Answer:
The slope of the budget line is -0.5.
Explanation:
A consumer buys two goods, A and B.
The income of the consumer is $100.
The price of good A is $10.
The price of good B is $20.
A budget line shows the maximum possible combinations of two goods that a consumer can purchase by completely exhausting his/her income. The two goods are represented on two different axis.
Good A is measured on the horizontal axis, while good B is measured on vertical axis.
The slope of the budget line is
= [tex]-\frac{Px}{Py}[/tex]
= [tex]-\frac{10}{20}[/tex]
= - 0.5
John decides to leave college early and play professional sports. Which of the following economic principles does John use? i) personal economic policies ii) marginal cost versus marginal benefit analysis iii) normative versus positive economics
Answer:
i) personal economic policies ii) marginal cost versus marginal benefit analysis
Explanation:
Marginal costs and benefits are an integral part of the economy as they help to calculate costs and benefits accurately at a particular production stage and usage stage.
An economic policy is an act that aims at influencing or controlling economic behavior.
At this stage John believes his decision will influence his economy positively and he sees more long-term benefits than costs for him if he plays professional sports rather than staying in college.
John's decision involves a marginal cost versus marginal benefit analysis, where he assesses the immediate benefits of professional sports against the costs of leaving college early.
John's decision to leave college early and play professional sports primarily involves marginal cost versus marginal benefit analysis. This economic principle suggests that John is assessing the additional costs and benefits of his next immediate action. Essentially, he is comparing the marginal benefit of earning immediately through professional sports against the marginal cost of forgoing his education temporarily or permanently. This analysis allows individuals to make choices that they believe will maximize their utility or satisfaction, based on the concept that people make decisions by considering the incremental costs and benefits of their actions. In John's case, if the perceived benefit of playing professional sports outweighs the cost of leaving college early, his choice aligns with this economic principle. This approach is practical in various decision-making processes where individuals weigh the immediate benefits against the potential costs.
I'maGoldMiner has benefited from a record rise in gold prices in the global commodities market. While the price of its output is highly influenced by market speculation, if it wants to increase production to take advantage of the current profit-maximizing opportunity, the company1. must accept market price for its physical capital inputs.2. must reduce what it pays for inputs that make up its costs of production.3. must reduce production to encourage speculators to drive gold prices higher.4. must alter the price of its labor inputs to maximize profits.
Answer:
1) must accept market price for its physical capital inputs.
Explanation:
Option 1 is correct because the company must increase it production output, so it can benefit from current high prices. Sometimes increasing production results in higher unit costs, but if those higher costs are offset by higher prices, then it is worth it.
Option 2 is wrong because the company must focus on increasing its production level in order to benefit from higher prices.
Option 3 is wrong because the company must increase its production level in order to benefit from higher prices.
Option 4 is wrong for the same reason as option 2.
Tiffany owns a health club and contracts to buy a set of weights from Dylan for $10,000. Dylan is hurting financially, so he changes the dollar amount on the contract to $18,000. Before delivering the weights, Dylan attempts to collect the $18,000 from Tiffany who accuses him of trying to cheat her. She has a copy of the contract with the original amount. When they end up in court, the court likely will
Discharges the contract by not enforce the contract at all because of the change made by Dylan. T/F
Answer:
True
Explanation:
Dylan's alteration of the contract terms automatically discharges (terminates) the contract, since the consideration was changed. Dylan's consideration remained the same, providing some set of weights, but Tiffany's consideration was wrongfully and illegally changed by Dylan($18,000 instead of $10,000), so the contract is terminated.
Beta Corporation is planning operations for the coming year. Beta uses normal costing and applies overhead on the basis of direct labor hours. The estimated overhead cost amounts to $10,000,000, estimated direct labor hours are 125,000, estimated direct labor cost amounts to $3,200,000, and estimated direct materials cost is $23,000,000. What is Beta's predetermined overhead rate?
Answer:
The correct answer is $80 per hour.
