Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,512,000, or it can make annual payments of $289,600 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 8% during the future period
Answers
Answer:
pay $289,600 for 15 years
Explanation:
we have to compare the present value of both options:
option 1:
pay $2,512,000 immediately, with the same present value
option 2:
pay $289,600 for 15 years
PVIFA, 15 periods, 8% = 8.5595
PV of hte annuity = $289,600 x 8.5595 = $2,478,831
they should choose the second option since the present value is lower.
Related Questions
1. Some businesspeople believe that elimination agents and wholesalers reduce their operating expenses. Discuss the opportunity costs associated with eliminating intermediaries.
Answers
1. While eliminating intermediaries may result in reduced operating expenses, businesses need to weigh these savings against the associated opportunity costs. These costs may include the loss of expertise and value-added services, additional responsibilities and expenses, and reduced customer access to products.
Eliminating intermediaries such as elimination agents and wholesalers reduce operating expenses, but it also has associated opportunity costs that businesses need to consider. One of the primary costs is the loss of the expertise and value-added services that intermediaries offer to businesses and customers. Eliminating intermediaries may result in businesses taking on additional responsibilities and expenses such as marketing, distribution, and logistics.
This may result in the need for additional staff and resources to ensure that products reach customers on time. Furthermore, eliminating intermediaries may also result in reduced customer access to products, as intermediaries are often responsible for finding new markets and customer segments. In this case, businesses may need to invest additional resources to market and promote their products to reach new customers.
In conclusion, while eliminating intermediaries may result in reduced operating expenses, businesses need to weigh these savings against the associated opportunity costs. These costs may include the loss of expertise and value-added services, additional responsibilities and expenses, and reduced customer access to products.
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Which of these details can be found on this kind of
informative website? Choose two answers.
activities
donor list
recipients
mission statement
founding members
Answers
Out of all given choices, activities and donor list can be found on the given kind of informative website. Thus, Answer would be Option A and B.
Explain how the above answer can be found on this kind of informative website?
Nonprofit organisations must examine their operations and stop any unsuccessful ones for their own good. And then they need to look at some of these ancillary improvements to find increasingly effective ways to create a workable financial model for their social change effort.
Events can be favorable if they are substantial, permitted to occur, and focused on creating as well as managing current or future important donors (individuals, institutions, corporate pioneers). However, only if you follow up with participants one-on-one to include them in the association as well as in the long term ask them to contribute or restore their commitments.
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Wember Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $400 per month plus $82 per job plus $10 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in September to be 20 jobs and 144 meals, but the actual activity was 16 jobs and 141 meals. The actual cost for catering supplies in September was $3,100. The catering supplies in the planning budget for September would be closest to:
Answers
Answer:
Standard cost Supplies= $3,480
Explanation:
Giving the following information:
The cost formula for catering supplies is $400 per month plus $82 per job plus $10 per meal.
The company expected its activity in September to be 20 jobs and 144 meals.
To calculate the total budgeted cost, we need to multiply the standard cost for the planned production:
Standard cost Supplies= 400 + (82*20) + (10*144)
Standard cost Supplies= $3,480
If Mary owes the IRS $5,000 for her income taxes and is in the 15% marginal tax bracket, what would be her average tax rate if she had taxable income of
$41,667?
O About 12%
O About 13%
O About 14%
O About 15%
Answers
explanation:
How do the location and size of warehouses affect the performance of a firm such as IKEA?
Answers
Answer:
Just guessing here, but could it be that the storage directly affects the layout which can determine the size. Ikea is known as a furniture store, so of course they need space to sell things like beds, couches, etc. In a smaller Ikea you cannot sell as many couches & refrigerators as you could in a larger Ikea, also you may have a larger variety. In turn if a customer enters a smaller Ikea said customer may not find the item they were looking to purchase & as a result may leave. Whereas in a larger Ikea they are more likely to find their item & make a purchase causing the business to gain more profit. Therefore sizing determines product, product determine profit and without a profit there is a much worse performance.
