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Zolol [24]
3 years ago
5

Your father's employer was just acquired, and he was given a severance payment of $375,000, which he invested at a 7.5% annual r

ate. He now plans to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year. How many years will it take to exhaust his funds, i.e., run the account down to zero?22.5023.6324.8126.0527.35
Business
1 answer:
forsale [732]3 years ago
4 0

Answer:

22.5 years will take to exhaust his funds

Explanation:

Consider the following calculations

  • PV = 375,000, payment = -35,000, interest rate is 7.5%.
  • FV = 0.
  • Plugging these numbers into a calculator and solving for number of periods gives 22.5 years.
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7 0
3 years ago
Net working capital decreases when: A. a dividend is paid to current shareholders. B. a new 3-year loan is obtained with the pro
dsp73

Answer:

A. Dividend is paid to current shareholders.

Explanation:

This is simply said to be the aggregate amount of all current asset and also all current liability of an investment. It is used in measuring the short term liability of a business by subtracting the current liability from the current asset.

In some cases, it can be tagged a company’s current assets, such as cash, accounts receivable, inventories of goods etc. Many companies sum their's by calculating cash plus accounts receivable plus inventories, less accounts payable and less accrued expenses. This is why it is seen to decrease when dividend is paid to current shareholders.

5 0
3 years ago
XZYY, Inc. currently has an issue of bonds outstanding that will mature in 16 years. The bonds have a face value of $1,000 and a
borishaifa [10]

Answer: 10.66%

Explanation:

The expected quoted annual rate of return when the bonds are bought and being held until maturity will be calculated thus:

Coupon payment = 1000 × 13% = 130

The Yield to Maturity formula will be:

= Rate(maturity period, coupon payment, -price, fave value)

= Rate(16, 130, -1176, 1000)

Yield to Maturity = 10.66%

Therefore, the expected quoted annual rate of return is 10.66%.

5 0
3 years ago
Which one of these equations applies to a bond that currently has a market price that exceeds par value? C) Market value = Face
seropon [69]

Answer:

E) Yield to maturity < Coupon rate

Explanation:

As we all know that:

Bond's Yield = Coupon Payments  /  Market Price

If the market price has exceeded from the par value then the yield of bond will eventually fall from the previous level. In other words, as market value of bond is directly proportional to the coupon payments so we can say that the coupon rate increases the value of the bond.

Hence

Coupon rate >  Yield to maturity (If the market value is above par value)

If we change the sign, we have:

Yield to maturity < Coupon rate (Which is the option E)

7 0
3 years ago
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