Based on the calculated NPVs, Project A has an NPV of R4,304,324, while Project B has an NPV of R1,694,954. Therefore, at face value, Project A appears to be the better financial investment as it has a higher NPV.
To calculate the Net Present Value (NPV) for Projects A and B, we need to discount the cash flows from each project using the required rate of return of 10% per annum. The NPV is the sum of the present values of the cash flows.
For Project A:
The initial investment is R10 million, and the cash flows of R3,250,000 per annum are received over 4 years. Using a discount rate of 10%, we can calculate the present value of each cash flow using the formula:
PV = Cash Flow / (1 + Discount Rate)^n
where PV is the present value, Cash Flow is the cash flow for the respective year, Discount Rate is the required rate of return, and n is the number of years.
PV(A1) = 3,250,000 / (1 + 0.10)^1 = R2,954,545
PV(A2) = 3,250,000 / (1 + 0.10)^2 = R2,686,777
PV(A3) = 3,250,000 / (1 + 0.10)^3 = R2,442,525
PV(A4) = 3,250,000 / (1 + 0.10)^4 = R2,220,477
Now, we can calculate the NPV for Project A by subtracting the initial investment from the sum of the present values of cash flows:
NPV(A) = -R10,000,000 + R2,954,545 + R2,686,777 + R2,442,525 + R2,220,477 = R4,304,324
For Project B:
The initial investment is R5 million, and the cash flows of R1,500,000 per annum are received over 5 years. Using the same discount rate of 10%, we can calculate the present value of each cash flow:
PV(B1) = 1,500,000 / (1 + 0.10)^1 = R1,363,636
PV(B2) = 1,500,000 / (1 + 0.10)^2 = R1,239,669
PV(B3) = 1,500,000 / (1 + 0.10)^3 = R1,127,881
PV(B4) = 1,500,000 / (1 + 0.10)^4 = R1,027,164
PV(B5) = 1,500,000 / (1 + 0.10)^5 = R935,604
The NPV for Project B can be calculated as:
NPV(B) = -R5,000,000 + R1,363,636 + R1,239,669 + R1,127,881 + R1,027,164 + R935,604 = R1,694,954
Based on the calculated NPVs, Project A has an NPV of R4,304,324, while Project B has an NPV of R1,694,954. Therefore, at face value, Project A appears to be the better financial investment as it has a higher NPV.
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If this price is increased by %, what is the approximate percentage change in demand?
Price elasticity is a measure of how responsive the quantity demanded or supplied of a good is to a change in its price. It is computed by dividing the percentage change in quantity demanded (or supplied) by the percentage change in price.
Elasticity can be categorized into five broad groups: perfectly elastic, elastic, perfectly inelastic, inelastic, and unitary. A demand or supply is considered elastic if the elasticity is greater than one, which means that there is a high responsiveness to changes in price.
Unitary elasticity is when the percentage change in quantity demanded (or supplied) is equal to the percentage change in price.
Understanding price elasticity is crucial in economics as it helps determine the behavior of consumers and producers in response to changes in price.
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The Bradshaw family has $200,000 of total assets and $140,000 of liabilities. What is their net worth?
Malleable
Measurable
Maintainable
Manageable
Answer: $60,000
Explanation:
The Net worth of a person or people can be calculated by deducting their liabilities from their total assets.
The net worth of the Bradshaw family is therefore;
= 200,000 - 140,000
= $60,000
The options given are not for this question. There is a similar question which asks what the M in the Goal-setting acronym S.M.A.R.T stands for.
The answer to that is Measurable.
breilfy explain the differenc between discentionary and mandatory government spending
Answer:
The difference between discentionary and mandatory government spending is whether spending is dictated by prior law or voted on in the annual appropriations process.
Explanation:
Discentionary spending is money formally approved by the government during the appropriations process each year.
Mandatory spending is based on laws previously enacted that dictate the money budgeted for spending each year.
