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Yuki888 [10]
3 years ago
9

Your company has been bought out by another company. In the acquisition, you have been asked to leave the company and as severan

ce pay may take either $100,000 per year for the next ten years or a lump settlement today. If 10% is a reasonable discount rate, what would be the minimum amount you would accept today
Business
1 answer:
expeople1 [14]3 years ago
8 0

Answer:

$614,457

Explanation:

The present value of the annual cash inflow of $100,000 for ten years can be found by the following formula:

Present Value  = Annual Cash Inflow * Annuity Factor (Step 1)

Here

annuity Factor at 10% for 10 years time is

By putting values we have:

Present Value = $100,000 × 6.14457 = $614,457

Step 1 : Annuity Factor

Annuity Factor = (1 - (1 + r)^-n) / r

Here r is 10% and n is 10 years.

So by putting values, we have:

Annuity Factor = (1 - (1 + 10%)^-10) / 10%   =  6.14457

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A year ago, you purchased 300 shares of Stellar Wood Products, Inc. stock at a price of $8.62 per share. The stock pays an annua
Galina-37 [17]

Answer:

D. -$1,116

Explanation:

Total amount of purchase = number of shares * price per share

= 300 * $8.62

= $2,586

Total dividends received = number of shares * dividend per share

= 300* $0.10

= $30

Total proceeds from sale of shares = number of shares sold  * price per share

= 300* $4.80

= $1,440

Total dollar return = (Total proceeds from sale of shares + Total dividends received - amount of purchase)

= $1,440 + $30 - $2,586

= -1,116

3 0
3 years ago
On January 1, 2020, Mirada, Inc. issued five year bonds with a face value of $100,000 and an annual stated rate of 8%. Interest
Sergio039 [100]

Answer:

Book Value of bond = $106,931

Explanation:

Given:

Face value of bond = $100,000

Issue price = $108,425

Computation:

Interest payment = $100,000 x 8%

Interest payment = $8,000

Interest expense = $108,425 x 6%

Interest expense = $6,505.50

Amortization of premium = $8,000 - $6,505.50

Amortization of premium = $1,494.50

Book Value of bond = $108,425 - $1,494.50

Book Value of bond = $106,931

3 0
3 years ago
Real GDP per capita in the U.S. grew from about​ $6,000 in the year 1900 to about​ $51,500 in​ 2016, an average growth rate of​
ollegr [7]

Answer:

36.84 years and 31.82 years

Explanation:

In this question ,we applied the rule no 70 which means we get to know the estimated number of years for doubling the real GDP

In the first case, the estimated number of years

= 70 ÷ average  annual growth rate

= 70 ÷ 1.9%

= 36.84 years

In the second case, the estimated number of years

= 70 ÷ average  annual growth rate

= 70 ÷ 2.2%

= 31.82 years

8 0
2 years ago
The consumer price index (CPI) is used to compute inflation.
mestny [16]

ANSWER: The correct answer is True. Consumer price Index computes inflation or market basket of consumers.

Explanation: It measures the price changes in the goods or services basket for consumers which represents the consumption expenditure in the economy. It is calculated on various  categories or  sub- categories like,urban or rural. It measures the inflation rate and scans the percentage change of the  index over a period of time. It measures increase in the price of households basket.

3 0
3 years ago
Read 2 more answers
Dee Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows$4,000from her bro
levacccp [35]

Answer:

A. The stock is purchased for $40 x 300 shares = $12,000.

Given that the amount borrowed from the broker is $4,000, Dee's margin is the initial purchase price net borrowing: $12,000 - $4,000 = $8,000.

B. If the share price falls to $30, then the value of the stock falls to $9,000. By the end of the year, the amount of the loan owed to the broker grows to:

Principal x (1 + Interest rate) = $4,000 x (1 + 0.08) = $4,320.

The value of the stock falls to: $30 x 300 shares = $9,000.

The remaining margin in the investor's account is:

Margin on long position = "Equity in account " /"Value of stock"

= "$9,000 - $4,320" /"$9,000" = 0.52 = 52%

Therefore, the investor will not receive a margin call.

C. Rate of return = "Ending equity in account - Initial equity in account" /"Initial equity in account"

= "$4,680 - $8,000" /"$8,000" = - 0.4150 = - 41.50%

7 0
3 years ago
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