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Alona [7]
3 years ago
7

The super prize in a contest is $10 million. This prize will be paid out in equal yearly payments over the next 20 years. If the

prize money is guaranteed by AAA bonds yielding 4% and is placed into an escrow account when the contest is announced 1 year before the first payment, how much do the contest sponsors have to deposit in the escrow account? (Round your answer to the nearest cent.)
Business
1 answer:
Angelina_Jolie [31]3 years ago
4 0

Answer:

contest sponsors have to deposit $6795163.17 in the escrow account

Explanation:

given data

amount = $10 million

time = 20 year

rate = 4 %

to find out

how much do the contest sponsors have to deposit in the escrow account

solution

we know Cash flow per period = 10000000/20 = $500000

we will apply here future value formula to find amount

future value = cash flow × \frac{1-(1+r)^{-t}}{r}

here r is rate and t is time

put here value

future value = 500000 × \frac{1-(1+0.04)^{-20}}{0.04}

future value = 6795163.1724

so contest sponsors have to deposit $6795163.17 in the escrow account

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Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations.
Vladimir79 [104]

Answer:

Phone Corporation

1. Return on equity, (Use AVG balance sheet figures %?)

= Net Income/Equity * 100

= $1,225/$10,672.5 * 100

= 11.48%

2. Return on assets (Use AVg balance sheet figures %?)

= Net Income/Average Assets

= $1,225/$27,938.5 * 100

= 4.38

3. Return on Capital Use AVg balance sheet figures      %?

= Net Income/Liabilities + Equity * 100

= $1,225/$27,938.50 * 100

= 4.38%

4. Day in Inventory use start of year balance sheet            Days?

= Average Inventory/Cost of goods sold * 365

= $212/$4,310 * 365

= 17.95 days

5. Inventory Turnover use start of year balance sheet

= Cost of goods sold/Average Inventory

$4,310/$212

= 20.33 times

6. Average collection period use start of year balance sheet       Days?

= Average Accounts Receivable/Net Sales * 365

= $2,632/$13,600 * 365

= 70.64 days

7. Operating Profit margin                                                            %?

= Net Income/Sales * 100

= $1,225/$13,600 * 100

= 9%

8. Long term debt ratio (Use end of the year balance sheet):

= Long-term Debts/Total Assets

= $12,137/$27,758

= 0.44

9. Total debt ratio (Use end of the year balance sheet):

= Total Liabilities/Total Assets

= $17,637/$27,758

= 0.64

10. Time interest earned:

= EBIT/Interest Expense

= $2,460/$710

= 3.46 times

11. Current ratio (Use end of the year balance sheet):

= Current Assets/Current Liabilities

= $3,973/$5,500

= 0.72

12. Quick ratio (Use end of the year balance sheet):

= (Current Assets - Inventory)/Current Liabilities

= ($3,973 - 263)/ $5,500

= 0.67

Explanation:

a) Data:

Phone Corporation Income Statement

(Figures in $ millions)

Net sales                    $13,600

Cost of goods sold        4,310

Other expenses            4,162

Depreciation                2,668

Earnings before interest

 and taxes (EBIT)    $2,460

Interest expense             710

Income before tax     $1,750

Taxes (at 30%)               525

Net income            $1,225

Dividends $906

BALANCE SHEET

(Figures in $ millions)

a) Averages Balance Figures:

                                                                         End     Start     Average

                                                                        Year     Year     Figures

Assets        

Cash and marketable securities                     $94       $163         $128.5

Receivables                                                   2,632     2,590      $2,611

Inventories                                                        212         263       $237.5

Other current assets                                       892         957       $924.5 

Total current assets                                    $3,830    $3,973    $3,901.5

Net property, plant, and equipment          20,023    19,965   $19,994

Other long-term assets                                4,266      3,820    $4,043 

Total assets                                                $28,119  $27,758  $27,938.5

Liabilities and shareholders’ equity        

Payables                                                      $2,614    $3,090    $2,852

Short-term debt                                             1,444       1,598      $1,521

Other current liabilities                                  836           812        $824

Total current liabilities                               $4,894    $5,500     $5,197  

Long-term debt and leases                         5,773      5,938     $5,855.5

Other long-term liabilities                           6,228       6,199      $6,213.5

Total long-term liabilities                          $12,001   $12,137    $12,069

Total liabilities                                          $16,895   $17,637    $17,266

Shareholders’ equity                                  11,224       10,121   $10,672.5

Total liabilities & shareholders’ equity    $28,119  $27,758  $27,938.5

b) Days in Inventory is an efficiency ratio that measures the average number of days the company holds its inventory before selling it. The ratio measures the number of days funds are tied up in inventory.

c) Inventory turnover is a ratio that measures the number of times inventory is sold or consumed in a given time period.

d) The average collection period is calculated by dividing the average balance of accounts receivable by total net credit sales for the period and multiplying the quotient by the number of days in the period.

e) For lack of space, other ratios are equally defined by the formulas for calculating them.

5 0
2 years ago
Suppose the S&P 500 index is currently 950 and the initial margin is 10%. You wish to enter into 10 S&P 500 futures cont
vagabundo [1.1K]

Answer:

$930.89

Explanation:

The Notional value of position = Price of S&P-500 index future x Contract multiplier x no. of contracts

= 950x250x10

=$2,375,000

Margin = Total nominal value of position x Initial margin

=2375,000x10%

=$237,500

b) Maintenance margin = Initial margin x Maintenance margin

=237500 x 80%

=$190,000

Margin call will be receive when value of the Initial margin falls below maintenance margin

Thus 237500e^0.06/52 + (St -950) x250 x10 <190,000

From here St = price at which margin call will be made

=237500e^0.0011538 + (St -950) x 2500 <190,000

=237500(1.0011538) + (St -950) x 2500 <190,000

=237774.04 + (2500St - 2375000) < 190,000

=2500St - 2137226 <190,000

= 2500St <2327226

St < 930.89

Thus price below $930.89 will be called maintenance margin.

7 0
3 years ago
A ________ is a registered representative acting as an intermediary to buy and sell securities for clients.
liubo4ka [24]
A s<span>tockbroker</span> is a registered representative acting as an intermediary to buy and sell securities for clients.
4 0
3 years ago
Lauren has chosen "Influence consideration" as the marketing objective in her Google Display Ads campaign. Which two targeting o
Maksim231197 [3]

ANSWER:

The correct answer are Custom Intent audiences and Similar Audiences.

STEP-BY-STEP EXPLANATION:

Custom Intent audiences: In a nutshell, custom intent audiences are a more granular form of targeting that allows you to target people who are in the market for the specific products and services you are offering. Custom intent audiences are available on the display network only.

Similar audiences is a targeting feature based on first party data lists, most commonly remarketing lists, that helps you expand the reach of your best-performing audiences by targeting new users with similar characteristics to your site visitors.

6 0
2 years ago
You expect KT industries (KTI) will have earnings per share of $4 this year and expect that they will pay out $1.75 of these ear
melisa1 [442]

The value of a share of KTI's stock today is closest to 9.5% , 0.004375 .

Explanation:

Investment Investment (ROI) is an investment performance metric used to evaluate or compare the success of a variety of investment operations.

In addition to the spending price, ROI aims to explicitly calculate the make value of a single project.

g = retention rate

ROI = 0.75*13% = 9.5%,

Price = 1.75/(0.10-0.0975) = 0.004375

5 0
3 years ago
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