests that when labor compensation, or the wage rate, increases, it leads to specific outcomes in the labor market.
When labor compensation rises, it creates an incentive for individuals to enter the labor market or increase their labor supply. However, it also affects firms' labor demand decisions. Firms consider the marginal revenue product of labor (MRPL), which is the additional revenue generated by hiring an additional unit of labor.
According to the model, when the MRPL is greater than the prevailing wage rate, firms have an incentive to hire more labor, as the additional revenue generated from their output exceeds the cost of hiring. As a result, the equilibrium quantity of labor increases.
However, the model also states that higher labor compensation causes a leftward shift in the supply curve. This means that at each wage rate, fewer individuals are willing to supply their labor due to the increased cost of hiring them. Consequently, the equilibrium quantity of labor decreases.
Simultaneously, the increase in labor compensation leads to an increase in the equilibrium price, which is the wage rate. As firms pay higher wages to attract workers, the cost of labor increases, resulting in a higher equilibrium price.
Overall, in model A, higher labor compensation triggers a leftward shift in the supply curve, a decrease in the equilibrium quantity of labor, and an increase in the equilibrium price.
Learn more about compensation
brainly.com/question/7469955
#SPJ11
Let U(x,y) = ax + by represent the consumer's utility function. In this case, Goods x and y are considered "economic bads" since the consumer maximizes utility by allocating her income equally among both goods
True
False
The given statement "Goods x and y are considered 'economic bads' since the consumer maximizes utility by allocating her income equally among both goods" is False.
In this case, the utility function U(x, y) = ax + by represents the consumer's utility function. The consumer maximizes utility by allocating her income in a way that maximizes the total utility obtained from consuming goods x and y. This means that the consumer will allocate her income in such a way that maximizes the sum of ax + by.
Since there is no information given about the values of a and b, we cannot determine whether goods x and y are considered "economic bads" or not. The terms "economic bads" typically refer to goods that are considered to have negative utility or that are undesirable.
However, in this case, without further information, we cannot make any conclusions about whether goods x and y are economic bads or not based solely on the given utility function.
Therefore, the statement is false.
Learn more about economic bads at
brainly.com/question/31940812
#SPJ11
Solve the following exercise, develop with the data, equation and the respective answer.
1) Responsibly your parents saved during your adolescence, so that you can study a university degree. To date, you have managed to accumulate the sum of 7,500,000.00, the Bank pays an interest rate of 10.50% capitalizable every four months and you must cancel the sum of 599,000.00 per quarter to the university in advance. How many quarters will you be able to cancel with the savings?
The given principal amount is P = 7,500,000.00.The interest rate is r = 10.50% capitalizable every four months.The amount to be paid to the university in advance is a = 599,000.00 per quarter.Let us find the number of quarters for which the payment to the university can be made using the savings.
To do this, we need to find the amount of interest earned in each quarter by the amount of savings accumulated at the end of the previous quarter.Additionally, we also need to subtract the amount paid to the university in advance during that quarter from the interest earned.Amount of interest earned in the first quarter = P × (1 + r/100/4) - P= P [(1 + r/100/4) - 1] = 7,500,000.00 [(1 + 10.50/100/4) - 1]= 7,817,537.50 - 7,500,000.00= 317,537.50Amount paid to the university in the first quarter = a = 599,000.00
The amount of savings at the end of the first quarter= P + interest earned in the first quarter - amount paid to the university in the first quarter= 7,500,000.00 + 317,537.50 - 599,000.00= 7,218,537.50We can repeat the above calculations for each subsequent quarter until the savings get exhausted. However, we can notice a pattern in the above calculations.
To know more about capitalizable visit:
https://brainly.com/question/417585
#SPJ11
