The Diagonal Stamp Company, which sells used postage stamps to collectors, advertises that its average price has increased from $1 to $9 in the last 10 years. Thus, management states, investors who had purchased stamps from Diagonal 10 years ago would have received a 100% rate of return each year. What is the annual rate of return?   The answer in the textbook is given as 23.11%. Can you please show how to get that?

Q: You receive a phone proposal to invest in a new business. The caller informs you that it will take a…

A: Present value of the investment is the cashflows discounted at given discount rates.

Q: Fruit Packers uses packing machines to prepare its products for shipping. Each machine  costs…

A: Equivalent annual cost (EAC) Equivalent annual cost (EAC) is an annual cost to own, maintain and…

Q: Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and…

A: Given:

Q: Biden has purchased a new piano for $5,000. He made a downpament of $500. He paid the balance by a…

A: Loan is the debt borrowed by the financial institute. Monthly payment (Pmt) Formula:…

Q: Macy's Design has daily sales of $42,000. The financial management team has determined that a…

A: Cash flows are the cash generated from the operation of the business organization. In other words,…

Q: A device is purchased for $30,000. It yields a $5,000 yearly net profit for first 4 years and then…

A: Given,  price of device =$30,000

Q: Income from the sale of application software (apps) is usually constant for several years and then…

A: EAA formula: EAA=r×NPV1-1+r-n where, r = rate of interest n = no of years

Q: Southern California Publishing Company is trying to decide whether to revise its popular textbook,…

A: Present value of cash inflows = Cash flows * Present value factor @ 8%.Cash flows :Year 1 =…

Q: One year ago, the Jenkins Family Fun Center deposited $4,400 into an investment account for the…

A: Future value of amount includes the amount being deposited and interest amount account accumulated…

Q: A student looking at a student loan of a size of $10,000, an interest rate of 9%, and a monthly…

A: Loan: It represents the amount borrowed by the borrower from the lender. The borrower makes…

Q: ent. (a) The expected appreciation rate on home price next year equals ______ percent. (Round to…

A: Appreciation rate refers to the rate or pace at which the value of an asset enhances over a course…

Q: Suppose you sell8000 of the 3 pack of lenses in one year. your cost on each 3 pack is $29.95 and you…

A: Net income  includes both operating and non-operating income. Non operating income is the income…

Q: MidAm, a charter airline, purchased five small planes (with 5 or 6 passenger seats each) to serve…

A: The problem requires first to calculate the equivalent present value of the revenue, hence we have…

Q: ACE Design has daily sales of $52,000. The financial management team has determined that a lockbox…

A: By reducing collection time by 2.9 days, the cash balance will be increased by = daily sales x…

Q: 2. You bought a $30,000.00 machine with $6,000.00 down payment and agreed to pay for the rest at 1%…

A: The question is based on the concept of Financial Management. Annuity refers to the amount of equal…

Q: The Portland Stallions professional football team is looking at its future revenue stream from…

A: Tickets sell for in 5th  year =Tickets sell for in 4th years * (1+inflation rate) Tickets sell for…

Q: Grouper Excavating Inc. is purchasing a bulldozer. The equipment has a price of $90,500. The…

A: Total interest=Total Payment-Amount Borrowed   Annual Payment=Amount borrowedPresent value annuity…

Q: An auto dealer has designed a marketing gimmick. They are asking their customers to pay only $119 at…

A: Monthly payment can be calculated with the help of below expression:

Q: You have purchased a canning machine for $7,000. You expect the machine to save your company $3,775…

A: The profitability index (PI) is a financial metric used to evaluate the attractiveness of an…

Q: A software company that installs systems for inventory control using RFID technology spent $600,000…

A: Inventory is the investment in material which is done by the firm. Firm maintains the level of…

Q: You have $100 to invest for 1 year at a rate of 10%. Bread sells for $2 today and that means you can…

A: Given information: Nominal rate is 10% Inflation rate is 4% Value of investment is $100 Current…

Q: After a successful year for your beach shop, you are wondering whether to open one more store this…

A: As there are equal chances of rainy or sunny so the probability of each chance is 0.50

Q: A student looking at a student loan of a size of $10,000, an interest rate of 9%, and a monthly…

A: A loan indicates a sum borrowed. To repay the loan, the borrower would pay the principal amount…

Q: Kermit plans to open a boutique. The initial investment is $10,000. He has to spend $1,500 in annual…

A: Here, Initial Investment = $10,000 Annual operating and maintenance cost = $1,500 Annual revenues =…

Q: You are considering the purchase of a Condo in downtown Toronto that you hope to operate as an…

A: The cost estimation seems to be an important aspect to consider when making a choice about investing…

Q: Econo-Cool air conditioners cost $340 to purchase, result in electricity bills of $190 per year, and…

A: Equivalent Annual Cost (EAC) is the annualized cost of an investment, considering all relevant…

Q: 1. If the company want to achieve target net income $800,000 and the tax rate is 30%, calculate how…

A: We know that under marginal costing  Profit = Sales Revenue - Total Variable cost - Total Fixed…

Q: An electronics retailer is offering a deferred payment plan. A customer can buy a laptop today for…

A: Monthly payment (P) = $ 145 Number of monthly payments (n) = 12 Rate of return = 12% Monthly…

Q: Your home has a value today of $160,000. You expect prices to increase at 8% per year (compounded…

A: In case when the amount is expected to rise at different rates for different time interval, future…

Q: Cullumber Excavating Inc. is purchasing a bulldozer. The equipment has a price of $99,800. The…

A: Total interest payment = Total payment made - Purchase price of equipment where, Total payment made…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.