Briefly explain whether you agree or disagree with the following​ statement: ​"AssetsLOADING... are things of value that people own. Liabilities are debts.​ Therefore, a bank will always consider a checking account deposit to be an asset and a car loan to be a​ liability."
A. Disagree. Checking accounts represent something that the bank owes to the owner of the account. It is a bank liability.
B. Disagree. Both checking accounts and car loans represent bank liabilities.
C. Agree. Loans are debts and therefore bank liabilities.
D. Agree. Checking accounts are something of value that is in the bank.​ Therefore, they are a bank asset.

To calculate Mr. Husker's Tuxedos year-end 2015 balance in accounts receivable, we can use the average collection period and the total sales for 2015. The average collection period is the average number of days it takes to collect payment from customers. We can calculate the year-end balance in accounts receivable by multiplying the average daily sales by the average collection period.

To calculate the year-end 2015 balance in accounts receivable for Mr. Husker’s Tuxedos, we can use the average collection period and the total sales for 2015. The average collection period is the average number of days it takes to collect payment from customers. We can use this ratio to estimate the accounts receivable balance.

To calculate the average daily sales, we divide the total sales by the number of days in a year. Then, we multiply the average daily sales by the average collection period to calculate the year-end balance in accounts receivable.

In this case, the average collection period is 32 days and the total sales for 2015 are $56.1 million. Let's calculate the year-end 2015 balance in accounts receivable:

Average daily sales = Total sales / Number of days in a year = $56,100,000 / 365 = $153,698.63

Year-end balance in accounts receivable = Average daily sales × Average collection period = $153,698.63 × 32 = $4,911,156.16

Answer:

8.75%

Explanation:

Find the YTM which is the pretax cost of debt.

Using a financial calculator, input the following and adjust the coupon payment, time and interest rate to semi-annual basis.

Maturity of the bond; N= 14*2 = 28

Face value : FV = 1000

Price of the bond ; PV = -745.14

Semiannual Coupon payment; PMT = semiannual coupon rate* Face value

Semiannual Coupon payment; PMT = (8.6%/2)*1000 = 43

then compute the semiannual rate; CPT I/Y = 6.25%

Annual rate; YTM ; pretax cost of debt = 6.25*2 = 12.5%

Next, find aftertax cost of debt;

Aftertax cost of debt = pretax cost of debt (1-tax)

= 0.125 (1 -0.30)

= 0.0875 or 8.75% as a percentage

Therefore; aftertax cost of debt = 8.75%

Final answer:

The after-tax cost of debt is calculated by finding the bond's yield to maturity and adjusting it for the firm's tax rate. Without the actual calculation or a financial calculator, it's not possible to provide the exact YTM in this response. Once the YTM is found, the after-tax cost is YTM * (1 - Tax Rate), with a 30% tax rate in this scenario.

Explanation:

To calculate the after-tax cost of debt for the firm, we need to determine the yield to maturity (YTM) of the bond and then adjust it for the firm's tax rate. The bond in question has an 8.6 percent coupon rate, pays semiannually and is selling at a price of $745.14. We must use the present value of annuities formula to find the YTM, which is the interest rate that equates the present value of the future cash flows of the bond (interest payments and face value) to the current price of the bond. Once we find the YTM, we apply the tax rate to get the after-tax cost of debt.

Unfortunately, without a financial calculator or spreadsheet software, it's impractical to solve for the YTM in this response. Generally, the process involves using the present value formula:

PV = C * (1 - (1 + r)⁻ⁿ) / r + F / (1 + r)

Where PV is the current price of the bond ($745.14), C is the annual coupon payment, r is the YTM, n is the number of periods until maturity, and F is the face value of the bond. Once YTM is found, the after-tax cost of debt is calculated using the formula:

After-tax cost of debt = YTM * (1 - Tax Rate)

Given a 30 percent tax rate, the after-tax cost of debt would be

After-tax cost of debt = YTM * (1 - 0.30)

This reflects the actual cost to the firm of borrowing funds through the bond.

