Answer:
24 months
Explanation:
Payback method analysis the amount of time that will pass until you recover your capital. Since the capital is $12000 ant the payments are $500 per month, the payback period will be 12000/500 = 24 months.
Answer: 24 months
Explanation: First, the $500 x 12 months = $6,000 savings in the first year.
For the next 12 months, the savings is an additional $6,00.
Therefore, if you add those 2 together, it is 24 months to recover the cost of refinancing.
The decision rule in a sell-or-process-further decision is:
process further as long as the incremental revenue from processing exceeds:
incremental processing costs.
variable processing costs.
fixed processing costs.
no correct answer is given.
Answer:
The answer is: Incremental processing costs
Explanation:
The decision rule in a sell or process further decision is the choice between selling a product now or process that product more so that more money can be made. This happens a lot in business that process agricultural products. For example, the company should sell corn as it is, or should it process it to make corn oil, or should it even process it a little more to make margarine.
The company will make a decision based on the incremental analysis of whether the additional incremental revenue provided by margarine exceeds all the additional incremental costs of producing margarine.
Production costs are not linear. Variable costs can change if the quantity being produced changes. For instance a company makes 100 chairs so it buys enough wood for the 100 chairs. But if they decide to produce 200 chairs, then they will probably be able to get a discount for buying a larger amount of wood. Fixed costs tend to decrease as the units produced increase until a point were a new machine is needed or new workers must be hired.
Breaking down complex skills into smaller subskills or steps to make learning easier is known as _____. direct instruction programmed instruction applied learning task analysis
Answer:
Learning task analysis
Explanation:
Task analysis is used in education to know the capabilities of students and figure out which assignments presents more difficulties for them. Additionally, it´s also used the breakdown from complex to simple steps as a tool in behavioral modification. Objective: the way a subject should be taught and the necessary tools to get the best achievable performance
Which financial decision is this:
Radford is a small company that manufactures automobile bearings. Managers at the company must make decisions on the kind and the cost of equipment to buy.
Answer: Investment decision
Explanation: Investment decision refers to the financial decisions of an organisation that deals with the purchase of long term assets. It focuses on what type of asset should be procured by the organisation that suits the current needs.
In the given case, Radford is trying to decide what kind of of equipment to buy and how much to spend.
Thus, it is an example of investment decision.
Amy's drive thru, a fast food facility, offers healthy and sustainably grown veggie and vegan fast food at higher prices than its competitors in the market and has a drive through and indoor seated casual dining operation. What strategy is Amy's drive thru using to gain competitive advantage?
Answer:
The answer is: Product Differentiation
Explanation:
This is a marketing strategy focused on differentiating your product from the competition. It highlights the good qualities of the products it sells: healthy, sustainably grown vegetables, vegan food. By highlighting its good qualities, Amy´s drive thru stands out from the rest of the competing restaurants.
This restaurant uses a vertical differentiation strategy because it highlights that it sells a better product (more healthy, etc.) and at the same time it costs more because it is a better product.
As a major steel manufacturer, SteelMakers Inc. focuses on having the most efficient manufacturing processes in place. The company believes that its competitive edge lies in its ability to offer the best prices. They also maintain an excellent distribution network that ensures wide availability of their products. SteelMakers has a ________.A) selling orientationB) production orientationC) product orientationD) marketing orientationE) social orientation
Answer: Production orientation
Explanation: It refers to a strategy when the company focuses only to provide the best quality product in the market without taking into consideration the preference of the customers.
In the given case, Steel makers are focusing on making their business process the best in market so that they can gain a competitive advantage.
Thus, from the above we can conclude that the correct option is C.
SteelMakers Inc. has a production orientation because it focuses on efficient manufacturing processes to offer competitive prices and prioritize distribution efficiency.
SteelMakers Inc., with its emphasis on efficient manufacturing processes and ability to offer the best prices through those efficiencies, as well as an excellent distribution network for wide product availability, can be said to have a
B) production orientation.