How would economists go about analyzing the likely influence of a forecast of heavy snow on the quantity of tickets sold for the Nutcracker ballet
Answers
Answer and Explanation:
Learning of a snow storm on the day of the ballet will definitely affect ticket sales. Economists should consider the distance, history of attendance and demographics of people attending (young, old or married people) in analyzing turn out for the ballet. Influencing the ticket sales in this situation could also be helped by lower prices for tickets and aggressive promotion and campaigning. This are all under assumption that people will react positively to adverts/promotions and lower prices
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Examine the supply and demand schedules for headphones, How much
would a seller charge if he or she wanted to sell headphones for their
equilibrium price?
Price of headphones
Quantity supplied
$25
100
$50
200
$75
300
$100
400
$125
500
Price of headphones
Quantity demanded
$25
300
$50
200
$75
150
$100
100
$125
75
Answers
Answer:
It's $50
Explanation:
California enacted the Wine Fair Dealing Act, which requires out-of-state suppliers of wine to show good cause if they wish to terminate a distributorship. In-state suppliers of wine are exempt from this requirement and can cancel at will. A New York wine supplier wants to end its relationship with a California firm. The California firm, invoking the operative provision of the Wine Fair Dealing Act, objects because the New York firm has not demonstrated good cause for the termination. The New York supplier argues that this provision of California law violates the commerce clause of the United States Constitution. Is the commerce clause violated? Why?
Answers
The issue at hand is whether the provision of California's Wine Fair Dealing Act, which imposes a requirement on out-of-state wine suppliers to show good cause for terminating a distributorship while exempting in-state suppliers, violates the commerce clause of the United States Constitution.
The commerce clause, found in Article I, Section 8, Clause 3 of the Constitution, grants Congress the power to regulate interstate commerce. It prohibits states from enacting laws that unduly burden or discriminate against interstate commerce.
In this case, the provision of the Wine Fair Dealing Act, which treats in-state suppliers differently from out-of-state suppliers, raises concerns of discrimination against interstate commerce. It creates a distinction based on the supplier's location, granting preferential treatment to in-state suppliers by allowing them to terminate distributorships at will without having to demonstrate good cause.
The commerce clause is designed to promote a unified and free national market by preventing states from erecting barriers or imposing burdens on interstate trade. When a state law discriminates against out-of-state economic interests, it is subject to strict scrutiny and is usually struck down unless it can be justified by a legitimate local purpose that cannot be adequately served by non-discriminatory means.
In this case, it is arguable that the provision of the Wine Fair Dealing Act violates the commerce clause because it places an additional burden on out-of-state wine suppliers and grants preferential treatment to in-state suppliers. This discriminatory treatment may hinder the free flow of goods and interfere with the efficient functioning of the national market.
However, it is important to note that the ultimate determination of whether the commerce clause has been violated would depend on the specific facts of the case and the arguments presented by both parties. Legal analysis and court interpretation would be necessary to reach a definitive conclusion.
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Categorize each scenario as describing a movement along a demand curve or a shift of the demand curve.
a. College students reduce how much detergent they use for each load of laundry in response to higher detergent prices.
b. College students rush and buy discount furniture to take advantage of an unexpected price drop.
c. College students purchase many more energy drinks during finals week than during the rest of the semester.
d. Students eat out more often as the federal government increases how much grant money it provides students.
Answers
a. College students reduce how much detergent they use for each load of laundry in response to higher detergent prices.
(demand curve)
b. College students rush and buy discount furniture to take advantage of an unexpected price drop.
(Shift of a demand curve)
c. College students purchase many more energy drinks during finals week than during the rest of the semester.
(Demand curve)
d. Students eat out more often as the federal government increases how much grant money it provides students.
(Shift or a demand curve)
Companies at the fourth stage of developing their global business
Answers
Answer:
what's the question here?
in what context pf the 4th stage are you referring to
Which of the following is an Internet job search “don’t”?
a.
Use all types of job sites
b.
Apply for jobs that you are not qualified for
c.
Take advantage of the special features available on job sites
d.
Customize your cover letter and résumé
Answers
An Internet job search “don’t” is Apply for jobs that you are not qualified for.
