Answer:
a.
Investment X.
Investment X offers to pay $4,500 per year for 9 years.
Discount rate of 7%
This is therefore an annuity as it is a constant figure.
Present value = 4,500 * Present value Interest factor for 9 years, 7%
= 4,500 * 6.5152
= $29,318.40
Investment Y
Present Value = 6,200 * Present value Interest factor for 5 years, 7%
= 6,200 * 4.1002
= $25,421.24
b. Investment X
Discount rate is 21%.
Use Present Value of Annuity formula as attached table does not have factor for 21%.
= $17,574.45
Investment Y
= $18,141.10
Answer:
A debit to raw material of $95,000
Explanation:
Raw material inventory is an asset, due to debit nature of this account an addition in the raw material will require a debit entry in this account and credit to cash / account payable.
The journal entry for purchase of raw material is as follow
General Ledger Dr. Cr.
Raw Material Inventory $95,000
Cash / Account Payable $95,000
Answer:
d. the supply of financial capital comes from savings, and the demand goes to making loans.
Explanation:
Capital markets refer to the areas where deposits and investment are transferred between the capital providers and others in need of capital. Capital markets consist of the main market, where new shares are released and exchanged, and the secondary market, where already issued securities are exchanged by investors.
Answer:
$29.70
Explanation:
Retention ratio = 1 - payout ratio
= ( 1 -0.5 )
= 0.5
Growth rate, g = ROE × Retention ratio
= 0.15 × 0.5
= 0.075
= 7.5%
Required return = Risk - free rate + [ Beta × (Market rate- risk-free rate) ]
= 2.5% + 1.44 × (11% - 2.5%)
= 14.74%
Intrinsic value =
=
= 29.69 ≈ $29.70
Answer:
True
Explanation:
The nominal GDP is divided by the real GDP to calculate GDP deflator which is used to calculate the CPI and Inflation rate. So it is true that the GDP delfator is used to calculate inflation rate.