BUSINESS COLLEGE

You would like to retire in 30 years. The expected rate of inflation is 2% per year. You currently have a standard of living that requires $7940 of monthly expenses. Assuming you want to maintain the same standard of living in retirement, what are your monthly expenses expected to be the first year of retirement

Answers

Answer 1
Answer:

Answer:

You would need $14,382.21 to maintain your purchasing power.

Explanation:

Giving the following information:

You would like to retire in 30 years. The expected rate of inflation is 2% per year. You currently have a standard of living that requires $7940 of monthly expenses.

The inflation rate has the same intrinsic behavior as an investment with a compounded interest rate.

We need to use the following formula:

FV= PV*(1+i)^n

FV= 7,940*(1.02^30)

FV= $14,382.21

You would need $14,382.21 to maintain your purchasing power.

Related Questions

Other things the same, when the price level rises, interest ratesa. rise, so firms increase investment.b. rise, so firms decrease investment.c. fall, so firms increase investment.d. fall, so firms decrease investment.
Presented below is the trial balance of Novak Corporation at December 31, 2020. Debit Credit Cash $ 198,550 Sales $ 8,101,220 Debt Investments (trading) (at cost, $145,000) 154,220 Cost of Goods Sold 4,800,000 Debt Investments (long-term) 300,550 Equity Investments (long-term) 278,550 Notes Payable (short-term) 91,220 Accounts Payable 456,220 Selling Expenses 2,001,220 Investment Revenue 64,400 Land 261,220 Buildings 1,041,550 Dividends Payable 137,550 Accrued Liabilities 97,220 Accounts Receivable 436,220 Accumulated Depreciation-Buildings 152,000 Allowance for Doubtful Accounts 26,220 Administrative Expenses 901,400 Interest Expense 212,400 Inventory 598,550 Gain 81,400 Notes Payable (long-term) 901,550 Equipment 601,220 Bonds Payable 1,001,550 Accumulated Depreciation-Equipment 60,000 Franchises 160,000 Common Stock ($5 par) 1,001,220 Treasury Stock 192,220 Patents 195,000 Retained Earnings 79,550 Paid-in Capital in Excess of Par 81,550 Totals $12,332,870 $12,332,870 Prepare a balance sheet at December 31, 2020, for Novak Corporation. (Ignore income taxes)
Suppose that there are two goods, X and Y, that are competing for dominance in a market with network externalities. Furthermore, suppose that the market has chosen good X even though it is inferior to good Y and that the net benefits of switching from X to Y are $20 while the costs of switching are $30. If the market stays with good X, then __________________ has occurred. If the costs of switching were to fall to $15 and the market still stays with good X then ___________________________.
Holmes Company produces a product that can be either sold as is or processed further. Holmes has already spent $96,000 to produce 1,375 units that can be sold now for $89,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $290 per unit. If Holmes processes further, the units can be sold for $440 each. Should Holmes sell the product now or process it further
Suppose you purchase twelve call contracts on Macron Technology stock. The strike price is $65, and the premium is $2.30. If, at expiration, the stock is selling for $71 per share, what are your call options worth? What is your net profit? (Omit the "$" sign in your response.)

Perfect Fit Company sells men's shirts and jeans. The average selling price and variable cost for each product follow: Selling price per shirt $22 Selling price per jean $27 Variable cost per shirt $14 Variable cost per jean $19 Fixed costs $3,200 Calculate the breakeven point in units assuming the sales mix is 1:1.

Answers

Answer:

Jeans= 200 units

Shirt= 200 units

Explanation:

To calculate the break-even point in units, we need to use the following formula:

Break-even point (units)= Total fixed costs / Weighted average contribution margin

Weighted average contribution margin= (weighted average selling price - weighted average unitary variable cost)

Weighted average contribution margin= (22*0.5 + 27*0.5) - (14*0.5 + 19*0.5)

Weighted average contribution margin= 8

Break-even point (units)= 3,200/8

Break-even point (units)= 400 units

Jeans= 0.5*400= 200 units

Shirt= 0.5*400= 200 units

Question Help The production demand for widgets for a​ 250-workday year is​ 7,500 units. Ordering costs are​ $25.00 per order and carrying costs are​ $9.00 per unit per year. Four days must be allowed between order placement and order receipt. What is the reorder​ point, assuming known and constant​ variables?

Answers

Answer:

120

Explanation:

Data provided in the question:

Number of workdays in a year = 250

Demand, D = 7,500 units

Ordering costs, F =​ $25.00 per order

Carrying costs, C =​ $9.00

Lead time = 4 days

Now,

Reorder point = Lead Time in days × Average Daily Demand

also,

Average Daily Demand = Demand ÷ Number of workdays in a year

= 7500 ÷ 250

= 30

Thus,

Reorder point = 4 × 30

= 120

A company marketing team identifies a small group of consumers who fit the profile of the typical customer. The team observes, gathers survey information from, or hangs out with these typical customers to gain insight into how the customers make product choices in order to design a future more rigorous study. The data collection method used in this example is ________.

