Doug Stamper just received an insurance settlement offer related to an accident he had several years ago. The offer gives Stamper a choice of one of the following three offers (payments are at the end of the period):

Option A: $2,000 per month for 84 months
Option B: $1,100 per month for 15 years
Option C: $125,000 lump sum today

Stamper can earn 6 percent on his investments. He does not care if he personally receives the funds or if they are paid to his heirs should he die within the settlement period. Which one of the following statements is CORRECT given this information?

a. Option B is the best choice because you will receive the most payments.
b. Option A is the best choice because it has the largest present value.
c. Option A is the best choice as it provides the largest monthly payment.
d. Option C is the best choice because it has the largest present value.
e. Option B is the best choice because it pays the largest total amount.

Answers

Answer 1

Answer:

Doug Stamper

The CORRECT statement is:

b. Option A is the best choice because it has the largest present value.

Explanation:

a) Data and Calculations:

Option A: $2,000 per month for 84 months is worth PV = $136,906.08:

N (# of periods)  84

I/Y (Interest per year)  6

PMT (Periodic Payment)  2000

FV (Future Value)  0

 

Results

PV = $136,906.08

Sum of all periodic payments $168,000.00

Total Interest $31,093.92

Option B: $1,100 per month for 15 years is worth PV = $130,353.87:

N (# of periods)  180

I/Y (Interest per year)  6

PMT (Periodic Payment)  1100

FV (Future Value)  0

Results

PV = $130,353.87

Sum of all periodic payments $198,000.00

Total Interest $67,646.13

Option C: $125,000 lump sum today is equal to PV.


Related Questions

What are some items that you like to buy or wish you could buy?

Answers

Answer:

computer or brainly plus

In order to buy something you need enough money. I would buy something useful that I can still afford. Something like an sd card is something I've needed for a long time...

Shen lives in San Diego and runs a business that sells guitars. In an average year, he receives $723,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $423,000; he also pays wages and utility bills totaling $267,000. He owns his showroom; if he chooses to rent it out, he will receive $2,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Shen does not operate this guitar business, he can work as a financial advisor, receive an annual salary of $20,000 with no additional monetary costs, and rent out his showroom at the $2,000 per year rate. No other costs are incurred in running this guitar business.

Identify each of Paolo's costs in the following table as either an implicit cost or an explicit cost of selling guitars.
a. The salary Paolo could earn if he worked as a financial advisor
b. The wages and utility bills that Paolo pays
c. The wholesale cost for the guitars that Paolo pays the manufacturer
d. The rental income Paolo could receive if he chose to rent out his showroom

Answers

Answer:

Shen

Paolo's Implicit and Explicit Costs:

Implicit Costs:

a. The salary Paolo could earn if he worked as a financial advisor = $20,000

d. The rental income Paolo could receive if he chose to rent out his showroom = $2,000

Total implicit costs = $22,000

Explicit Costs:

b. The wages and utility bills that Paolo pays = $267,000

c. The wholesale cost for the guitars that Paolo pays the manufacturer = $423,000

Total explicit costs = $690,000

Explanation:

a) Data and Analysis:

Sales revenue from selling guitars per year = $723,000

Cost of goods sold = $423,000

Wages and Utility expenses = $267,000

Accounting profit = $33,000 ($723,000 - ($423,000 + $267,000))

Opportunity costs:

Annual rent to be received from showroom if rented out = $2,000

Salary as a financial advisor = $20,000

Economic profit = $11,000 ($33,000 - $22,000)

Determine the net present value for a project that costs $84,500 and would yield after-tax cash flows of $13,000 the first year, $15,000 the second year, $18,000 the third year, $20,000 the fourth year, $24,000 the fifth year, and $30,000 the sixth year. Your firm's cost of capital is 5.00%.

Answers

Answer:

The net present value for the project is $14,680.61.

Explanation:

The net present value (NPV) of a project is the sum of the present values of all the after-tax cash flows minus the cost of the project. This can be calculated as follows:

NPV = (First year after-tax cash flows / (100% + Cost of capital)^1) + (Second year after-tax cash flows / (100% + Cost of capital)^2) + (Third year after-tax cash flows / (100% + Cost of capital)^3) + (Fourth year after-tax cash flows / (100% + Cost of capital)^4) + (Fifth year after-tax cash flows / (100% + Cost of capital)^5) + (Sixth year after-tax cash flows / (100% + Cost of capital)^6) - Project cost

NPV = ($13,000 / (100% + 5.00%)^1) + ($15,000/ (100% + 5.00%)^2) + ($18,000 / (100% + 5.00%)^3) + ($20,000 / (100% + 5.00%)^4) + ($24,000 / (100% + 5.00%)^5) + ($30,000 / (100% + 5.00%)^6) - $84,500

NPV = $14,680.61

Therefore, the net present value for the project is $14,680.61.