This organizational approach prioritizes production efficiency and operations to minimize costs and maximizes distribution to outcompete others with lower prices. It focuses on the internal capability to produce and distribute goods at scale, often characterized by economies of scale in production, which are evident in the profitability of the company mentioned, providing significant ROI to shareholders.
Suppose that there is a checkable deposit intoYourBank. Which of the following statements is an accurate description of the changes that occur at YourBank? A. The required reserves decrease by the amount of the deposit times the required reserve ratio. B. The required reserves increase by the amount of the deposit. C. The required reserves increase by the amount of the deposit times the required reserve ratio. D. The excess reserves increase by the amount of the deposit times the required reserve ratio.
Answer: Option (C) is correct.
Explanation:
The required reserves are the reserves that banks have to keep it with central bank. Required reserves are the fraction of Check-able deposits. The required reserves are determined by multiplying the deposited amount with the required reserve ratio.
Required reserves = Deposited amount × Required reserve ratio
Required reserve ratio is set by the central bank.
_______________ is an approach that starts by investigating the general data and information needs of an organization at the strategic level and then examines more specific data and information needs for the functional areas and departments within the organization.
Answer:
The answer is Enterprise data modeling.
Explanation:
Enteprise data modeling is a component of data architecture, with subject, conceptual and enterprise logical models based on business concepts and requirements.
To define the subject area model, it is important to identify the key concepts for business expressed as singular nouns, there must be no more than 20 subjects, and they must no be functiones.
To define the enterprise logical data model, you should describe in detail the entities found, and related entities needed to complete the description.
According to the United Nations, there were roughly 300 million humans on the planet 1,000 years ago.
Essentially all of them were poor by modern standards: They lacked antibiotics, almost all lacked indoor
plumbing, and none traveled faster than a horse or a river could carry them. Today, between 1 billion and 3
billion humans (out of about 7 billion total humans) are poor. So, over the last 1,000 years, what has
happened to the fraction of humans who are poor?
a. It rose.
b. It fell.
c. It stayed about the same.
d. The answer is impossible to determine from the given information.
Answer:
d) The answer is impossible to determine from the given information
Explanation:
One might think that the correct answer is the b) it rose. However, you should consider that the statement is comparing the lifestyle of humans 1000 years ago with modern standards of poverty. Which is not entirely correct, since 1000 years ago antibiotics had not been discovered, nor had processes developed to purify water, much less invented means of transport such as train or cars. It is possible that 1000 years ago, lacking these comforts wasn't an indicator of poverty as it is today, basically because at that time in history those things didn't exist.
Which resource management task enables resource coordination throughout the incident? A. Order and Acquire B. Demobilize C. Reimburse and Restock D. Track and Report
Answer:
D. Track and Report
Explanation:
The resource management task which enables the resource coordination throughout incident is Track and Report.
Resource tracking is standardized as well as integrated process which is conducted to:
Help the staff so to prepare to receive the resources. Provide clear picture of where the resources are located. Enable the resource coordination and the movement. Protect safety and security of the personnel and supplies.
In resource management, the task of 'Track and Report' facilitates resource coordination throughout an incident by keeping a record of resource handling and usage, and informing all concerned parties about it.
Explanation:The resource management task that enables resource coordination throughout an incident is Track and Report. This element of resource management involves keeping a record of the resources at hand and their usage, as well as providing regular updates about their status to all relevant parties. This ongoing process aids resource coordination as it ensures that stakeholders are aware of the resources' whereabouts and availability at all times, thereby facilitating better scheduling, allocation, and usage of resources. Contrarily, order and acquire is about obtaining resources, Demobilize involves releasing resources when they're no longer required, and Reimburse and Restock is about replenishing used resources.
