Answer:
PV= $22,677.03
Explanation:
Giving the following formula:
Number of periods (n)= 9 years
Annual payment (A)= $3,800
Discount rate (i)= 12%
<u>First, we will calculate the future value of the payments using the following formula:</u>
FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}
FV= {3,800*[(1.12^9) - 1]} / 0.12 + {[3,800*(1.12^9)] - 3,800}
FV= 56,147.49 + 6,737.7
FV= $62,885.19
<u>Now, the present value:</u>
PV= FV / (1 + i)^n
PV= 62,885.19 / (1.12^9)
PV= $22,677.03
Answer:
His conclusion is based on his own soul-interest.
Explanation:
In the following situation, Ayden is a sole Proprietor he has no team or management system to discuss the idea of opening a new shop, Ayden has to decide about his all expenses, revenues, sources of finance and decision cost from his knowledge and experience.
- Ayden is behaving rationally because he is fully liable for his decisions.
Answer:
c. American put.
Explanation:
American options are defined as the type of contract that allows owner to exercise his option rights on any date of his choosing. This can even be on the date of expiration of the option.
European option on the other hand only allows option rights on the day of expiration of the option contract.
American put option allows the owner sell his option at any period within the contract life.
In the given scenario Jeff decided to sell his August options on on the 10th of August (before the expiry date). In exchange he recieved cash of $2,500.
GDP data can be criticized as being inaccurate measures of economic welfare because:
1. GDP data do not take into consideration all the changes in product quality.
2. The data do not take into consideration the negative effects which economic activities have on the environment.
3. The data do not take into account changes in the amount of leisure.
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Answer:
Vo = <u>C1 </u> + <u>C2 + V2</u>
1 + k (1 + K)2
Vo = <u>$129,600 </u> + <u>$129,600 + $3,200,000</u>
1 + 0.14 (1 + 0.14)2
Vo = $113,684.21 + $2,562,019.08
Vo = $2,675,703.29
The correct answer is C
Explanation:
The current value of the business equals cashflow in year 1 divided by 1 + K plus the aggregate of cashflow and sales value in year 2 divided by 1 + k raised to power 2.
