A loan of $100,000 is taken out which requires an annual interest payment of 6% of the borrowed amount of money (in market dollars). No principal payments are made, only interest is paid. Inflation is 3.1% per year. what will be the value of interest payment at the end of fifth year in real dollars?A. $5,930 B. $6,000 C. $5,150. D. $6.989
Answers
Answer:
C. $5,150
Explanation:
Calculation for what will be the value of interest payment at the end of fifth year in real dollars
First step is to calculate the Interest amount per year
Interest amount per year = 100,000*6%
Interest amount per year = $6,000
Now let calculate the value of interest payment at the end of fifth year in real dollars
Value of interest payment in 5th year in real dollars = 6,000/(1+3.1%)^5
Value of interest payment in 5th year in real dollars= 6,000/1.164913
Value of interest payment in 5th year in real dollars= $5,150
Therefore the Value of interest payment in 5th year in real dollars will be $5,150
Related Questions
You are considering buying a 30-year U.S. Treasury bond but are nervous about the effect on bond price if the yield to maturity on the bond increases. The bond has a 3% coupon rate and pays coupons semi-annually. The duration is 18 years. Suppose that interest rates on this bond rise by 1.8%. Calculate the corresponding percentage change in the price of the bond using the approximation method based on bond duration. Give your answer in percent to one decimal place. If the price decreases, then include a minus sign; if the price increases, do not include any sign. Do not type the % symbol.
Scarcity exists because: Multiple Choice individuals cannot solve the three central coordination problems. new wants continue to develop and willingness to meet them is limited. the supply of goods is always less than the demand. governments cannot solve the three central coordination problems.
If Congress ends an investment tax credit that used to subsidize domestic investment, how would this affect the market for loanable funds in an open economy context?
Wiley Consulting purchased $7,800 worth of supplies and paid cash immediately. Which of the following general journal entrie will Wiley Consulting make to record this transaction? Assume the company's policy is to Initially record prepaid and unearned Items In balance sheet accounts. Multiple Choice Accounts Accounts Payable 7,800 Supplies 7, 800
For all other assets and liabilities, book value and fair value were equal. Any excess of costover fair value was attributed to goodwill, which has not been impaired. For all other assets and liabilities, book value and fair value were equal. Any excess of costover fair value was attributed to goodwill, which has not been impaired.
What is the amount of goodwill associated with the investment?
Answers
Answer:
Amount of goodwill associated with the investment is $500,000
Explanation:
The first step is to calculate the total value of GainsvilleCo:
Total Value of GainsvilleCo = 2,500,000 / 25% = $10,000,000
Book value of GainsvilleCo's underlying assets = $8,000,000
Goodwill = 10,000,000 - 8,000,000 = 2,000,000
Austin Corp Investor share = 25% of 2,000,000 = $500,000
Answers
Answer:
Given this change in the cost, the adequacy and quality of the estimated cost drivers and costs used by the system will determine the costing results for SR6 under the new system.
Explanation:
A cost driver can be described as the unit of an activity or any factor that makes the cost of an activity to fluctuate. An estimated cost driver is adequate and of the expected quality when quality or quantity is satisfactory or acceptable.
Therefore, given this change in the cost, the adequacy and quality of the estimated cost drivers and costs used by the system will determine the costing results for SR6 under the new system.
Final answer:
Cannady has transitioned from a traditional to an Activity-Based Costing system, which uses three cost drivers. As a result, the cost of manufacturing SR6 rose from $168 to $178 per unit due to the more accurately distributed costs.
Explanation:
In this context, Cannady's move from a traditional cost system using a single cost driver to an Activity-Based Costing (ABC) system that uses three cost drivers resulted in a change in the unit cost of their SR6 product. The new price reflects a more accurate calculation of the costs incurred in producing SR6.
In a traditional cost system, overhead costs are simply divided by the total number of units produced using one cost driver. With the ABC system, costs are allocated based on the actual activities that consume resources, making the costs more accurate. Therefore, the unit cost of SR6 increased from $168.00 to $178.00 under the new system as the costs were more accurately allocated under the ABC system.
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Answers
Answer:
The incremental annual net cash inflows provided by the new machine would be $2,525.
Explanation:
In order to calculate the incremental annual net cash inflows provided by the new machine we would have to use the following formula:
incremental annual net cash inflows=saving in annual operating cost+contribution earned on additional sales
=( $4,125-$3,730)+(21,300×$0.10)
=$395+$2,130
=$2,525
Hence, The incremental annual net cash inflows provided by the new machine would be $2,525.
Answers
Answer:
(i) and (iv)
Explanation:
The appreciable cost is the cost in which the assets can be depreciation over the useful life
And, the appreciable cost is come after deducting the salvage value from the acquisition cost
The formula to compute the depreciation expense using the straight-line method is shown below:
= (Original cost - salvage value) ÷ (useful life)
So it can be calculated after considering the first and four options
Answers
Answer:
a)no. 2 wooden pencils - perfectly competitive market
b) copper - perfectly competitive market
c) Local public utilities- monopoly market
d) Peanut butter - monopolistic competitive market
e) Lipstick - monopolistic market
All no 2 pencils are identical each other. There are many sellers of pencils. And there's usually a general price for the pencils. Also, there are little barriers to entry or exit of firms. So the market for the no 2 pencils are perfectly competitive firms.
Also, coppers are identical to each other. They can't be differentiated from each other. There is usually a standard price for copper. So the market for copper is perfectly competitive.
For local public utilities, there is usually one firm providing the service. Also, because of the high cost of setting up these services, there is a high barrier to the entry of firms into the industry. This is why local public utilities are a monopoly.
Peanut butter and lipsticks are perfectly monopolistic firms because:
A. There are many firms selling this product but the products are usually differentiated.
B. Also, firms sets the price for their products
Explanation:
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
A monopolistic competition is when there are many firms selling differentiated goods. The demand curve is downward sloping
A monopoly is when there is only one firm operating in the industry. There are high barriers to entry and exit of firms in the industry.
I hope my answer helps you
Answers
Answer:
A gallon of gasoline cost 1.36 carton of milk
Explanation:
We should divide the given product over the base product
In this case, gasoline is the product we want to express based on carton of milk:
2.39 gallon of gasoline / 1.76 carton of milk = 1,35795454
A gallon of gasoline cost 1.36 carton of milk
Final answer:
The relative price of a gallon of gasoline in terms of milk in March 2017 can be calculated by dividing the price of a gallon of gasoline ($2.39) by the price of a carton of milk ($1.76), which equals 1.36
Explanation:
To calculate the relative price of a gallon of gasoline in terms of milk. We need to divide the money price of the gallon of gasoline by the money price of the milk. So, $2.39 divided by $1.76 would give us the relative price of gas in terms of milk.
Here's the calculation:
- Divide the price of a gallon of gasoline by the price of a carton of milk: $2.39 / $1.76 = 1.3579545454545454So, in March 2017, the relative price of a gallon of gasoline was approximately 1.36 cartons of milk.
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