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Whitepunk [10]
4 years ago
9

Jorge is considering an investment that will pay $4,650 a year for five years, starting one year from today. What is the maximum

amount he should pay for this investment if he desires a rate of return of 9.0 percent?
Business
1 answer:
lutik1710 [3]4 years ago
8 0

Answer:

He should pay $18,086.88 for the investment.

Explanation:

Giving the following information:

Yearly cash flow= $4,650

Number of years= 5

Rate of return= 9%

To determine the price to pay for the investment, we need to determine the present value of the cash flow.

First, we need to calculate the final value using the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual cash flow= 4,650

i= 0.09

n= 5

FV= {4,650*[(1.09^5)-1] / 0.09}

FV= $27,828.90

Finally, the present value:

PV= FV/ (1+i)^n

PV= 27,828.90/ 1.09^5

PV= $18,086.88

He should pay $18,086.88 for the investment.

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Rolling Coast Inc. issued BBB bonds two years ago. These bonds provided a yield to maturity (YTM) of 11.5 percent. Long-term ris
vaieri [72.5K]

Answer: 9.2%

Explanation:

The interest rate that Rolling Coast should expect to issue new bonds will be calculated thus:

Firstly, we will calculate the previous risk premium on BBB bonds which will be:

= 11.5% - 8.7% = 2.8%

Then, the new risk premium on BBB bonds will be:

= Previous risk premium / 2

= 2.8% / 2

= 1.4%

Then, the interest rate that Rolling Coast should expect to issue new bonds will be:

= 7.8% + 1.4%

= 9.2%

8 0
3 years ago
At the end of the current accounting period, Ringgold Co. recorded depreciation of $15,000 on its equipment. The effect of this
kolbaska11 [484]

Answer:

B)owners' equity and decrease assets.

Explanation:

From the question, we are informed about Ringgold Co. Whereby At the end of the current accounting period, Ringgold Co. recorded depreciation of $15,000 on its equipment. In this case, The effect of this entry on the company's balance sheet is to decrease owners' equity and decrease assets. Depreciation can be regarded as type of expense that brings reduction in value of an asset. It can be regarded as scheduled and not estimated expense . Depreciation can be recorded on balance sheet, as well as cash flow statement.

3 0
3 years ago
On July 14 joseph invested $12000 in a fund that was growing at 5% compound semi annually
kramer

Answer:

$12,300

Explanation:

I will assume that Joseph invested in the fund on July 14, 2013.

We have to calculate the future value to March 15, 2014 (8 months later).

since the interest is compounded semi annually, it will earn interest on January  14, 2014.

Future value = $12,000 x (1 + 2.5%) = $12,300

since the fund is going to earn interests again on July 14, 2014, the value on march 14 is the same = $12,300

5 0
3 years ago
Research and media firm Youth Culture publishes Watch magazine, a teen publication distributed free to high school students, and
Anuta_ua [19.1K]

The feedback received through the survey that indicated that boys and girls were demanding very different things from Watch magazine was obtained from questionnaire data, which is a survey method used to gather information.

<h3 /><h3>Qualitative research</h3>

It is a method of scientific investigation that uses verbal and visual data to understand a given phenomenon in a more comprehensive and subjective way, being a method widely used in the social sciences.

Therefore, the questionnaire corresponds to a method of collecting information through an exploratory character that can use words, phrases and images for a better understanding of subjective aspects of human behavior.

The correct answer is:

  • Questionnaire

Find out more information about Qualitative research here:

brainly.com/question/25272333

5 0
2 years ago
Whistle Corp. has a preferred stock that pays a dividend of​ $2.40. If you are willing to purchase the stock at​ $11, what is yo
kiruha [24]

Answer:

B. 21.8%

Explanation:

Cost of preference capital = \frac{dividend}{price}\times100

No adjustment of growth rate is done as the dividend on preference capital is constant and do not grow in normal conditions, that is it only differs in exceptional conditions.

therefore, in the given instance we have,

Dividend = $2.40

Current price = $11

Expected Return = \frac{2.40}{11.00} \times 100 = 21.8%

Thus correct option is

B. 21.8%

6 0
3 years ago
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