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algol [13]
3 years ago
11

The current market value of the assets of AMN Co. is $47 million, with a standard deviation of 21 percent per year. The firm has

zero-coupon bonds outstanding with a total face value of $35 million. These bonds mature in two years. The risk-free rate is 3.6 percent per year, compounded continuously. What is the value of d1 as it applies to the Black-Scholes option pricing model
Business
1 answer:
larisa [96]3 years ago
8 0

Answer:

The answer is "1.38357"

Explanation:

Given values:

The current market value of the assets (s)= $ 47

standard deviation(\sigma) = 21%

risk-free rate (r)=3.6%

Exercise price (X) = 35

Maturity time (T)= 2 year

Formula:

\bold{d1 =\frac{\frac{s}{X}+(r+0.5 \times \sigma^2)\times T}{\sigma \times \sqrt{T}}}\\\\

by solving the given values, we get the d1 value that is "1.38357"

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Roget Factory has budgeted factory overhead for the year at $15,500,000. It plans to produce 2,000,000 units of product. Budgete
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Answer:

$14,76

Explanation:

Using a single plantwide factory overhead rate based on direct labor hours, the factory overhead rate for the year is $14,76.

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(Deferred Tax Asset with and without valuation Account) Jennifer Capriati Corp. has a deferred tax asset account with a balance
valina [46]

Answer:

a. Income Tax Expense (Dr.) $298,000

Deferred Tax (Dr.) $30,000

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Explanation:

b. Income Tax expense (Dr.) $30,000

Allowance to reduce deferred tax value to NRV (Cr.) $30,000

Income tax payable is calculated based on tax rate of 40%.

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2 years ago
Sub-prime loan company is thinking of opening a new office, and the key data are shown below.
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To complete the above question, please see below:

Sub-Prime Loan Company is thinking of opening a new office, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new office. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. No change in net operating working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.) 

<span>WACC 10.0% </span>
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5 0
3 years ago
Identify which principle applies to each scenario by placing the appropriate label next to each scenario.
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2 years ago
Martinez Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2020. The goods have a sales price of $
Artemon [7]

Answer:

Martinez Company

a) Journal Entries

Jan. 2, 2020:

Debit Accounts Receivable (Danone Inc.) $630,000

Credit Cash Discounts $9,100

Credit Sales Revenue $639,100

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To record the cost of goods sold.

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Credit Accounts Receivable (Danone Inc.) $630,000

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a) Data and Analysis:

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Cost of goods sold $480,000 Inventory $480,000

Jan. 28, 2020:

Cash $639,100 Accounts Receivable $630,000 Cash Discounts $9,100

7 0
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