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If the Federal Reserve tightens the money supply, other things held constant, short-term interest rates will be pushed upward, and this increase will generally be greater than the increase in rates in the long-term market.
a) True
b) False
Answer:
The statement is true
Explanation:
Tightening monetary policy or curbing money supply in an economy is a move by Federal Reserve to control inflation or bring down over-heated economic growth.
Money supply is curbed by increasing short-term interest rates, thereby increasing cost of borrowing and making borrowing less attractive to public. This increase in short-term rates, also called Federal fund rates are usually greater than long-term interest rates prevailing in the market.
To estimate the percentage of defects in a recent manufacturing batch, a quality control manager at Toyota selects every 19th car that comes off the assembly line starting with the ninth until she obtains a sample of 120 cars.
What type of sampling is used?
(a) Simple random
(b) Systematic
(c) Cluster
(d)Convenience
(e) Stratified
Answer: Systematic
Explanation: It refers to a method of sampling in which the samples are selected from a population randomly but as per a set criteria and defined interval. The interval is computed by dividing the population with the sample size needed.
In the given case, the quality manager starts taking sample on the on a fixed interval, that is, every 19th car after the ninth car.
Hence from the above we can conclude that the correct option is B.
Which of the following professional services would be considered an attestation engagement?A. Advising management in the selection of a computer system to meet business needs.B. Preparing the income statement and balance sheet for one year in the future based on client expectations and predictions.C. Advocating on behalf of a client about trust tax matters under review by the Internal Revenue Service.D. Providing financial analysis, planning, and capital acquisition services as a part-time, in-house controller.
Answer: Option B
Explanation:
In simple words, attestation engagement refers to the preparation of reports and investigation by a third party on the order or request from the client's side.
Attestation engagement requires independence in the working of the investigator. Audit is an example of attestation engagement.
Hence from the above we can conclude that the correct option is B.
A company sold merchandise with a cost of $213 for $440 on account. The seller uses the perpetual inventory system. The entry to record the cost of merchandise sold would include ________.
Answer:
Explanation:
The journal entry for recording the cost of merchandise sold is shown below:
Cost of goods sold A/c Dr $213
To Merchandise Inventory A/c $213
(Being cost of merchandise inventory is recorded)
In this question, we record the cost, not the sale value. That's why we consider $213, not $440 amount
At the beginning of the year, Tektron Company had total assets of $600,000 and total liabilities of $300,000. If the total assets increased $100,000 and the total liabilities decreased $70,000, what is the amount of stockholders’ equity at the end of the year?
Answer:
what is the amount of stockholders’ equity at the end of the year is $470000
Explanation:
y1 Variation y2
Assets 600000 100000 700000
Liabilities 300000 -70000 230000
Equity 300000 470000
Which of the following is FALSE regarding the difference between debt and common stock? A. Equity is ownership in a firm but debt is not. B. Stockholders have voting power while creditors do not. C. Periodic payments made to both are tax deductible for the company. D. Interest payments are usually legally binding while dividend payments generally are not. E.
Answer:
C. Periodic payments made to both are tax deductible for the company.
Explanation:
Interest expense is tax deductible and dividends are not tax deductible.
This is because, interest is an expense charged to income statement and paid on debt, which is a compulsory payment.
Whereas, when we discuss about payment of dividend it is paid as part of retained earnings, as this is paid from retained earnings which is balance of net income added after tax to retained earnings.
Therefore, the statement which is false
C. Periodic payments made to both are tax deductible for the company.
Which of the following would NOT be considered an investment in human capital?
A
obtaining a college degree
B
purchasing a new computer
C
attending a first-aid class
D
paying for cooking lessons
Answer:
B: Purchasing a new computer
Explanation:
Investing your money in a new computer does not teach you new skills so it would not be counted as an investment in human capital. Obtaining a college degree, attending a first-aid class, and paying for cooking lessons enhances your creativity and skills so they are the perfect examples of investments in human capital. Moreover, one of the major characteristics of investing in human capital is that they are intangible so that's another reason why purchasing a new computer cannot be categorized as an investment in human capital.
