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ankoles [38]
3 years ago
7

John would like to move from the suburbs into the city, but the rent in the city is very high.john has found an apartment he rea

lly likes, but he can only afford about 60% of the monthly rent. what is the best housing option for john
Business
1 answer:
RSB [31]3 years ago
7 0
John could either keep looking for an apartment that he can afford 100% of, or he could look for a roommate and go 50/50 on the monthly rent. 
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Two mutually exclusive investment opportunities require an initial investment of $7 million. Investment A pays $1.5 million per
Nataly_w [17]

Answer:The cost of capital that will make both investments equal is 17.045%

Explanation:

Investment A

$1.5 million will be received in perpetuity we can there use perpetuity formula to Value investment A.

Value of Investment A = 1500 000/r

Investment B

$1.2 Million will be received in Investment B with a growth rate of 3% will then use Gordon's growth rate model to value investment B.

Value of investment B = (1200 000 x (1+0.03))/(r - 0.03)

Value of investment B = 1236000/(r - 0.03)

1500 000/r = 1236000/(r - 0.03)

1236000(r) = 1500000(r - 0.03)

(r - 0.03) = 1236000( r)/1500000

r - 0.03 = 0.824r

r - 0.824r = 0.03 = 0.176r = 0.03

r = 0.03/0.176 = 0.170454545

R = 17.045%

The cost of capital that will make both investments to be equal is 17.045%

4 0
3 years ago
The last dividend paid by Wilden Corporation was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years,
shtirl [24]

Answer:

e)  $37.05

Explanation:

Using the dividend growth model, the value of a stock is the present value of the future dividends receivable discounted at the required rate of return . The required rate of return is given as 12%.

So we discount the year 3 dividend using the dividend growth model formula

P = D (1+g)/r-g

r- rate of return, g = growth rate

Present value of the future dividends:

PV of Year 1 = 1.55(1.015)m × 1.12^(-1)

                     = 1.4047

PV of Year 2 = 1.55 (1.015)(1.015) × 1.12^(-2)

                     =  1.27

PV of Year 3 (this will be done in two steps)

Step 1; PV (in yr 2) of year 3 dividend

= (1.55)(1.015)^2×(1.08)/(0.12-0.08)

=43.114

Step 2 : PV (in yr 2) of year 3 dividend

  =43.114 × (1.12^(-2))

   = 34.37

Best estimate of stock = 1.40 + 1.27 +34.37

                                       = $37.05

Note

To discount the year 3 dividend, we use two steps. The first stp helps get the PV in year 2, and step 3 helps to take it further to the PV in year 0

         

8 0
3 years ago
The amount of money collected by a snack bar at a large university has been recorded daily for the past five years. Records indi
disa [49]

Answer:

A) skewed to the right with a mean of $4000 and a standard deviation of $450.

Explanation:

While the days are picked at random, the size of the sample is enough to represent the reality. Among the random pick those days of football game will be picked too and will skewed to the right the distribution

The distribution will not change into normal as the reality is that distribution of revenue is not normally distributed among the days of the year.

3 0
3 years ago
Someone taking a course in Web design is affecting what factor of production?
Solnce55 [7]

Answer:

Someone taking a course in Web design is affecting human capital.

7 0
2 years ago
Which payment type is best if you are trying to stick to a budget?
Alja [10]
I think the best way would be credit
8 0
3 years ago
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