Answered

Welcome to Westonci.ca, the place where your questions find answers from a community of knowledgeable experts. Explore thousands of questions and answers from knowledgeable experts in various fields on our Q&A platform. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

Well-managed companies set aside money to pay for emergencies that inevitably arise in the course of doing business. A commercial solid-waste recycling and disposal company in Mexico City puts 0.5% of its after-tax income into such an account. (a) How much will the company have after 7 years if after-tax income averages $15.2 million and inflation and market interest rates are 5% per year and 9% per year, respectively

Sagot :

Answer:

$699,200

Explanation:

According to the scenario, computation of the given data are as follows,

After tax income = $15,200,000

Amount in account = 0.5% × $15,200,000 = $76,000

Time period = 7 years

inflation = 5%

Interest rate = 9%

So, Total amount after 7 years = $76,000 × (F/A, 9%, 7)

= $76,000 ×[ [tex]((1+.09)^{7}-1 )[/tex] ÷ .09]

= $76,000 × [.82803912082 ÷ .09]

= $76,000 × 9.2

= $699,200

Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Discover more at Westonci.ca. Return for the latest expert answers and updates on various topics.