Harley-Davidson Inc. manufactures motorcycles. During the years following 2018 (the company's 115th anniversary year), the company's gross income can be approximated ¹ by 1.97 -0.13t billion dollars per year, where t is time in years since January 1, 2018. Assume this rate holds through January 1, 2023, and assume a continuous interest rate of 2.1% per year. (a) What was the income of the Harley-Davidson Company in 2018 (t = 0)? What is the projected gross income in 2022 (t = 4)? The gross income in 2018 was 1.97 billion dollars. The projected gross income in 2022 is 1.45 (b) What was the present value, on January 1, 2018, of Harley-Davidson's gross income for the four years from January 1, 2018 to January 1, 2022? Round your answer to two decimal places. ! billion dollars i billion dollars. (c) What is the future value, on January 1, 2022, of the gross income for the preceding 4 years? ! billion dollars

Harley-Davidson Inc. manufactures motorcycles. During the years following 2018 (the company's 115th anniversary year), the company's gross income can be approximated ¹ by 1.97 -0.13t billion dollars per year, where t is time in years since January 1, 2018. Assume this rate holds through January 1, 2023, and assume a continuous interest rate of 2.1% per year. (a) What was the income of the Harley-Davidson Company in 2018 (t = 0)? What is the projected gross income in 2022 (t = 4)? The gross income in 2018 was 1.97 billion dollars. The projected gross income in 2022 is 1.45 (b) What was the present value, on January 1, 2018, of Harley-Davidson's gross income for the four years from January 1, 2018 to January 1, 2022? Round your answer to two decimal places. ! billion dollars i billion dollars. (c) What is the future value, on January 1, 2022, of the gross income for the preceding 4 years? ! billion dollars

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Crane Curtin borrowed $33,300 on July 1, 2022. This amount plus accrued interest at 8% compounded…

A: · Time value of money states that the value of money decreases over time. · The…

Q: Calculate the cost of the equipment, where necessary using any of the three methods (tables,…

A: It is a problem that requires calculating the cost of the equipment under different scenarios of…

Q: present value of $153,000 to be received in 14 years from today. Assume a per annum discount rate…

A: The present value of the amount can be computed as follows:- Present value= Amount/ (1+r)^n Amount =…

Q: GHA Co. made an investment of $10,000 and from this it will receive $800 annually for the next 18…

A: The present value of the annuity factor is used when there is an equal series of cash flows and the…

Q: Larkspur Shoe Store uses the retail inventory method for its two departments: men's shoes and…

A: The cost to retail ratio is calculated as cost of goods available for sale divided by the retail…

Q: 3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements.

A: Interest Expenses :- interest expenses is the cost of Borrowing which is Payable by the Borrower…

Q: $122093

Q: The company has made an investment in government bonds. The bonds will generate an interest income…

A: Government bonds are those bonds which are issued by the governments of a country. It can be issued…

Q: Fenland Company plans to retire $200 million in bonds in five years. To save for the retirement, the…

A: An annuity due involves consistent payments made or received at the start of each period, commonly…

Q: Ted deposited $1750 in an RRSP on March 1, 2014, at 3% compounded quarterly. Subsequently the…

A: Future value refers to the projected or expected value of an asset, investment, or amount of money…

Q: Your company pays 8.76% on short-term debt, 6.31% on long-term debt, and 8.66% on any additional…

A: Interest expenses are the expenses that are incurred by the company against the borrowings. Interest…

Q: On January 1, 2023, Holiday Corporation completed the following transactions (you can assume a 6%…

A: As per accounting concept, all costs directly associated with purchase of assets or making them…

Q: On December 1, 2022, Barnes Inc. borrow $100,000 in the form of an installment loan to purchase a…

A: Notes payable also known as a promissory note because it is a written agreement between two parties…

Q: For the next two items: A company sold a factory on January 1, 2016 for P7,000,000. The entity…

A: When a factory is sold the payment can be received outrightly or over a period of when credit is…

Q: JPX's decides to value a property based on its expected net after-tax monthly cash flow of $7,400,…

A: Prepetuity In the financial system, perpetuity refers to a circumstance in which a stream of cash…

Q: SureWin Company owes an amount of debt to a bank and the bank proposed the following annual payments…

A: The Present Value of a cash flow series: The present value of a cash flow series is calculated as…

Q: Swifty Corporation borrowed $660000 from Liber Bank on January 1, 2019 in order to expand its mining…

A: The interest expense is calculated on the carrying value of note. The annual payment for note…