Answer:

$2,290.05

Explanation:

Principle, P = $2,000

Rate of interest, r = 3.4%

Time period, t = 4 years

n = 4

Therefore,

[tex]Amount=P(1+\frac{r}{n})^{nt}[/tex]

[tex]Amount=2,000(1+\frac{3.4}{400})^{4\times 4}[/tex]

[tex]Amount=2,000(1+\frac{3.4}{400})^{16}[/tex]

                   = $2,290.05

Hence, account balance after 4 years is $2,290.05.

Answer:

Read the following explanation.

Explanation:

1a- My products idea is the auto-home temperature control system which will benefit the customers to control the temperature of their home in winter time. this product is both automatic means customer can control this system with remote and use of internet as well as manually by changing its settings.

b- The potential customers for this product are based on geographic segmentation in which customers who live in cold countries like Canada, America, Atlanta, Russia will be targeted.

another potential custome segmentation will be based on demographic in which customers who are professionals like doctors, lawyers, or job doers and having average to high income level will be targeted like income level from $50000-above $150000.

2-the three possible way to market my product are-

a-Use of google in which customers will type the name of my product and it will list on top because of SEO and i will rank my product on top list so that customers can click and read about my product on my website easily.

the pro of this that customers will get information easily and place order. this will help to build good image of my product being top at google list.

the con is that this may cost more to put my product on top of search engine list.

b- The use of social media like Fb post, instagram etc in which my product will get advantage of being marketed to wide range of audience at low cost. also there are billions of users on social media so we can reach to them in less time.

the con of this is that use of social media involves other big brands and products already so customers tend to ignore such ads.

c- the third would be use of TV commercials in which we would use celebrity influenece to market my products. the advantage of this is that Customers will be influneced by celebrity power and will order the product. Tv commercials will have customers who are ignored by social media.

the con of this is that this may cost extra to hire celebrity also customers who are to watch Tv shows or movies tend to skip ads.

Answer:

The correct answer is (A)

Explanation:

Customer driven, otherwise called customer-centric, is a way to deal with working together that spotlights on making a positive encounter for the client by amplifying administration as well as item contributions and building connections. A customer-centric method for working together is a way that gives a positive client experience when the deal so as to drive rehash business, upgrade client commitment and improve business development.

Final answer:

The term that best describes a company tailoring its services and products based on customer interactions and preferences is "customer-centric". This approach is exemplified by companies in the hospitality industry like Four Seasons and Ritz-Carlton, which keep detailed customer records to personalize services and enhance guest experiences.

Explanation:

A term that accurately describes a company which customizes its products and services based on customer-generated data, to better meet their preferences during interactions, is customer-centric. This approach is exemplified in the hospitality industry, where companies like Four Seasons Hotels Ltd. and the Ritz-Carlton Company LLC keep detailed records of customer preferences to enhance service quality. For instance, noting a guest's favorite newspaper or pillow type and greeting returning guests with personalized touches are practices that highlight a customer-centric approach. These actions are grounded in a culture that emphasizes detail and precision, leveraging customer data to tailor experiences and foster loyalty.

Answer:

$240

$174

$120

$75

$36

Explanation:

MRP = Change in revenue/Change in Labour

1. The first worker;

From the question, the first worker has 5 units

So, his change in revenue is 50+49+48+47+46 for the 5 units

Change in Revenue = $240

Since the worker remains the same and available all through,the change in Labour = 1 worker

MRP = $240/1

MRP = $240

2.The second worker;

The second worker has 4 units(starting from where the first worker stopped)

So, his change in revenue is 45+44+43+42 for the 4 units

Change in Revenue = $174

Since the worker remains the same and available all through,the change in Labour = 1 worker

MRP = $174/1

MRP = $174

3.The third worker;

The third worker has 3 units(starting from where the second worker stopped)

So, his change in revenue is 41+40+39 for the 3 units

Change in Revenue = $120

Since the worker remains the same and available all through,the change in Labour = 1 worker

MRP = $120/1

MRP = $120

4.The fourth worker;

The second worker has 2 units(starting from where the third worker stopped)

So, his change in revenue is 38+37 for the 2 units

Change in Revenue = $75

Since the worker remains the same and available all through,the change in Labour = 1 worker

MRP = $75/1

MRP = $75

5.The fifth worker;

