The required return on the stock of Moe's Pizza is 10.8 percent and aftertax required return on the company's debt is 3.40 perce
1 answer:
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Answer:
Ans. Assuming that the withdrawal period is 300 months (25 years), you can withdraw every month $15,547.96
Explanation:
Hi, first, we have to take to future value (30 years in the future) the invested capital (both the stock account and the bond account). From there, we will consider the sum of both future values as the present value of the annuity that you are about to receive for the next 25 years (300 months). But before we do all that, we need to convert the return rates (compounded monthly) into effective monthly rates, for that we just go ahead and divide each one by 12, as follows
r(Stock) = 0.105/12= 0.00875
r(Bond)= 0.061/12 = 0.00508
r(Combined Account)= 0.069/12=0.00575
Now we are ready, first, let´s find the future value of the stock account.
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Now, let´s find out how much will it be in 30 years, investing $325 per month, at the end of the month, at 0.508% effective monthly.
And then we add them up and we get:
Ok, now let´s find the annuity (monthly withdraw) taking into account that we are going to make 300 withdraws at a rate of 0.575% effective monthly,
\frac{A((1+0.00575)^{300}-1) }{0.00575(1+0.00575)^{300} }[/tex]
Best of luck.
Answer:
price for selling 3000 share right is $25060.87
Explanation:
Given data:
Total Amount raised= $4,400,000
Spreading rate = 6%
Subscription price = $20 per share
Number of share owned by company = 500,000
Per share cost = $45
Totals share own in the company = 3000
subscription price after deducting spreading rate
Now, Right share
Right price is calculated as
Right price = ((Number of share held * market price) + (Right share *Right price))/( Number of share held + Right share)
plugging all value in above relation
Right share = $36.65
single right value = 45- 36.65 = $8.35
Price for 3000 share right = 8.35 *3000 = $25060.86