1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
attashe74 [19]
3 years ago
14

A single stock futures contract on a nondividend-paying stock with current price $180 has a maturity of one year.

Business
1 answer:
guajiro [1.7K]3 years ago
5 0

Answer:

a. $187.20.

b. $202.48.

c. $217.43.

Explanation:

Please find the below for detailed explanations and calculations:

We have the formula for determining the future price of the non-dividend-paying stock as below:

Future price = Spot price x (1+ annual risk free rate )n; which n = number of year(s) to maturity.

Thus, apply the general formula above, we have the below calculations:

a. Future price = 180 x (1+4%)^1 = $187.20;

b. Future price = 180 x ( 1+4%)^3 = $202.48;

c. Future price = 180 x (1+6.5%)^3 = $217.43.  

You might be interested in
In a SWOT analysis, increasing gasoline prices would represent a potential __________ for manufacturers of electric cars.
tester [92]

Answer: Opportunity

Explanation:

SWOT analysis measures the strength, weakness, opportunities and threats of an individual/organization in the areas they operate in. Manufacturers of electric cars would see increase in gasoline prices as an opportunity, as people would want to buy more electric cars.

4 0
3 years ago
A business practice associated with globalization involves business moving manufacturing and service centers to countries where
Law Incorporation [45]
Im so sure but I can help you later just give me a few minutes
3 0
2 years ago
On August 1, Greene Company purchased merchandise inventory on account with a list price of $25,000 and credit terms of 2/10, n/
Alekssandra [29.7K]

Answer:

August 1, merchandise purchased on account 2/10, n/30

Dr Merchandise inventory 25,000

    Cr Accounts payable 25,000

Explanation:

If Greene paid within the discount period, the journal entry to record the payment would be:

August 2-11, payment of accounts payable

Dr Accounts payable 25,000

    Cr Cash 24,500

    Cr Purchase discounts 500

If Greene didn't paid within the discount period, the journal entry to record the payment would be:

August 20, payment of accounts payable

Dr Accounts payable 25,000

    Cr Cash 25,000

5 0
3 years ago
Becca, an office manager for a small construction company, met with representatives from Xerox and Minolta, along with the presi
lilavasa [31]

Answer: User

Explanation: Becca has the role of the user of the new copier machines being purchased for their company, because although she isn't the one making the purchase, she is the one who has the duty to operate the machines on a daily basis.

6 0
2 years ago
Dragon Inc. a NJ based construction firm is evaluating whether to replace an aging machine with a new model. For the old machine
Vilka [71]

Answer:

It should replace the old machine. In the current accounting period.

Explanation:

We need to perform a relevant cost analysis:

Keep the machine:

F0 = $0

F1 = $1500 maintenance

F2 = $3,000 maintenance

F3 = $6,000 maintenance

F4 = $12,000 maintenance

F5 =$24,000 maintenance + 250 resale value

replace the machine:

F0 = -12,000 purchase + 4,000 sale of old machine = -800

F1 = $900 maintenance

F2 = $900 maintenance

F3 = $900 maintenance

F4 = $900 maintenance

F5 =$900 maintenance + 1,500 resale value

As revenues are the same for each machine, we ignore them. We will only focus on the cost each machine generate:

We solve for the present worth of each machine with a discount rate of 12%

\displaystyle PV_{old} = -\frac{1,500}{1.12} - \frac{3,000}{1.12^2} - \frac{6,000}{1.12^3} - \frac{12,000}{1.12^4} - \frac{23,750}{1.12^5}\\\\\displaystyle PV_{old} = -29,104.15

\displaystyle PV_{new} = -8,000 - \frac{900}{1.12} - \frac{900}{1.12^2} - \frac{900}{1.12^3} - \frac{900}{1.12^4} +  \frac{600}{1.12^5}\\\\\displaystyle PV_{new} = -10,393.16

As the present worth of the new machine is lower, the best decision for the company is to purchase the new machine and sale the old machine.

Delaying this will incur in higher maintenance cost (1,500 - 900)

and a lower recovery value (4,000 - 2,000)

As there is no cost saving for delaying the purchase, it should be made immediately.

8 0
3 years ago
Other questions:
  • An important part of the onboarding process is to explain the history, values, and mission of the company. The ________ step is
    13·2 answers
  • What best describes the economic interaction between early colonists and native americans?
    6·1 answer
  • Administrators of crawford county's memorial hospital are interested in identifying the various costs and expenses that are incu
    13·1 answer
  • The term illustration in a life insurance policy refers to
    7·1 answer
  • Marcus is a self-employed marketing consultant. He is good at helping his clients with their marketing challenges; however, he i
    6·1 answer
  • Which best describes a way people can use personal loans? to buy a house to buy a bicycle to pay for college to pay for grocerie
    5·2 answers
  • Suppose that the stock return follows a normal distribution with mean 20% and standard deviation 40%. What is the 5% VaR (value-
    11·1 answer
  • Bombs Away Video Games Corporation has forecasted the following monthly sales:
    11·1 answer
  • What is the minimum number of integers that you must pick between 0 and 9 (inclusive), such that two of them add up to 9?
    11·1 answer
  • What are the determinants of demand? what happens to the demand curve when any of these determinants change? distinguish between
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!