In each dropdown next to the following terms, select the identifying letter of its best description. Incurs costs without directly yielding revenues. Provides information used to evaluate the performance of a department. Costs incurred for the joint benefit of more than one department. Costs that a manager has the ability to affect. Holds manager responsible for revenues, costs and investments. Provides information to evaluate the performance of a department manager.

Answers

Answer:

Cost center ⇒  Incurs costs without directly yielding revenues.

Investment center ⇒ Holds manager responsible for revenues, costs and investments.

Departmental accounting system ⇒ Provides information used to evaluate the performance of a department.

Indirect expenses ⇒ Costs incurred for the joint benefit of more than one department.

Controllable Cost ⇒  Costs that a manager has the ability to affect.

Responsibility accounting system ⇒ Provides information to evaluate the performance of a department manager.

What is meant by the phrase nonverbal communication and what form of nonverbal communication do you think is misunderstood the most by people? in a 200 word​

Answers

Answer:

See the explanation below.

Explanation:

Nonverbal communication involves the transfer of messages or signals utilizing nonverbal platforms such as eye contact, facial expressions, gestures, posture, and body language. It entails the utilization of social cues, kinesics, distance, physical environments/appearance, voice, and touch, among other things.

I think that gesture is the most misinterpreted form of nonverbal communication. Gesture refers to the movement of a body component, especially the hand or the head, to convey a message or meaning.

Gesture is the most misinterpreted form of nonverbal communication due to the fact that the meaning of particular gestures varies greatly throughout cultures. While the hand-held “OK” sign, for example, normally sends a positive message in English-speaking countries, it is deemed offensive in Germany, Russia, and Brazil. As a result, it's critical to be cautious about how you utilize gestures in order to avoid misinterpretation.

what is the positive impact of Commerce subject on our society?​

Answers

Answer:

E-commerce facilitates the fundamental movement of goods from suppliers to customers. They offer an ideal commerce development to do digital business and improve the global presence. E-commerce has altered the workflow of the business

Janine is considering what auto costs she is going to have after buying a new Honda Civic. She has budgeted enough money for the monthly auto loan payment, gas, and auto insurance. Has Janine factored in all of the costs associated with car ownership

Answers

Answer:

No. Janine has not factored in all of the costs usually associated with car ownership.

Explanation:

Other costs associated with the ownership of a car like a new Honda Civic that Janine is considering buying are: maintenance, license and registration, loan finance charges, and depreciation costs.  These costs can drastically reduce Janine's monthly purchasing power and ability to save.  The costs of owning a new Honda Civic should be compared to the cost of not owning one now vis-a-vis Janine income.

Bob writes a check to cash for $1000 to pay a bill from Acme. He then finds out that Acme breached the contract so he decides he will not pay them and puts a stop payment on the check. However, the check is stolen by Theron Thief (and Bob was not negligent) who then gives it to his landlord, Larry Landlord, who Theron already owes $1000. If Larry does not know about the theft or any problems with the instrument, what is the status of Larry:

Answers

Answer:

Holder in due course

Explanation:

A holder in due course arise when someone accepted the negotiable instrument for exchange in the value without any kind of reason. In this, there is a right for claim the value of an instrument that oppose to the orginator and the intermediate holders

So as per the given situation, Lary is holder in due case as he is holding the check in the good faith also he is not aware of the last theft

If your firm is a potential entrant thinking about entering an industry, you want the entry barriers to be _____.

Answers

Answer:

High

Explanation:

Entrants can be regarded as firms that are willing in entering a particular industry. As regards to market theory, a potential entry can become actual entry into a market on some condition such as when existing firms that are in the market have their earns above the Normal profit. It should be noted that If your firm is a potential entrant thinking about entering an industry, you want the entry barriers to be High

Crane Company makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable Cost Per Unit Sold Monthly Fixed Cost Sales commissions $0.60 $ 4000 Shipping 1.20 Advertising 0.30 Executive salaries 30000 Depreciation on office equipment 7000 Other 0.35 18000 Expenses are paid in the month incurred. If the company has budgeted to sell 6000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?

