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4 years ago

Three months ago, you purchased a stock for $54.14. The stock is currently priced at $57.36. What is the EAR on your investment?

Business

1 answer:

Crazy boy [7]4 years ago

5 0

Answer:

The EAR on the investment is 23.79%

Explanation:

Here, we are concerned with calculating the EAR on the stock investment.

Firstly, we start with calculating the return on shares

Mathematically, that is; P1 - P0

From the question P1 = $57.36 while P0 = $54.14

So Return on shares = $57.36-$54.14 = $3.22

We proceed with calculating the Return on shares in percentage

Mathematically;

Return on shares in % = Return on shares/P0 * 100

= 3.22/54.14 * 100 = 5.95%

Lastly we calculate the effective annual interest;

The effective annual interest = 5.95%/3 * 12 = 23.79%

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Answer:

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Explanation:

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3 years ago

Inventory is often reported as a miscellaneous expense on the income statement. reported as a current asset on the balance sheet

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Answer:

reported as a current asset on the balance sheet.

Explanation:

According to US GAAP, inventory must be reported at lower of cost or market value. ⇒ Therefore, "generally valued at the price for which the goods can be sold." is wrong.

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3 years ago

What is the moving force of air

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Horizontal pressure gradient force results from high and low pressure systems in the atmosphere

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3 years ago

Tim Dye, the CFO of Blackwell Automotive, Inc., is putting together this year's financial statements. He has gathered the follow

never [62]

Answer:

210,421 Long-Term Liabilities

Explanation:

We are going to use the accounting equation to solve for long term liabilities

$Assets = Equity + Liabilities\\Liablities = short\: term + long\: term$

Total Assets

cash 23,015

Account Receivables 141,258

Inventory 213,000

other current assets 11,223

PPE 714,100

goodwill and other assets 78,656

Total Assets 1,181,252

common stock 311,300

retained earnings 512,159

Total equity 823,459

We use he accounting equation to get total liabilities:

1,181,252 - 823,459 = 357,793 Total Liabilities

Now we calcualte the short-term debt

126,257 Account Payable

21,115 short-term Note Payable

Total Current Liabilities 147,372

And with this, the diference between short-term adn total liabilities is the long-term liabilities

357,793 - 147,372 = 210,421 Long-Term Liabilities

7 0

3 years ago

When interest is compounded continuously, the amount of money increases at a rate proportional to the amount S present at time t

liubo4ka [24]

Answer:

a) - r=5%: $S=$ 5,136.10$

- r=4%: $S=$ 4,885.61$

- r=3%: $S=$ 4,647.34$

b) - r=5%: t=14 years

- r=4%: t=17 years [/tex]

- r=3%: t=23 years [/tex]

c) The amount obtained is

- Compuonded quarterly: $5,191.83

- Compuonded continously: $5,200.71

The latter is always greater, since the more often it is capitalized, the greater the effect of compound interest and the greater the capital that ends up accumulating.

Explanation:

The rate of accumulation of money is

$dS/dt=rS$

To calculate the amount of money accumulted in a period, we have to rearrange and integrate:

$\int dS/S=\int rdt=r \int dt\\\\ln(S)=C*r*t\\\\S=C*e^{rt}$

When t=0, S=S₀ (the initial capital).

$S=S_0=Ce^{r*0}=Ce^0=C\\\\C=S_0$

Now we have the equation for the capital in function of time:

$S=S_0e^{rt}$

a) For an initial capital of $4000 and for a period of five years, the amount of capital accumulated for this interest rates is:

- r=5%: $S=4000e^{0.05*5}=4000*e^{0.25}= 5,136.10$

- r=4%: $S=4000e^{0.04*5}=4000*e^{0.20}= 4,885.61$

- r=3%: $S=4000e^{0.03*5}=4000*e^{0.15}= 4,647.34$

b) We can express this as

$S=S_0e^{rt}\\\\2S_0=S_0e^{rt}\\\\2=e^{rt}\\\\ln(2)=rt\\\\t=ln(2)/r$

- r=5%: $t=ln(2)/0.05=14$

- r=4%: $t=ln(2)/0.04=17$

- r=3%: $t=ln(2)/0.03= 23$

c) When the interest is compuonded quarterly, the anual period is divided by 4. In 5 years, there are 4*5=20 periods of capitalization. The annual rate r=0.0525 to calculate the interest is also divided by 4:

$S = 4000 (1+(1/4)(0.0525))^{5*4}=4000(1.013125)^{20}\\\\S=4000*1.297958= 5,191.83$

If compuonded continously, we have:

$S=S_0e^{rt}=4000*e^{0.0525*5}=4000*1.3= 5,200.71$

The amount obtained is

- Compuonded quarterly: $5,191.83

- Compuonded continously: $5,200.71

The latter is always greater, since the more often it is capitalized, the greater the effect of compound interest and the greater the capital that ends up accumulating.

5 0

4 years ago