Answer:
a. If the interest rate was 8%, how much would you have been prepared to bid for the prize?
this is an ordinary annuity:
annual payment = $9,420,713 / 20 = $471,035.65
number of periods = 19 periods
interest rate = 8%
therefore, the present value annuity factor = 9.6036
the present value of the annuity = $471,035.65 x 9.6036 = $4,523,637.97 ≈ $4,523,638
b. Enhance Reinsurance Company was reported to have offered S4.2 million. Use Excel to find the return that the company was looking for.
using the IRR function in Excel, the return that Enhance was looking for was 9.05%
In this problem we are given the mean of $1100, SD of $150 and x equal to $900. In this case, we need to use the z-score table to answer the problem:
z = (x-mean)/sd
z = (900-1100)/150
z = -1.33
from z-table, the probability at the left of z= -1.33 is equal to 9.18%
Answer:
d.All of the above.
Explanation:
Free cash flow is the amount of cash that is available for management to use in
any way they want (at their discretion), after all essential payments have been made.
Essential payment may include taxation payment and other operational expenditure.
Keeping in view the above discussion, it can be assumed that the free cash flow can be used to pay additional dividends, acquire more property, plant and equipment and pay off debts.
Therefore the answer is d.All of the above.
Add the first four numbers than u will need to know what increased means it means u either add or subtract $150 and than u find your answer
