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Tpy6a
16 days ago
8

A perpetuity will pay $1000 per year, starting five years after the perpetuity is purchased. What is the present value (PV) of t

his perpetuity on the date that it is purchased, given that the interest rate is 4%?
Business
1 answer:
arsen [2.9K]16 days ago
5 0

Answer:

$21,370.1071

Explanation:

The calculation for the present value of this perpetuity is as follows:

= Present value five years later + present value at the time of purchase

where,

The present value after five years is

= ($1,000) ÷ (1.04)^5

=$821.9271

Additionally, the present value at the purchase time is

= $821.9271 ÷ 4%

=$20,548.18

Thus, the total present value of the perpetuity is

=$821.9271 + $20,548.18

= $21,370.1071

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Answer:

Net Present Value = $ 34,310.45  

Explanation:

The Net Present Value (NPV) represents the difference between the present value of cash inflows and outflows. A positive NPV indicates a favorable investment decision, while a negative value suggests otherwise.

NPV of a project

NPV = Present Value of Cash inflows - Present Value of Cash outflow  

The cash inflow is characterized as an annuity.

Present Value of annuity= A × 1 - (1+r)^(-n)/r  

A refers to Annual cash flow, - 65,000, r is the discount rate at 12%, and the term is 5 years.

Calculation for Present Value of cash inflow equals 65,000 × (1 - (1.12)^(-5)/0.12) =  234,310.45.

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Net Present Value = $ 34,310.45  

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1 month ago
How do basic level occupation help society​
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Answer:

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18 days ago
If a company invests in production improvement option D that will boost labor productivity by 50%, while its annual depreciation
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Answer:

Option (E) is the correct answer.

Explanation:

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= 5,000 × (1 + 50%)

= 7,500.

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Cost per unit with higher productivity:

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=

$5.33.

Thus, labor costs per unit produced will decrease from $8.00 to $5.33 for a facility in North America.

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Answer:

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