Answer:
c. $8.63
Explanation:
Missing word <em>"The forward LIBOR rate is 7%. All rates are compounded semiannually. A. $8.88
, B. $9.12
, C. $8.63
, D. $9.02"</em>
Principal = $1000, FRA Rate = 9 % per annum, LIBOR after 2 years = 7 % per annum, Compounding Frequency: Semi-Annual, Risk-Free Rate = 6 % per annum
The FRA matures 2 years or 24 months from now. Further, the Interest Rate that the FRA hedges will create an interest expense only at the end of the LIBOR loan period which is an additional 6 months after the 24 month period.
Hence, Exchange of Interest Expense at the end of 30 Months = (FRA Rate - LIBOR) x Principal (calculated on a semi-annual basis)
= (0.045 - 0.035) * 1000
= $10
Current Value of FRA = Present Value of Interest Expense at the end of the 30 Months Period
= 10 / [1+(0.06/2)]^(30/6)
= $8.6261
= $8.63
A. is required to draw up a petition listing all assets and liabilities.
Answer:
(a) 8.90%
(b) $102.04
Explanation:
(a) Market capitalization rate i.e. expected return:
= Risk free rate + Beta (Market return - Risk free rate)
= 4% + 0.70 (11% - 4%)
= 8.90%
Therefore, the market capitalization rate is 8.90%.
(b) Intrinsic value of stock:
= Expected dividend ÷ (Required return - Growth rate)
= $5 ÷ (8.90% - 4%)
= $102.04
Therefore, the intrinsic value of the stock is $102.04.
Balance sheet.
The balance sheet shows assets, liabilities, and stockholder's equity. Buying the van on credit would be a liability.
Answer:
The correct answer is B: the jobs produced during the period have been under-costed
Explanation:
Giving the following information:
If manufacturing overhead has been under-allocated during the period, then which of the following is true?
(a) the jobs produced during the period have been over-costed
(b) the jobs produced during the period have been under-costed
(c) the jobs produced during the period have been costed correctly
(d) none of the above
When manufacturing overhead has been under-allocated means that the actual costs incurred where superior that the estimated cost for the period.