Answer:
-11.8%
Explanation:
the key to answer this question is to remember that valuation of a bond depends basically of calculating the present value of a series of cash flows, so let´s think about a bond as if you were a lender so you will get interest by the money you lend (coupon) and at the end of n years you will get back the money you lend at the beginnin (principal), so applying math we have the bond value given by:
so in this particular case that one year later there are 29 years to maturity so we have:
so as we have a higher rate the investment has the next return:
Answer:
The share is worth $5.68 today.
Explanation:
The current price of the stock can be calculated using the DDM or dividend discount model. The DDM values the stock based on the present value of the expected future dividends from the stock.
The following is the formula for the price of the stock today,
P0 = D1 / (1+r) + D2 / (1+r)^2 + ... + Dn / (1+r)^n + Terminal value / (1+r)^n
The terminal value is the cumulative value of all the future dividends calculated when the dividend growth becomes zero or constant. In case the dividend growth becomes constant, like in this case, the terminal value is calculated as follows,
Terminal value = Dn * (1+g) / r - g
Where,
- g is the Constant growth rate in dividends
So, the price of this stock today is,
P0 = 0.65 / (1+0.145) + 0.70 / (1+0.145)^2 + 0.75 / (1+0.145)^3 +
((0.75 * (1+0.02) / (0.145 - 0.02)) / (1+0.145)^3
P0 = $5.678 rounded off to $5.68
Answer:
Shows the output that is produced using different combinations of inputs combined with existing technology
Explanation:
The production function is an <u>expression that links the different amount of inptuts used in the production process and the final output obtained with each combination of inputs, with a given tehcnology.</u>
As an example, if a economy produces only popcorn, a production function would be an expression that shows hou much popcorn that economy can produce with different combinations of corn and sugar, with a given technology.
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