What is Internet job search?The internet job search is an application engine that allows perspective job seekers search for available jobs, using the internet.
Internet job search has to do with searching for available jobs or vacancy that suit you qualifications and experience online.With Internet unemployed candidate can find or search for available jobs or vacancy posted by hiring managers or employers.To apply for jobs that your are qualified means that you have all the requirements that the job role entails and your qualifications, skills and experiences suit the job.Applying for jobs your are best qualified for is the best as this will enables you to show case your skills and experience.Learn more about Internet job search here: https://brainly.com/question/11183908
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Answer:
b
Explanation:
right on edge
Determine aggregate expenditures (AE) in this economy when real GDP (Y) is equal to $1,500 billion, $2,000 billion, and $2,500 billion.
When Y = $1,500 billion, AE =
billion.
When Y = $2,000 billion, AE =
billion
When Y = $2.500 billion, AE =
billion.
Answers
Answer:
a) When Y = $1,500 billion, AE =$1050 billion
b)When Y = $2,000 billion, AE = $1400 billion
c) When Y = $2.500 billion, AE =$1750 billion
Explanation:
As we know,
Yd = Y- T
Y = national income (or GDP)
T = Tax Revenues = 0.3Y
a) When Y = $1,500 billion, AE = $1,500 -0.3*$1,500 = $1050 billion
b) When Y = $2,000 billion, AE =$2,000 - 0.3*$2,000 = $1400 billion
c) When Y = $2.500 billion, AE = $2.500 - 0.3 * $2.500 = $1750 billion
Assuming the economy to operate in equilibrium, the aggregate expenditure model explains that GDP is equal to the Aggregate expenditure. Therefore, the solutions are:
Y = $1,500 billion, AE = $1,500 billion.Y = $2,000 billion, AE = $2,000 billion.Y = $2,500 billion, AE = $2,500 billion.What is the aggregate expenditure model?The aggregate expenditure model explains the relationship between GDP and planned spending. The model states that:
\(\rm GDP = Planned \:spendings\)
Therefore the Aggregate expenditure for the real GPDs is:
Y = $1,500 billion, AE = $1,500 billion.Y = $2,000 billion, AE = $2,000 billion.Y = $2,500 billion, AE = $2,500 billion.Learn more about the aggregate expenditure model here:
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The Assembly Division of American Car Company has offered to purchase 90,000 batteries from the Electrical Divison for $104 per unit. Currently, Electrical Division is producing 250,000 batteries per year and the production costs per battery are as follows:
Electrical Division:
Direct materials, $40
Direct labor, 20
Variable factory overhead, 12
Fixed factory overhead, 40
Total, $ 112
The Electrical Division has been selling 250,000 batteries per year to outside buyers at $136 each. Capacity is 250,000 batteries per year. The Assembly Division has been buying batteries from outside sources for $130 each.
A. What is the transfer price range?
B. From the company's perspective, if a transfer is made, how much more or less will firm profits be?
Answers
A. The transfer price range is between $112 and $136.
B. If a transfer is made at $130, the firm profits will reduce by $1,500,000.
What is an acceptable transfer price?
The acceptable transfer price ranges between the variable costs of the producing department or the variable costs plus a calculated opportunity cost.
The opportunity cost represents the lost cost with the transfer when the division could have gone ahead with an external sale instead.
Data and Calculations:Offer from the Assembly Division = 90,000 batteries
Offer transfer price = $104 per unit
Current production per year = 250,000 units
Current external selling price = $136 per unit
External cost per unit = $130
Production Costs of the Electrical Division:Direct materials, $40
Direct labor, 20
Variable factory overhead, 12
Total variable costs per unit = $72
Opportunity cost per unit = $64 ($136 - $72)
Fixed factory overhead, 40
Total, $ 112
A. The transfer price range is between $112 and $136.
B. If a transfer is made at $130, the firm profits will be less by $1,500,000 (250,000 x $130 - $136).
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Joshua borrowed $1,000 for one year and paid $100 in interest the bank charged him a service charge of $10 what is the finance charge on this loan
Answers
Answer:
1000-100-10 = 890 dollars left
He needs 110 dollars to pay the money he borrowed back.
