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Likurg_2 [28]
3 years ago
8

2. You plan to invest in securities that pay 8.0%, compounded annually. If you invest $5,000 today, how many years will it take

for your investment to double? 3. Using the information in the problem above; How many years will it take if monthly compounding, assuming everything else is the same? (Round to tenth decimal)
Business
1 answer:
Gre4nikov [31]3 years ago
3 0

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

1) You plan to invest in securities that pay 8.0%, compounded annually. You invest $5,000 today.

We need to double it. Final value= 16,000. Number if years=?

FV= PV*(1+i)^n

Isolating n:

n=[ln(FV/PV)]/ln(1+r)

n= ln(16000/8000)/ln(1+0.08)

n= 9 years.

2) Now, the interest is compounded monthly.

Effective rate= 0.08/12= 0.0067

n=[ln(Ct/PV)]/ln(1+r)

n= ln(16000/8000)/ln(1+0.0067)

n= 103 months= 8.65 years

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Answer:

d) The ROE would increase

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Since the company's operating income will remain unchanged, net income will decrease due to interest expense, but the total number of shares outstanding will decrease. This will result in a higher EPS (earnings per share), and a higher ROE (return on equity), but it would also make the company's risk increase and Re (cost of equity) increase.

6 0
3 years ago
An investor believes that interest rates will be flat or falling into the future; and that prices may deflate. The MOST appropri
ale4655 [162]

Answer:

A. Long term U.S. Government bonds

Explanation:

A. Long term U.S. Government bonds

For this case that's the best option since by a general rule when we have a deflation the interest rates tend to decrease. Usually the long term investments have fixed rates and fixed payments that can be accumulated over the time.

B. Real estate

Not a good option since when we have deflation the real state prices tend to decrease as the good and services in order to mantain the sales.

C. Gold

No possible when we have deflation all the prices of good and services tend to decrease and the gold is an example of this. So is not a good option to invest.

D. Large Capitalization stocks

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3 0
3 years ago
The projected growth in buyer demand for private-label athletic footwear is.
Naily [24]

The projected growth in buyer demand for private-label athletic footwear is:

  • 5-7%% annually

<h3>What is Projected Growth?</h3>

This refers to the estimated rate by which a particular thing would change in demand in a given time frame which would lead to its growth.

With this in mind, we can see that based on the study made about the private-label athletic footwear, the projected growth was pegged at 5-7% annually.

Read more about projected growth here:
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7 0
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A company had the following partial list of account balances at year-end: Sales returns and allowances $ 500 Account Receivables
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$56,000

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The computation of net sales is shown below.

For the net sales reported, we'll add the sales revenue and deduct the sales return and allowances with sales discount

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4 years ago
The difference between total utility and marginal utility is thatGroup of answer choicesa. total utility is usually larger than
Thepotemich [5.8K]

Answer:

The correct answer is letter "B": total utility is cumulate and marginal utility is not.

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While the total utility is the <em>aggregate result</em> of consuming goods or services representing the overall satisfaction those goods or services provided, the marginal utility refers only to the satisfaction provided by consuming one more good in regards to its cost.

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