Question

Betty Kay has a contract under which she will receive the following payment for the next...

Betty Kay has a contract under which she will receive the following payment for the next 5 years: $1,000, $2,000, $3,000, $4,000 and $5,000. She will then receive an annuity of $8,500 a year for the end of the 6th through the end of the 15th year. She is offered $30,000 to cancel the contract. If the payments are discounted at 14 percent should she cancel the contract? Show all workings

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution :-

Present Value of Future Receipts = $32,433.45

Offered Contract Price = $30,000

As Offered Price is less than the Present Value of Future Receipts

So no need to cancel a contract

If there is any doubt please ask in comments

Thank you please rate

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Betty Kay has a contract in which she will receive the following payment for the next...
Betty Kay has a contract in which she will receive the following payment for the next 5 year: $1,000, $2,000, $3,000, $4,000 and $5,000. She will then receive an annuity of $8,500 a year for the end of the 6th through the end of the 15th year. She is offered $30,000 to cancel the contract. If the payments are discounted at 14 percent should she cancel the contract? Show all workings. Please work using the Financial Calculator
Bridget Jones has a contract In which she will receive the following payment for the next...
Bridget Jones has a contract In which she will receive the following payment for the next five years: $20,000, $22,000, $23,000, and $24,000. she will then receive an annuity of $26,000 a year from the end of the 6th through the end of the 15th year. the appropriate discount rate is 10 percent. What is the present value oa all future payments.
Bridget Jones has a contract in which she will receive the following payments for the next...
Bridget Jones has a contract in which she will receive the following payments for the next five years: $8,000, $9,000, $10,000, $11,000, and $12,000. She will then receive an annuity of $14,000 a year from the end of the 6th through the end of the 15th year. The appropriate discount rate is 13 percent. a. What is the present value of all future payments?
Bridget Jones has a contract in which she will receive the following payments for the next...
Bridget Jones has a contract in which she will receive the following payments for the next five years: $17,000, $18,000, $19,000, $20,000, $21,000. She will then receive an annuity of $24,500 a year from the end of the sixth year through the end of the 15th year. The appropriate discount rate is 18 percent. a. What is the present value of all future payments?
A construction firm enters a long-term contract to build a bridge, which was completed in Year...
A construction firm enters a long-term contract to build a bridge, which was completed in Year 4. The expected and actual cash receipts and disbursements for the   project (in millions) are as follows: year Receipts Expenditures 1 3,000 4,000 2 4,000 3,000 3 5,000 2,000 4 8,000 1,000 Total 20,000 10,000 What is the income before taxes during each year under Installment Method of revenue recognition?   
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1:...
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1: $1.28 million Year 2: $1.83 million Year 3: $2.19 million Year 4: $2.74 million Year 5: $3.20 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate a contract that has a present value of $1.73 million more than that which has been offered....
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1:...
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1: $1.19 million Year 2: $1.55 million Year 3: $2.24 million Year 4: $2.72 million Year 5: $3.07 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate a contract that has a present value of $1.79 million more than that which has been offered....
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1:...
A baseball player is offered a 5-year contract that pays him the following amounts: Year 1: $2.7 million Year 2: $1.1 million Year 3: $1.6 million Year 4: $2.3 million Year 5: $1.4 million Under the terms of agreements all payments are made at the end of each year. Instead of accepting the contract, the basketball player asks his agent to negotiate a contract that has a present value of $2 million more than that which has been offered. Moreover,...
Sally is 92 years old and single and claimed by her daughter as a dependent. During...
Sally is 92 years old and single and claimed by her daughter as a dependent. During the tax year she received $1,900 in interest from her savings account, $1,500 in interest from State of New York general obligation bonds, and $8,000 distributions from a Roth IRA. What is her AGI? $1,500 $1,900 $3,400 $11,400 2) Cranky, age 70, is single and an employee of Unknown Corporation. Her only sources of income in 2017 $80,000 of W-2 wages, $5,100 in alimony...
8. According to IAS 39 and IFRS 9, which is true about the classification of financial...
8. According to IAS 39 and IFRS 9, which is true about the classification of financial assets and financial liabilities? A. Bonds payable should be classified as financial liability measured as fair value B. Held to maturity investments should be classified as financial assets measured as fair value. C. Loans and receivables should be classified as financial assets measured as amortized cost. D. Deposits from customers should be classified as financial liabilities measured as fair value. 9. Under IFRS, if...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT