Answer:
$16,875
Explanation:
The amount received per year is $15,000 and the CPI increased from 144 to 162
Inflation rate = (New CPI - Old CPI)/Old CPI * 100
Inflation rate = 162-144/144 * 100
Inflation rate = 0.125
Inflation rate = 12.5%
Amount received = $15,000 * 12.5% = $1,875
==> $15,000 + $1,875 = $16,875
So, Grandmother will receive $16,875
Answer:
0.4820
Explanation:
The computation of the weight of debt is shown below:
= Debt value ÷ Total capital structure
where,
Debt value is
= 630 bonds × $1,000 × 0.93
= $585,900
And, the total capital structure is
= Debt value + common stock + preferred stock
= $585,900 + 5,800 shares × $81 + 4,700 shares × $34
= $1,215,500
So, the weight of debt is
= $585,900 ÷ $1,215,500
= 0.4820
Answer:
15.7 years
Explanation:
We employ a mathematical approach to solve this;
Present value (PV) of $10 per year at start of year, for n years = $100 (lifetime subscription, life = n years)
Now, we need to get the equivalent amount at the end of each year. This is obtainable from the cost of capital. Which is 7% and that is same as 0.07.
Therefore, we are expecting a value of 1+0.07 = 1.07 and this brings the equivalent amount at the end of each year = 10*1.07
Now, this equivalent amount at the end of each year will give;
(10*1.07)(1.07^n - 1)/(0.07*1.07^n) = 100
Where n is the number of years
n = 15.7 years
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