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Katarina [22]
3 years ago
9

Which of the following is a true statement?

Business
1 answer:
MissTica3 years ago
6 0

Answer: a) To estimate the before-tax cost of debt, we need to solve for YTM on the firm's existing debt.

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Explanation:

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Calculate the following: The future value of lump-sum investment of $3,200 in four years that earns 6 percent. Round your answer
tresset_1 [31]

Answer:

(a) $4,040

(b) $3,434

(c) $348

(d) $3,265

Explanation:

(a) Calculate the following: The future value of lump-sum investment of $3,200 in four years that earns 6 percent. Round your answer to the nearest dollar. (Hint: Use Appendix A.1 or the Garman/Forgue companion website.) Round Future value of a Single Amount in intermediate calculations to four decimal places. $

To estimate this, the formula for calculating future value is used as follows:

FV = PV * (1 + r)^n ………………………….. (1)

Where,

FV = future value = ?

PV = lump-sum investment = $3,200

r = interest rate = 6%, or 0.06

n = number of years = 4

Substitute the values into equation (1) to have:

FV = $3,200 * (1 + 0.06)^4

FV = $3,200 * (1.06)^4

FV = $3,200 * 1.2625

FV = $4,040

(b) The future value of $1,100 saved each year for three years that earns 4 percent. Round your answer to the nearest dollar. (Hint: Use Appendix A.3 or the Garman/Forgue companion website.) Round Future value of Series of Equal Amounts in intermediate calculations to four decimal places. $

To calculate this, the formula for calculating the Future Value (FV) of an Ordinary Annuity is used as follows:

FV = M * (((1 + r)^n - 1) / r) ................................. (2)

Where,

FV = Future value of the amount after 3 years =?

M = Annual savings = $1,100

r = interest rate = 4%, or 0.04

n = number of years = 3

Substituting the values into equation (2), we have:

FV = $1,100 * (((1 + 0.04)^3 - 1) / 0.04)

FV = $1,100 * 3.1216

FV = $3,434

(c) A person who invests $1,800 each year finds one choice that is expected to pay 4 percent per year and another choice that may pay 7 percent. What is the difference in return if the investment is made for four years? Round your answer to the nearest dollar. (Hint: Use Appendix A.3 or the Garman/Forgue companion website.) Round Future value of Series of Equal Amounts in intermediate calculations to four decimal places. $

To do this, we first calculate the return of each of the 2  investments by using the the formula for calculating the Future Value (FV) of an Ordinary Annuity in part b above is used as follows:

<u>Calculation of return at 4 percent</u>

Where;

FV at 4% = Future value of the return after 4 years =?

M = Annual savings = $1,800

r = interest rate = 4%, or 0.04

n = number of years = 4

Substituting the values into equation (2), we have:

FV at 4% = $1,800 * (((1 + 0.04)^4 - 1) / 0.04)

FV  at 4% = $1,800 * 4.2465

FV  at 4% = $7,644

<u>Calculation of return at 7 percent</u>

Where;

FV at 7% = Future value of the return after 4 years =?

M = Annual savings = $1,800

r = interest rate = 7%, or 0.07

n = number of years = 4

Substituting the values into equation (2), we have:

FV at 7%= $1,800 * (((1 + 0.07)^4 - 1) / 0.07)

FV at 7% = $1,800 * 4.4399

FV at 7% = $7,992

<u>Calculation of the difference in return</u>

This is calculated as follows:

Difference = FV at 7% - FV at 4% = $7,992 - $7,644 = $348

(d) The amount a person would need to deposit today with a 7 percent interest rate to have $4,000 in three years. Round your answer to the nearest dollar. (Hint: Use Appendix A.2 or the Garman/Forgue companion website.) Round Present value of a Single Amount in intermediate calculations to four decimal places. $

To estimate this, the formula for calculating present value is used as follows:

PV = FV / (1 + r)^n ………………………….. (1)

Where;

PV = Present value or amount to deposit today = ?

FV = future value in three years = $4,000

r = interest rate = 7%, or 0.07

n = number of years = 3

Substitute the values into equation (1) to have:

PV = $4,000 / (1 + 0.07)^3

PV = $4,000 / 1.2250

PV = $3,265

4 0
3 years ago
The nation with the largest percentage of publically held land is
RideAnS [48]
The nation with the largest percentage of publicly held land is United state of America. These lands are usually set aside for different purposes such as parks, refuge camps, forests, historical places, etc.
6 0
3 years ago
PLS HELP!!! What is the meaning of Customer Relationship Management (CRM)?
Alla [95]

Answer:

CRM means collecting information about the customer for the purpose of improving their future experience.

Explanation:

CRM is an acronym for customer relationship management and it typically involves the process of combining strategies, techniques, practices and technology so as to effectively and efficiently manage their customer data in order to improve and enhance their satisfaction.

CRM means collecting information about the customer for the purpose of improving their future experience.

3 0
3 years ago
Read 2 more answers
Assume MU_c and Mu_d represent the marginal utility that a consumer gets from products C and D, the respective prices of which a
lana [24]

Answer:

<h2>The correct answer in this case is option C. or MU(c)/P(c)>MU(d)/P(d).</h2>

Explanation:

Under consumer equilibrium theory for two commodity model,a rational consumer maximizes his or her utility when the marginal utility(MU) obtained from consuming one good is equal to the same of the other.This is the fundamental essence of the Law of Equimarginal Utility in Economics.Now,in this case,the consumer will purchase more of good C than good D if the Marginal utility obtained from one unit of good C or MU(c)  for the money spend on consumption of good C or price of C,P(c) is greater than the marginal utility obtained from consuming 1 more unit of good D or MU(d) for money spend on purchase of good D or price of that particular unit of D or P(d).Therefore,since the marginal satisfaction compared to the amount of money spend for the consumer is higher for good C compared to the other or good D,it will increase the total utility level of the consumer from that particular consumption bundle or pattern.Hence,he or she will spend more on the consumption of good C than good D.

8 0
3 years ago
If the factory overhead is underapplied, then the adjusting journal entry to close the factory overhead account includes a: (Che
Ymorist [56]

Answer:

Debit to cost of goods sold and credit to factory overhead

Explanation:

Here we are interested in knowing the appropriate journal entry when the factory overhead is under applied.

What happens to the factory overhead journal in this case is that the we should have an adjusting journal entry.

The adjusting journal entry here is that we debit cost of goods sold and credit factory overhead

5 0
3 years ago
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