Swampy Ox Real Estate has been growing at a constant 5 percent rate for many yea
ID: 2789274 • Letter: S
Question
Swampy Ox Real Estate has been growing at a constant 5 percent rate for many years, and it expects to continue this growth long into the future. On January 1 of this year, which is the slow part of its selling season, Swampy Ox Real Estate total assets were $420 million. At the height of its selling season, which is at the end of June, Swampy Ox Real Estate expects total assets to be $480 million. How much of the $480 million in assets represents permanent assets, and how much represents temporary current assets?
Explanation / Answer
At the begining of the year Assets = $ 420
With 5% growth, Assets at the end of the year = $ 420 *(1.05) = $441
In June(6 months from start of the season) Assets would be at 420 * (1.05)^1/2 = $430.37 (these would be the permanent assets) (Assuming at the slow part of the season, there is no temporary current assets.
The remaining would be the temporary current assets = 480 - 430.37 = $49.62
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.