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zimovet [89]
3 years ago
8

You have some property for sale and have received two offers. The first offer is for $89,500 today in cash. The second offer is

the payment of $35,000 today and an additional guaranteed $70,000 two years from today. If the applicable discount rate is 11.5 percent, which offer should you accept and why?
Business
1 answer:
kvv77 [185]3 years ago
6 0

Answer:

We should accept offer 2 because the amount <u>today</u> is higher than offer 1.  

(offer 1 is $89,500, offer 2 is 91305)

Explanation:

To get the right answer we have to compare the 2 offers in the same moment of time.  We use interest formula to bring the future amount to this moment.  

First offer is for $89,500 today

Second offer is $35,000 today and $70,000 in two years  discount rate is 11.5.

The formula of interest is A=P (1+r)ⁿ

A=Final amount  

P= Principal ( deposit)  

r= interest rate

n= time

We know A, r and n

Looking for P,

then  P= A/(1+r)ⁿ

P= 70000/(1+0,115)² =56305

Offer 2 is =35000+56305=91305

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Beale Manufacturing Company has a beta of 1.8, and Foley Industries has a beta of 0.80. The required return on an index fund tha
navik [9.2K]

Answer:

3.5%

Explanation:

We will apply asset pricing model to calculate cost of equity (required rate of return). The capital asset pricing model is stated as below:

Cost of equity = Risk-free rate + Beta x Market risk premium

Putting all the number together, we have:                          

Cost of equity (Beale) = 5.5% + 1.8 x (9% - 5.5%) = 11.8%

Cost of equity (Foley) = 5.5% + 0.8 x (9% - 5.5%) = 8.3%

Cost of equity (Beale) - Cost of equity (Foley) = 11.8% - 8.3% = 3.5%

<em />

<em>Note: You can also do quick calculation as below:</em>

<em>Cost of equity (Beale) - Cost of equity (Foley) = (Beta of Beale - Bete of Foley) x Market risk premium = (1.8 - 0.8) x (9% - 5.5%) = 3.5%</em>

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3 years ago
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NARA [144]
B. is the best choice
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Alika [10]
Three essential <span>principles of test construction are:
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7 0
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If a country has a trade surplus, then the country Group of answer choices imports as much as it exports imports more than it ex
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Answer:

exports more than it imports

Explanation:

Trade surplus is when export exceeds import.

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Verizon [17]

Answer:

See explanation below.

Explanation:

It is important to note that from 1830-1900 migration in America increased especially on the coasts with immigrants who came from other countries in search of a better life. We will show some of the most important events associated with external and internal migration.

External migration increased by the discovery of gold on the west coast and opportunities across the country. In 1982 there was an important event called "Chinese exclusion law", this was the first law implemented to prevent all members of a specific ethnic group (Chinese women) from immigrating in the United States.

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