Answer:
(1) 95.23 (2)5.008% or 5% (3) The value of equity is zero (4)The future value of the firm will be 110 mil. than Firm equity will be 110-100 =10 mil not zero
Explanation:
Solution
Given that:
The worth in good in this example= 110 mil
Worth in bad in this example =90 mil
The future value =( 110+90)/2
=100
Future value = 100
Now
(1) The Present value = F/(1+r)^n
=100/1.05
=95.23
(2) the yield to maturity is given below:
YTM = (FV/PV)^n -1
Here
FV = future value
PV = present value
n=years
Thus
(100/95.23)^1 -1
=5.008% or 5%
Since the bond are zero coupon bond so interest rate is equal to YTM
(3) The total worth =100 mil
Thus
The Debt +equity =100
100+equity =100
Equity =100-100
=0
Hence the value of equity is zero.
The firm BIG is only debt firm. Firm do not have equity.
(4) The future value of the firm will be 110 mil. than Firm equity will be 110-100
=10 mil not zero
Answer:
Number of stocks in portfolio = 15
Last year portfolio return = 11%
Out of 15 stocks, RJH stock is doubles in value.
Zachary should sell some of the RJH stock to attain some level of profit and is also constitutes higher percentage among all of the other holdings. By selling the stock of RJH, he will be able to earn more profit than any other holding he has.
The amount of people who can come is 38
Answer:
inflation
Explanation:
The real interest rate charged on a loan = nominal interest rate - inflation rate
The inflation rate is the change in the general level of prices, and as the inflation rate increases, the purchasing power of the currency decreases. For example, if you purchase 50 cans of Coke with $50 this year, and the inflation rate is 10%, you will only be able to purchase only 45 cans next year with the same $50.