Author Question: Under TANF, there is a lifetime eligibility cap of five years, with some loopholes. Indicate ... (Read 36 times)

asan beg · **on:** Jul 1, 2018

Under TANF, there is a lifetime eligibility cap of five years, with some loopholes.

Indicate whether the statement is true or false

Question 2

Nancy is considering forming a 5 year business partnership with Claudia. Nancy believes her portion of the partnership will generate the following profits:

Year Profits Present Value
1 2,000
2 4,000
3 12,000
4 15,000
5 18,000

Nancy's appropriate discount rate is 6. To join the partnership, Nancy needs to invest 30,000. Does the partnership offer a rate of return in excess of 6?

Ptupou85 · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

T

Answer to Question 2

As the table below indicates, the present value of the partnership is in excess of the 30,000 investment. This implies the partnership offers a rate of return greater than 6. In this case, Nancy should join the partnership.

Year Profits Present Value
1 2,000 1,886.79
2 4,000 3,559.99
3 12,000 10,075.43
4 15,000 11,881.41
5 18,000 13,450.65
TOTAL 40,854.27