Explanation:
hope this helps
$890 is the finance charge on this loan. As Joshua borrowed $1,000 for one year and paid $100 in interest the bank charged him a service charge of $10.
What is meant by finance charge?The financing charge is the cost of consumer credit stated in monetary terms. It covers any charges made by the lender as a condition or event of extending credit that are paid directly or indirectly by the client.
A finance charge is the total cost of borrowing money, including interest and other costs. It could be a percentage of the loan balance or a fixed charge imposed by the company. Credit card companies use a variety of formulas to compute finance charges.
The most common type of finance charge is the interest you accrue on the balance of your credit card each month if you don't pay it off in full.
Thus, it is $890.
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Paul’s grocery received 1,000 pounds of onion at $0.11 per pound. On the average, 3% of the onions will spoil before selling. Find the selling price per pound to obtain a makeup rate of 180% based on cost.
Answers
The selling price per pound for onions to obtain a makeup rate of 180% based on cost is $2.0350.
What is the selling price per pound for onions?Total Cost = Quantity * Cost per pound
Total Cost = 1,000 pounds * $0.11/pound
Total Cost = $110
Spoilage Quantity = 3% of Quantity
Spoilage Quantity = 3% of 1,000 pounds
Spoilage Quantity = 0.03 * 1,000 pounds
Spoilage Quantity = 30 pounds
Effective Quantity = Quantity - Spoilage Quantity
Effective Quantity = 1,000 pounds - 30 pounds
Effective Quantity = 970 pounds
Makeup Rate = 180%
Selling Price per pound:
= (Total Cost * Makeup Rate) / Effective Quantity
= ($110 * 1.80) / 970 pounds
= $2.03505/pound.
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which is better Window 11 or 10?
Answers
Answer:
Window 10 is better then 11, so i recommand skip 11
Explanation:
What are some tasks commonly performed in Regulation jobs? Check all that apply.
Answers
Answer:
C,E,F. C-Gary attends a state fair to sell his handmade clothing in a booth. E-Yolanda uses a computer tablet to draw an illustration for a textbook. F-Shirley has a meeting with a customer to discuss a wedding she will be photographing.
Explanation:
I just took the instruction
Answer:
The correct answer is A D E F
Explanation:
Good luck, I did the instruction!
Match each federal law in Column A to the protection it gives to consumers in Column B.
Column A:
1) Requires banks to give customers documents explaining the rules and policies of a savings account.
2) Ensures financial institutions protect your personal information.
3) Requires creditors to provide written rules to borrowers about the costs and fees associated with the credit or a loan.
4) Allows you to dispute incorrect information on paper bank or credit card statements.
5) Allows you to dispute incorrect information on an electronic bank or credit card statements.
6) Allows you to receive a free copy of your credit report.
7) Requires debt collectors to follow fair guidelines.
Column B:
Gramm-Leach-Bliley Act
Truth in Savings Act
Truth in Lending Act
Fair Credit Billing Act
Electronic Funds Transfer Act
Fair Credit Reporting Act
Fair Debt Collection Practices Act
Answers
The correct matching of the federal laws are given below:
What is the matching of the federal laws?Truth in Savings Act requires banks to give customers documents explaining the rules and policies of a savings account.
Gramm-Leach-Bliley Act ensures financial institutions protect your personal information.
Truth in Lending Act requires creditors to provide written rules to borrowers about the costs and fees associated with the credit or a loan.
Fair Credit Billing Act allows you to dispute incorrect information on paper bank or credit card statements.
Electronic Funds Transfer Act allows you to dispute incorrect information on electronic bank or credit card statements.
Fair Credit Reporting Act allows you to receive a free copy of your credit report.
Fair Debt Collection Practices Act requires debt collectors to follow fair guidelines.
These federal laws provide different protections to consumers, from access to information about savings and loans, to the right to dispute errors on credit card statements, to fair debt collection practices.