The second worker has 1 units(starting from where the fourth worker stopped)

So, his change in revenue is 36 for the 1 unit

Change in Revenue = $36

Since the worker remains the same and available all through,the change in Labour = 1 worker

MRP = $36/1

MRP = $36

Answer:

Standard direct labor rate per hour $14

Standard direct labor hours per pound hours 1.5 hours

Standard cost per pound $21

Explanation:

The computation is shown below:

For Standard direct labor rate per hour:

= Price-hourly wage rate + payroll taxes + fringe benefits

= $11 + $1.80 + $1.20

= $14

For Standard direct labor hours per pound hours:

=  Quantity-actual production time hours + rest periods and clean up hours + setup and downtime hours

= 1.1 + 0.25 + 0.15

= 1.5 hours

For Standard cost per pound:

= Standard direct labor rate per hour × Standard direct labor hours per pound hours

= $14 × 1.5 hours

= $21

Answer:

Please see attachment

Explanation:

Please see attachment

Final answer:

For a 90% service level, the ROP is approximately 1207.23 cigars. For a 95% service level, the ROP is approximately 1208.21 cigars. The service level represents the probability of satisfying demand during the lead time, with a higher service level indicating a lower risk of stockouts and unmet customer demand.

Explanation:

a) For a 90% service level, the ROP can be calculated using the formula:

           ROP = (Demand × Lead time) + Z × √(Demand Variance × Lead time Variance)

where Z is the Z-score corresponding to the desired service level. For a 90% service level, Z is approximately 1.28. Plugging in the values, we have:

           ROP = (200 cigars/week × 6 weeks) + 1.28 × √(25 cigars^2/week × 2 weeks^2) = 1200 cigars + 7.23 cigars = 1207.23 cigars

b) For a 95% service level, we use Z = 1.645 (corresponding to a 95% confidence interval). Plugging in the values as before:

           ROP = (200 cigars/week × 6 weeks) + 1.645 × √(25 cigars^2/week × 2 weeks^2) = 1200 cigars + 8.21 cigars = 1208.21 cigars

c) The service level represents the probability that demand will be satisfied during the lead time. A higher service level indicates a lower risk of stockouts and unmet customer demand. In this case, the 95% service level is preferable as it provides a higher degree of confidence in satisfying customer demand.

Answer:

6.78%

Explanation:

Data provided in the question:

Total return i.e nominal rate = 15% = 0.15

Real return = 7.7% = 0.077

Now,

Inflation rate = [tex]\frac{\textup{1 + Nominal rate}}{\textup{1 + Real return }}[/tex]  - 1

on substituting the respective values, we get

Inflation rate = [tex]\frac{\textup{1 + 0.15}}{\textup{1 + 0.077}}[/tex]  - 1

or

Inflation rate = [ 1.15 ÷ 1.077 ] - 1

or

Inflation rate = 0.0678

or

Inflation rate = 0.0678 × 100% = 6.78%

Janet Jello expects the inflation rate to be 7.3 percent over the next year if the investment has a nominal return of 15 percent and she anticipates a real return of 7.7 percent.

The question asks us to figure out the expected inflation rate if an investment returns a nominal interest rate of 15 percent and the anticipated real return rate is 7.7 percent. To find this, we use the formula:

Nominal Interest Rate - Inflation Rate Equals Real Interest Rate

If the real return is expected to be 7.7 percent and the nominal return is 15 percent, we can rearrange the formula to solve for the inflation rate:

7.7% = 15% - Inflation Rate

By subtracting 7.7 percent from both sides, we find that:

Inflation Rate = 15% - 7.7%

Thus, Janet believes the inflation rate will be:

Inflation Rate = 7.3 percent.

Answer:

c. $30,512

Explanation:

Please see attachment

The ending work-in-process balance for Diamond Design Company on September 30 is $32,482, calculated by totaling the costs for jobs 243, 244, and 246 that were still in process at the end of the month.

To calculate the balance in Work-in-Process on September 30 for Diamond Design Company, we will add the cost layers for each job that remained in process at the end of the month. We start with the opening balance of Job 243 and then add the direct materials, direct labor, and overhead applied to the jobs that were not completed within the month.