Answers

Answer:

$14,700

Explanation:

Calculation to determine how much is the total budgeted variable selling and administrative expenses for October

Using this formula

Total budget variable selling and administrative =(Sales commissions+Shipping+Advertising+Other)*Budgeted umbrellas

Let plug in the formula

Total budget variable selling and administrative = ($0.60 + 1.20 + 0.30 + 0.35)*6,000

Total budget variable selling and administrative= $2.45*6,000

Total budget variable selling and administrative= $14,700

Therefore the total budgeted variable selling and administrative expenses for October is $14,700

If a bank had demand deposits of $50 million and it faced a 25 percent reserve requirement, it would be required to have how many reserves

Answers

Answer:

$12.5 million

Explanation:

The computation of the number of reserves required is shown below:

= Demand deposits × reserve requirement

= $50 million × 25%

= $12.5 million

We simply applied the demand deposits with the reserve requirement so that the number of reserve required could come

Tim has a knee replacement. He has applied for a loan for this surgery; the loan has an annual interest rate of 9 percent. The artificial knee can function for 10 years and depreciates at a constant rate every year until the time of replacement. Fees for knee replacement surgery are expected to grow at 10 percent annually. What is the cost of this capital

Answers

That will more and likely be 10

Spartan Credit Bank is offering 8.1 percent compounded daily on its savings accounts. You deposit $6,500 today. a. How much will you have in the account in 5 years

Answers

Answer:

FV = $9745.02838  rounded off to $9745.03

Explanation:

To calculate the amount of money in account after five years, we will use the formula for future value of cash flow. The formula is as follows,

FV = Present value * (1+i)^t

Where,

i is the annual interest ratet is the time in years

As we have annual interest rate of 8.1% but it is compounded daily, we will use 8.1%/365 in our formula to get daily rates. Move over as the compounding is done daily, we will take 365*5 days instead of 5 years.

So,

FV = 6500 * [1+(8.1%/365)]^(5*365)

FV = $9745.02838  rounded off to $9745.03

A plot of land close to the beach could earn its owners $300/day as a parking lot or $500/day as a campground. Calculate the weekly economic rent of using the land as a campground.

Answers

Answer:

Weekly economic earning = $1400

Explanation:

Below is the calculation of weekly economic rent:

Given the earn at the parking lot = $300/day

Earning as a campground = $500/ day

Now, in order to find the economic rent just subtract the earning from the parking from the earning of the campground.

Economic earning  = 500 - 300

Economic earning = $200

Now, weekly economic earning = $200 x 7

Weekly economic earning = $1400

g Brokaw Industries signs a $40,000, 9%, 6-month note payable on September 1, 2021. How much interest expense will Brokaw report in its 2022 financial statements

Answers

Answer:

$600

Explanation:

Calculation to determine How much interest expense will Brokaw report in its 2022 financial statements

Based on the information given they will have to incur two months of interest expense which is January and February since four months went by in 2021 starting from September to December

Now let calculate the interest expense

Interest expense =$40,000 x .09 x 2/12

Interest expense =$600

Therefore the amount of interest expense that Brokaw will report in its 2022 financial statements is $609

$600

What is the health insurance program that requires recipients to fall within a certain income bracket

Answers

Answer:

Medicaid

Explanation:

The Affordable Care Act (ACA) was formally known as the Patient Protection and Affordable Care Act (Obamacare). It is a federal statute of the United States of America which was enacted by the 111th US Congress and signed into law by President Barack Obama. The Affordable Care Act (ACA) became effective on the 23rd of March, 2010 and it focused on making affordable health insurance available to qualified people or households through cost-sharing reductions and premium tax credits (subsidies).

Medicaid is a collaborative health program of the federal and state government which was established to provide effective and efficient health coverage to the citizens of the United States of America.

Medicaid is the health insurance program that generally requires recipients or beneficiaries to fall within a certain income bracket as a form of eligibility for health care.

If a firm sells 6 units at a price of $6 with a total cost of $7, what is the firm's profit from selling 6 units

Answers

Answer:

$6 (loss)

Explanation:

Profit per unit = Selling Price - Cost Price

                       = $6 - $7

                       = - $1

Total profit / (loss) = - $1 x 6 = ($6)

Conclusion

The result is a loss simply because the Cost is higher than the Selling Price

Drag each tile to the correct box.
Match each type of social media to its description.
allows users to provide short
updates to followers
connects individuals with common
relationships or interests
creates a space for individuals to
share knowledge on a specific topic
social network
arrowRight
discussion forum
arrowRight
microblogging
arrowRight
Reset Next

Answers

Answer:

1. Microblogging.

2. Social network.

3. Discussion forum.

Explanation:

1. Microblogging: it is an online platform or web resource designed and developed to avail end users with the opportunity to provide short updates to followers. One of the most commonly used microblogging platform in the world is Twi-tter. Others include Tumblr, Pinterest, WordPress, blog etc.