Explanation:
According to the scenario, the given data are as follows:
Estimated overhead cost = $10,000,000
Estimated direct labor hours = 125,000 hours
Direct labor cost amount = $3,200,000
Direct material cost = $23,000,000
So, we can calculate the predetermined overhead rate by using following formula:
Predetermined overhead rate = Estimated overhead /Estimated Direct labor hours
= $10,000,000 / 125,000 hours
= $80 per hour
Hence, the predetermined overhead rate is $80 per hour.
Check My Work The strategic planning process begins with _______. a. SWOT analysis b. finance objectives c. business-unit strategies d. organizational mission and goals
Answer:
d. organizational mission and goals
Explanation:
Strategic planning process has following sequence:
1. Organizational mission and goals
2. SWOT analysis
3. Marketing objectives
4. Finance objectives
5. Business-unit strategies
So according to above sequence the correct option is b. organizational mission and goals
A company borrows $100,000 from a bank; this is part of the: a. Secondary debt market b. Primary debt market c. Secondary equity market d. Primary equity market
Answer:
The answer is B. Primary Debt Market
Explanation:
Primary Debt Market is a type of market in which participants issue/obtain loan(bonds, notes, bills etc.)directly from a company(bank or lender).
The money is directly from the bank to the debtor(the company that is borrowing money).
Option B is incorrect because secondary debt market is from hand to hand i.e from debtor to debtor.
For example, Mr A. obtains a loan of $1000 dollar from a bank. This is primarily debt market. And afterwards Mr A. sells this particular loan to Mr B. This is secondary debt market because it is not directly from the bank.
Option C and D are incorrect because this transaction is a debt transaction and not an equity transaction
Which event will NOT cause the supply curve for kayaks to shift to the left?1. an increase in the costs of materials to build a kayak 2. a decrease in the price of a kayak 3. an increase in the taxes on kayaks4. a decrease in the number of sellers of kayaks
Answer:
a decrease in the price of a kayak
Explanation:
A decrease in the price of kayaks leads to a downward movement along the supply curve for kayaks and not a shift of the supply curve.
An increase in the costs of materials to build a kayak and an increase in the taxes on kayaks increases cost of production and discourages production. Therefore, supply would fall. The supply curve would shift to the left as a result.
A decrease in the number of sellers of kayaks would reduce sipply and supply would fall. The supply curve would shift to the left as a result.
I hope my answer helps you
On January 1, 2021, Solis Co. issued its 10% bonds in the face amount of $8,000,000, which mature on January 1, 2031. The bonds were issued for $9,080,000 to yield 8%, resulting in the bond premium of $1,080,000. Solis uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. At December 31, 2021, Solis's adjusted unamortized bond premium should be
Answer:
1,006,400
Explanation:
To know the unamortized portion we have to solve for the amount amortizated at the first payment in December 31th,2021.
Under the effective-rate method we will calculate the amortization as follow:
interest expense:
9,080,000 x 8% = 726,400
cash outlay:
8,000,000 x 10% = 800,000
amortization on premium:
800,000 - 726,400 = 73,600
the unamortized bond premium at year-end should be:
1,080,000 - 73,600 = 1,006,400
If the expected return on Stock 1 is 6%, and the expected return on Stock 2 is 20%, the expected return on a two-asset portfolio that holds 10% of its funds in Stock 1 and 90% in Stock 2 is:________
A) 13%
B) 18.6%
C) 11.52%
D) 19.14%
Answer:
B) 18.6%
Explanation:
Given that
The expected return on Stock 1 is 6% and the holding percentage is 10%
The expected return on Stock 2 is 20% and holding percentage is 20%
So, The computation of the total expected return is
= Expected return on Stock 1 × holding percentage + Expected return on Stock 2 × holding percentage
= 6% × 10% + 20% × 90%
= 0.6% + 18%
= 18.6%
Basically we multiplied the expected return with its holding percentage
Job HE-65 at Wilson Manufacturing Inc. required $300 of direct materials and 15 direct labor hours at $10 per hour. The company’s estimated total overhead cost for the year was $900,000 and estimated direct labor hours were 30,000.
