Calculate the amount of return you would earn

Assignment Help Accounting Basics
Reference no: EM13911853

You have accumulated $12,000 and are looking for the best rate of return that can be earned over the next year. A bank savings account will pay 5%. A one-year bank certificate of deposit will pay 8%, but the minimum investment is $15,000.

Required:

a. Calculate the amount of return you would earn if the $12,000 were invested for one year at 5%.

b. Calculate the net amount of return you would earn if $3,000 were borrowed at a cost of 15%, and then $15,000 were invested for one year at 8%.

c. Calculate the net rate of return on your investment of $12,000 if you accept the strategy of part b.

d. 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?

Reference no: EM13911853

Questions Cloud

How does iso in terms of manufacturing relate to an industry : How does ISO in terms of manufacturing relate to an industry that only offers services? How do you think 'standardization' would be imparted to the customer?
Prepare an unadjusted trial balance and worksheet : Matthews delivery service completed the following transaction during December 2014. Prepare an unadjusted trial balance as of December 31,2014. Prepare a worksheet as of December 31,2014. Journalize the adjusting entries using the following adjustmen..
Importance of financial account to economic indicators : Propose the similarities and differences of current account and financial account in the balance of payments structure. In doing so, apply your analysis to explain the trade balance between U.S, and China.
What proportion of us residents who believed that amount : What proportion of the U.S. residents who believed that the amount of violent programming had increased believed that the overall quality of programming had decreased?
Calculate the amount of return you would earn : You have accumulated $12,000 and are looking for the best rate of return that can be earned over the next year. A bank savings account will pay 5%. A one-year bank certificate of deposit will pay 8%, but the minimum investment is $15,000.
Calculate the firms turnover and average total assets : Firm D has net income of $66,640, sales of $2,380,000, and average total assets of $680,000. Calculate the firm's margin, turnover, and ROI.
What amount should be reported as the bad debt expense : On December 31, 2013, Hanks Company's accounts receivable balance was of $300,000, and an analysis of their accounts receivable suggests that the Allowance for Doubtful Accounts should be 2% of accounts receivable. The balance in the Allowance for Do..
Does the advertisement seem to have been effective : What proportion of the individuals surveyed who recalled seeing the advertisement had purchased Fresh? Based on your answer to part a, does the advertisement seem to have been effective? Explain.
What contemporary factors contribute to internationalization : What contemporary factors are contributing to the internationalization of the subject of Finance and What contemporary factors are contributing to the internationalization of the subject of Finance?

Reviews

Write a Review

Accounting Basics Questions & Answers

  In addition to other costs fenwick telephone company

in addition to other costs fenwick telephone company planned to incur 475200 of fixed manufacturing overhead in making

  Discuss steps a company with a less-than-favorable debt

determine which of the two debt ratings you researched is the most accurate. defend your response.discuss steps a

  Acc for baber makayla module 2 cost volume profit analysis

Cost-Volume-Profit Analysis Case Assignment The Annie Smith Dance Center The Director of Annie Smith Dance Center is asking for assistance with the financial aspects of running a professional group of performers. She wants financial information prese..

  Income taxes in future financial reporting periods

Are there any provisions that a company can take to avoid a big hit from audit findings for income taxes in future financial reporting periods - sort of a temporary holding accounts?

  Franco and elisa share income equally during the current

franco and elisa share income equally. during the current year the partnership net income was 40000. franco made

  A bakery company is considering one capital budgeting

a bakery company is considering one capital budgeting project involving the replacement of a sophisticated brick oven

  Which source document do you believe is most important to

which source document do you believe is most important to the accounting process and why?

  Which is the true concerning bond covenants

Which of the following is true concerning bond covenants? When considering defined benefit pension plans, which of the following will not increase the projected benefit obligation (PBO)?

  Describe any steps a company could take to prevent

Discuss whether the situation described can happen to a company with a good control environment. Describe any steps a company could take to prevent such abuse.

  Computing variuos accounting measures

Sawaya Company had depreciation and amortization expenses of $522,311, interest expenses of $114,077, and an EBITDA of $1,521,087 for the year ended June 30, 2010. What is the Times Interest Earned for this company?

  Future lease payments for an operating lease

Using IFRS, future lease payments for an operating lease include what required disclosures?

  Characteristic of management accounting

The reason of the marketing idea is to rivet the attention of marketing managers on serving broad classes of requires supplier employee partner customer.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd