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Elodia [21]
2 years ago
3

A salt mine you inherited will pay you $25,000 per year for 25 years, with the first payment being made today. If you think a fa

ir return on the mine is 7.5%, how much should you ask for it if you decide to sell it?
a.$284,595
b.$330,281
c.$346,795
d.$299,574
e.$314,553
Business
1 answer:
WARRIOR [948]2 years ago
7 0

Answer:

d) $299,574

Explanation:

This will be the future value of an <em>annuity-due. </em>That means<em> </em> Payments are made at the beginning of the period, becasue you are going to receive the first payment of 25,000 the same day you adquire the mine.

The way to calcualte this will be doing the present value of common annuity of $25,000 for 25 years and then multiply it by (1+ rate) = 1.075

The present value of that will be $278,613.75

now we multiply by  (1+rate)        x             1.075

equals to                                      $299,574.17

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The core revenue principle states that
Nastasia [14]

Answer:

B

Explanation:

Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services.

8 0
2 years ago
The Baldwin company will continue to train their existing workforce at their current level to help reduce turnover and improve p
Anarel [89]

Answer: $1,600

Explanation:

The training hours per employee can be calculated by multiplying the Employee Training hours by the cost of training per employee.

From the Attached document, the Baldwin company does 80 hours of training for employees.

The Training costs per Employee is;

= 80 * 20

= $1,600

6 0
2 years ago
The renewal probability is assumed to be 60% for a particular lease with 12 months vacant if the lease is not renewed. The expec
RUDIKE [14]

Answer:

(A) ​4.8 months

Explanation:

After the expiration of a lease, a maximum of one third allowance is usually given.

Therefore, The expected vacancy at the end of this lease can be calculated as follows:

The expected vacancy = 60% × 12 × (2 ÷ 3) = 4.8 months

Therefore, the expected vacancy at the end of the lease is 4.8 months.

6 0
2 years ago
clarissa wants to fund a growing perpetuity that will pay $5000 per year to a local museum, starting next year. She wants the an
Sergeeva-Olga [200]

Answer:

$166,666.67

Explanation:

Clarissa wants to take charge of finding a growing perpetuity that will pay a total amount of $5,000 per year to a local museum

She wants the annual amount paid to the museum to grow by 5% per year

= 5/100

= 0.05

The interest rate is 8%

= 8/100

= 0.08

Therefore, the amount used to fund the perpetuity can be calculated as follows

Pvo= $5,000/(0.08-0.05)

= $5,000/0.03

= $166,666.67

Hence Clarissa needs $166,666.67 to fund the perpetuity.

4 0
2 years ago
The real risk-free rate of interest is 4%. Inflation is expected to be 2% this year and 4% during each of the next 2 years. Assu
JulijaS [17]

Answer:

<em>For the 2 year treasury securities it was 7%, and for a 3 year treasury securities it was 7.33%</em>

Explanation:

<em>From the example, </em>

<em>The real risk rate of interest is= 4%</em>

<em>The inflation expectation of this year=2%</em>

<em>Inflation expected  for the next 2 years=4%</em>

<em>Maximum risk premium=0</em>

<em>Therefore</em>

Rt= r* + (Inflation/ year)

Rt2= 4 + (2 + 4 / 2) = 7%

<em>Rt3= 4 + (2 + 4 / 3) = 7.33% </em>

4 0
2 years ago
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