2. Social network: it is a software application, online platform or web resource designed and developed to connect individuals with common relationships or share similar interests. Face-book is one of the most widely used social network in the world today. Other social network include You-Tube, Hangout, Insta-gram, etc.

3. Discussion forum: it is an online platform or software application designed and developed to create a space for various individuals, especially registered members to share knowledge on a specific topic ranging from sports, education, comedy, movies, jobs, politics, romance, crime, books, food, etc. Some examples of discussion forum are Reddit, nairaland, etc.

Answer:

social network - connects individuals

discussion forum - creates a space

microblogging - allows users

plato

The following information is available for Kiss Company: Sales$100,000 Operating expenses$94,000 Operating assets$40,000 Stockholder's equity$25,000 Cost of capital 10% What is Kiss Company's residual income

Answers

Answer:

the residual income is $2,000

Explanation:

The computation of the residual income is shown below:

= Operating income - rate of return × operating assets

= ($100,000 - $94,000) - (10% × $40,000)

= $6,000 - $4,000

= $2,000

hence, the residual income is $2,000

The same is to be considered and relevant

The theory of constraints says thatqueues should not be allowed to form in the plant.bottleneck resources should be idle whenever possible.the bottleneck is the most critical resource.labor expense reduction should be the primary goal.

Answers

Answer:

the bottleneck is the most critical resource

Explanation:

The constraint theory represent that the bottleneck would be considered as the most critical resources as it decided how much long the process could be delayed and due to this the objectives and the goals of the organization would be highly impacted

Therefore as per the given situation, the above represent the answer

he appropriate discount rate for the following cash flows is 8 percent compounded quarterly. Year Cash Flow 1 $700 2 700 3 0 4 1,100 What is the present value of the cash flows

Answers

Answer:

Thus, the present value is $2045.52.

Explanation:

Use the below formula to find the present value:

Present value = FV ÷ (1 + r/4)^(n*4)

Present value :

[tex]=\frac{700}{(1 + \frac{0.08}{4} )^{1 \times 4} } + \frac{700}{(1 + \frac{0.08}{4} )^{2 \times 4} } + \frac{0}{(1 + \frac{0.08}{4} )^{3 \times 4} } +\frac{1100}{(1 + \frac{0.08}{4} )^{4 \times 4} } \\ \\= \frac{700}{1.0824}+\frac{700}{1.1716} +0+\frac{1100}{1.3727} \\= 2045.52[/tex]

Thus, the present value is $2045.52.

hola como estan todos​

Answers

Answer:

Estoy haciendo las gracias buenas

Explanation:

.

Answer:

bien y tu

Explanation:

Rerun Manufacturing Company is in the process of preparing its 2020 budget and is anticipating the following changes: 30% increase in the number of units sold. 25% increase in the direct material unit cost. 20% increase in the direct labor cost per unit. 12% increase in the manufacturing overhead cost per unit. 20% increase in the sales price. 6% increase in the administrative expenses.

Answers

Answer:

$403,485

Explanation:

The computation is shown below;

Composition of direct material, direct labor and factory overhead in the ratio of 3:2:1

So,  

Direct Materials = $333,000 × 3 ÷ 6 =$166,500

Direct Labor = $333,000 × 2 ÷ 6 = $111,000

Factory Overhead = $333,000 × 1 ÷ 6 = $55,500

Now the Revised Cost of Goods Sold for the year 2020 is

Direct Materials = $166,500 × 125% = $208,125

Direct Labor = $111,000 × 120% = $133,200

Factory Overhead = $55,500 × 112% = $62,160

finally  the estimated cost of goods sold for the year 2020 is

= $208,125 + $133,200 + $62,160

= $403,485

The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:
Year Investment Cash Inflow
1 15000 1000
2 8000 2000
3 2500
4 4000
5 5000
6 6000
7 5000
8 4000
9 3000
10 2000
Determine the payback period of the investment. (Round up your answer to the next whole number.)