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Lube Oil, a chain of automobile service stations, reports
net income of $100 million after depreciation of $50
million. The firm has capital expenditures of $80 million, and the noncash working capital increased from $25 to $40 million, FCFF=55million. Lube Oil paid a dividend of $20 million and bought back $25 million in stock. Estimate how much the cash balance of the firm changed during the year
Answers
Since the company is entirely funded by equity, its FCFF would be equal to its FCFE, which is $55 million. Cash Balance Change for the Year = $25 Million The business can refund 5% of shareholders funds
Whose funds are shareholders?The term "shareholders' funds" describes the portion company's equity that is owned by the shareholders. The quantity of shareholders' funds provides a rough estimate of how much shareholders might hypothetically get in the event of a business's liquidation.
Cash Flows towards Stock Holders = Change in Cash Balance throughout the Year + Free Cash Flows towards Equity during the Year
Change of Cash Balance for the Year = $70,000,000-$45,000,000
Cash Balance Change for the Year = $25 Million
What distinguishes equity from shareholders' funds?Equity is distinct from shareholders' equity. While the term "equity" normally refers to a public company's ownership, "shareholders' equity" refers to the difference between a company's total assets and total liabilities as shown on its financial statements.
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Allison lives in the United States and has just retired. It is the end of October 2018. She has long had dreams of cruising the fjords on the west coast of Norway, visiting Buckingham Palace in the United Kingdom, seeing the cherry blossoms in Japan, and going to the top of the Eiffel Tower in France. She last considered all four options on New Year's Day 2008. She would like to select her trip based on which country´s currency has subsequently weakened the most against the U.S. dollar. Where should she go on vacation?
Answers
Answer:
In 2015, an accounting gimmick gave Ireland a 26% growth rate in GDP. What does this event reflect about the nature of GDP?
Click card to see definition
If the measurement of economic activity evolves, GDP can change.
Explanation:
Based on the weakened conditions of a currency exchange against the U.S. Dollar between 2008 and 2018, it would be advisable for Allison to go on a vacation for visiting Buckingham Palace in the United Kingdom.
What is the significance of currency exchange?A currency exchange can be referred to or considered as the rate at which the currency of one country compares with the currency of any other country. U.S. Dollar is currently the strongest currency in the world.
When a comparison between the currencies like the American Dollar and Euros is done, it is found that there is a degrowth in the value of Euros against the dollars, and thus, vacation in such country will be cheaper for Allison to visit to.
Therefore, the significance regarding currency exchange has been aforementioned.
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Suppose you own a bicycle but haven't found the time to ride it much lately. These days, it is only worth $25 to you. One of your close friends, who recently got a job at the college bookstore two miles down the road, wants to take it off your hands. He offers you $70 for the bicycle, and you gladly accept. Your friend is also happy because he thinks the bicycle is worth $94 . How much total value was created from this trade? $
Answers
The total value created from this trade can be calculated by subtracting the value of the bicycle to you from the value of the bicycle to your friend and adding it to the value of the bicycle to you.
The value of the bicycle to you is $25 and the value of the bicycle to your friend is $94.
Therefore, the total value created from this trade is: $94 - $25 + $70 = $139
So, the total value created from this trade is $139.
Who manages the company at transnet
Answers
The company at Transnet is managed by the Government of the Republic of South Africa and is the custodian of rail, ports, and pipelines.
Large South African pipeline, port, and rail firm Transnet SOC Ltd is headquartered in Johannesburg's Carlton Center. On April 1st, 1990, a limited company was established. The Department of Public Enterprises, or DPE, of the South African government, owns the bulk of the company's equity.
The goal of Transnet is to maintain an internationally competitive freight network that supports sustained economic growth and diversification in the nation. Transnet Pipelines, formerly known as Petronet, is currently providing transportation services for petroleum and gas products over variable distances to two important industries (fuel and gas).
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When you set up an informational interview, you need to think about your objectives. For one thing, you want to gain ____________
from the person that you’re interviewing to help you learn about the career field. The questions that you choose to ask will help you learn the information that interests you most. You can also ____________
which will help you have a better chance of receiving a job offer in the future. You can follow up with this individual and learn about positions that become available.
Answers
Answer:
Firsthand information, Expand your professional network
Explanation:
Plato
In the recent times, which of the following factors is making purchasing harder for some firms?