Discretionary government spending refers to a type of spending where the spending budget is subject to change yearly as determined by Congress, while mandatory government spending refers to the portion of the federal budget that is required by law and does not require annual congressional approval.
What is government spending?The term government spending refers to the use of public funds by a government to pay for various goods, services, and programs that are intended to benefit society.
There are basically two type types of government spending:
discretionarymandatoryFor example, spending on things like defense, education, and transportation constitutes discretionary spending as the amount to be spent each year can change based on the discretion of Congress. While spending on things like social security and medicare constitutes mandatory spending as they require no congressional approval.
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The Americans with Disabilities Act defines disabled as:
a. persons with permanent physical and mental problems
b. anyone with a physical or mental impairment that substantially limits one or more major life activities
c. individuals with physical impairments only
d. those who cannot work
is this statement true or false? all states have financial responsibility laws. responses true true false false
Financial accountability rules are present in all 50 states. Due to these rules, drivers must demonstrate that they have the resources to pay for any damages they may be responsible for in a mishap. This assertion is true.
The purchase of automobile insurance that satisfies the state's minimal requirements is one method to adhere to these rules. State-specific guidelines and procedures for demonstrating financial accountability, however, differ.
For drivers to be able to pay for any damages they may cause in a mishap, financial accountability rules are in place. State-by-state variations in these laws apply, but generally speaking, drivers must show that they have the resources to cover any losses they may cause.
One way to comply with these laws is by purchasing car insurance that meets the state’s minimum requirements. However, there are other ways to comply with financial responsibility laws as well. For example, some states allow drivers to post a bond or make a cash deposit as proof of financial responsibility. In some cases, businesses may be allowed to self-insure their fleet of vehicles.
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why is it important that decision-making starts by recognizing that a problem exists?
Answer:
Explanation:
Decision-making starts by recognizing that a problem exists.
When we recognize the problem, then we could easily look out for solutions and make decisions accordingly which increases the decision-making ability of a person.
We research and gather problems and information then we need to identify solutions following which we can make decisions accordingly,
briefly describe what is meant by the organizational structure and explain any three examples of organizational structure used by businesses
Explanation:
Organizational structure : Framework for managers which shows the division of responsibilities and roles played by each stakeholder
Examples :How the business carries it self
: Does the business have ethical issues
: Does the business have a code of conduct
A four-step process for evaluating situations where the correct action is in question so that one can act appropriately and defend one's actions is called:
a. professional ethics.
b. ethics consultation.
c. ethical analysis.
d. ethical problem-solving.
The concise answer is c. ethical analysis. Ethical analysis refers to a four-step process that helps individuals evaluate situations where the correct action is uncertain.
This process allows individuals to act appropriately and defend their actions by considering the ethical implications of a situation and making informed decisions based on ethical reasoning. Identify the ethical dilemma: Recognize that there is a situation where ethical considerations are at stake and that there may be conflicting values or principles involved.
Gather relevant information: Collect all the necessary facts and information related to the situation, including the perspectives and interests of all parties involved.
Evaluate ethical options: Consider different possible courses of action and evaluate them against ethical principles, standards, and values. This step involves analyzing the potential consequences, assessing the rights and responsibilities of individuals, and examining the fairness and justice aspects of each option.
Make a decision and defend it: Based on the ethical analysis conducted, choose the most ethically justifiable action and be prepared to explain and defend that decision by articulating the ethical reasoning behind it.
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Next week, Super Discount Airlines has a flight from New York to Los Angeles that will be booked to capacity. The airline knows from past history that an average of 35 customers (with a standard deviation of 24) cancel their reservation or do not show for the flight. Revenue from a ticket on the flight is $134. If the flight is overbooked, the airline has a policy of getting the customer on the next available flight and giving the person a free round-trip ticket on a future flight. The cost of this free round-trip ticket averages $263. Super Discount considers the cost of flying the plane from New York to Los Angeles a sunk cost.
