Answer:
The current share price is 56.60
Explanation:
The expected dividend by Lohn Corporation in 1st year, D1 = $12
The expected dividend by Lohn Corporation in 2nd year, D2 = $9
The expected dividend by Lohn Corporation in the third year, D3 = $8
The expected dividend by Lohn Corporation in the fourth year, D4 = $3.50
Given the interest rate = 14%
Now use the present value of all dividends and then add all to find the current share price.
Present value (PV) = Future value / (1+r)^n
r = interest rate
n = time period
PV of D1 = 12 / 1.14 = 10.53
PV of D2 = 9 / 1.14^2 = 6.93
PV of D3 = 8 / 1.14^3 = 5.40
PV of D4 = 3.50 / 1.14^4 = 2.07
D5 = 3.50 * 1.07 = 3.745
P4 = D5 / (14%-7%) = 53.5
PV of P4 = 53.5 / 1.14^4 = 31.68
The Stock price = 10.53 + 6.93 + 5.40 + 2.07 + 31.68
The Stock price = 56.60
In the Month of March, Digby received orders of 107 units at a price of $15.00 for their product Dug. Digby uses the accrual method of accounting and offers 30 day credit terms. Digby delivers 107 units in April. They received payment for 54 units in March, and 54 units in April. In the March income statement, how much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands) Select: 1Save Answer 0, $1,605 0, $803 $803 , $803 $1,605 , 0
Answer:
0, $1,605
Explanation:
The computation of the revenue recognized in the month of March and in the month of April is shown below:
Since the Digby delivers 107 units in April so now revenue recognized should be in the month of March
But for the month of April, it would be
= 107 units × $15
= $1,605
Hence, the first option is correct
__________ is not a technology company but used technology to revamp the business process of renting movies.
Answer:
Netflix
Explanation:
Netflix is a company that uses streaming service where viewers can watch varieties of documentaries, popular films etc on their network . This type of service enables users to access latest films, TV shows, offered by Netflix over the internet. Although users get to watch and enjoy these services through a paid subscription, there are quite unlimited films that can be watched and downloaded for offline viewing.
Unlike a conventional method where people can watch and download films, documentaries online, Netflix provides a platform that warehouses collections of films, documentaries, TV shows hence revamp the business methods of renting movies.
In an effort to capture the large jet market, Wright Brothers Aviation invested $12 billion developing its 1903A, which is capable of carrying 800 passengers. The plane has a list price of $170 million. In discussing the plane, Wright Brothers Aviation stated that the company would break even when 170 1903As were sold.
a. Assuming the break-even sales figure given is the accounting break-even, what is the cash flow per plane? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole dollar amount, e.g., 32.)
b. Wright Brothers Aviation promised its shareholders a return of 30 percent on the investment. If sales of the plane continue in perpetuity, how many planes must the company sell per year to deliver on this promise? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
c. Suppose instead that the sales of the 1903A last for only 10 years. How many planes must Wright Brothers Aviation sell per year to deliver the same rate of return? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a) $70,588,235 per plane
b) 51 planes per year
c) 54.99 planes
Explanation:
initial investment $12,000 million
unit price $170 million
break even point = 170 x $170 million = $28,900 million
cash flow per plane = initial cost / break even number = $12,000 million / 170 units = $70,588,235 per plane
$12,000 million x 30% = $3,600 million in returns
$3,600,000,000 / $70,588,235 per plane = 51 planes per year
if the project lasts only 10 years, then its yearly returns = $12,000 / 3.09154 (PV annuity factor, 30%, 10 periods) = $3,881,560,606
number of planes sold per year = $3,881,560,606 / $70,588,235 per plane = 55 planes
Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.