Answer:
Job HE-65 total cost 900 dollars
Explanation:
predeterminated overhead rate:
expected cost / expected driver
900,000 / 30,000 = $30
Each labor hour generates $30 dollars of overhead according to our expectation
Now we solve for the cost of job HE-65
materials 300
labor 15 hours x $10 = 150
and overhead 15 hours x $30 each = 450
total cost 300 + 150 + 450 0 900
Answer:
$900
Explanation:
costs for Job HE-65:
direct materials = $300
direct labor = 15 x $10 = $150
applied overhead = ??? = $30 per labor hour x 15 labor hours = $450
⇵
if we apply predetermined overhead rate based on direct labor hours, then we should apply $900,000 / 30,000 = $30 per labor hour.
the total costs for JOB HE-65 = $300 + $150 + $450 = $900
When the price of a good (e.g., oranges) or service (e.g., hair cut) changes,
a. the demand curve of that good or service shifts in the same direction.
b. the demand curve of that good or service shifts in the opposite direction.
c. the supply curve of that good or service shifts in the opposite direction.
d. there is a movement along the demand curve of that good or service.
Answer:
d. there is a movement along the demand curve of that good or service.
Explanation:
A change in price of a good or service leads to a movement along the demand curve either up or down. If price increase, quantity demanded falls and there's a movement up the demand curve. If prices fall, quantity demanded rises and there's a movement down the demand curve.
I hope my answer helps you
When the price of a good or service changes, there is a movement along the demand curve of that good or service, not a shift in the curve. This movement represents a change in the quantity demanded due to a change in price.
Explanation:When the price of a good or service changes, it does not cause the demand curve or the supply curve to shift. Instead, it results in a movement along the existing demand curve. This is because the demand curve represents the relationship between price and quantity demanded, all else being equal. This is known as the law of demand. Therefore, a change in price results in a change in the quantity demanded, which is a movement along the demand curve, not a shift of the curve itself.
For example, if the price of oranges decreases, according to the law of demand, the quantity demanded for oranges will increase. This represents a movement down along the demand curve for oranges. So the correct answer is (d) there is a movement along the demand curve of that good or service when its price changes.
Learn more about Price Change and Demand Curve here:https://brainly.com/question/14844856
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Expansionary fiscal policy actions include __________ government spending and/or __________ taxes, while contractionary fiscal policy actions include __________ government spending and/or __________ taxes.
Answer:
increasing; decreasing; decreasing; increasing
Explanation:
Answer:
Expansionary fiscal policy actions include __increase__ government spending and/or _decrease_ taxes, while contractionary fiscal policy actions include __decrease_ government spending and/or __increase__ taxes.
Explanation:
The fical policy stand for what is the government doing to the aggreate demand curve.
When it is expanding it means it increase their defecit or reduces their surplus
As increases the expenses or reduces the taxation on the agent ( enterprise and families). Both, makes more demand for good as the consumer will consumer a protion of the tax-cut and save another (increasing investing) while the spending will consume goods.
The opposite will occur at a contractionary fiscal polocy. In this policy the state weight in the economy decreases.
. A firm decides to pay for a small investment project through a $1 million increase in short-term bank loans. This is best described as an example of a(n): A. financing decision. B. investment decision. C. capital budgeting decision. D. capital market decision.
Answer:
A. financing decision.
Explanation:
The financial decision refers to that decision which reflects the borrowing and fund allocation. It also results in the investment that is paid and expenses held that can increase the shareholder wealth.
It consists of capital structure, working capital management decisions. The capital structure shows a mix of debt and equity whereas the working capital shows the current assets and the current liabilities
According to the given situation, since the small investment project is paid through a $1 million that shows a financing decision
Nick, a hotel general manager, has had great success using MBO. Vivian, his district manager, has found that Nick’s employees are highly motivated. Because Nick _________, Vivian is able to discern that he is using MBO.
