Answer:
Both an initial cash outflow and future cash inflow
Explanation:
Net value cash flow is the different cash flows that happens at different times. It takes into account the initial cash outflow or capital investment and the amount that it would be getting in the future that is the future cash inflow.
The net present value gives us a difference between cash inflows and cash outflows in their present values over a period of time.
Answer:
the risk premium = return of the deposit - risk free deposit return
risk premium = 5.2% - 2.5% = 2.7% or $27 for a $1,000 CD
Besides the investment risk, Casey must also consider the inflation rate and taxes. The inflation rate lowers the real interest earned by Casey: real interest rate = nominal interest rate - inflation rate. And she must also find out how the return from the non-financial institution is taxed, if it can be taxed as capital gains or regular income.
Answer:
1.Taxable bonds
2Taxable bonds
3.They have the same after-tax yield
4.
municipal bond
Explanation:
The missing tax brackets are zero,10%,20% and 30%
Zero % tax rate:
municipal bond pays 4%
taxable bonds after tax yield=5%*(1-0)=5%
10% tax rate
municipal bond pays 4%
taxable bond after tax yield=5%*(1-10%)=4.5%
20% tax rate
municipal bond pays 4.0%
taxable bond after tax yield=5%*(1-20%)=4.0%
30% tax rate
municipal bond pays 4.0%
taxable bond after tax yield=5%*(1-30%)=3.50%
Answer:
a. Assets were understated by $5,000 and pretax income was understated by $5,000.
Explanation:
Inventory are part of Current Assets in the Balance Sheet. This means that when they are understated, the Assets are also understated. Also understated inventory means that cost of sales are overstated in the Income Statement and consequently, Gross Profit and Pre-tax Income are understated.