Answer:
25 seats
Explanation:
Calculation to determine By how many seats should Super Discount overbook the fight
First step is to calculate the Critical ratio=
Using this formula
Critical ratio=Cu/Cu+Co
Where,
Cu represent cost of underetimating the demand =$134
Co represent the cost of overestimating the demand $263
Let plug in the formula
Critical ratio=$134/$134+$263
Critical ratio=$134/397
Critical ratio=0.3375
Second step is to find the z-score that yields a p-value of 0.3375 using excel's normsinv() function which gives us -0.4193.
Now let determine how many seats should Super Discount overbook the fight
Numbers of seats to overbook the fight=35+ (-0.4193 x 24)
Numbers of seats to overbook the fight= 35 - 10.0632
Numbers of seats to overbook the fight = 24.9368
Numbers of seats to overbook the fight = 25
(Approximately)
Therefore the numbers of seats that super discount airlines should overbook the flight is 25 seats.
Next week, Super Discount Airlines has a flight from New York to Los Angeles that will be booked to capacity. The airline expects that an average of 35 customers will cancel or not show for the flight, with a standard deviation of 24.
Since the revenue for each ticket is $134, the airline has a policy of overbooking the flight and giving a free round-trip ticket on a future flight to customers who do not make it on the flight. The cost of this free round-trip ticket averages $263. Since the airline has already accounted for the cost of flying the plane from New York to Los Angeles, they consider it a sunk cost.
According to the given problem, Super Discount Airlines has a flight from New York to Los Angeles next week, which will be booked to capacity. From past history, the airline knows that an average of 35 customers cancel their reservation or do not show for the flight, with a standard deviation of 24.
The revenue from a ticket on the flight is $134, and if the flight is overbooked, the airline has a policy of getting the customer on the next available flight and giving the person a free round-trip ticket on a future flight. The cost of this free round-trip ticket averages $263. Super Discount considers the cost of flying the plane from New York to Los Angeles a sunk cost.The overbooking formula of the airline is:P = Z(α)σ + μ - CWhere, P = Probability of overbookingZ(α) = Z value of α = αth percentileσ = Standard deviation of cancellations per flightμ = Mean cancellations per flightC = Capacity of the plane
The Z(α) value for 95% α is 1.64Substituting the values in the above equation, we get:P = 1.64 x 24 + 35 - 160P = 87.36The probability of overbooking the flight is 87.36%.The expected revenue from the flight, considering that there would be no cancellations or no-shows, is:P = 160 x $134 = $21,440The expected revenue from the flight after taking into consideration the probability of overbooking can be calculated as:P = 0.8736 x 160 x $134 + (1 - 0.8736) x (160 - 160 x 0.8736) x $134 - $263P = $20,616The expected revenue from the flight after taking into account the probability of overbooking is $20,616.
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A physical item that can be touched is called
Answer:
Persom
Explanation:
what is the most likely reason the logistics staff is paid less than salespeople for comparable work?
The supply of trained logistics professionals is comparatively high is the most likely reason the logistics staff is paid less than salespeople for comparable work.
Logisticians oversee activities that embrace purchasing, transportation, inventory, and warehousing. they'll direct the movement of a variety of goods, people, or provides, from common commodities to military supplies and personnel. Logisticians use package systems to arrange and track the movement of products.
Types of Logistics
Logistics Fields.Procurement Logistics: Procuring Raw Materials and Parts.Production Logistics: Materials Management, Distribution in Factories, Product Management, Shipping.Sales Logistics: Delivery from Warehouse to Wholesalers, Retailers, and Consumers.The 5 parts of supplying include storage handling, packing, inventory, delivery, and knowledge handling. Logistics refers to what happens among one company, together with the purchase and delivery of raw materials, packaging, shipment, and transportation of products to distributors, parenthetically
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manuel wants to purchase a new computer and go to the caribbean for spring break. the computer is priced at $1,299, and the vacation is priced at $800. he has only $1,574 in his checking account, so he cannot afford to purchase both. after much thought, manuel buys the computer and writes a check for $1,299.