Answer:
Rewards his employees with compliments, raises, and other benefits as they meet their goals.
Explanation:
When you have a nice steak dinner at a local restaurant, literally thousands of people engage in actions that make your dinner possible. Identify at least 10 people who were involved in your steak dinner and briefly describe their role.
Answer:
Explanation:
1. The person who raised the cows, the farmer
2. The person who butchered the animal, the butcher
3. The driver who delivered the meat,
the delivery person
4. The person who orders and receives the meat and food products, kitchen manager
5. The food prep person who prepares your food, food preparation worker
6. The person who washes the dishes so you can have clean dishes, the dishwasher
7. The hostess who seats you and your table, the hostess
8. The person who creates the menu, the head chef
9. The chef who cooked your food, the chef
10. The waiter (or waitress) who took your food to the table, the waiter( or waitress)
Many people are involved in the process of getting a steak dinner to your table at a restaurant, including individuals such as ranchers, feed suppliers, butchers, transport drivers, restaurant owners, chefs, cooks, waitstaff, dishwashers, and other suppliers.
Explanation:A great number of individuals are involved in the process of serving a steak dinner at a restaurant. Here are ten people who, in one way or another, contribute:
Rancher: Raises the cattle that is eventually transformed into your steak at the restaurant.Feed Supplier: Provides the necessary feed for the cattle to grow.Butcher: Slaughters the cattle and prepares the cuts of meat that arrive at the restaurant.Transport Driver: Ensures the safe, sanitary, and efficient transportation of the meat from the butcher to the restaurant.Restaurant Owner: They select the items on the menu, including the steak you order.Executive Chef: Develops the recipes for each dish, including the cooking method for your steak.Line Cook: Executes the recipe and physically cooks your steak.Waitstaff: Takes your order, serves your food, and provides service throughout your meal.Dishwasher: Cleans the dishes on which your meal is served.Supplier of other ingredients or sides: Everything else in your meal from the potatoes to the garnishes to your dessert. Learn more about Steak dinner process here:https://brainly.com/question/11131493
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Jane contracts Tom, a home developer, to build her a new house. In the contract it states that all necessary parts of the home must be complete before the contract is to be considered finished. However, Tom decides it is simply too much work to carpet and tile the home and finishes his work without completing the carpet and tile. Tom breached his contract with Jane. To initiate a lawsuit against Tom, Jane must:
Answer:
Simply file a complain in the court. The court will read the contract and then order Tom to finish the necessary parts of the company which means that the finishing of the tiles and carpet was an implied clause in the contract. So it seems better for Jane to sue Tom to mitigate for damages.
Dora and Keith are managers at ABC Corporation. Keith is having problems in his department due to lack of innovation. In response, he consults the corporate procedures manual and speaks with his boss about the right way to solve the problem. Dora is also having a similar problem in her own department but decides to confront it by hosting team luncheons where she can learn new perspectives and discuss new "outside the box" ways to deal with the problem.
Keith is an example of a(n) _____ thinker.
Answer:
Convergent Thinker
Explanation:
A convergent thinker is the one who gives correct answers to the problems and does not considers other options whereas divergent thinker considers all the possible options to choose the best options. It doesn't matter who you are, all that matters is what is your decision. You can not be right all the times. Divergent thinker is bit more risk averse approach and creative people are always divergent thinkers.
Each of the following is a primary consideration in the choice of business entity, except: a. The degree to which the founders' personal assets are protected from liabilities of the business b. The availability of favorable tax strategies c. The desirability for potential investors and lenders d. The entrepreneur's lifestyle
Answer:
d. The entrepreneur's lifestyle
Explanation:
One of the principles of accounting is business entity, the business is a distinct entity from the owners. So the lifestyle of the enterpreneur does not affect the business.
Also because of this financial transactions of the business and those of the owners are mutually exclusive. For example if an entrepreneur buys a house for himself, this is not connected to the business and the business cannot lay claim on it. This also applies vice versa when the business obtains property the owner cannot claim it for personal use.
