Answer:
Explanation:
Use Future value formula for the calculation of number of years
Future Value = Present value ( 1 + interest rate )^number of years
FV = PV ( 1 + r )^n
$500,000 = $200,000 ( 1 + 10.5% )^n
$500,000 / $200,000 = ( 1 + 0.105 )^n
2.5 = ( 1.105 )^n
log 2.5 = n log 1.105
n = log 2.5 / log 1.105
n = 9.1771
n = 9 years 2 months
Answer:
The differential implicit in this acquisition is $110,000
Explanation:
The computation of the differential implicit is shown below:
Differential implicit = Amount paid - book value
= $450,000 - $340,000
= $110,000
The differential implicit shows a difference between the amount paid and the book value so we do not consider the fair value which is given in the question
Answer:
represent the quantity of each good that could be purchased if all of the budget were allocated to that good.
Explanation:
The budget line is a graph which shows the two combinations of goods a consumer can consume given price and income level
<u>Properties of the budget line </u>
- When income increases, the budget line shifts outward and shifts inward when income decreases
- the horizontal and vertical intercepts represent the quantity of each good that could be purchased if all of the budget were allocated to that good.
- the budget line is a straight line. This indicates that the marginal rate of substitution is constant
- the budget line is negatively sloped
Answer:
Yield to maturity is 6.6%
Explanation:
Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity.
Face value = F = $1,000
Assuming Coupon payments are made annually
Coupon payment = $1,000 x 8% = $80
Selling price = P = $1,100
Number of payment = n = 13 years
Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
Yield to maturity = [ $80 + ( 1000 - 1100 ) / 13 ] / [ (1,000 + 1100 ) / 2 ]
Yield to maturity = [ $80 - 7.7 ] / 1100 = $72.3 /1100 = 0.066 = 6.6%