Money's function as a "store of value" and a "means of exchange"
What is a computer ?A computers is a piece of electronic equipment used to manipulate data or information. Data can be stored, retrieved, and processed by it. You may already be aware of the fact that you are able be using a computer to surf the Internet, send emails, type documents, and play games.
What is importance of computer ?Will be the first window can access the Internet, a computer is a crucial instrument for processing information and data. It is a crucial tool for scientific students, who frequently use it to create reports and projects for school.
Explanation:Money serves as a medium of commerce, a unit of measurement, a store of value, and a benchmark for deferred payments.
Manuel use of money to buy a computer demonstrates the function of money as a "medium of exchange," since it serves as a means of acquiring purchasing power. It is considerably more convenient to use money as a medium of exchange and to transmit purchasing power than the barter economy (commodity to commodity exchange)
Bank money left over after buying a computer: This illustrates the function of money as a "store of value." Compared to barter commodities, which require upkeep and have variable value, money represents the most practical, affordable, and stable form of holding value. The saved funds may be applied to future needs (eg - vacation later).
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according to mintzberg's organizational structures, the adhocracy emphasizes:
According to Mintzberg's organizational structures, the adhocracy emphasizes: Flexibility and innovation. The adhocracy structure prioritizes flexibility and innovation as key elements for success. It encourages employees to be proactive, creative, and adaptable in their work, promoting a culture of continuous learning and experimentation.
The adhocracy is one of the organizational structures proposed by Henry Mintzberg. It is characterized by a flexible and decentralized approach to organizing work. In an adhocracy, the emphasis is on innovation, creativity, and the ability to quickly adapt to changing circumstances. Adhocracies are typically found in dynamic and uncertain environments where there is a need for rapid decision-making and experimentation. They often rely on cross-functional teams, project-based work, and a fluid organizational structure that allows for collaboration and individual initiative.
The adhocracy structure prioritizes flexibility and innovation as key elements for success. It encourages employees to be proactive, creative, and adaptable in their work, promoting a culture of continuous learning and experimentation. This structure is suitable for organizations operating in rapidly changing industries or those seeking to foster a culture of innovation.
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the supply schedule of loanable funds indicates the quantity of funds that would be demanded at various possible interest rates. group of answer choices true false
The statement the supply schedule of loanable funds indicates the quantity of funds that would be demanded at various possible interest rates is false.
The amount of loanable cash that would be required at various potential interest rates is shown in the supply schedule. In an effort to lower inflation, the funds would probably boost the expansion of the money supply.
It is predicated on borrowing that loanable funds are in demand. The real interest rate and the amount of loans made depend on how the supply of savings and the demand for loans interact. The entire amount of cash required to finance investment, the government budget deficit, and foreign investment.
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Tucker works for a retail distributor company that was recently started. Tucker already invested a lot of his earnings into shares of the company. When the quarterly earnings are posted, Tucker receives a check for 8% of the quarterly profit of the company. Tucker belongs to a _________ Corporation.
A. Professional
B. Closely-Held
C. Sub chapter S
Why is it good to be organized?
Answer:
its good to be organized to feel like you have your life together. it makes it easier to find things and makes you feel less stressed and anxious when the area youre in is organized and clean
Because when you are organized things are easier, you have an organized sleep schedule and your school things and papers are organized so it's easier to know where everything is. Also when you are organized you'll notice some things would run smoother than it would when you aren't organized. But you have to want to be organized.
Hawaiian food would be an example of what type of cuisine?
A
Classic cuisine
B
Regional cuisine
С
Nouvelle cuisine
D
National cuisine
Nouvelle cuisine is the type of cuisine. As it is an example of Hawaiian food. Hence, option C is correct.
