Answer:
Explanation:
Future value after 24 months = 1200
present value = 1000
Let monthly rate of interest = r
1000 = 1200/( 1+r )²⁴
( 1+r )²⁴ = 1200/1000
( 1+r )²⁴ = 1.2
taking log on both sides
24 log( 1+r ) = log 1.2
24 log( 1+r ) = .07918
log( 1+r ) = .003299
( 1+r ) = 1.007625
r = .007625
monthly rate of interest in percent = .7625%
II Option
Future value after 24 months = 1220
present value = 1020 - 20 = 1000
Let monthly rate of interest = r
1000 = 1220/( 1+r )²⁴
( 1+r )²⁴ = 1220/1000
( 1+r )²⁴ = 1.22
taking log on both sides
24 log( 1+r ) = log 1.22
24 log( 1+r ) = .086359
log( 1+r ) = .003598
( 1+r ) = 1.008319
r = .008319
monthly rate of interest in percent = .8319%
b )
Effective annual rate of uncle = (1.007625)¹² -1
= 1.09543 - 1 = .09543
In percent = 9.543 %
Effective annual rate of greedy friend = ( 1.008319)¹² -1
= 1.1045 -1
= 10.45 %
c ) The first one is cheaper so it is preferable.
Answer:
0.56
Explanation:
Opportunity cost refers to the alternative forgone from a list of preference. It is a concept in economics developed as a result of the scarce resources available to satisfy unlimited wants.
Since the family can afford either 80 cans of beans or 45 frozen dinners.
it means that for every 1 can of beans purchased, 45/80 frozen dinner will be let go or not be purchased. Also, for unit of frozen dinners purchased, the family sacrifices the purchase of 80/45 cans of beans.
Hence the opportunity cost of a can of beans in terms of frozen dinners in the time frame
= 45/80 frozen dinner
= 0.5625
to 2 decimal place = 0.56
Answer: 15000; 3750
Explanation:
From the question,
Q = 660 – 12P
MC = 5
The consumer surplus in a perfectly competitive market will be:
P = MC
Therefore, P = 5
Q = 660 - 12P = 660 - 12(5) = 660 - 60 = 600
Consumer surplus = 1/2 × (55 - 5) (600)
= 1/2 × 50 × 600
= 15,000
For monopoly, MR = MC
Total Revenue = P × Q
Since Q= 660 - 12P
P = (660 - Q)/12
TR = P × Q
= (660 - Q)/12 × Q
= (660Q- Q²)/12 × Q
MR = (660 - 2Q)/12
MR = MC
(660 - 2Q)/12 = 5
(660 - 2Q) = 5 × 12
660 - 2Q = 60
2Q = 660 - 60
2Q = 600
Q = 600/2
Q= 300
Since P =(660 - Q)/12
= (660 - 300)/12
= 360/12
= 30
Consumer surplus = 1/2 × (55 - 30) (30)
= 1/2 × 25 × 300
= 3750
Therefore, the answer is 15000; 3750
Answer:
Following is given the solution of the question.
I hope it will help you a lot.
Explanation:
Answer:
(E) Given the 7.5% interest rate on the mortgage bonds, the plain debentures might carry an interest rate of 8.0% and the subordinated debentures a rate of 8.5%.
Explanation:
In the problem shown above, the company wants to create a financial expansion by issuing bonds. The company has three different options to use for the bond issuing and plans to select the best options by considering different variables. Based on the available options, if the mortgage bond has an interest rate of 7.5%, there will be an approximately 8% interest rate on the plain debentures and 8.5 interest rate on the subordinated debentures.