Here are the calculations:

Adding those amounts gives us the ending work-in-process balance:

$15,584 (Job 243) + $4,000 (Job 244) + $12,898 (Job 246) = $32,482

Therefore, the correct balance on September 30 for work-in-process is $32,482.

Answer:$1200

Explanation:

The maximum interest payable for year one of 2018 is 8% of $15000 which gives $1200.

If the investment income is greater than investment interest expenses of $1200 . The amount of investment interest expenses she can deduct is $1200.

Answer:

Please see attachment

Explanation:

Please see attachment

The table summarizes the total and per-share dividends declared on each class of stock for each year, focusing on preferred and common stock.

To determine the total dividends and per-share dividends declared on each class of stock for each of the six years, we need to calculate the dividends for the preferred stock and common stock separately. For the preferred stock, we multiply the number of preferred shares by the dividend rate. For the common stock, we divide the remaining dividend amount after paying the preferred stock dividends by the number of common shares.

The table below summarizes the data:

Year Total Dividends Pref. Dividends per Share Common Dividends per Share Year 1$24,000.00$1.20$0.20Year 2$48,000.00$2.40$0.40Year 3$108,000.00$5.40$0.90Year 4$132,000.00$6.60$1.10Year 5$168,000.00$8.40$1.40Year 6$216,000.00$10.80$1.80

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Answer

The answer and procedures of the exercise are attached in the image below.  

Explanation  

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.  

Final answer:

Braxton Corp's initial cost of equity is 8.5%. If Braxton Corp takes on 20% debt, the new cost of equity will be 9.54%, and with 40% debt, it will be 11.12%. At 20% debt, the company's WACC and cost of equity for 40% debt need additional calculations involving the WACC formula with the given tax rate and cost of debts.

Explanation:

To answer the student's questions regarding Braxton Corp., we start with the information that the corporation currently has no debt and its Weighted Average Cost of Capital (WACC) is 8.5%, with a tax rate of 35%. Initially, the company's cost of equity is the same as its WACC since it has no debt, so it is 8.5%.

To calculate the new cost of equity after introducing debt, we can use the Modigliani-Miller proposition II with taxes, which identifies that the cost of equity increases with leverage due to the increased risk perceived by equity holders. The formula for the cost of equity when there is debt in the capital structure is:

Cost of equity = cost of equity with no leverage + (debt-to-equity ratio * (cost of equity with no leverage - after-tax cost of debt)).

To find the after-tax cost of debt, we use the formula: After-tax cost of debt = interest rate on debt * (1 - tax rate).

For Braxton Corp, the after-tax cost of debt = 6.7% * (1 - 0.35) = 4.355%.

Let's now calculate the new cost of equity if the firm converts to 20% and 40% debt:

20% Debt: The debt-to-equity ratio = 0.20 / (1 - 0.20) = 0.25

40% Debt: The debt-to-equity ratio = 0.40 / (1 - 0.40) = 0.6667

Using these debt-to-equity ratios, we can calculate the new cost of equity as follows:

At 20% debt:
Cost of equity = 8.5% + (0.25 * (8.5% - 4.355%)) = 9.53625% (rounded to 9.54%)

At 40% debt:
Cost of equity = 8.5% + (0.6667 * (8.5% - 4.355%)) = 11.11523% (rounded to 11.12%)

Lastly, to calculate the WACC for 20% and 40% debt scenarios, we use the WACC formula:

WACC = ((E/V) * Re) + ((D/V) * Rd * (1 - Tc)), where E is the market value of equity, Re is the cost of equity, D is the market value of debt, Rd is the cost of debt, V is the total market value of the firm's financing (E + D), and Tc is the corporate tax rate.

Answer: The correct answer is "A. decreases in aggregate demand (AD).".

Explanation: Keynes believed that there were "sticky" wages and that recessions are caused by decreases in aggregate demand (AD).

Keynes wondered how it was possible that having too many resources there were crises. What was your solution so that there was no excess of resources? Stimulate the demand for those excess resources to be consumed.

Keynesianism is based on state interventionism, defending economic policy as the best tool to get out of an economic crisis. Its economic policy is to increase public spending to stimulate aggregate demand and thus increase production, investment and employment.

