Ct1 X Assignment Solutions

Exhibit 1 shows that the customer lifetime value for each segment with a 15% discount rate.

Net Price = list price – trade discount amount = $300.00 - $15.00 = $285.00 6. Lee Company bought computer equipment - $7000.00, terms 4/10, n/30, FOB shipping point  Discounted price = List Price x (1-Discount) = $7000 x (100%-4%) = $7000 x 96% = $6720.00 Discounted price  Final Payment =

1. A $120,000, 5%, 200-day note dated June 6 is discounted on October 8. The discount period is:

The amount of money that I had spent over one week ended up totaling $100.77. To come up with the amount of money that would be spent in a year if I spent $100.77 for 52 weeks, the total would be $5,240.04. Then to determine the amount of money that would be spent over 25 years, it would be $5,240.04 multiplied by 25 years, and that would be $131,001. That is $131,001 that I spent on completely unnecessary expenses. To determine what $131,001 would equal in todays money it requires to be plugged into an equation, PV=FV/(1+i)^n . “FV” stands for the future value, that is the value that we calculated by multiplying by 25 years, $131,001. The “i” stands for the interest

4. Now consider a second alternative for accumulating funds to buy the new billing system. In lieu of a lump sum investment, assume that five annual payments of $32,000 are made at the end of each year.

WILSON OFFERS HIS CUSTOMERS TERMS OF 2 % DISCOUNT FOR PAYMENT IN 10 DAYS WHAT WOULD COST.

9. What is the present value of an 8-year annuity that makes quarterly payments of $73 if

Given that the total profit over 8 years is $1.2375B (or $155M per year for 8 years), we will now compute the Present Value of this amount using the following formula:

FVN = FV1= PV × (1 +I)N = $500 x (1 + 0.08) = $500 x 1.08 = $540

owing for a percentage yield of 74.###%. A percentage yield of 11#.##% was also calculated, had the

665 0.34 174 216 537 234 122 1.2 0.2 60.4 9.6 0.22 65.0 2,149 554 66.6 2,483 80,300 492 14 23 6 21 15 874 524 12,216 30

2.22 0.54 69.91 7.39 99.07 54.00 116.51 113.84 3.01 1.03 0.63 0.54 6.32 1.49 38.21% 15.70% 8.59% 10.50% 23.85%

RE = D1/P0 + g = (D0 (1 + g))/P0 + g RE = 11.46%

i. The present value of the future minimum lease payments is equal to $8,546. This amount was calculated by discounting each of the payments at the given rate of 12%.

With a discount rate of 4.4%, the present values of the rental payments for the years 2006 and 2007 are as follows: