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Temka [501]
3 years ago
13

An investor purchasing a British consol is entitled to receive annual payments from the British government forever. What is the

price of a consol that pays $190 annually if the next payment occurs one year from today? The market interest rate is 4.2 percent. (Round your answer to 2 decimal places. (e.g., 32.16)) Present value $
Business
1 answer:
Dima020 [189]3 years ago
7 0

Answer:

               \large\boxed{\large\boxed{\$ 4,523.81}}

Explanation:

The <em>price of a consol</em> (a type of debt issued by the goverment) is the present value of all the future payments.

A constant <em>payment forever</em> is known as a constant annuity to perpetuity.

The price of a constant perpetuity is calculated with the formula:

      Price=C/r

Where C is the constant payment, equal to $190 (annually forever), and r is the opportunity cost, which you assume to be equal to the market interest rate: r = 4.2%.

Substituting:

        Price=\$ 190/(4.2\%) =\$ 190/0.042=\$ 4,523.81

You might be interested in
Advanced Analysis) Suppose that the linear equation for consumption in a hypothetical economy is:
natima [27]

Answer:

0.8; 0.2; $360; 90%; 10%

Explanation:

Linear equation for consumption is as follows:

C = 40 + 0.8Y

suppose that income (Y) = $400

MPC = 0.8

Marginal propensity to save = 1 - Marginal propensity to consume

MPS = 1 - 0.8

       = 0.2

C = 40 + 0.8Y

C = 40 + 0.8 × 400

   = $360

Therefore, consumption is $360.

Average propensity to consume ( APC):

= Consumption ÷ Income level

= 360 ÷ 400

= 0.9

= 90%

We know that income is either consumed or saved, therefore,

Y = C + S

$400 = $360 + S

S = $40

Average propensity to save ( APS):

= Savings ÷ Income level

= 40 ÷ 400

= 0.1

= 10%

5 0
3 years ago
BREIFLY EXPAIN THE WEEKNESSES OF RSA INDUSTRAIL DEVELOPMENT ZONES
GREYUIT [131]

Answer:

Disadvantages

Revenue losses because of the various tax exemptions and incentives.

Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves.

The number of units applying for settimg up EOU's is not commensurate to the number of applications for setting up SEZ's leading to a belief that this project may not match up to the expextions.

<h2>Hope it helps you.</h2>

3 0
3 years ago
Scubapro Corporation currently has 500,000 shares of common stock outstanding and plans to issue 200,000 more shares in a season
Oduvanchick [21]

Answer:

the answer is : the shareholder can buy as many he wants to owned

Explanation:

for a investment company when they offers a new shares , and the shareholders who has been buying every time with the same company they get a benefits from new shareholders , that is why any one them can buy any share without limit.

6 0
3 years ago
Rafner Manufacturing identified the following budgeted data in its two production departments.
boyakko [2]

Answer:

$99.78; $39.76

Explanation:

Assembly:

Manufacturing overhead costs = $1,257,300

Direct labor hours = 12,600 DLH

Machine hours = 6,600

Departmental Overhead rate for Assembly:

= Estimated Overhead Cost ÷ Estimated Direct labor hours

= $1,257,300 ÷ 12,600

= $99.78

Finishing:

Manufacturing overhead costs = $660,000

Direct labor hours = 20,600 DLH

Machine hours = 16,600

Departmental Overhead rate for Finishing:

= Estimated Overhead Cost ÷ Estimated Machine hours

= $660,000 ÷ 16,600

= $39.76

8 0
3 years ago
A report showing an employee's age as a negative number is useless because it lacks ___
kozerog [31]

Answer:

A report showing an employee's age as a negative number is useless because it lacks Validity.

<h3>What is Validity?</h3>
  • Validity refers to how accurately a method measures what it is intended to measure.
  • If research has high validity, that means it produces results that correspond to real properties, characteristics, and variations in the physical or social world.

To learn more about validity, refer

to brainly.com/question/25689052

#SPJ4

4 0
2 years ago
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