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Robert W.

Finance Tutor with Professional Investment Banking Experience

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Microsoft Excel

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Question:

What does the SUM() function do?

Robert W.

Answer:

The SUM() function is used to find the total of all values within an array of cells.

Finance

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Question:

John won the grand prize of a writing competition and has the option to receive $150.00 today or $200.00 a year from now. Assuming the interest rate is 10%, which option should John choose?

Robert W.

Answer:

To compare John's two options, the first step is to find the present value of each option. Money received in the future has less value than money received today. The present value of receiving $150.00 today is $150.00 since the money holds all of its value if it is received immediately. To calculate the present value of money received in the future, the formula is: Present value = Future value / (1 + r)^n - "Future value" is the amount of money that will be paid in the future - "r" is the interest rate - "n" is the number of periods until the money is received Therefore, the present value of $200.00 can be calculated as follows: Present value = Future value / (1 + r)^n Present value = $200.00 / (1 + 10%)^1 Present value = $200.00 / 1.1 Present value = $181.82 The present value of receiving $150.00 immediately is $150.00, but the present value of receiving $200.00 in a year is $181.82. John should choose to receive the $200.00 in a year since it has a higher present value.

Accounting

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Question:

In 2016, XYZ Incorporated had revenue of $572,600. The company's cost of goods sold during this period was $112,000. What was the gross profit margin of XYZ Incorporated in 2016?

Robert W.

Answer:

To calculate the gross profit margin of XYZ Incorporated in 2016, start by finding the company's gross profit. The gross profit is calculated by subtracting the cost of goods sold from revenue. The problem tells us that the revenue was $572,600 and the cost of goods sold was $112,00. Gross profit = Revenue - Cost of goods sold Gross profit = $572,600 - $112,000 Gross profit = $460,600 Once the gross profit is calculated, the gross profit margin is calculated by dividing gross profit by revenue. Gross profit margin = Gross profit / Revenue Gross profit margin = $460,600 / $572,600 Gross profit margin = .8044 or 80.44%

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