What is Nouvelle cuisine?Nouvelle cuisine, which translates to "new cuisine," is a diverse international cooking style that first appeared in France in the 1960s and 1970s. It emphasized freshness, lightness, and clarity of flavour while also influencing new culinary trends across the globe.
Roger Verge, a pioneer of nouvelle cuisine, developed a Provençal cuisine he named "the meal of the sun" at his renowned restaurant Le Moulin de Mougins near Cannes, France. On Friday, Roger Verge passed away in his Mougins residence.
Nouvelle cuisine is still relevant today. Many chefs throughout the world are advocating the idea of using the freshest and locally produced ingredients, stressing plating as well, to obtain a good explosion of flavour in every dish.
Thus, option C is correct.
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Devonte is balancing his checking account. His account statement does not include a deposit of $107.00 that he made on November 1st. What is Devonte’s actual account balance?
Answer:
✓ $1,330.26
Explanation:
Answer:
$1,330.26
Explanation:
Why are employers wiling to pay productive workers higher wages than less productive workers?
Employers are willing to pay productive workers higher wages than less productive workers because they provide fast and effective work compared to the others.
Who are employers?An entrepreneur is an end, individual, business, or both, entity that hires workers and compensates individuals for their labor. Employees are those who receive paid to perform labor. Employers lend workers a job.
The market price of the valuable capacity a majority of vendors collects determines their earnings. These people provide extra work in less time and generate more products for the company.
Since businesses anticipate selling the products and services these employees make at rates adequate to cover the benefits of the employees in addition to any other manufacturing costs, businesses are prepared to pay employees wages.
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Discuss the role of the father in attachment theory
Explanation:
Both parents are considered attachment figures in attachment theory, and the child-father attachment is autonomous from the child-mother attachment. Whereas mothers are commonly involved in caregiving and providing emotional refuge, fathers are particularly involved in play and exploratory undertakings.
True/False
1. A thank you note sent after a job interview will serve as a reminder to those people you met.
2. When giving the time of your emploment on your resume, be sure to specify only the year of starting and ending of each job.
3. If an interviewer asks you what your weakness are, you should think for a moment before answering.
4. To prevent discrimination, all applicants for a job should be asked the same questions during an interview.
A thank you note sent after a job interview will serve as a reminder to those people you met is a false statement
2. False
3. False
4. False
What is an interview for a job?A job interview is known to be a kind of conversation tak that is said to occurs between a said and potential employer and that of a job applicant.
Note that During the job interview, the employer is one who has a lot of opportunity to appraise any kind of applicant's qualifications, as well as their appearance and full fitness in regards to the job opening.
Hence, A thank you note sent after a job interview will serve as a reminder to those people you met is a false statement
2. False
3. False
4. False
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You can use the continuous feedback loop known as the ______ cycle to ensure you're headed in the right direction once you've made plans.
It is important one uses the planning and controlling cycle to ensure we are headed in the right direction once you've made plans.
What is the planning and controlling?Both the planning and controlling are important function of management because one's activities helps to accomplish the planned objectives while the other direct and monitor business process,
In conclusion, the adoption of the planning and controlling cycle is important in ensuring we are headed in the right direction once you've made plans.
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A company using public relations sends information to media outlets such as newspapers and ratio stations. Who decides what Information about the company the outlets will publish?
Answer:
The media outlets should be correct
Explanation:
A P E X
What are incentives in marketing?
The use of motivating tools to encourage the purchase of a good or service, such as contests, games, bonuses, and special pricing are called incentives in marketing.
Businesses provide special deals to encourage people to buy their products, whether it's through a customer loyalty program or a one-time promotion. Incentive marketing assists companies in attracting customers' attention with exceptional offers or possibilities in a world when consumers have more options than ever.