Answers

The data collection method in that example is a focus group.

Buerhle Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are) ______________. A. Both recoverability test and fair value test
B. Recoverability test but not fair value test
C. Not recoverability test but fair value test
D. Neither recoverability test nor fair value test

Answers

Answer: The correct answer is "C. Not recoverability test but fair value test".

Explanation: The impairment test to be used is Not recoverability test but fair value test. To determine whether intangibles of indefinite life have deteriorated and must present another value in their balance sheet, they must implement the fair value test.

Galvanized Products is considering a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow one-fourth of the purchase price from a bank at 15 percent compounded annually. The loan is to be repaid using equall annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5,000 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $25,000 per year to maintain the system but will save $55,000 per year through increased effciencies. Galvanized Products uses a MARR of 18 percent/year to evaluate investments.a) what is the present worth of this investment?

b) should the new computer system be purchased?

Answers

Galvanized Products consideration to buy  a new computer system for their enterprise data management system with the purchase price of $100,000 is being a good decision

Explanation:

Purchase value $100,000

cash on hand 75,000 + bank loan 1/4 of $100,000= $25000 =$100,000

Estimated Income                      

(increased efficiencies-payment to technician+MARR )× 5( life span )+ 5000 (salvage value )

(($55,000-$25,000=30,000)+(100,000×18÷100)=18000))×5 =$240,000+5000 = $245,000    

((55,000-25,000=30,000)+(100,000×18÷100)=18000))×5 =240,000+5000 = 245,000

Expected liabilities  

bank loan interest=((P*(1+i)^n) - P)=(25,000×(1+0.15)^3-25,000)= 13,022  

bank loan interest=((P*(1+i)^n) - P)=(25,000×(1+0.15)^3-25,000)= 13,022

Net value of the purchase proposal

 (Estimated Income - Expected liabilities) - Purchase price

     = (245,000 - 13,022) = $231,978 - $100,000 = $131,978 (profit)

  = (245,000 - 13,022) = 231,978 - 100,000 = 131,978 (profit)

Hence ,the Galvanized Products consideration to buy a new computer system is a good decision.

           

Final answer:

The present worth of this investment is -$30,911.60, and the new computer system should not be purchased as the current estimates show that the benefits do not outweigh the costs at the 18% discount rate.

Explanation:

To determine whether the investment is worth it, we will need to calculate the Net Present Value (NPV) of the investment. This takes into account the present value of both the costs and the benefits associated with the investment.

Let's start by calculating the present value of the costs:

  • The system itself costs $100,000.
  • The loan is $25,000, compounded annually at a rate of 15% over 3 years, which results in a total repayment of roughly $31,357.50 using the formula P(1+r)^n.
  • The technician costs amount to a total of $125,000 over 5 years. If we discount these payments back to their present value using the rate of 18%, we get approximately $88,938.24. Using the formula [P/(1+r)^n] for each year and adding them up.

The total present value of costs is therefore roughly $220,295.74.

Next, let’s calculate the present value of the benefits. This is comprised of the $55,000 savings per year due to increased efficiencies, discounted back to present value over 5 years at a rate of 18%, which results in approximately $184,384.14. Then we add the salvage value of the system, which is $5,000, because this value is already in present terms.

The total present value of the benefits is thus around $189,384.14.

The net present value (NPV), calculated by subtracting the present value of costs from the present value of benefits, is thus around -$30,911.60. Since this is a negative value, this suggests that the anticipated benefits of the system does not outweigh its costs at the 18% discount rate.

Therefore: a) the present worth of this investment is about -$30,911.60 and b) the new computer system should not be purchased, based on these calculations and assumptions.

Learn more about Net Present Value Calculation here:

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Almost overnight, several police officers, all members of the police force of the growing suburb of mayberry, called in sick. as the dispatcher took those calls, one right after the other, she speculated that there could be more to this story than she was hearing. in fact, she thought it might be related to the emotional banter she heard the night before in the locker room as several members of the force were leaving their shifts. the group was not happy with the recent changes in scheduling, the excessive overtime hours, and, management's reluctance to begin negotiations on a new benefits package. she heard one officer saying, "it's time for a mental health day!" although it is illegal for police to strike, what the police dispatcher was witnessing may have been ______.

Answers

What the police dispatcher was witnessing may have been "a blue flue".

A blue flu is an informal term used to portray a sort of strike activity embraced by cops in which an expansive number simultaneously utilize sick leave. A blue flue is a strike activity by police in a few sections of the US where police strikes are denied by law.

Answer:

The correct answer is:  a Blue Flu.

Explanation:

A Blue Flu is the act by which police officers call in sick leaves massively as a form of protest against labor conditions. This action is carried out because law enforcement deputies in most parts of the United States are not allowed to go on a strike by law.
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