Direct material cost per unit of RST $15
Total estimated manufacturing overhead $300,000
Total cost per unit of RST $80
Total estimated machine hours 150,000 MH
Direct labor cost per unit of RST $23
A. 21 MH per unit of RST.
B. 2 MH per unit of RST.
C. 20 MH per unit of RST.
D. 37.5 MH per unit of RST.
E. 38 MH per unit of RST.
Answer:
A. 21 MH per unit of RST
Explanation:
Total cost = Direct material + Direct labor + Overhead
$80 = $15 + $23 + Overhead
Overhead = $80 - $15 - $23
Overhead = $42
Plant-wide overhead rate = Total estimated manufacturing overhead / Total estimated machine hours
Plant-wide overhead rate =$300,000 / 150,000 machine hours
Plant-wide overhead rate =$2 per machine hours
Machine hour per unit of RST = Overhead per unit of RST / Plant wide overhead rate
Machine hour per unit of RST = $42/$2
Machine hour per unit of RST = 21 machine hour per unit of RST
Thus, the machine hour per unit of RST is 21 Machine Hour per unit of RST.
You purchased a zero-coupon bond one year ago for $283.83. The market interest rate is now 9 percent. Assume semiannual compounding. If the bond had 15 years to maturity when you originally purchased it, what was your total return for the past year?
Answer:
2.73%
Explanation:
Price of Zero Coupon Bond now = 1,000 / (1 + 0.09 / 2)^28
Price of Zero Coupon Bond now = 1,000 / (1 + 0.09 / 2)^28
Price of Zero Coupon Bond now = 1,000 / 3.4297
Price of Zero Coupon Bond now = $291.57
Rate of Return = (291.57 - 283.83) / 283.83
Rate of Return = 2.73%
Cost of goods sold is characterized by the following statements
Answer:
The interpretation of the particular context is provided in the subsection below on clarification.
Explanation:
The cost of the products sold has become a reporting liability on either the cash flow statement. The cost of the goods offered for sale includes the cost of materials expenditures and the time to prepare such a component for selling price. The cost of the goods generated is measured using gross profit. Prices of the products sold are also known as selling costs.calculate the gross margin in dollars and percentage for the home department if net sales = 140,000, billed cost of merchandise = $84,000, cost discount = 7.5%, shipping charges = 240
Answer:
Gross Margin (dollars) = $62,060
Gross Margin % = 44.33 %
Explanation:
Calculation of Gross Margin
Net Sales $140,000
Less Cost of Sales
Opening Stock $0
Add Purchase of Merchandise $84,000
Less Trade Discount ($84,000 × 7.5%) ($6,300)
Add shipping charges $240
Cost of Goods Sold ($77,940)
Gross Profit $62,060
Gross Margin %
Gross Margin % = Gross Profit / Net Sales × 100
= $62,060 / $140,000 × 100
= 44.33 %
Which statements are TRUE regarding purchase limitations under Regulation A? I Tier 1 offerings are subject to purchase limitations II Tier 1 offerings are not subject to purchase limitations III Tier 2 offerings are subject to purchase limitations IV Tier 2 offerings are not subject to purchase limitations
A. I and III B. I and IV C. II and III D. II and IV
Answer:
Tier 1 offerings are not subject to purchase limitations and Tier 2 offerings are subject to purchase limitations ( C )
Explanation:
purchase limitations under regulation A states that Non-accredited investors buying tier 2 offerings are subject to purchase limitations which simply means that Tier 2 offerings are subject to purchase limitations while Tier 1 offerings are not subject to purchase limitations according to purchase limitations under Regulation A .
We know the following expected returns for stocks A and B, given different states of the economy:
States(s) Probability E(rAS) E(rB,)
Recession 0.2 -0.1 0.04
Normal 0.5 0.08 0.05
Expansion 0.3 0.1 0.07
1. What is the expected return for stock A?
2. What is the expected return for stock B?
Answer:
Expected Returns:
1. Stock A:
= (0.2 x 0.04) + (0.5 x 0.05) + (0.3 x 0.07)
= -0.02 + 0.04 + 0.12
= 0.14
= 14%
2. Stock B:
= (0.2 x -0.1) + (0.5 x 0.08) + (0.3 x 0.1)
= -0.008 + 0.025 + 0.021
= 0.054
= 5.4%
Explanation:
a) Data and Calculations:
States(s) Probability E(rAS) E(rB,)
Recession 0.2 -0.1 0.04
Normal 0.5 0.08 0.05
Expansion 0.3 0.1 0.07
b) An investor in Stock A's expected return is the sum of the returns under different economic scenarios of recession, normal economy, and expansion, weighed by the probabilities of each event, which the investor would expect to realize by making the investment in a security. Stock A's expected return shows that the investor in the stock would expect a 14% return on the value of the investment. Whereas, the same investor would expect a return of 5.4% in Stock B's investment.