The accompanying performance indicators for companies who adopt loyalty and incentive programs, as well as the fact that customers have learned to anticipate a loyalty offering or savings opportunity from the firms they deal with, have made these programs "must-haves."
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Select the correct answer.
Oliver is busy planning the launch of his new company. He hired a business professional to act as the interim CEO and asked for a report on the
possible controllable risks the company could face. Which risk would be deemed as controllable?
Oliver is busy planning the launch of his new company. He hired a business professional to act as the interim CEO and asked for a report on the possible controllable risks the company. The firm’s IT architecture risk would be deemed as controllable.
What is a business?
A business can be referred to as an organization or enterprising entity that engages in professional, commercial or industrial activities. There are different types of businesses like sole proprietorships, partnerships, corporations, and more.
The businesses are basically work for profit motive. Businesses can be small-scale or large-scale. Some of the biggest businesses in the world are Amazon and Walmart.
There are different types of partners in a business. The persons who owns the shares of the company is known as shareholder. The partner who can lose only what he or she has invested in a business is the general manager.
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Answer:
i think A edmentum
1. What is the author trying to say in comparing Becky's world with Desta's world?
Help me
Answer:
The author is trying to say that the living standards of different classes of people depend on the economic choices they make and the economy of the nations they find themselves in.
Explanation:
The topic, "Mathematics and Economic Reasoning," began by comparing the world's of two girls namely Becky and Desta. Becky who lives in America has a good and comfortable living standard. Her father works at a good law firm where he earns well enough to cater for his family. He has some savings, insurance, two cars, and a partially mortgaged house.
Desta, on the other hand, lives in a poor village in Ethiopia where her family depend on farming to survive. They have no running water, electricity, adequate healthcare, enough food, etc. The author drew these comparisons to show that the environment a person finds himself can affect his economic standard of living.
If a firm wishes to choose at most 2 of 4 possible activities (A, B, C and D), the constraint XA + X8+ Xc+ XD 2 2 will enforce this relationship in a linear program. Xi = 1 if activity i is chosen and zero otherwise, where i can be A, B, C, or D. True False
The statement is False, The constraint XA + XB + XC + XD <= 2 enforces that at most two of the activities can be chosen. This is because each of the decision variables XA, XB, XC, and XD takes on a value of 0 or 1, indicating whether or not the activity is chosen.
A constraint refers to any factor that limits or restricts the ability of an organization to achieve its goals or objectives. Constraints can be internal or external to an organization and can be caused by a variety of factors such as resource limitations, market conditions, or regulatory requirements.
Internal constraints are those that are within an organization's control, such as limited resources, outdated technology, or inefficient processes. External constraints, on the other hand, are factors that are outside an organization's control, such as economic downturns, changes in government policies, or new competitors entering the market. Constraints can have a significant impact on an organization's operations, profitability, and ability to achieve its strategic objectives
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One reason that mark to mark pipettes have helped with biocontainment is:_______.
Answer:
Mark to mark pipettes allow the precision delivery of the required volume of liquids and minimize the need to forcibly expel all of the liquids from a pipette.
Explanation:
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when she seeks to discover the value of her brand’s overall strength in the market, martha is trying to determine the coffee collective’s______
Martha is trying to determine the Coffee Collective's brand equity when she seeks to discover the value of her brand's overall strength in the market.
Brand equity refers to the value that a brand brings to a company beyond its tangible assets, such as products, services, or facilities. It encompasses the brand's intangible value, such as customer perception, brand awareness, and customer loyalty.
Brand equity is important because it can have a significant impact on a company's financial performance, including its revenue, profit margins, and market share. A strong brand can command a premium price, increase customer loyalty, and help a company differentiate itself from competitors.
To determine the Coffee Collective's brand equity, Martha would need to evaluate various factors, including:
Brand awareness: The extent to which the Coffee Collective's brand is recognized and remembered by consumers.
Brand associations: The qualities and attributes that consumers associate with the Coffee Collective's brand, such as quality, reliability, and sustainability.