Answer:
D
Explanation:
A business entity means that the business is its own owner and it is a completely different and distinct entity from the entrrpreneur. Definitely the lifestyle of the enterpreneur cannot affect the business.
The finances owned by the business and that owned by the enterpreneur doesn"t have a meeting point and are seperate entities
If the business buys a car for itself, this is not connected to the enterpreneur even though he might be using it and the enterpreneur cannot lay claim on it. In case the business is liquidated the car is sold as an assest of the business. This goes for the enterpreneur personal property also. So his lifestyle is not part of the business entity.
Caitlin is a highly motivated sales executive for a company that sells business textbooks. She always strives to create personal relationships with the professors of colleges and universities. When a committee of professors at Bridgeton University was constituted to select a new marketing book, her book was selected. Her amiable relationship with the committee chairman paved the way for this selection. The committee chairman trusts Caitlin and believes that she will meet his expectations. Identify the type of relationship between Caitlin and the committee chairman in this scenario.
A. Relational partnership
B. Functional relationship
C. Internal partnership
D. Solo market transaction
E. Strategic partnership
Answer:
A. Relational partnership
Explanation:
Relational partnership - This type of partnership is based on trust and close relationships. In this type of relationship, both parties are open on discussion and always ready to tackle the objection or obstacle by working together.
In every partnership, both parties are trying to get more money but the main focus on this partnership is to get that money for a longer period of time.
Mostly relationship partnership built because of prior relationship but mostly it is happened due to financial necessity.
A company has 10,000 shares of $100 par, 6% cumulative preferred stock outstanding. If the company declares a total of $200,000 of cash dividends for the year for both its common and preferred stock and the preferred stock is two years in arrears, how much will be allocated to the (1) preferred stockholders and (2) the common stockholders?
A) (1) $60,000 and (2) $140,000
B) (1) $120,000 and $80,000.
C) (1) $180,000 and $20,000.
D) (1) $200,000 and (2) $0.
E) None of the above.
Answer:
A) (1) $60,000 and (2) $140,000
Explanation:
Number of preferred share = 10,000
Price of Preferred share = $100
Total value of Preference share = 10,000 x $100 = $1,000,000
(1) Preferred dividend = $1,000,000 x 6% = $60,000
Total Dividend Announced = $200,000
Dividend for common stockholders = Total Announced Dividend - Dividend for Preferred Stockholders
(2) Dividend for common stockholders = $200,000 - $60,000
Dividend for common stockholders = $140,000
"A cost that is constant within a relevant range but differs outside the relevant range of activity is best classified as what type of cost?"
Jessica is a U.S. Army Reservist and in 2019 traveled 130 miles each way to serve duty at a local military installation. She was required to report four times in 2019. Her normal route from home to the base included a $1.75 toll each way. Jessica's for AGI deduction for these costs is:________.
a. $0.
b. $14.00.
c. $122.00.
d. $566.80.
e. $580.80.
Final answer:
Jessica's for AGI deduction for the travel costs to the military installation is based on toll costs alone, since the standard mileage rate is not provided in the information. The calculation comes to a total of $14.00 which is the sum of the tolls paid for four round trips, making option b the correct answer. Since the IRS standard mileage rate is not provided, the mileage costs cannot be calculated.
Explanation:
To determine Jessica's for AGI deduction for her travel costs to the military installation, we need to calculate the total amount she spent. Jessica traveled 130 miles each way and reported for duty four times in 2019. Although the information provided does not explicitly state the IRS deductible rate for travel in 2019, typically the Internal Revenue Service (IRS) allows a certain amount per mile driven for business purposes.
For the sake of this example, let's use the standard IRS mileage rate for 2019, which was 58 cents per mile for business travel. However, the actual problem doesn't provide us with a mileage rate, so we cannot calculate the mileage costs without this information.
Jessica incurred a $1.75 toll each way during her trips. Since she made four round trips, the total toll cost would be 4 trips × 2 tolls per trip × $1.75 per toll, which equals $14.00.