ABC has the following: cash, $102 million; receivables, $94 million; inventory, $182 million; other current assets, $18 million, Plant Property and Equipment $220 million, accounts payable, $98 million long-term debt, $23 million. Based on these amounts, what is the current ratio (round to 2 decimal points)?
Answer:
Current ratio = 4.04
Explanation:
Current ratio measures the ability of a business to settle its short term obligations using its liquid financial resources (current assets)
A current ratio in excess of 2 is considered as adequate (except for some special occasions) and vice versa.
Current ratio is computed as follows:
Current ratio = current assets/current liabilities
Applying this we have
$
Cash 102
Receivable 94
Inventory 182
Other current assets 18
Total current assets 396
Total current liability 98
Current ratio= Total current assets / Total current liability
Current ratio = 396/98= 4.04:1
Current ratio = 4.04
Two Brothers Moving prepared the following sales budget: Month Cash Sales Credit Sales March $18000 April May June Credit collections are % in the month of sale, % in the month following the sale, and % two months following the sale. The remaining % is expected to be uncollectible. What are the total cash collections in June at Two Brothers Moving?
Answer: $104,360
Explanation:
The cash collections for June will be;
= June Cash sales + (50 % *June credit sales ) + (43% * May credit sales) + ( 5% of April credit sales)
= 58,000 + (0.5 * 55,000) + (0.43 * 42,000) + ( 0.05 * 16,000)
= 58,000 + 27,500 + 18,060 + 800
= $104,360
Genesee Organics has just bought a new packing machine for its warehouse.
The total cost was $750,000. The CCA rate is 25%. What is the CCA for Year 2?
Answer:
CCA for year 2 is $164,062.50
Explanation:
Total cost of machine = $750,000
CCA rate = 25%
CCA in year 1 = (Total cost / 2) * CCA rate
CCA in year 1 = ($750,000/2)*0.25
CCA in year 1 = $93,750
For year 2, CCA = (Total cost - CCA in year 1) *CCA rate
For year 2, CCA = ($750,000 - $93,750)*0.25
For year 2, CCA = $164,062.50
Hence, CCA for year 2 is $164,062.50
Wha) is the name given to the operations used by most organizations to
reach their customer goals?
A. Market planning
B. Research and development
C. Universal marketing functions
D. Customer support
SUBMIT
Answer:it’s c
Explanation:A P E X
Answer:
Explanation:
c
Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $363,800; materials of $404,000 and direct labor of $214,000. During the year Adams Incurred $386,400 in materials costs, $382 200 in overhead costs and $218,000 In direct labor costs. Compute the amount of under- or overapplied overhead for the year.
A) $11600 overapplied.
B) $18,400 overapplied.
C) $11,600 underapplied
D) $18,400 underapplied.
E) $4.200 underapplied.
Answer:
The correct answer is C.
Explanation:
Giving the following information:
Estimated:
Overhead= $363,800
Direct labor= $214,000
Actual:
$382,200 in overhead costs
$218,000 direct labor costs
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 363,800/214,000
Predetermined manufacturing overhead rate= $1.7 per direct labor dollar
Now, we can allocate overhead based on actual direct labor costs:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 1.7*218,000
Allocated MOH= $370,600
Finally, we can determine the under/over allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 382,200 - 370,600
Under/over applied overhead= $11,600 underallocated
The "comparative advantage" argument for the popularity of interest rate swaps is that poorly rated firms may be pushed to borrowing in the based on the assumption floating rate market while their first choice is fixed.
a) true
b) false
Answer: Option A -- True
Explanation:
Comparative advantage can be defined as acompany which has higher credit rating pays less to raise funds. Therefore, the "comparative advantage" argument for the popularity of interest rate swaps is that poorly rated firms may be pushed to borrowing in the based on the assumption floating rate market while their first choice is fixed is TRUE
The following information is available for a company's cost of sales over the last four months.Month Units sold Cost of salesJanuary 400 $ 31,000February 800 $ 37,000March 1,600 $ 49,000April 2,400 $ 61,000Using the high-low method, the estimated total fixed cost is:A. $25,000.B. $30,000.C. $13,692.D. $100,000.E. $50,000.
