The approximate internal rate of return for this investment is $0.054.
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What is rate of return?</u></h3>
- The net gain or loss of an investment over a given time period, stated as a percentage of the investment's starting cost, is known as a rate of return (RoR).
- You determine the percentage change from the start of the period to the end when computing the rate of return.
- Any type of investment instrument, including real estate, bonds, equities, and fine art, can be subject to a rate of return (RoR).
Any asset can be used with the RoR as long as it is purchased once and generates cash flow at some point in the future. The attractiveness of various investments can be determined, in part, by comparing their historical rates of return to those of comparable assets.
We have, (Net Annual cash inflow x PV of an Annuity of 1 at 10%) - Initial Investment = Net present value (find closest to zero))
($17,514 x 4.111) = $72000.054 - $72,000 = $0.054 (closest to zero).
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Answer:
If the effective tax rate increases then the net savings coming from investments will get lowered as a result the investment will have higher payback period (The increase in effective tax rate would lower demand of the product which means there is decline in net saving arising from the sale of the product). Likewise this decrease in annual net savings will also decrease the internal rate of return which shows that their are increased chances of project rejections. The NPV method is based on cash flows and relevant costing just like IRR and payback method but the only difference is that it assumes that the cash earned would be reinvested at cost of capital. The NPV will also decrease due to increased effective tax rate.
Answer:
First National Bank's EAR is 11.68%
First United Bank's EAR is 11.62%
Explanation:
Effective annual rate=(1+APR/m)^m-1
APR is the annual rates given in the question as 11.1% and 11.3%
m is the number of times in the year that compounding is done, for instance, it is 12 for monthly compounding and 2 for semiannual compounding
First National Bank's EAR=(1+11.1%/12)^12-1=11.68%
First United Bank's EAR=(1+11.3%/2)^2-1=11.62%
The EAR for First National Bank is higher
<span>the answer for this question is 10.50%</span>
Answer:
The answer is D. balance sheet as a current liability
Explanation:
Unearned fee is the amount that has been collected before rendering a service. For example, a customer paid in advance for goods that have been delivered, a football season ticket holder. The full service has not been rendered. So it is recognized as a liability because the customer can terminate the contract anytime.
As the service is being rendered, maybe monthly, quarterly or weekly, revenue is recognized and unearned fee decreases.
For example, a customer paid a $12,000 on Jan 1. for monthly delivery of magazine for a year. Here, the customer paid for a service that last till Dec 31st.
What will be recognized as revenue monthly is $1,000($12,000/12months) and unearned revenue too decrease by $1,000 monthly