At times, customers have an unexpected need and require certain departments, such as production, to change their schedule to meet the demands of the sales department. When Shannon, the vice president of marketing, inspires the production team to put in the extra effort, she is playing a(n) ________ role.
Answer:
leadership
Explanation:
According to my research on different business roles and responsibilities, I can say that based on the information provided within the question she is playing a leadership role. This can be said because leading is defined as the act of motivating employees to achieve organizational goals. Since Shannon inspired the production team we can say that she was leading them, which is the role of leadership.
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Shannon, the vice president of marketing, is playing a leadership role when she inspires the production team to put in extra effort and change their schedule to meet the demands of the sales department.
Explanation:Shannon, the vice president of marketing, is playing a leadership role when she inspires the production team to put in extra effort and change their schedule to meet the demands of the sales department. This involves influencing and motivating the team to align with the needs of the sales department, which requires leadership skills.
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Objectives of financial reporting to external investors and creditors include preparing information about all of the following except: Multiple Choice Information used to determine which products to produce. Information about economic resources, claims to those resources, and changes in both resources and claims. Information that is useful in assessing the amount, timing, and uncertainty of future cash flows. Information that is useful in making investment and credit decisions.
Answer:
Information used to determine which products to produce
Explanation:
Determination of products whose production is not yet decided is a managerial issue, and it is part of internal information that should be not delivered to external parties. Furthermore, this data usually is not accurate, so sharing outside would not be even recommended for this sole reason.
Claire and Don are farmers who produce beef and corn. In a year, Claire can produce 20 tons of beef or 100 bushels of corn. In a year, Don can produce 40 tons of beef or 240 bushels of corn.. To maximize their total output of beef and corn _______.
Answer:
Claire produces beef and Dag produces corn
Explanation:
Based on the information provided within the question I think it is safe to say that in order to maximize their total output Claire produces beef and Dag produces corn. This is because Claire's beef to corn ratio is 1:5 while Dag's is 1:6 therefore Claire's beef production is more efficient than Dag's, while Dag's corn production is more efficient than Claire's. Which is why each one should focus on what they are best at.
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Final answer:
To maximize their total output of beef and corn, Claire and Don should specialize in producing the goods in which they have a comparative advantage; Claire in beef and Don in corn, based on the concept of opportunity cost.
Explanation:
The question "Claire and Don are farmers who produce beef and corn. In a year, Claire can produce 20 tons of beef or 100 bushels of corn. In a year, Don can produce 40 tons of beef or 240 bushels of corn. To maximize their total output of beef and corn" touches upon the economic principle of comparative advantage and specialization. To maximize their total output, Claire and Don should specialize in producing the good in which they have a comparative advantage. Comparative advantage is determined by who has the lower opportunity cost in production of a good.
Claire has the opportunity cost of producing beef as 5 bushels of corn (100/20), and Don's is 6 bushels of corn (240/40). Thus, Claire has a comparative advantage in beef production. For corn, Claire sacrifices 0.2 tons of beef for every bushel of corn (20/100), and Don sacrifices 0.1667 tons of beef (40/240), meaning Don has a comparative advantage in corn production. Therefore, to maximize their total output, Claire should specialize in beef production and Don in corn production.
The You Look Marvelous! cosmetic company is considering building a new shampoo factory. Its accountants and board of directors meet and decide that it is not a good idea to build the factory. If interest rates fall after the meeting
a.the present value of the factory rises. It’s more likely the company will build the factory.
b.the present value of the factory rises. It’s less likely the company will build the factory.
c.the present value of the factory falls. It’s more likely the company will build the factory.
d.the present value of the factory falls. It’s less likely the company will build the factory.