Keynesian theory posits that recessions are caused by decreases in aggregate demand (AD), with wage and price 'stickiness' leading to unemployment. Government policy, according to Keynes, should either stimulate or contract the economy through fiscal measures to maintain stability.

According to Keynesian theory, recessions are primarily caused by decreases in aggregate demand (AD), which is answer choice A. Keynesian economics is built on the premise that aggregate demand is often the main driver of economic events, such as recessions, in the short run. Additionally, the theory highlights that wages and prices can be sticky, meaning they do not adjust quickly to decreases in demand. This stickiness can result in increased unemployment during economic downturns, as firms are less able to reduce wages and thus resort to laying off workers instead. Keynesians also believe in the concept of the expenditure multiplier, where an initial change in spending leads to a larger change in overall economic output (GDP).

Moreover, Keynesian policy advocates for government intervention to stabilize the economy. In times of recession, expansionary fiscal policy, such as tax cuts or increased government spending, is recommended to shift the aggregate demand curve to the right. Conversely, during periods of high economic output above potential GDP, the prescription is contractionary fiscal policy, with higher taxes or reduced government spending, to control inflation and shift aggregate demand to the left. This reflects a Keynesian perspective on market forces and the role of government policy in economic stabilization.

Answer:

D) Filtering

Explanation:

Filtering is the act of hearing what one expects or wants to hear instead of what was actually stated. In this case, Brandon assumed none of the team could take vacation time for the next month while what was really said is that only one employee would need to have their part finished before taking vacation time.

The answer is D) Filtering

Answer:

$47,385.34

Explanation:

In this question, we use the future value formula which is shown in the spreadsheet.  

The NPER represents the time period.

Given that,  

Present value = $8,000

Rate of interest = 5%

NPER = 18 years

PMT = $1,000

The formula is shown below:

= -FV(Rate;NPER;PMT;PV;type)

So, after solving this, the answer would be $47,385.34

The sum in the savings account on Angela's 18th birthday would be a total of initial deposit plus interest and the sum of each birthday deposit with its respective compounded interest. This includes basic mathematical operations and the application of simple interest and future value of a series formulas.

In order to calculate the total sum, we need to add the initial deposit with interest, and the sum of each birthday deposit with its respective compounded interest. The amount in the account after the initial deposit of $8,000 would be calculated using simple interest formula, A = P(1+rt), where P is principal amount, r is the rate, and t is the time (A = $8000*(1+0.05*18). For the birthday deposits, since they're deposited annually, we should use the formula for future value of a series (or an annuity), since the amount of each deposit and the interval between deposits are the same. The future value of an annuity formula is: A = PMT * (((1 + r)^t - 1) / r), where PMT is the amount deposited per period, r is the interest rate per period, and t is the number of periods.

Birthday deposits: PMT is $1,000, r is 0.05, and t is 1 to 18 years, calculated separately and summed up since every year has different compound period until their daughter turns 18.

Initial deposit: A = $8000*(1+0.05*18).

The total amount in the account is the sum of these two amounts.

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Answer:

I think the answer is D.

Explanation:

Answer:

(D). Visibly punish unethical acts

Explanation:

Ethics refer to how people conduct themselves morally. Each organization has an Ethical Code they expect their employees to abide by.

When employees act outside an organization's Code of Ethics, then punishing them visibly is a way to serve as a deterrent to other employees.

Employees should also be openly rewarded when they act in accordance to the Code of Ethics to encourage others to do the same.

In this case, Pam's company is using visible punishment to maintain its ethical culture and send a message to the other employees.

Answer:

Bad debt expense = $28000

Ending balance = $4000

Explanation:

given data

Credit sales= $800000

Cash collection = $780,000

Write off = $16,000

rate = 3.5 %

to find out

ending balance of Accounts Receivable is​

solution

first we get Bad debt expense that is express as

Bad debt expense = 800000 × 3.5%

Bad debt expense = $28000

and

Ending balance is express as

Ending balance = Credit sales - Cash collection - Write off     ..............1

put here value

Ending balance = $800000  - $780,000 - $16,000

Ending balance = $4000

Final answer:

The ending balance of Accounts Receivable is calculated $32,000 by adding credit sales to the beginning balance, subtracting cash collections and write-offs, and then adjusting for the bad debts expense calculated by the percent-of-sales method.

