Answer:
Compounding formula would be used here which is as under:
Future Value = Present value * (1+r)^n
FV = (PV is $2000) * ( 1 + 4%)^ 3 number of years
Remember that r is the return that is 4% that Sarah Jones will receive.
So
FV = $2250
So this is the amount that she will receive after three years. I would recommend her to invest in ordinary shares (take higher risk for higher return) so that she is able to buy a better car.
Answer:
8.5%
Explanation:
Avy incorporation has a beta of 1.10
The risk free rate is 3.0%
The market risk premium is 5.0%
Therefore, the required rate of return can be calculated as follows
Required rate of return= Risk-free rate+beta(market Risk premium)
= 3.0% + 1.10(5.0%)
= 3.0%+5.5
= 8.5%
Hence the required rate of return is 8.5%
Answer:
1. As this is a personal loss, the claim for casualty loss is:
= Loss Amount - $100 - 10% of Adjusted Gross Income (AGI)
= (142,500 loss - 79,750 insurance payout) - 100 - (10% * 362,500)
= $26,400
2. As a corporation:
Corporations do not get the $100 and AGI adjustment. Deductible casualty loss is:
= 142,500 loss - 79,750 insurance payout
= $62,750