Since the information on the standard mileage rate is missing, we cannot complete the calculation for mileage costs accurately. However, with the toll costs alone, Jessica's for AGI deduction for these costs, based only on available information, would be $14.00, which corresponds to option b.
The employees at Titanium Inc. have the freedom to plan their own schedules and areempowered to make decisions. They also believe in sharing common goals. The managers have highlevels of trust in their employees and foster team work. These beliefs and attitudes constituteTitanium's _____.
(A) opportunistic behavior
(B) industry regulation
(C) general environment
(D) organizational culture
Answer: Organizational culture
Explanation:
The organizational culture is the term which refers to the vales, assumptions and the beliefs of the people that helps in governing the people behavior in an organization.
The main objective of the organizational culture is that it helps control the behavior of the employees in an organization or any workplace.
According to the given question, Titanium Inc. is one of the organization in which the employees easily plan their own schedule and also have the freedom for making the various types of decisions.
Therefore, These given attitude and the beliefs constitute the Titanium's organizational culture.
In year 8, Mondo Magazines began selling one- and two-year subscriptions to its publications. Subscriptions are collected in advance and credited to sales. An analysis of the recorded sales activity revealed the following:____________
Answer:
$450,000
Explanation:
Deferred subscription revenue (or unearned subscription revenue) is a liability account since your customers paid you in advance for goods or services that you must provide in the future.
The net unearned revue for 2018 and 2019 is = $390,000 and $460,000 respectively.
Of the 2018 amount, only $115,000 (= $390,000 - $115,000 - $160,000) remain as a liability during 2019 since they expire on 2020.
Of the 2019 amount, $335,000 (= $460,000 - $125,000) remain as a liability during 2019 since they expire on 2020 and 2021.
By December 31, 2019, unearned revenue = $115,000 + $335,000 = $450,000
A property is destroyed before escrow closes. Risk of loss would be _________(a) with the seller if possession had not passed and the loss was not due to the fault of the purchaser.(b) with the buyer if either possession or title has passed and not the fault of the seller. (c) with the escrow holder if not the fault of the buyer or seller. (d) both a and b are correct.
Answer:
The correct answer is letter "D": both a and b are correct.
Explanation:
Escrow is a two-party financial agreement that usually involves a buyer and a seller. The buyer deposits money, securities or other funds into the escrow account where they are kept until they fulfill certain predefined requirements for both parties involved. The funds are then passed on to the seller.
If there is damage on the property, the risk loss is transferred to the buyer if the title has already been transferred to the buyer and if the damage is not the fault of the seller. If the seller still possesses the property's title, the damage must be covered by the seller in case the buyer is not involved in it.
MNM & Co incurred depreciation expenses of $36,810 last year. The sales were $903,480 and the addition to retained earnings was $11,530. The firm paid interest of $7,711 and dividends of $7,500. The tax rate was 33 percent. What was the amount of the costs incurred by the company?
Answer:
The costs incurred by the company is the same as the costs of good sold of the company-MNM&Co ,last year.
The costs of good sold=$830,556.01
Explanation:
The detailed computation is found in the excel file attached.
. What are the advantages of (a) management contracts and (b) franchising? Discuss their impacts on the development of the hotel industry.
Answer:
It enhances Effective and efficient performance
It enhances expansion.
It helps to build strong and competitive brands
FRANCHISING
It enhances Globalization of businesses
It enhances brand recognition
Explanation: Management contracts are contracts through which the management of an business entity is handed over to another set of managers in order to achieve certain objectives.
Franchising is allows a business entity expand more rapidly by using funds from the Franchise investors'. Franchising factors both parties.
Franchising started with Hotels in 1907, top brands in the United States of America a currently into Franchise agreement throughout the world.
For a high-school student, Tim is highly concerned about environmental issues. He is a strong supporter of the garbage recycling and afforestation campaigns taken up by the environmental activists in his neighborhood. He wants to become a full time volunteer for their upcoming wildlife protection program and has even saved money to contribute to the cause. This group of environmental activists can be categorized under which of the following reference groups?
A) primary group
B) secondary group
C) aspirational group
D) dissociative group
E) cognitive group
The correct answer is C) Aspirational group
Explanation:
An aspirational group refers to a group an individual wants to join. This is usually because the individual considers the values, ideas, practices, and behavior of the group are positive or fit his/her ideas and values. Additionally, aspirational groups are part of reference groups (groups that individuals use as standards) and include groups in which there are interaction and sense of identity or groups that include people with common features but not interaction.
In the case presented, the environmental activists are an aspirational group because Tim wants to join this group and considers the values, ideas, etc. of this group are ideal, this explains why Tim admires the actions of this group. Moreover, this group holds similar values, beliefs, etc. to those of the high-school student.
Joe, owner of ABC Electronics, just discovered that his trusted friend Paul, his accountant for over 30 years, has been mishandling the company books and stealing from the company bank account. Joe must decide whether to publicly ignore his friend's actions and avoid bad publicity for the firm, an example of ____.
Answer:
Ethical dilemma
Explanation:
An ethical dilemma is a situation that requires choosing between two conflicting alternatives where choosing any of them will lead to a breach in ethical principles and might lead to ethical violation.
In the case of Joe the owner of ABC Electronics and his friend Paul which is also his accountant for over 30 years and who has been mishandling the company books. Joe having to decide whether to publicly ignore his friend and avoid bad publicity for the firm shows a situation of an ethical dilemma.
Stowell earns 20% interest compounded annually on his savings. He will deposit $1,500 today, $1,650 one year from today, and $1,820 two years from today. What will be the account balance three years from today? (Round intermediate calculations to nearest four decimals.)
The account balance will be $7,152 three years from now.
Explanation:
The annual interest is 20%. The formula to calculate compound interest is
A = P × (1 + (r/n))^tn where A is the amount after adding the compound interest, P is the interest, r is the interest %, n is number of compounds per year and tn is the years to be calculated but since the interest is compounded yearly and we check the balance every year we get that the n and rn equal to 1 so we get that A = P (1 +r)^1
So for the beginning of the first year where principal is $1,500,
A = $1,500 (1 + 0.20) = $1,500 (1.20) = $1,800.
For the beginning of the second year, the current balance is $1,800 and another $1,650 is added so prinicipal P is equal to $1,800 + $1,650 = $3,450,
A = $3,450 (1 + 0.20) = $3,450 (1.20) = $4,140.
For the start of the third year, current balance is $4,140 and $1,820 is added so principal is $4,140 + $1,820 = $5,960,
A = $5,490 (1 + 0.20) = $5,490 (1.20) = $7,152.
Final answer:
To find Stowell's account balance after three years with a 20% annual compound interest, calculate the future value of each deposit ($1,500 today, $1,650 in one year, and $1,820 in two years) and sum them up.
Explanation:
Stowell's account balance three years from today, with 20% interest compounded annually, can be calculated considering each of the deposits separately and then adding them together. The deposits made are as follows: $1,500 today, $1,650 one year from today, and $1,820 two years from today. We'll calculate the future value of each deposit after three years and sum them to find the total balance.
The formula for compound interest is A = P(1 + r)^n, where P is the principal amount, r is the annual interest rate (as a decimal), and n is the number of compounding periods.
First Deposit: $1,500 will compound for three years:So for the beginning of the first year where principal is $1,500,
A = $1,500 (1 + 0.20) = $1,500 (1.20) = $1,800.
For the beginning of the second year, the current balance is $1,800 and another $1,650 is added so prinicipal P is equal to $1,800 + $1,650 = $3,450,
A = $3,450 (1 + 0.20) = $3,450 (1.20) = $4,140.
For the start of the third year, current balance is $4,140 and $1,820 is added so principal is $4,140 + $1,820 = $5,960,
A = $5,490 (1 + 0.20) = $5,490 (1.20) = $7,152.