Answer:
The statement is: True.
Explanation:
The Annual Rate of Return or Yearly Rate of Return is the amount earned over an investment within one year. It is typically represented as a percentage and takes into consideration capital appreciation and the payment of dividends. The formula to calculate the annual rate of return is the following:
Annual Rate of Return = (EYP - BYP)/BYP X 100%
Where:
EYP = End of year price
BYP = Beginning of year price
Answer:
$1,724.138
Explanation:
Given:
Payment received each year = $125,000
Rate of return = 7.25 % = 0.0725
Present value = ?
Computation of Present value:
Present value = Payment received each year / Rate of return
= $125,000 / 0.0725
= $1724137.93
Present value = $1724137.93
Present value = $1,724,138 (approx)
Therefore, firm have to contribute $1,724.138
Answer:
The price of the stock today is $42.94
Explanation:
The price of a stock whose dividends are expected to grow at a constant rate is calculated using the constant growth model of Dividend Discount model approach. It bases the price of the stock on the present value of the expected future dividends. The price today under this model is calculated as follows,
P0 = D0 * (1+g) / r - g
Where,
- D0 * (1+g) is the D1 or the dividend for the next year
- r is the required rate of return
- g is the growth rate in dividends
P0 = 4 * (1+0.052) / (0.15 - 0.052)
P0 = $42.938 rounded off to $42.94
Answer:
$1,008.18
Explanation:
Using a financial calculator, you can calculate the price of this bond with the following inputs;
Maturity of the bond; N= 3
Face value ; FV = 1000
Annual coupon payment; PMT = 7% *1000 = 70
Yield to maturity ; I/Y = 6.69%
then compute the Price; CPT PV = 1,008.182
Therefore, the current price is $1,008.18
FOB shipping point
Explanation:
FOB affects the buyer's inventory cost adding liability for shipped goods increases inventory costs and reduce net income.