Answers
Answer: a) The expanding number of purchasing options
Explanation:
Fuelled by Globalization and population growth, the economy keeps growing and adding more market participants. This has led to an increased number of purchasing options for buyers.
This has made purchasing harder for some firms because these purchasing options keep coming up with better ways and more incentives to enable them to sell more of their goods than the next one which leads to so many attractive options in the market that one is unable to decide which to pick easily.
(d) consider the following scenarios: scenario 1 scenario 2 scenario 3 scenario 4 scenario 5 variable cost/book $7 $10 $11 $8 $13 access price $49 $40 $45 $50 $55 demand 3,000 2,000 4,500 6,000 1,000 for each of these scenarios, the fixed cost remains $150,000. use scenario manager to generate a summary report that gives the profit for each of these scenarios. which scenario yields the highest profit? which scenario yields the lowest profit? for subtractive or negative numbers use a minus sign. _______ yields the highest profit of $ ________
_______ yields the lowest profit of $ ________
Answers
With a fixed cost of $150,000 and Scenario Manager, Scenario 3 produces the largest profit of $1,457,500 while Scenario 5 produces the lowest profit of -$236,500.
Can the majority of scenarios be created using the scenario manager?To compare and evaluate data, you can combine several scenarios from various sources using the scenario manager. For instance, a business can opt to compare operating cost information from several divisions.
What does Microsoft Scenario Manager and Goal Seek do?Goal Seek in Excel: What is it. What-If Analysis tool Goal Seek in Excel displays how one number in a formula affects another. More specifically, it establishes the value that must be entered in an input cell to produce the intended formula result.
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Which statement BEST matches the image. Cannot be used more than once. < < soda soda soda 个 orange juice • A orange juice • A orange juice A 1. Inefficient / Underutilization 2. Impossible / Unobtainable Technological advances in production 3. 4. Efficient Production
Answers
We can see here that the statement that best matches the image is Inefficient production / Underutilization.
What is inefficient production?Inefficient production refers to a situation where resources are not utilized optimally or where the production process does not achieve the highest possible output given the available resources and technology. It implies that the production process is not operating at its maximum efficiency or effectiveness.
Addressing inefficiencies in production is crucial for organizations to enhance productivity, reduce costs, improve competitiveness, and maximize their output.
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There are many advantages to saving to buy something that you want rather than borrowing money that must be
paid back. Which of the following is an advantage of borrowing money rather than saving to buy something?
Answers
While there are certainly advantages to borrowing money, saving up to buy something is a wise financial choice that can ultimately lead to less stress and better financial health. This is because there are already many advantages to borrowing money, such as being able to obtain the item or service immediately without having to wait and save up for it.
Borrowing money can also help build credit if payments are made on time, and can provide a way to finance larger purchases that would be difficult to save up for. On the other hand, saving up to buy something has its own advantages. Firstly, there is no interest to pay, which means that the item will ultimately cost less. Additionally, saving up for something teaches financial discipline and can help develop better money management habits.
Saving up for something can also give a sense of accomplishment and satisfaction once the item is finally obtained. Furthermore, borrowing money can lead to debt and financial strain if the borrower is unable to make the payments on time. In contrast, saving up for something ensures that the item is paid for in full and there are no ongoing financial obligations.
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Lamar has budgeted to pay $150 each month on his credit card which has a $4,938 balance and has an annual finance rate of 19.9%. If he wants to pay the credit card off in 1 year, how much would he have to increase his monthly payment by?
Answers
Answer:
$303
Explanation:
To find the answer, we first convert the 19.9% annual rate to a monthly rate. The conversion results in a 1.5% monthly rate.
Next, we use the present value of an annuity formula to find the answer:
$4,938 = X [1 - (1 + 0,015)^-12] / (0,015)
$4,938 = X (10,9)
$4,938 / 10,9 = X
$453 = X
So, to pay off the credit card balance in one year, the monthly annuity is $453.
$453 - $150 = $303
So, the additional amount that Lamar would have to pay is $303
The amount that should increase the monthly payment is $303.
