Answer:
So after 5 year total amount will be $1781.529
So option (a) is correct option
Explanation:
We have given that JG Asset is recommending that you invest $1500 for 5 years at rate of 3.5%
So principle amount P = $1500
Rate of interest r = 3.5 %
Time n = 5 years
We know that when total amount is given by
, here r is rate of interest and n is time period
So amount after 5 years will be
So after 5 year total amount will be $1781.529
So option (a) is correct option
Answer:
These are the options for the question:
A. They should be more willing to tear down the $5 million stadium, because it cost less to build.
B. They should be more willing to tear down the $50 million stadium, because it cost more to build.
C. The cost to build the old stadium shouldn’t be considered.
And this is the correct answer:
A. They should be more willing to tear down the $5 million stadium, because it cost less to build.
Explanation:
City A will likely be more willing to tear down its old stadium because it costed $5 million to build. City B, on the other hand, will have to think twice because a stadium that costed $50 billion to build could have more value than it seems, or the City could simply not have enough money to build a better new stadium (something that would probably cost more than $50 billion to do).
Answer:
WACC is 9%
Explanation:
WACC is the average cost of capital of the firm based on the weightage of the debt and weightage of the equity multiplied to their respective costs.
According to WACC formula
WACC = ( Cost of equity x Weightage of equity ) + ( Cost of debt ( 1- t) x Weightage of debt ) + ( Cost of Preferred equity x Weightage of Preferred equity )
As per given data
Market Values
Equity = $7 billion,
Preferred stock = $2 billion
Debt = $13 billion
Cost
Equity
Capital asset pricing model measure the expected return on an asset or investment. it is considered as the cost of common stock.
Formula for CAPM
Cost of Equity = Risk free rate + beta ( market return - risk free rate )
Cost of Equity = Rf + β ( Mrp )
Cost of Equity = 3% + 1.6 ( 8% ) = 15.8%
Preferred stock = $2 / $26 = 0.077 = 7.7%
Debt = 8%
Placing values in the formula
WACC = ( 15.8% x $7 billion / $22 billion ) + ( 8% ( 1- 0.3) x $13 billion / $22 billion ) + ( 7.7% x $2 billion / $22 billion )
WACC = 5.03% + 3.31% + 0.7% = 9.04%
Answer: The actual rate of the mortgage is 5.27%.
Since we're taking two mortgages for a total of $200,000 for 30 years, we can find the actual rate of the mortgage by finding the weighted average of the two rates. The weights in this case will be the proportion of loan taken at each rate
We have
Rates Weights Rates * Weights
4.15 0.80 
9.75 0.20 
Total 5.27%
Answer:
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