Answer:
a: current value of the bond $405.11
b: Robison loss: 59.49%
c Pinson gain: 146.85%
As the investment is smaller the percentage change at maturity is greater than the difference in percentage of the par value.
A percent of the original investmentrepresent 10 dollars while !% of Mrs Pinson represent 4.05 dollars
Explanation:
The present value of the bonds is the sum of the present value of the coupon payment and the maturity discounted at market rate:
C: 1,000 x 8% / 2 = 40.00
time: 25 years x 2 payment per year = 50
market rate 0.10
PV $396.5926
Maturity 1,000.00
time 50.00
rate 0.1
PV 8.52
PV c $396.5926
PV m $8.5186
<em>Total $405.1111 </em>
Robinson capital loss:
405.1111/ 1,000 -1 = <em>-59.49%</em>
If purchased today and held to maturity by Mrs Pinson:
1,000 / 405.1111 - 1 = 146.85%
8.42%
Using your financial calculator, input the initial cost of $142,000 as a cash outflow (negative), and each of the four cash inflows (positive) as $41,650 for each of the first 3 years and $49,000 in the fourth year. Then hit the IRR button on your financial calculator to compute the internal rate of return (IRR), as 8.4167, rounded to 8.42%.
Answer:
Individual firms and workers are wage takers because they cannot exert any control over the market wage rate.
Explanation:
Remember, a labor market shows the availability of employment and labor, in terms of their supply and demand.
This scenario occurs in a purely competitive labor market.
In this market there many qualified workers with identical skills; meaning the workers share similar skills while the demand for such skills is high because of their importance to firms.
Answer:
a. $20
b. No.
c. $0.18 per unit
Explanation:
a. Hourly cost = Material defects * Cost to replace
50 units are inspected per hour with a 0.04 chance of defects.
= 50 * 0.04 = 2 units
Hourly cost = 2 * 10
= $20
b. No. Based on costs alone, Paying the inspector $9 an hour would be more cost effective than paying $20 to replace the defect.
c. Cost of inspecting each unit = Instructor fee/ Units inspected in an hour
= 9 / 50
= $0.18 per unit