Calculation of the increment:Since Lamar has budgeted to pay $150 each month on his credit card which has a $4,938 balance and has an annual finance rate of 19.9%.
here we need to used the present value of an annuity formula
So,
$4,938 = X [1 - (1 + 0,015)^-12] / (0,015)
$4,938 = X (10,9)
$4,938 / 10,9 = X
$453 = X
Now the increment amount should be
= $453 - $150
= $303
So, the additional amount that Lamar would have to pay is $303
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1.Why is knowledge of consumer behavior important to the marketer?
Answers
The knowledge of consumer behavior is extremely important to the marketer in order to provide the customers with best possible products and earning profit for himself sideways.
CONSUMER BEHAVIOR is the study of consumers and the processes they use to select the product. It particularly deals with the psychological of the customer i.e., What the think? What they want? What are the trends they are interested in? At what price do they feel comfortable? And so on.
When the marketer understands the mental state of the consumer then he/she becomes fit to earn and compete with his fellow marketers. This enables him to provide the customers with the products of their choice at reasonable prices. This is how he sustains in market and earns profit.
Example: a marketer understands that customers are attracted by discounts. So he would increase the actual cost of product and increase the discount price. The selling price is not changed but since the customer thinks he is getting more discount, he is attracted.
Consumer Behavior is of great significance to marketers because it helps them to survive in the industry. It helps them to analyze business trends and helps to keep up with their competitors. It also helps to retain their customers.
Consumer buying behavior refers to the analysis of consumers' actions when selecting whether to get a good that meets their needs. it's an investigation into how customers behave and what motivates them to purchase and use particular goods.
The study of consumer purchasing behavior is crucial for marketers because it helps them comprehend what customers anticipate from them. Understanding what prompts a consumer to get a product is useful.
The importance of consumer behavior to marketers is discussed below:
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purchases a wellpoint pump connected to a skid-mounted diesel engine for $14,000. Its market value for salvage purposes decrease by 30 percent each year. When installed on a construction job, a wellpoint system operates virtually 24/7, and operating and maintenance costs will be $3,500 the first year, increasing by $600 each year thereafter. What is the optimum replacement interval if MARR before taxis15%
Answers
Replace the pump at the end of year 3 to maximize the net present value of the cash flows associated with the pump.
Describe optimum replacement interval?Optimum replacement interval refers to the point in time at which it becomes most economically feasible to replace an asset due to factors such as obsolescence, wear and tear, or declining performance. It is the point at which the present value of the cost of owning and maintaining the existing asset is equal to the present value of the cost of replacing it with a new asset.
To find the optimum replacement interval, we need to determine the year in which the present worth of the cash flows associated with keeping the pump is equal to the present worth of the cash flows associated with replacing the pump. We can calculate the present worth of each alternative using the MARR of 15%.
Let's assume that the wellpoint pump has a useful life of 5 years.
Present worth of keeping the pump:
PW(keep) = -14,000 - 3,500(P/A,15%,1) - 4,100(P/A,15%,2) - 4,900(P/A,15%,3) - 3,430(P/A,15%,4) - 2,401(P/A,15%,5)
PW(keep) = -14,000 - 3,500(0.8696) - 4,100(0.7561) - 4,900(0.6575) - 3,430(0.5718) - 2,401(0.4972)
PW(keep) = -14,000 - 3,042.32 - 3,105.96 - 3,218.50 - 1,960.97 - 1,194.43
PW(keep) = -26,522.18
Present worth of replacing the pump:
PW(replace) = -20,000 - 600(P/A,15%,1) - 900(P/A,15%,2) - 1,215(P/A,15%,3) - 1,457.25(P/A,15%,4)
PW(replace) = -20,000 - 600(0.8696) - 900(0.7561) - 1,215(0.6575) - 1,457.25(0.5718)
PW(replace) = -20,000 - 521.76 - 680.49 - 798.26 - 833.34
PW(replace) = -22,833.85
Therefore, the present worth of keeping the pump is lower than the present worth of replacing the pump. We should replace the pump at the end of year 3 to maximize the net present value of the cash flows associated with the pump.
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