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VLD [36.1K]
3 years ago
10

You have successfully started and operated a company for the past 10 years. You have decided that it is time to sell your compan

y and spend time on the beaches of Hawaii. A potential buyer is interested in your company, but he does not have the necessary capital to pay you a lump sum. Instead, he has offered $800,000 today and annuity payments for the balance. The first payment will be for $250,000 in three months. The payments will increase at 1.6 percent per quarter and a total of 20 quarterly payments will be made. If you require an EAR of 11 percent, how much are you being offered for your company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
VikaD [51]3 years ago
5 0

Answer:

$5,225,417

Explanation:

first payment 800000

1 quarter         250000

2 quarters 254000

3 quarters 258064

4 quarters 262193

5 quarters 266388

6 quarters 270650

7 quarters 274981

8 quarters 279380

9 quarters 283851

10 quarters 288392

11 quarters 293006

12 quarters 297694

13 quarters 302458

14 quarters 307297

15 quarters 312214

16 quarters 317209

17 quarters 322284

18 quarters 327441

19 quarters 332680

20 quarters 338003

11% = (1 + i/4)⁴

i = 0.106

quarterly interest = 2.65%

Now we need to determine the present value of this  annuity and our discount rate is 2.65%. I will use an excel spreadsheet to determine the present value of the 20 quarterly payments and then add the initial payment.

$4,425,417 + $800,000 = $5,225,417

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Creating a favorable impression and building trust with prospective customers is a critical part of the __________ step of perso
AnnyKZ [126]

Answer:

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Explanation:

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3 0
3 years ago
Quickbrush Paint Company is developing a linear program to determine the optimal quantities of ingredient A and ingredient B to
Sonbull [250]

Answer:

A. 0.9x + 0.3y ≤ 10,000

Explanation:

Given

x \to oil based plant

y \to water based plant

The data can be represented in tabular form as:

\begin{array}{ccc}{} & {A} & {B}  & {x} & {90\%} & {10\%}  & {y} & {30\%} & {70\%} & {} & {10000} & {5000}\ \end{array}

Considering only A, we have the following constraints:

A \to 90\% * x + 30\% * y

A \to 0.9x + 0.3y

Since the company currently has 10000 of A.

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So, we have:

A \to 0.9x + 0.3y \le 10000

<em>Hence, (A) is correct</em>

4 0
3 years ago
Checking for quality and paying creditors would fall within which two functional​ areas?
horsena [70]
Checking for quality fall within MANUFACTURING AND PRODUCTION AREA while paying creditor fall within FINANCE AND ACCOUNTING AREA.
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3 0
3 years ago
Whats the difference between stock and stockholder?
Charra [1.4K]

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8 0
3 years ago
The 10-year bond of Crown Electronics is selling at $960 each. The bond has a coupon rate of 8% and par value of $1,000. The fir
stich3 [128]

Answer: 5.36%

Explanation:

The after-tax cost of debt refers to the interest that is paid on debt which is then less the income tax savings as a result of the deductible interest expenses.

When calculating the after-tax cost of debt, the effective tax rate of a company should be subtracted from 1, after which the difference will be multiplied by the cost of debt. This will therefore be:

= Rate (10,8% × 1000, -960 + 20, 1000) × (1-40%)

=5.36%

6 0
3 years ago
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