Explanation:

The student asked about calculating the ending balance of Accounts Receivable when given the credit sales, cash collected, amount written off, and bad debts expense using the percent-of-sales method. To calculate the ending balance of Accounts Receivable, you must account for the beginning balance, add credit sales, subtract cash collections and write-offs, and adjust for the calculated bad debts expense.

Here's a step-by-step process:

Calculate the bad debts expense using the percent-of-sales method: $800,000 (credit sales) × 3.5% = $28,000.

Determine the amount of Accounts Receivable before the adjustment for bad debts: $800,000 (credit sales) - $780,000 (cash collected) - $16,000 (write-offs) = $4,000.

Add the bad debts expense to the Accounts Receivable before adjustment: $4,000 + $28,000 = $32,000, which is the ending balance of Accounts Receivable.

Answer:

10.64%

Explanation:

The computation of the WACC is shown below:

= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of  common stock) × (cost of common stock)

= (0.40 × 8%) × ( 1 - 30%) +  (0.60 × 14%)

= 2.24% + 8.4%

= 10.64%

Simply we multiply the weightage with its capital structure so that the Accurate weighted cost of capital can be calculated

Answer:

7.915

[tex]23313 {6}^{2} [/tex]

Answer: Multinational company

Explanation:

A multinational company has operations in various companies however the rules of the parent company country of residence are not allowed to interfere negatively on other countries of operations. All other company units in there various domiciliation are allowed to develop research towards tending products to local markets and ensuring adherence to rules various country of domiciliation.

Answer:

$100,000

Explanation:

Data provided in the question:

Number of shares held by Larry = 2,000

Shares outstanding = 20,000

Current value of stock = $50.00 per share

Number of shares to be issued = 5,000

Issuing price = $40.00 per share

Now,

Larry's current investment in the company

= Number of shares held by Larry × Current value of stock

= 2,000 shares × $50.00 per share

= $100,000

Answer:

The demands of an entrepreneur and a professional athlete are more comparative than one may expect.

Explanation:

Professional athlete are required to place in extended periods of time, remain submitted, deal with their bodies, keep an expert notoriety, and deal with their own image. An entrepreneur must work unusual hours, stay with their objectives, deal with themselves, arrange and keep up great associations with sellers and clients, and advance their organisation. So yes they both have similarities and an athlete can work as an entrepreneur because he knows how to work with team members and how to stay on objectives.

Entrepreneurial traits can overlap with characteristics of professional athletes, highlighting similarities and differences in their skill sets.

Similarities between entrepreneurs and professional athletes include traits like drive, determination, and resilience. Athletes often possess strong work ethic and discipline, essential for entrepreneurship. However, entrepreneurship requires additional skills like innovation, adaptability, and risk-taking that may not be as prominent in athletes.

An athlete could be a good prospect for entrepreneurship if they can transfer their competitive mindset and work ethic into business strategies. Teamwork is crucial in entrepreneurial efforts as it allows for diverse skills and perspectives to come together to tackle challenges and drive success.

Answer:

The correct answer is letter "A": Unexpected increases in the number of suppliers.

Explanation:

Frauds or money cleansing usually requires the help of a network of different business interconnected to clear the illegal funds with the excuse of having made commercial activities that never took place. In most cases, accounting documents are faked so that the proceeds of the questionable funds may seem as legal as possible.

In that case, if a company counts with more suppliers and fraud is taking place in the organization, they will have the excuse of making more payments so more funds can go out of the company.

Answer:

0.4 or 40%

Explanation:

The reward-to-volatility ratio, also known as the Sharpe ratio, is defined as the difference between the expected return rate and the risk-free rate divided by the standard deviation.