Answer:
A
Explanation:
The present value of cash inflows or of the factory project depends inversely on the interest rates; if interest rates fall, present value will rise. The formula attached shows the mathematical relationship but intuitively if the interest rate falls then the cost of money over the time decreases, then when you convert cash inflows into monetary units of today, you will discount less and net cash inflows will rise .In this case, cash inflows of the factory, converted into monetary units of today, will increase and the company will perceive better earnings if they decide to build the shampoo factory. Because of that it is more likely that the company will build the factory.
Which of the following refers to individual units within a firm that operate like separate businesses, with each having its own mission, business objectives, resources, managers, and competitors?
A. Business portfolio
B. Strategic business units (SBUs)
C. Market development strategies
D. Strategic plan
E. Diversification strategies
Answer:
B. Strategic business units (SBUs)
Explanation:
A strategic business unit, popularly known as SBU, is a fully-functional unit of a business that has its own vision and direction. Typically, a strategic business unit operates as a separate unit, but it is also an important part of the company. It reports to the headquarters about its operational status.
Suppose that in 2018, nominal Gross Domestic Product (GDP) for the economy of Chiconia was $10 trillion and the Gross Domestic Product (GDP) price index was 200.0. What is Chiconia's real Gross Domestic Product (GDP) in 2018?
Answer:
Chiconia's real Gross Domestic Product (GDP) in 2018 is 0.05 Trillion or $ 50 billions
Explanation:
Real Domestic Product is GDP adjusted by price levels and can be found as:
Real GDP = Nominal GDP / Price Index
so in this case
Real GDP = $10 trillion / 200 = 0.05 Trillion or $ 50 billions
GDP is a measure of the monetary value of the production an economy that can be large either by an increase in production or in the prices you are selling . Real GDP always makes that adjustment.
A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?
a. For the first 30 houses, the average cost per house was $250,000.
b. The marginal cost of the 31st house, if it is built, will be $260,000.
c. If the company can experience a marginal benefit of $275,000 by building the 31st house, then the company should build it.
d. All of the above are correct.
Answer:
d. All of the above are correct
Explanation:
a. is correct bescause if we calculate the average cost for the first houses we find this:
[tex]\frac{7,500,000}{30}=250,000[/tex]
this agrees with the statement of option a.
b. The marginal cost is the variation in the total cost if an additional unit is produced.
The TC of producing 30 houses is 7,500,000 and the TC for 31 houses is 7,760,000
Now we just find the variation of producing that additional house by substracting the two costs
Cm= 7,760,000 - 7,500,000 = 260,000
c.
The marginal benefit is 275,000, the marginal cost is 260,000
The profit is then:
275,000 - 260,000 = 15,000
There is a profit of $15,000 product of building the 31st house
The three statements are correct so the answer is d.
The question is focused on understanding of average and marginal costs in a business situation. The first 30 houses cost an average of $250,000 each. The 31st house will cost an additional $260,000. If the marginal benefit for the 31st house exceeds this cost, it would be advantageous for the company to build it.
Explanation:The subject of this question is Mathematics, specifically, it is about financial calculations in a business context. To answer the question, first, let's find the average cost of the first 30 houses. By dividing the total cost of $7.5 million by 30, we get $250,000. So option a is correct. Then, the
marginal cost
of the 31st house is the difference between the total cost if 31 houses are built and the cost of 30 houses, which is $7.76 million - $7.5 million = $260,000. So option b is also correct. Lastly, if the
company
can get a
marginal
benefit of $275,000 from building the 31st house, which is greater than the marginal cost, then it would be financially sensible to build it. That validates option c. In conclusion, all the options a, b and c are correct, suggesting that the answer is d. All of the above.
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If a bank has $100 in cash in its vault, $2,000 in loans to customers, and $400 in deposits at the Federal Reserve, then the bank's reserves are: Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices
$100.
$400.
$500.
$2,500.
Answer:
$500
Explanation:
A bank's reserves refer to the sum of the amount of cash physically held by the bank, and deposits held in the bank's account with the Federal Reserve.
In our case therefore,
Cash held by bank = $100
Cash held by Federal Reserve =$400
Total = $100 + $400 = $ 500
Different companies using the same accounting principles is an example of _________________. For instance, this occurs when two different companies both use the accrual accounting rather than cash-basis accounting or when both companies use the same method to compute depreciation rather than using two different methods.
Answer: Comparability
Explanation: Financial statements of an organisation indicates the position of the business on the market and what are its future prospects. Thus, every organisation markets have to follow same accounting principles while preparing financial statements so that investors in the market could compare different alternatives.
Hence the given statement is an example of comparability.
A toll of $1 per car is imposed on a road regardless of time of day. If the toll creates equilibrium travel flows at the busiest time of day, it will create a __________ at all other times.
Answer:
[tex]surplus[/tex] [tex]of[/tex] [tex]space[/tex]
Explanation:
Surplus of space definition - a more amount of something that was required.
This could fit into the blank
Brooke Monroe, the Vice President of Manufacturing for Diacon Products has made a strong argument for the company to enter foreign markets via turnkey projects. However, the company's Chief Financial Officer, Nandu Kishore argues that turnkey projects being short-term propositions could be disadvantageous for the firm if a country subsequently proves to be a major market for the output of the process that has been exported. Brooke Monroe could counter this objection by arguing that Diacon Products can get around this problem by
Answer:
The answer is: If the new market proves to be big enough for Diacon Products (DP) to enter, they can always build a new facility for themselves.
Explanation:
Unless prohibited in the contract, DP will always be able to build new factories or facilities in the new markets they just entered. Their better know how on the production processes will always be an advantage for them.
For instance they might build a new cement factory in India. If India´s market for cement turns to be huge and DP decides to enter into it, of course they should be able to build a new cement plant for themselves. They will probably be able to set up the cement plant in a better way than before due to the experience they gained the first time.
Usually the worst thing to do is simply nothing. If they believe a market is so good for them to enter, then they should do it directly the first time. But if they are unsure, building a turnkey project for someone else is very good marketing research.
Brooke Monroe could counter this objection by arguing that Diacon Products can get around this problem by negotiating long-term service contracts or licensing agreements with the local firms in the foreign markets.
Brooke Monroe's argument for entering foreign markets through turnkey projects is based on the idea that such projects can provide immediate revenue and entry into new markets. However, Nandu Kishore's concern is valid as turnkey projects are typically short-term and may not provide sustained revenue streams if the market grows significantly after the project's completion.To address this concern, Brooke Monroe could propose that along with the turnkey project, Diacon Products should negotiate long-term service contracts or licensing agreements with the local firms. Here's how these strategies could mitigate the issue:
1. Long-term Service Contracts: By offering ongoing maintenance, support, and other services related to the turnkey project, Diacon Products can establish a continuous revenue stream. This would ensure that even after the initial project is completed, the company remains involved in the market, benefiting from the continued growth and demand for their expertise and services.
2. Licensing Agreements: Diacon Products could license the technology or process used in the turnkey project to the local firm. This would allow the local firm to continue producing the output, and Diacon Products would receive royalties or licensing fees. This approach ensures that Diacon Products can capitalize on the market's growth without having to manage the production facilities themselves.By implementing these strategies, Diacon Products can transform what would have been a short-term engagement into a long-term business relationship. This not only addresses the CFO's concerns about missing out on a major market but also positions the company to benefit from the market's potential over time.
Additionally, these approaches can help build strong local partnerships, enhance brand presence, and provide valuable market insights that can inform future business strategies.
Jane always finishes the work assigned to her before her team members. Her performance never dropped even when she was working on different projects with different teams. In the context of scientific management, Jane can be considered a(n) _____.
Answer: Rate buster
Explanation: Those employees that exceed their performance level beyond the agreed formal rate are called rate buster in scientific management. These are the workers who use their maximum ability while performing a job.