Answer:
Fixed costs= $25,000
Explanation:
Giving the following information:
January 400 $ 31,000
February 800 $ 37,000
March 1,600 $ 49,000
April 2,400 $ 61,000
To calculate the fixed costs, first, we need to determine the unitary variable cost:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (61,000 - 31,000) / (2,400 - 4,000)
Variable cost per unit= $15
Now, we can calculate the fixed costs:
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 61,000 - (15*2,400)
Fixed costs= $25,000
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 31,000 - (15*400)
Fixed costs= $25,000
__________ are broad statements describing where the organization wants to be in the future.
Answer:
official goals
The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir Company Sales $510,000 $510,000 Variable costs 306,000 255,000 Contribution margin 204,000 255,000 Fixed costs 195,840 246,840 Net income $8,160 $8,160Calculate Contribution margin ratio
Answer:
Results are below.
Explanation:
Giving the following information:
Blanc Company:
Sles= 510,000
Variable costs= 306,000
Noir Company
Sales= $510,000
Variable costs= 255,000
To calculate the contribution margin ratio, we need to use the following formula:
contribution margin ratio= (sales - variable cost) / sales
Blanc:
contribution margin ratio= (510,000 - 306,000)/510,000
contribution margin ratio= 0.4
Noir:
contribution margin ratio= (510,000 - 255,000) / 510,000
contribution margin ratio= 0.5
If a store sells a good at the market price, even though the government authorities have set the maximum price that can be charged for it, the store is selling the good in a(n)
Complete Question:
If a store sells a good at the market price, even though the government authorities have set the minimum price that can be charged, the store is selling the good in an?
Group of answer choices
A. black market for a market price that is higher.
B. black market for a market price that is lower.
C. effort to eliminate a surplus of the good.
D. legal market for a market price that is higher.
E. legal market for a market price that is lower.
Answer:
A. black market for a market price that is higher.
Explanation:
If a store sells a good at the market price, even though the government authorities have set the maximum price that can be charged for it, the store is selling the good in a black market for a market price that is higher.
A black market can be defined as a type of underground market that is typically characterized by illegal transactions of goods and services as against the ethical trade of finished products.
In this context, any trader selling goods at a market price other than the maximum price that the government has set is certainly selling at a higher price and would only do that in an illegal way such as a black market, so as not to be caught by the regulatory agencies of the government.
"In 2020, a customer buys a 3% U.S. Government bond maturing in 2024 at 102. The customer elects to amortize the bond premium for tax purposes. If the bond is sold after 2 years, its cost basis at that time is:"
Answer: A. 101
Explanation:
Amortization is done on the premium of the bond if elected to be done by the owner.
Bonds at par are worth 100 so a 102 bond has a premium of 2.
If amortized, this premium will have to be amortized over the period till maturity which in this case is 4 years.
Amortization per year = 2 points / 4 years
= 0.5
In 2 years the amortization would therefore be 1 point.
Cost basis of Bond = 102 - 1
= 101
A company wants to create a dynamic survey that navigates users through a different series of questions based on their previous responses. What is the recommended solution to meet this requirement
Answer:
Visual force
Explanation:
Visual force is a programming language made and designed for the purpose of sales force, which shall allow the company to create and expand its horizons. It helps to create a user interface.
With the help of that user interface the company can interact with as many number of people as they want. Also it uses the defined database, that you would create with the help of such interface.
Visual force can be designed in the manner as required by the company. Simple or complex depending upon the use as required.
Gilberto Company currently manufactures 60,000 units per year of one of its crucial parts. Variable costs are $2.30 per unit, fixed costs related to making this part are $60,000 per year, and allocated fixed costs are $45,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $3.50 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 60,000 and buying 60,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier?