Brand loyalty: The degree to which customers are loyal to the Coffee Collective's brand and are willing to repeat purchases.
Brand perceived quality: The overall perception of the quality of the Coffee Collective's products or services in the minds of consumers.
Brand personality: The personality traits that are associated with the Coffee Collective's brand, such as innovative, trustworthy, or exciting.
By assessing these factors, Martha can gain a comprehensive understanding of the Coffee Collective's brand equity and make informed decisions on how to leverage and enhance the brand's value in the market.
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Janet Boyle intends to deposit $300 per year in a credit union for the next 10 years, and the credit union pays an annual interest rate of 8%. A. Determine the future value that Janet will have at the end of 10 years, given that end-of-period deposits are made and no interest is withdrawn, if (1) $300 is deposited annually and the credit union pays interest annually. (2) $150 is deposited semiannually and the credit union pays interest semiannually. (3) $75 is deposited quarterly and the credit union pays interest quarterly. B. Use your finding in part a to discuss the effect of more frequent deposits and compounding of interest on the future value of an annuity.
Answer:
A(1) Future value of annual deposit = $4,345.97
A(2) Future value of semiannual deposit = $4,466.71
A(3) Future value of quarterly deposit = $4,530.15
B. The more frequent deposits and compounding of interest are, the higher the future value of an annuity of an annuity will be.
Explanation:
A(1). Determine the future value that Janet will have at the end of 10 years, given that end-of-period deposits are made and no interest is withdrawn if (1) $300 is deposited annually and the credit union pays interest annually.
These can be calculated using the Future Value (FV) of an Ordinary Annuity as follows:
FVA = P * (((1 + r)^n - 1) / r) ................................. (1)
Where,
FVA = Future value of the annual deposit = ?
P = Annual deposit = $300
r = Annual interest rate = 8%, or 0.08
n = number of years = 10
Substituting the values into equation (1), we have:
FVA = $300 * (((1 + 0.08)^10 - 1) / 0.08)
FVA = $4,345.97
A(2). Determine the future value that Janet will have at the end of 10 years, given that end-of-period deposits are made and no interest is withdrawn if (2) $150 is deposited semiannually and the credit union pays interest semiannually.
These can be calculated using the Future Value (FV) of an Ordinary Annuity as follows:
FVS = P * (((1 + r)^n - 1) / r) ................................. (2)
Where,
FVS = Future value of the semiannual deposit = ?
P = Semiannual deposit = $150
r = Semiannual interest rate = 8% / 2 = 0.08 / 2 = 0.04
n = number of semiannual = 10 * 2 = 20
Substituting the values into equation (2), we have:
FVS = $150 * (((1 + 0.04)^20 - 1) / 0.04)
FVS = $4,466.71
A(3). Determine the future value that Janet will have at the end of 10 years, given that end-of-period deposits are made and no interest is withdrawn if (3) $75 is deposited quarterly and the credit union pays interest quarterly.
These can be calculated using the Future Value (FV) of an Ordinary Annuity as follows:
FVQ = P * (((1 + r)^n - 1) / r) ................................. (3)
Where,
FVQ = Future value of the semiannual deposit = ?
P = Quarterly deposit = $75
r = Quarterly interest rate = 8% / 4 = 0.08 / 4 = 0.02
n = number of quarters = 10 * 4 = 40
Substituting the values into equation (3), we have:
FVQ = $75 * (((1 + 0.02)^40 - 1) / 0.02)
FVQ = $4,530.15
B. Use your finding in part a to discuss the effect of more frequent deposits and compounding of interest on the future value of an annuity.
Since the future value of quarterly deposit of $4,530.15 is greater than the future value of semiannual deposit of $4,466.71 which on its own is also greater than the future value of annual deposit of $4,345.97, this implies that the more frequent deposits and compounding of interest are, the higher the future value of an annuity will be.