Q: Assume that in 2018, the first edition of a comic book was sold at auction for $585,400. The comic…

A: The annual increase in value is the increase in price of the asset per year. This is based on the…

Question

Harley-Davidson Inc. manufactures motorcycles. During the years following 2018 (the company's 115th anniversary year), the
company's gross income can be approximated ¹ by 1.97 -0.13t billion dollars per year, where t is time in years since January 1, 2018.
Assume this rate holds through January 1, 2023, and assume a continuous interest rate of 2.1% per year.
(a) What was the income of the Harley-Davidson Company in 2018 (t = 0)? What is the projected gross income in 2022 (t = 4)?
The gross income in 2018 was 1.97
billion dollars.
The projected gross income in 2022 is 1.45
(b) What was the present value, on January 1, 2018, of Harley-Davidson's gross income for the four years from January 1, 2018 to
January 1, 2022?
Round your answer to two decimal places.
i
billion dollars.
! billion dollars
i
(c) What is the future value, on January 1, 2022, of the gross income for the preceding 4 years?
! billion dollars

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction to the calculations of present value and future value of money

VIEW

Step 2: Calculation of Present Value of Gross Income

VIEW

Step 3: Calculation of Future Value of Gross Income

VIEW

Solution

VIEW

Step by step

Solved in 4 steps with 6 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Crane Excavating Inc. is purchasing a bulldozer. The equipment has a price of $103,000. The manufacturer has offered a payment plan that would allow Crane to make 10 equal annual payments of $18,229.37, with the first payment due one year after the purchase. (a) How much total interest will Crane pay on this payment plan? (Round answer to 0 decimal places, e.g. 458,581.) Total interest
Am. 355.
Assume that in 2020, the first edition of a comic book was sold at auction for $691,600. The comic book was originally sold in 1936 for $.10. What was the annual increase in the value of the comic book? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Annual increase = %
Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,673,000, or it can make annual payments of $347,100 for 15 years, each payment due on the last day of the year. Click here to view factor tables. Which method of payment do you recommend, assuming an expected effective interest rate of 10% during the future period? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value of annual payments Recommended payment method Annual Payments 44
On December 28, 2021, Tristar Communications sold 13 units of its new satellite uplink system to various customers for $20,000 each. The terms of each sale were 1/10, n/30. Tristar uses the gross method to account for sales discounts. In what year will income before tax be affected by discounts, assuming that all customers paid the net-of-discount amount on January 6, 2022? By how much? In income before tax will be by
Subject:
A company has had record profits and decided to use some of the profits to pay for manufacturing improvements. If the company can invest $1,600,000.00 in an a annuity will that will make payments at the beginning of every six months for 4 years. If the annuity pays 5.6%, compounded semi-annual. What is the size of payments that the company can expect?The payment amount will be $. (Round to 2 decimal places.)
Waterway Industries will receive $26500 today (January 1, 2020), and also on each January 1st for the next five years (2021 – 2025). What is the present value of the six $26500 receipts, assuming a 8% interest rate?
A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to someone for a period of five years. Note: Although payment of rent is typically considered to be an annuity due, treat it as an ordinary annuity when completing this problem in a spreadsheet or when using present value factors. If the firm charges $38,730 annually to rent the equipment, what are the net present value and the internal rate of return on the investment? Use Appendix D to answer the questions. Use a minus sign to enter negative values, if any. Round your answers for the net present value to the nearest dollar and for the internal rate of return to the nearest whole number. NPV: $ IRR: % Should the firm acquire the equipment? The firm acquire the equipment as the net present value is , and the internal rate of return the firm's cost of capital. If the equipment has no estimated residual value, what must be the minimum annual rental charge for the firm to earn the required 8…
Your company is planning to borrow $1 million on a 5-year, 11%, annual payment, fully amortized term loan. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet What fraction of the payment made at the end of the second year will represent repayment of principal? Do not round intermediate calculations. Round your answer to two decimal places. %
On May 3, 2020, Leven Corporation negotiated a short-term loan of $660,000. The loan is due October 1, 2020, and carries a 5.40% interest rate. Use ordinary interest to calculate the interest. What is the total amount Leven would pay on the maturity date? (Use Days in a year table.) Note: Do not round intermediate calculations. Round your answer to the nearest cent.
Assume that in 2018, the first edition of a comic book was sold at auction for $632,600. The comic book was originally sold in 1935 for $.10. For this to have been true, what was the annual increase in the value of the comic book? Annual increase: ____%