Answer:
the costs of producing the parts is $12,000 less than buying them from an outside vendor
Explanation:
production costs (60,000 units)
variable $2.30 per unit
fixed (avoidable) $1 per unit
fixed (unavoidable) $0.75 per unit
total $4.05 per unit
price from outside supplier $3.50 per unit
total incremental cost of buying from outside supplier = (60,000 x $3.50) + (60,000 x $0.75) = $210,000 + $45,000 = $255,000
production costs to manufacture = 60,000 x $4.05 = $243,000
the costs of producing the parts is $12,000 less than buying them from an outside vendor
A manufacturer of tiling grout has supplied the following data: Kilograms produced and sold 380,000 Sales revenue $ 2,736,000 Variable manufacturing expense $ 1,349,000 Fixed manufacturing expense $ 336,000 Variable selling and administrative expense $ 399,000 Fixed selling and administrative expense $ 372,000 Net operating income $ 280,000 The company's break-even in unit sales is closest to:
Answer:
Break-even point in units= 272,308 units
Explanation:
Giving the following information:
Variable manufacturing expense $ 1,349,000
Variable selling and administrative expense $ 399,000
Total variable cost= 1,748,000
Fixed manufacturing expense $ 336,000
Fixed selling and administrative expense $ 372,000
Total fixed costs= 708,000
First, we need to calculate the unitary selling price and unitary variable cost:
Unitary selling price= 2,736,000/380,000= $7.2
Unitary variable cost= 1,748,000/380,000= $4.6
Now, to calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 708,000 / (7.2 - 4.6)
Break-even point in units= 272,308 units
Valley Farms offers to sell Whole Harvest Bakeries, Inc., five hundred bushels of wheat. Whole Harvest responds, "We agree to buy five hundred bushels only if the wheat is Grade A quality." This statement is
Answer: a counteroffer
Explanation:
From the question, we are informed that Valley Farms offers to sell Whole Harvest Bakeries, Inc., five hundred bushels of wheat and that Whole Harvest responds by saying "We agree to buy five hundred bushels only if the wheat is Grade A quality."
The above statement is s counteroffer. A counteroffer is a response that is given based on an initial offer and it happens mostly when the initial offer is not accepted and therefore it is replaced with another offer.
Below is the common equity section (in millions) of Fethe Industries' last two year-end balance sheets:
2015 2014
Common stock $2,000 $1,000
Retained earnings 2,000 2,340
Total common equity $4,000 $3,340
The company has never paid a dividend to its common stockholders. Which of the following statements is CORRECT?
a. The company's net income in 2014 was higher than in 2015.
b. The company issued common stock in 2015.
c. The market price of the company's stock doubled in 2015.
d. The company had positive net income in both 2014 and 2015, but the company's net income in 2014 was lower than it was in 2015.
e. The company has more equity than debt on its balance sheet.
Answer: b. The company issued common stock in 2015.
Explanation:
Common Stock is recorded at par value in the books and so the only things that can affect it are more stock being issued which would increase it or treasury stocks being purchased which would decrease it.
As the common stock increased in 2015 from 2014 by $1,000 more, it shows that the company issued $1,000 worth of stock in 2015.
The phone bill for a corporation consists of both fixed and variable costs. Refer to the fourmonth data below and apply the highlow method to answer the question.
Min. Total Bill
January 460 $4,000
February 240 $2,675
March 180 $2,655
April 310 $5,730
If the company uses 390 minutes in May, how much will the total bill be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)
A) $1,842
B) $1,829
C) $3,672
D) $6,157
Answer:
$3,601
Explanation:
The calculation for the total bill is as follow;
Change in total cost [ $4,000 - $2,655 ] = $1,345
Change in minutes [ 460 - 180 ] = 280
Therefore,
Variable cost per minute = $1,345 ÷ 280
= $4.80 per minutes
Also,
Variable costs for January
= 460 minutes * 4.80 per minutes
= $2,208
Total fixed costs =Total mixed cost - Total variable cost
= $4,000 - $2,208
= $1,792
For 390 minutes used by the company,
Total costs would be
= [390 minutes * $4.80 per minutes] + $1,792
= $1,872 + $1,729
= $3,601
characteristics of insurance that distinguish insurance contracts from other general contract
Answer:
When attempting to get a better understanding of insurance, there are four unique characteristics that need to be done and they are conditional, unilateral, adhesion, and aleatory.
hose economists who believe that monetary policy is more potent than fiscal policy argue that the: Group of answer choices
Answer: responsiveness of investment to the interest rate is small.