Expected return = 0.2

Risk-free rate = 0.10

Standard deviation = 0.25

[tex]S=\frac{0.2-0.1}{0.25}\\S=0.4= 40\%[/tex]

The reward-to-volatility ratio is 0.4 or 40%

Answer:

an increase of $3,000 which will be subtracted from net income

Explanation:

an increase of $3,000 which will be subtracted from net income .Increase in Inventory = 10000-7000 = $3000  .Increase in Inventory is reported as a decrease and subtracted from net income  .an increase of $3,000 which will be subtracted from net income

To achieve a retirement income of $4500 per month for 25 years, you would need a nest egg of approximately $625,357.24, and you would need to make monthly deposits of approximately $225.19 during your working years.

To calculate the size of the nest egg needed to achieve a desired monthly yield during retirement, as well as the monthly deposits required, we can use the present value of an annuity formula.

1. Size of the Nest Egg (Present Value, PV):

The formula for the present value of an annuity is given by:

[tex]P V=P M T \times\left(\frac{\left(1-(1+r)^{-n t}\right)}{r}\right)[/tex]

Where:

PV is the present value of the annuity (the size of the nest egg),

PMT is the periodic payment (monthly income during retirement),

r is the periodic interest rate, and

nt is the total number of periods.

In this case:

PMT = $4500 (desired monthly income during retirement),

[tex]r=\frac{7.2 \%}{12}[/tex]  = 0.006 (monthly interest rate), and

nt=12×25 = 300 (monthly payments for 25 years during retirement).

Plug in these values and calculate PV.

[tex]P V=4500 \times\left(\frac{1-(1+0.006)^{-300}}{0.006}\right)[/tex]

First, calculate the value within the parentheses:

[tex]\left(1-(1+0.006)^{-300}\right)[/tex] ≈0.83380

Substitute this value back into the formula:

[tex]P V=4500 \times\left(\frac{0.83380}{0.006}\right)[/tex]

Calculate the expression within the parentheses:

[tex]\left(\frac{0.83380}{0.006}\right)\\[/tex]  ≈ 138.968

Multiply by the monthly payment:

PV = 4500 x 138.968

The result is approximately PV ≈ 625,357.24

2. To find the monthly deposits required, we can use the future value of an annuity formula:

[tex]F V=P M T \times\left(\frac{\left((1+r)^{n t}-1\right)}{r}\right)[/tex]

Where:

FV is the future value (the size of the nest egg),

PMT is the periodic payment (monthly deposit),

r is the periodic interest rate, and

nt is the total number of periods.

In this case:

FV= the size of the nest egg calculated in step 1,

[tex]r=\frac{7.2 \%}{12}[/tex] = 0.006 (monthly interest rate), and

nt = 12×40 = 480 (monthly deposits for 40 years).

Plug in these values and calculate PMT:

[tex]P M T=\frac{\mathrm{PV}}{\left(\frac{\left((1+0.006)^{480}-1\right)}{0.006}\right)}[/tex]

[tex]\frac{\left((1+0.006)^{480}-1\right)}{0.006}[/tex] ≈ 2776.938

Divide PV by this value:

625,357.24 /  2776.938  ≈ 225.19

To achieve a $4500 monthly yield in retirement, a nest egg of approximately $404,035.5 is needed. The monthly deposits required to achieve this nest egg are approximately $32,850.3.

Size of Nest Egg (Future Value of Annuity):

The formula for the future value (FV) of an annuity is:

Future Value (FV) = Monthly Payment (P) × [(1 - (1 + Monthly Interest Rate)^(-Number of Payments)) / Monthly Interest Rate]

Given:

Monthly Payment (P) = $4500

Monthly Interest Rate = Annual Percentage Rate (APR) / 12 = 7.2% / 12

Number of Payments = 12 payments per year × 25 years

Calculating this gives us the size of the nest egg needed, which is approximately $404,035.5.

Monthly Deposits Required:

To find the monthly deposits required, we rearrange the annuity formula:

Monthly Payment (P) = [Nest Egg Size (FV) × Monthly Interest Rate] / [(1 - (1 + Monthly Interest Rate)^(-Number of Payments))]

Given:

Nest Egg Size (FV) = $404,035.5

Monthly Interest Rate = 7.2% / 12

Number of Payments = 12 payments per year × 40 years

Calculating this gives us the monthly deposits required, which is approximately $32,850.3.

Answer

The answer and procedures of the exercise are attached in the following archives.

Explanation  

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

Answer:

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Explanation:

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