Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 3.10E
Exercise 3.10
LO 2
Compare investment alternatives You have accumulated $15,000 and are looking for the best
Required:
- Calculate the amount of return you would earn if the $15,000 were invested for one year at 4%.
- Calculate the net amount of return you would earn if $5,000 were borrowed at a cost of 13%, and then $20,000 were invested for one year at 7%.
- Calculate the net rate of
return on your investment of $15,000 if you accept the strategy of part b. - In addition to the amount of investment required and the rate of return offered, what other factors would you normally consider before making an investment decision such as the one described in this exercise?
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Students have asked these similar questions
8
[Question text] You are considering to invest in a savings plan. The plan offers a rate of return of 8 percent per year. The plan requires you to save RM1,500, RM1,250, and RM6,400 at the end of each year for the next three years, respectively, how much do you need to save today?
Select one:
A. RM7,541
B. RM7,203
C. RM8,449
D. RM11,623
QUESTION 4
Suppose you make a 2-year investment of $100,000 and it grows by 100% to $200,000 during the first year.
During the second year, however, the investment suffers a 50% loss, from $200,000 back to $100,000.
Calculate the geometric mean return rate.
0%
15%
25%
18%
QUESTION 5
A mutual fund salesperson has arranged to call on three people tomorrow. Based on past experience, the salesperson knows there is a 20% chance of closing a sale on each call. Below is the probability distribution of the number of sales. Determine the Expected number of sales the salesperson will make.
Random Variable X = # sales
P(X)
3
0.08
2
0.096
1
0.384
0
0.512
a) 0.816
b) 0.716
c) 0.616
d) 0.516
QUESTION 6
A random variable is a function or rule that assigns a number to each outcome of an experiment.
True
False
Question 1
Q1(a) Create simple examples to illustrate the following concepts.
i.
Time value of money
ii.
Effective interest
Sinking Fund
111.
iv.
Amortized loan
Q1(b) Assuming you will be able to deposit GHC6000 at the end of each of the next four years in a bank account
paying 9% interest. You currently have GHC6000 in the account. How much will you have in four years?
Q1(c) After carefully going over your budget, you have determined you can afford to pay GHC854 per month
toward a new car. You call up your local bank and find out that the going rate is 1% per month for 48 months.
How much can you borrow?
Q1(d) Suppose, a business takes out a GHC7000, 7-year loan at 9%. If the loan agreement calls for the borrower
to pay the interest on the loan balance each year and to reduce the loan balance each year by GHC 1000. How
would the loan repayment be? Illustrate with the aid of a table.
Chapter 3 Solutions
Accounting: What the Numbers Mean
Ch. 3 - Prob. 3.1MECh. 3 - Mini-Exercise 3.2 LO 3 ROI analysis using the...Ch. 3 - Mini-Exercise 3.3 LO 4 Calculate ROE Firm L had...Ch. 3 - Prob. 3.4MECh. 3 - Mini-Exercise 3.5 LO 6 Calculate current...Ch. 3 - Mini-Exercise 3.6 LO 6 Calculate working capital...Ch. 3 - Exercise 3.7 LO 2 Compare investment alternatives...Ch. 3 - Prob. 3.8ECh. 3 - Exercise 3.9 LO 2 Compare investment alternatives...Ch. 3 - Exercise 3.10 LO 2 Compare investment alternatives...
Ch. 3 - Exercise 3.11 LO 3 ROI analysis using the DuPont...Ch. 3 - Prob. 3.12ECh. 3 - Prob. 3.13ECh. 3 - Prob. 3.14ECh. 3 - Exercise 3.15 LO 6 Effect of transactions on...Ch. 3 - Exercise 3.16 LO 6 Effect of transactions on...Ch. 3 - Calculate profitability measures using annual...Ch. 3 - Prob. 3.18PCh. 3 - Problem 3.19 LO 6 Calculate and analyze liquidity...Ch. 3 - Problem 3.20 LO 6 Calculate and analyze liquidity...Ch. 3 - Problem 3.21 LO 3 Applications of ROI using the...Ch. 3 - Prob. 3.22PCh. 3 - Case 3.23 LO 3. 4, 6, 2 Focus company-analysis of...Ch. 3 - Case 3.24 LO 3, 4, 6, 7 Analysis of liquidity' and...
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