Explanation:
Here is the complete question:
Those economists who believe that fiscal policy is more potent than monetary policy argue that the:
a. responsiveness of investment to the interest rate is small.
b. responsiveness of investment to the interest rate is large.
c. IS curve is nearly horizontal.
d. LM curve is nearly vertical
Monetary policy are the activities of the central bank of a country that are used to control the supply an availability of money in an economy. Fiscal policy is the use of taxation and spending to control the economy.
Those economists who believe that monetary policy is more potent than fiscal policy argue that the responsiveness of investment to the interest rate is small.
The process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as:
Answer:
Zero based budgeting
Explanation:
In the zero based budgeting, the budget should be prepared from the starting i.e. based on the available budgeted income. Also it is not same as traditionla budget as no previous years statements should be considered
Also new prediction could be taken in consideration due to which it is costly and time consuming process
Therefore for initiated the first time, the zero based budgeting is used
Having recently graduated, Jack and Jill just started working for the same company. The company has offered each of them a retirement savings plan (e.g., an Individual Retirement Annuity, sometimes called an IRA) in which for each year that they save $5000 in the retirement plan, the company will also contribute $5000 to their plan. Contributions to the plan, if any, are made at the end of each year, and the money in the plan is invested in a broad index of stocks. Jill has decided to start the plan immediately-contributing $5000 at the end of each year for the next 30 years. Jack has decided postpone his starting the plan for 6 years because of his loan payments for a Tesla. Thus, Jack will make his first contribution to the plan in year 7. Use Excel to answer the following:
(a) If the return each year is exactly 10%, how much will Jill have in the account at the beginning of year 31?
(b) If the return each year is exactly 10%, how much will Jack have in the account at the beginning of year 31? (Recall Jack only contributed for 25 years)
(c) Suppose that instead the returns alternate between 30% and-10% (i.e., 30% for year 1, -10% for year 2, 30% for year 3, -10% for year 4, 30% for year 5, etc. Observe that the average return is 10%. How much will Jill have in the account at the beginning of year 31?
(d) If, similar to (c), the returns alternate between 30% and -10%, how much will Jack have in the account at the beginning of year 31?
(e) What is the difference between your answers to (a) and (b)? Also what is the difference between your answers (c) and (d)? What insight does this give?
(f) What is the difference between your answers to (a) and (c)? Also what is the difference between your answers (b) and (d)? What insight does this give?
Answer:
see attached
Explanation:
Please note that Jack foregoes contributions for 6 years, so only contributes for 24 years, not 25.
Per the attached spreadsheet, the account balances and differences at the end of year 30 (beginning of year 31) are ...
a) $822,470.11
b) $442,486.63
c) $645,266.45
d) $377,475.15
e) a-b $379,983.48
c-d $267,791.31
Jack takes quite a hit by not investing early. He could have increased his balance by about 86% (constant 10%) or 71% (alternating returns) had he started when Jill did. Ultimately, his Tesla costs him in excess of $260,000.
f) a-c $177,203.66
b-d $65,011.49
The alternating returns year to year mean the average rate for the annuity is lower than the highest return and higher than the lowest return. Over the long term, it tends toward the geometric mean of the annual rates. Here, that limit value is about √(1.30·0.90) -1 ≈ 8.17%. The returns realized by Jack and Jill in this scenario are 8.88% and 8.71%, respectively. (Jill's is lower because of the longer term.)
_____
Comment on average return
The alternating 30%, -10% returns cannot be averaged by adding them together and dividing by 2. Rather, the interest rate that corresponds to the resulting amount must be computed based on actual results.