In the given case, Jane performs superior than her fellows even in case of difficult situations.
Hence, from the above we can conclude that Jane should be considered as a rate buster.
Jane can be considered a highly efficient worker in the context of scientific management, which emphasizes optimizing work processes to increase productivity according to Frederick W. Taylor's principles.
Explanation:Jane always finishes the work assigned to her before her team members and maintains consistent performance across various projects and teams. In the context of scientific management, Jane can be considered a highly efficient worker, embodying the principles of Frederick W. Taylor's scientific management. Taylor's methodology focused on analyzing and improving work processes through time-motion studies, and optimizing worker performance by designing tasks to increase efficiency, often at the cost of personal interaction and job satisfaction. Such workers were seen as cogs in a machine, with incentives provided to encourage productivity. Jane's ability to prioritize her tasks and work effectively, as indicated in her interactions with her supervisor, demonstrates her competence in a system driven by efficiency and precise management protocols.
It costs Calient Company $46 per unit ($27 variable and $19 fixed) to produce its product, which normally sells for $58 per unit. A Brazilian wholesaler offers to purchase 5,000 units at $36 each. Client would incur special shipping costs of $5 per unit if the order were accepted. Galiente has sufficient unused capacity to produce the 5,000 units. If the special order is accepted, what will be the effect on net income?
Answer:
The effect on net income will be $25,000, meaning the company will lose $25,000.
Explanation:
The Wholesaler offers = 5000×$36
= $180,000
Special shipping cost = 5000×$5
= $25,000
but the actual cost per unit = 5000×$46
= $230,000
The effect on the net income = $230,000 - $180,000 - $25,000
= $25,000
Therefore, the effect on net income will be $25,000. this means the company will lose $25,000.
Use the appropriate compound interest formula to find the amount that will be in each account, given the stated conditions. $26,500 invested at 3.85% annual interest for 2 years compounded (a) daily (n equals365); (b) continuously
Answer:
= $26.5000 * ( 1+ 0,0104%)^(365*2)
Explanation:
First of all, you have to convert the 3,85% annual interest rate in a daily interest rate because n= 365.
1) = ((1+annual interest)^ (1/n))-1
= ((1+3,85%)^(1/365))-1
= 0,0104% it the result of the daily interest rate
Secondly, you need to use the compund interest formula according with the invested money
2) = Capital invested*(1+ daily interest rate)^ (365 x numbers of years)
= $26.5000 * ( 1+ 0,0104%)^(365*2)
= $26.5000 * ( 1+ 0,0104%)^(365*2)
= $26.5000 * 107,85%
= $28.580,78
Finally, as you can see the compunded interest formula is elaborated by the information of the daily interest rate calculated first, multiplied by the days of the year (n) and the numbers of the years (2) that the investing is going to be generating profits.
The future value of an investment of $26,500 at an annual interest rate of 3.85% compounded daily for 2 years is $28,487.88. When the compounding is continuous, the future value becomes slightly higher at $28,495.67.
Explanation:The subject of your question is compound interest, where the interest in each compounding period is added to the principal before calculating the interest for the next period. Compound interest significantly enhances the growth of an investment over time compared to simple interest.
Part (a): Daily Compounding
For daily compounding, we use the formula A = P(1 + r/n)^(nt) where P = principal amount (initial investment), r = annual interest rate (in decimal), t = time the money is invested for (in years), n = number of times interest applied per time period.
By substituting the given values into the formula, we have A = $26,500 * (1 + 0.0385/365)^(365*2) = $28,487.88
Part (b): Continuous Compounding
For continuous compounding, we use the formula A = Pe^(rt), where P = principal amount, r = annual interest rate (in decimal), t = time for which the money is invested and e is Euler's number approximately equal to 2.71828.
By plugging in the given values, we get A = 26500 * e^(0.0385*2) = $28,495.67. Hence, the higher the frequency of compounding, the higher the future value of the investment.
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