A business is deciding whether to give an end-of-year bonus of $5000 each year for the next four years to an employee, in order to increase the number of sales that employee makes. What is the minimum extra profit the employee must generate this year for the bonus to be worthwhile over the next four years, if the discount rate is 7%? OA. $18,600 OB. $16,936 OC. $12,263 OD. $14,480 O E. $20,000

43. A small business owner contributes $3000 at the end of each quarter to a retirement account that earns 8% com- pounded quarterly. (a) How long will it be until the account is worth $150,000? (b) Suppose when the account reaches $150,000, the business owner increases the contributions to $5000 at the end of each quarter. What will the total value of the account be after 15 more years?

A business promises to pay the investor of $2,000 today for a payment of $500 in one year's time, $1,000 in two years' time and $1,000 in three years' time. What is the present value of this business opportunity if the interest rate is 3% per year? A. $412 B. $343 C. $172 D. $549

Choose the best retirement plan for the employee from among those presented below. Effective interest is 12.68% pa.a. P1.4M now b. P64,000/month for 2 years c. P1.65M on the 18th month d. P100,000/month for 1 year plus P400,000 after one year

None

1) Your job pays you only once a year, for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $75,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 10 percent of your annual salary in an account that will earn 9.5 percent per year. Your salary will increase at 3.4 % per year throughout your career. How much money will you have on the date of your retirement 35 years from today? Give typing answer with explanation and conclusion

You have just started working at a new job. You are making $3500 gross per month and want to save 5% of your gross earnings each month in a Roth IRA. You found an account that is averaging 6% APR. You plan to leave the money in the account for 20 years. How much will you have in the account after 20 years?   A. $80,857.16 B. $23,465.46 C. $3,671.35 D. $77,249.74

A university graduate earns a starting salary of $50,000 per year, and expects to receive a 5% increase in salary in each of the next 4 years. If the inflation rate is 5% during the 4 years, what will be her real income in terms of today’s dollars at the end of 4 years? a. $55,987.32 b. $60,000.00 c. unchanged, $50,000 d. $63,123.85

Now assume that it is several years later. The brothers are concerned about the firm’s current credit terms of net 30, which means that contractors buying building products from the firm are not offered a discount and are supposed to pay the full amount in 30 days. Gross sales are now running $1,000,000 a year, and 80% (by dollar volume) of the firm’s paying customers generally pay the full amount on Day 30; the other 20% pay, on average, on Day 40. Of the firm’s gross sales, 2% ends up as bad-debt losses. The brothers are now considering a change in the firm’s credit policy. The change would entail: (1) changing the credit terms to 2/10, net 20, (2) employing stricter credit standards before granting credit, and (3) enforcing collections with greater vigor than in the past. Thus, cash customers and those paying within 10 days would receive a 2% discount, but all others would have to pay the full amount after only 20 days. The brothers believe the discount would both attract additional customers and encourage some existing customers to purchase more from the firm—after all, the discount amounts to a price reduction. Of course, these customers would take the discount and hence would pay in only 10 days. The net expected result is for sales to increase to $1,100,000; for 60% of the paying customers to take the discount and pay on the 10th day; for 30% to pay the full amount on Day 20; for 10% to pay late on Day 30; and for bad-debt losses to fall from 2% to 1% of gross sales. The firm’s operating cost ratio will remain unchanged at 75%, and its cost of carrying receivables will remain unchanged at 12%. To begin the analysis, describe the four variables that make up a firm’s credit policy and explain how each of them affects sales and collections.

Suppose you have $2,200 and plan to purchase a 10-year certificate of deposit (CD) that pays 10.9% interest, compounded annually. How much will you have when the CD matures?   a. $6,358.50     b. $6,190.68     c. $5,582.22     d. $6,976.63     e. $2,439.80