Answer:
a. If the interest rate was 8%, how much would you have been prepared to bid for the prize?
this is an ordinary annuity:
annual payment = $9,420,713 / 20 = $471,035.65
number of periods = 19 periods
interest rate = 8%
therefore, the present value annuity factor = 9.6036
the present value of the annuity = $471,035.65 x 9.6036 = $4,523,637.97 ≈ $4,523,638
b. Enhance Reinsurance Company was reported to have offered S4.2 million. Use Excel to find the return that the company was looking for.
using the IRR function in Excel, the return that Enhance was looking for was 9.05%
Answer:
The additional sale will not conflict with regular sales.
Explanation:
Accept business at a special price if the additional sales conflict regular sales. That is, special price must maintain the status quo or improve it.
Answer:
the real rate of interest of 6.39 %
Explanation:
given,
rate of return on your bond = 11.29 %
the inflation rate = 4.6 %
real rate of return = ?
rate of return = 
rate of return = 
rate of return =
rate of return = 
= 6.39 %
the real rate of interest of 6.39 %
Answer:
$479,500
Explanation:
To determine the interest due for the first payment we can solve the following:
interest due on payment 1 = total debt x interest rate x 1/12 = $480,000 x 10% x 1/12 = $4,000
Now we need to subtract the interest due from the first payment:
principal paid = payment - interest due = $4,500 - $4,000 = $500
remaining principal = $480,000 - $500 = $479,500
Answer:
Cash for $475 and Credit Card Expense for $25
Explanation:
Cash for $475 and Credit Card Expense for $25
