A.) Consumer demand for a certain car is greater than the number of cars that can be produced.
Answer:
$19,144.61
Explanation:
The first step would be to determine the present value of $1.25 million. After, the future value of that amount in 2 years has to be calculated
The formula for calculating future value:
P = FV / (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
$1.25 million / (1.135)^35 = $14,861.23
Now we find the future value using this formula :
FV = P (1 + r)^n
$14,861.23 x (1.135)^2 = $19,144.61
Answer:
The correct answer is option (B).
Explanation:
According to the scenario, the given data are as follows:
Par value of bond = $10,000
Coupon rate Annual = 5%
So, Coupon rate semi annual = 2.5%
Inflation rate semi annual = 2%
So, we can calculate the coupon payment for six months by using following formula:
New par value of bonds after inflation = $10,000 + ( $10,000 × 2% ) = $10,200
So, Coupon payment = New par value × Coupon rate semi annual
= $10,200 × 2.5%
= $255
Answer:
$28.27
$33.67
$67.74
Explanation:
The computation of current price, price be in three years and In 15 years is shown below:-
Stock current price = Next expected dividend ÷ (Required return - Growth rate)
= $1.60 × (1 + 6%) ÷ (12% - 6%)
= $1.60 × 1.06 ÷ 0.06
= $28.27
Stock price in three years = D4 ÷ (Required return - Growth rate)
= $1.60 × ((1 + 6%)^4) ÷ (12% - 6%)
= $1.60 × (1.06)^4) ÷ 0.06
= $1.60 × 1.26247696 ÷ 0.06
= 33.66605227
or
= $33.67
Stock price in 15 years = D16 ÷ (Required return - Growth rate)
= $1.60 × ((1 + 6%)^16) ÷ (12% - 6%)
= $1.60 × (1.06)^16) ÷ 0.06
= $1.60 × 2.540351685
÷ 0.06
= 67.74271159
or
= $67.74