Answers

Answer:

6.50 Years

Explanation:

The computation of the  payback period of the investment is shown below;

Total cash outflow is

= $15,000 + $8,000

= $23,000

Now the Cash Inflow in all 6 years is

= $1,000 + $2,000 + $2,500 + $4,000 + $5,000 + $6,000

= $20,500

Cash inflow in Year 7 is $5,000.

But Cumulative Cash flows from Year 1 to Year 7 is

= $20,500 + $5,000

= $26,500

This amount is more than Initial Investment  i.e. $23,000.

So our Payback period is between 6 & 7 years i.e.  

= 6 + ($23,000 - $20,500) ÷ 5000

= 6.50 Years

Loki Revengers has expected sales of $650 million a year. Variable costs are expected to be 65 percent of sales and fixed operating costs are $200000000 a year. Total capital is presently $500000000 and must be expanded to $700000000 to generate the anticipated sales level. The company presently has no debt outstanding, and 2670000 shares of stock. Additional common stock could be sold for $150 a share. The interest rate on new debt would be 6 percent and the tax rate is 21 percent.

Required:
Compute the return on equity and earnings per share assuming the expansion is financed.

Answers

Answer:

the return on equity and the earning per share is 3.104% and $5.43 respectively

Explanation:

The computation of the return on equity and the earning per share is shown below:

Return on equity is

=($650 × (1 - 65%) - $200) × (1 - 21%) ÷ (700)

= 3.104%

Now  

Earning Per Share is

= ($650 × (1 - 65%) - $200) × (1 - 21%) × 10^6 ÷ (2670000 + 200 × 10^6 ÷ 150)

= $5.4267

Hence, the return on equity and the earning per share is 3.104% and $5.43 respectively

Income can be earned through:
- A permanent job
- A seasonal job
- All of the above​

Answers

all of the above

mark me brainliesttt :))

The following transactions occurred during July: Received $930 cash for services provided to a customer during July. Issued common stock for $2,600 cash. Received $780 from a customer in partial payment of his account receivable which arose from sales in June. Provided services to a customer on credit, $405. Borrowed $6,300 from the bank by signing a promissory note. Received $1,280 cash from a customer for services to be performed next year. What was the amount of revenue for July

Answers

Answer:

the amount of revenue for the july month is $1,335

Explanation:

The computation of the amount of revenue for the july month is shown below:;

= Cash received from the service provided to the customer + provided the service to the customer on credit basis

= $930 + $405

= $1,335

Hence, the amount of revenue for the july month is $1,335

The same would be relevant

Fuente, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,075 2 1,210 3 1,340 4 1,420 a. If the discount rate is 8 percent, what is the future value of the cash flows in Year 4

Answers

Answer:

the future value of the cash flow in year 4 is $5,632.73

Explanation:

The computation of the future value of the cash flow in year 4 is as follows:

= $1,075 × (1.08^3) + $1,210 × (1.08^2) + $1,340 × (1.08^1) + $1,420 ×(1.08^0)

= $1,354.19 + $1,411.34 + $1,447.20 + $1,420  

= $5,632.73

Hence, the future value of the cash flow in year 4 is $5,632.73

The same is to be considered and relevant  

Understand and explain the process of idea generation and validation

Answers

Answer:

Idea generation is the creative process or procedure that a company uses in order to figure out solutions to any number of difficult challenges. It involves coming up with many ideas in a group discussion, selecting the best idea or ideas, working to create a plan to implement the idea, and then actually taking that idea and putting it into practice. The idea can be tangible, something you can touch or see, or intangible, something symbolic or cultural.

Idea validation is the process of testing and validating your idea prior to launching your business name, tagline, product, service or website. This is like the research and development process big companies use to test product ideas before they’re released to the general public.

Idea validation can involve anything from information-gathering interviews to special landing pages on the web. The entire purpose is to expose the idea to your target audience before you build and release the final product.

Vaughn Manufacturing has a materials price standard of $2.00 per pound. 4900 pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 4900 pounds, although the standard quantity allowed for the output was 3700 pounds. Vaughn Manufacturing's materials quantity variance is

Answers

Answer:

$2,400 Unfavourable

Explanation:

Direct material quantity variance = (Standard quantity - Actual quantity) × Standard cost

Given that:

Standard quantity = 3,700 pounds

Actual quantity = 4,900 pounds

Standard cost = $2

Therefore,

Direct materials quantity variance

= (3,700 - 4,900) × 2

= - $2,400

= $2,400 Unfavourable

The difference between the standard and actual quantity is negative. We used more pounds than expected, hence variance will be unfavourable.

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