The market for widgets is increasing by 15% per year from current profits of $2,000,000. Investing in a design change will allow the profit per widget to stay steady; otherwise the price will drop by 3% per year. If inflation in the economy is 4%, what is the present worth in Year-1 dollars of the savings over the next 5 years? 10 years? The interest rate is 10%.

Q: The stock market has an average annual return of 10% per year. We will consider the annual return to…

A: Present Value(PV) is current value of amount to be received or paid at future date; PV is computed…

Q: 2. ABC Corporation plans to set aside $50,000 per year beginning 1 year from now for replacing…

A: Annual amount (P) = $50,000 Interest rate (r) = 10% Inflation rate (i) = 4% Period (t) = 6 Years

Q: Your project will give you a rate of return of 100% over 15 years. Is this a lot or a little? How…

A: Effective Rate is real rate at which investment value will appreciate over a given period. It shows…

Q: You want to save $800 a month for the next 30 years and hope to earn an average rate of return of 12…

A: The equal series of payment will be annuity. To compute the money after certain point of time in…

Q: A security that costs $89.90 will provide a return of 6.5 percent per year. If you want to keep the…

A: PV=today cost=$89.90FV=Future value=$143.80Interest rate=r=6.5%Required to find out the period…

Q: Consider an investment which pays $2,000 at the end of year 1, year 2, and year 3. In year 4, the…

A: Terminal value at end of year 3 = Cash flow in year 4  / (Interest rate - growth rate) = $5000 / (7%…

Q: Your firm has taken on cost saving measures that will provide a benefit of $11,000 in the first…

A: First year benefits (C) = $11,000 Annual growth rate (g) = - 0.03 (-3%) Interest rate (r) = 0.09…

Q: Suppose you found an investment that earns 6.0% each year. Suppose you want to withdraw 11,000…

A: Present value is the value of future cashflow at todays date discounted at specified rate. formula:…

Q: Suppose you invest $3,000 today and receive $10,000 in 25 years. a. What is the internal rate of…

A: IRRIt is a capital budgeting technique of a discounted cash flow that gives a rate of return is that…

Q: How much is the sum of the present value of the expected return over those periods

A: Cash Flows (Year 1-10) (CF) =  $15,000 per year Annual interest rate (r) = 5% Time Period (t) = 10…

Q: he market interest rate is 9 percent and is expected to stay at that level. Consumers can borrow and…

A: Annuity is regular and periodic instalment for a specific time period. Perpetuity is the annuity…

Q: An investment pays an annual cash flow of $1 forever. The appropriate discount rate is 4% per year.…

A: Annual cash flow (C) = $1Discount rate (r) = 0.04Present value = ?Present value will be the…

Q: You just made an investment in an insurance policy that is guaranteed to pay you $2 million 20 years…

A: The present value is the present worth of the amount that will be paid or received at future.

Q: Company PQR is starting a sinking fund for two future purchases. The risk free rate is 3.2%. They…

A: A sinking fund is a fund that is established to meet future debt obligations. Any individual or…

Q: An investment product promises to pay $500 at the end of the fifth year (year 5), and the payment…

A: Perpetuity:It shows the present value of the cash flows which are payable at equal intervals…

Q: You estimate that by the time you retire in 35 years, you will have accumulated savings of $3.5…

A: b.) For real expenditure , firstly we will calculate real rate of interest using formula :   Real…

Q: An investment is expected to generate cash flows of $20,000 next year (at time t=1), and $10,000 in…

A: Given: Year Particulars Amount 1 Cash inflows $20,000 2 Cash inflows $10,000   Growth rate…

Q: Suppose you have an investment offer that guarantees an average investment gain of $1,000 per year.…

A: The average rate of change describes the rate at which one quantity changes in relation to another.…

Q: In 10 years from now, how many future dollars will have the same buying power as $24,000 today? The…

A: Future value refers to the value of annuity at future date. It is the value determined when…

Q: You have just had a big win on Powerball. You will receive $7,500,000 today, and then receive 35…

A: Present value (PV) is a financial concept used to determine the current worth of future cash flows…

Q: Your organization has been asked to invest in a continuing care retirement center. Your investment…

A: Profitability index = Present value of cash flow / present value of investment

Q: You are offered and investment opportunity that will produce continuous income at a constant rate of…

A: Pressent value:Present value refers to the concept in finance that calculates the current worth of a…

Q: You are thinking of building a new machine that will save you $5,000 in the first year. The machine…

A: To calculate the present value we will use the below formula   Present value = P/(r+d) Where P -…

Q: Suppose you have $100,000 cash today and you can invest it to become a millionaire in 15 years. What…

A: The future value refers to the estimated value of an asset or investment at a specific point in the…

Q: An investment offers $8800 per year for 14 years with the first payment occuring one year from now.…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

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: saver wants $100000 after 10 years and believes it is possible to earn an annual rate of 8% on…

A: Amount required = FV = $100,000No of years = nper = 10 yearsInterest rate = rate = 8%Yearly…

Q: An investment opportunity requires a payment of $620 for 12 years, starting a year from today. If…

A: Present value : The financial concept used to establish the current valuation of future cash flows…

Q: In recent years, the United States has gone from being a “positive savings” notion to a “negative…

A: Borrowings are the liabilities which is used to finance the requirement of the funds. An individual…

Q: Suppose you found an investment that earns 6.0% each year. Suppose you want to withdraw 24,000…

A: Given information: Investment earns 6% Future value is $24,000 Number of years is 4

Q: You are thinking of building a new machine that will save you $1000 in the first year. The machine…

A: Here, First year saving is $ 1000 Growth rate is -2% Interest rate = 5%

Q: If you want to withdraw $4500 in each year for the next 5 years when the interest rate is 20%, what…

A: Annual withdrawal (C) = $ 4500 Interest rate (r) = 20% Period (n) = 5 Years

Q: You are considering a safe investment opportunity that requires a $1,450 investment today, and will…

A: IRR is the break even rate of return at which net present value is zero and cost of capital is the…

Q: An investment of $1,000 was made 35 years ago. What is the amount now at the market interest rate of…

A: FV  =  PV (1 + r)n where, FV  =  Future ValuePV  =  Present Valuer     =  Interest Raten    =  No.…

Q: City Garden Suppliers paid a $2 dividend yesterday. It is expected that the dividend will grow at 11…

A: The current stock price is equal to the sum of the present value of the future dividends.

Q: If the inflation rate is expected to be 3% for the next 10 years, what annual income will be needed…

A: Expected inflation rate is 3% Time period is 10 years Current Annual Income "Present Value" is…

Q: Wells Fargo offers a new savings product: You make the following payments over the next 5 years and…

A: The FV of an investment refers to the cumulative worth of the investment's cash flows at a future…

Q: You purchase an investment for $1,000. You expect it will increase in value at a rate of 9% per…

A: Initial Investment is $1,000 rate is 9% per yeat time period is 12 years   To Find:- Worth of…

Q: (Future value) Sales of a new finance book were 15,000 copies this year and were expected to…

A: Sales this year = S0 = 15,000 copiesAnnual growth rate in sales = g = 20%

Q: PROBLEM SOLVING: A certain amount of money after a decade is said to be worth Php 10,000.00. If the…

A: In this we need to calculate the present value of future value.

Q: A fixed interest investment is growing at 2.9% per year. Its current value is $3500. a.) What will…

A: The concept of the time value of money states that the same amount of money has more value today…

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…

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.