Narrative 12-1Use Tables 12-1 and 12-2 from your text to answer the following problems. (Round dollars to the nearest cent)
Refer to Narrative 12-1. Find the interest earned on an account if a deposit of $800 is made at the END of every quarter, for 8 years if the bank pays 8% interest, compounded quarterly.
What will be an ideal response?
$9,781.62
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In general, revenue is recognized
A) during the production process. B) upon completion of the production process. C) when cash is received. D) when goods are sold or services are rendered.
When an appeal is filed with the U.S. Supreme Court, the Supreme Court
a. must hear the case if the validity of a federal statute is in question. b. must hear the case if two or more U.S. courts of appeals have decided the legal issue differently. c. has discretion as to which cases it hears. d. must hear all cases.
Parsons Company has a cash flow problem. The company owes its suppliers $300,000 on credit
terms of 2/10 net 40, but Parsons doesn't have the cash to pay during the discount period. Parsons, however, can borrow the $300,000 at annual rate of 24%. Should Parsons borrow the money to pay its accounts payable? A) Yes, the effective cost of forgoing the discount is greater than 24%. B) No, the effective cost of forgoing the discount is equal to 24%, and there are transactions costs associated with borrowing. C) No, additional borrowing will cost more for interest ($60,000 per year) than the discount is worth. D) It doesn't matter because the present value of the cost of borrowing is exactly equal to the amount of the discount for paying within 10 days.
Austin Company, which experiences considerable seasonal variation in its activity and has a high level of fixed costs, is preparing a bid for a project. This particular project will be done during a slack period of the year.Required:A. How should the fixed costs be handled in the bidding approach to this project?B. Assume that the company wins the bid and performs the job on a profitable basis, consistent with the results as projected in the bid. Several months later, the customer contacts Austin and requests a bid to do another job. This project, however, must be done during a peak season. How should Austin's management respond? How do you think the customer will respond?
What will be an ideal response?