Bob, a philanthropist, is not sure what rate of return his gifts may realize once donated to
Question:
Bob, a philanthropist, is not sure what rate of return his gifts may realize once donated to his favorite charity. Determine the capitalized cost of $10,000 every 5 years forever, starting 5 years from now at an interest rate of
(a) 3%
(b) 8% per year.
(c) Explain the significant difference between the two capitalized costs.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 87% (8 reviews)
Cumulative valve of capitalized cost of 10000 every 5 years forever is equal to the present value of ...View the full answer
Answered By
Rahul Nagpal
I am a management student at IIM, a mechanical engineering graduate and also worked for two years with a startup as a Manager. I am an active learner of marketing, financial markets, and economics and teaching help me to learn more with others.
0.00
0 Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Economics questions
-
Determine the capitalized cost of a permanent roadside historical marker that has a first cost of $78,000 and a maintenance cost of $3500 once every 5 years. Use an interest rate of 8% per year.
-
What rate of return in the second year of an investment will wipe out a 50% gain in the first year?
-
What rate of return in the second year of an investment will nullify a 25% return on investment in the first year?
-
Assume that a security is selling at INR 217 and American call and American put options are available on the stock with 3 months maturity and an exercise price of INR 210. The call is selling at INR...
-
Show that (a) Log(-ei) = 1 - /2i; (b) Log (1 - i) = ln 2 - /4 i.
-
Does scheduling according to shortest processing time tend to minimize average flowtime or average tardiness?
-
A baseball is thrown by a pitcher at \(95 \mathrm{mph}\) through standard air. The diameter of the baseball is \(2.82 \mathrm{in}\). Estimate the drag force on the baseball. Explain how the actual...
-
Assume that you have been hired by Willington, CPA, as a new staff assistant. He informs you that his approach to audits has always been to assess control risk at the maximum and perform all the...
-
Crane reported the following results from the sale of 5000 units in May: sales $300000, variable costs $165000, fixed costs $65000, and net income $70000. Assume that Crane increases its selling...
-
Volunteer Corporation reported taxable income of $500,000 from operations this year. The company paid federal income taxes of $105,000 on this taxable income. During the year, the company made a...
-
A wealthy businessman wants to start a permanent fund for supporting research directed toward sustainability. The donor plans to give equal amounts of money for each of the next 5 years, plus one now...
-
Find the capitalized cost of a present cost of $300,000, annual costs of $35,000, and periodic costs every 5 years of $75,000. Use an interest rate of 12% per year.
-
Let S = {M| M is a DFA that accepts w R whenever it accepts w}. Show that S is decidable.
-
What are the criteria for categorizing an event as an extraordinary item? Provide an example of an event that would properly be categorized as an extraordinary item and one that would not. How does...
-
Philipich Company purchases \(80 \%\) of Hirst Company's common stock for \(\$ 300,000\) cash when Hirst Company has \(\$ 150,000\) of common stock and \(\$ 225,000\) of retained earnings. If a...
-
Why do companies report a gain or loss when they repurchase their bonds? Is this a real economic gain or loss?
-
How do credit (debt) ratings affect the cost of borrowing for a company?
-
On January 1 of the current year, Engel Company purchases \(100 \%\) of Ball Company for \(\$ 8.4\) million. At the time of acquisition, the fair value of Ball's tangible net assets (excluding...
-
Calculate the total mass of a circular piece of wire of radius \(4 \mathrm{~cm}\) centered at the origin whose mass density is \(ho(x, y)=x^{2} \mathrm{~g} / \mathrm{cm}\).
-
What is a lobbyist in US? How did this term emerge?
-
On December 30, Burrows Inc. sold $12,000 of merchandise to Wall Company on account, with terms 2/10, n/30. The merchandise cost Burrows $8,000. On January 3, Wall determines that a portion of the...
-
Rework Problem 4-47 assuming the construction bonds had been retired as an annuity (i.e., equal uni-form annual payments had been made to repay the $35 million). Data from Problem 4-47: A piece of...
-
It is likely that your college tuition will in-crease an average of 8% per year for the next 4 years. The annual cost of tuition at the beginning of your freshman year in college will be $12,000 (A 1...
-
Amy Parker, a 22-year-old and newly hired marine biologist, is quick to admit that she does not plan to keep close tabs on how her 401(k) retirement plan will grow with time. This sort of thing does...
-
1. Solve FV = PMT((1+r/m)mt 1) for PMT. PMT = r/m 2. Given the formula in the format to input into the calculator. PMT =
-
Bramble Enterprises purchased a machine on January 1 , 2 0 2 4 , for $ 2 2 1 0 0 . The machine had an estimated useful life of 1 0 years and an estimated residual value of $ 2 7 0 0 . Assuming...
-
For an ideal gas, what is the pressure in atm if the volume of the container is 5000 mL, the mol quantity is 0.812 mol, and the temperature is 28 degrees Celsius? PV = nRT (qu - A) (BA/MA + d) = nRT
Study smarter with the SolutionInn App