Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Given the following information, answer questions 18 to 21. Jack and Jill have a six-year consulting contract with an insurance company. For the first three

image text in transcribed
Given the following information, answer questions 18 to 21. Jack and Jill have a six-year consulting contract with an insurance company. For the first three years of the contract, the company guarantees them ($35,000 ID real dollars per year plus $25,000 in actual dollars per year. For years 4 and 5 of the contract, the company will pay them $45,000 in real dollars per year. And for year 6, they will receive $45.000 in real dollars plus $45,000 in actual dollars. They estimate inflation to be 3.63% per year for the duration of the contract. Their actual MARR is 14%. Please determine the present worth of this contract. 18. What is the total amount paid to Jack and Jill in actual dollars in year 3? (2 marks) a $ 54,736 is $ 57,464 +0.0363 $ 60,000 d) $ 63,952 19. What is the total amount paid to Jack and Jill in real dollars in year 6? (2 marks) a) $ 81,333 $ 90,000 $ 100,735 a $ 109,437 20. What is the PW of the amounts paid in real dollars during the contract? (2 marks) a) $ 151,778 b) $ 171,116 (c)$ 193,602 X d) $ 201,439 21. What is the PW of the amounts paid in actual dollars during the contract? marks) a) $ 70,789 os 78,542 C $ 87,345 d) $ 112,441

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions