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Karolina [17]
3 years ago
9

What is the present value of a $400 perpetuity if the interest rate is 7%? If interest rates doubled to 14%, what would its pres

ent value be? Round your answers to the nearest cent.
Business
1 answer:
s2008m [1.1K]3 years ago
8 0

Answer:

present value = $57.14.28

present value = $2857.13

Explanation:

given data

perpetuity value  = $400

interest rate = 7% = 0.07

interest rate = 14% = 0.14

to find out

What is the present value

solution

we get her present value that is express as

present value = \frac{perpetuity}{rate}   ............1

put here value for rate 7% and 14%

present value = \frac{400}{0.07}

present value = $57.14.28

and

present value = \frac{400}{0.14}

present value = $2857.13

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Computing the terminal-year FCF: Miles Cyprus Corp. purchased a truck that currently has a book value of $1,000. If the firm sel
jeka57 [31]

Answer:

$3,800

Explanation:

Miles Cyrus bought the truck for $1,000 and then sold it for $5,000:

The selling price of the truck is =                  $5,000

The cost basis of the truck is =                     ($1,000)

Net capital gain is =                                        $4,000

capital gains taxes is $4,000 x 30% = $1,200

The terminal year future cash flow is = $5,000 - $1,200 = $3,800

4 0
3 years ago
The management of Cooper Corporation is considering the purchase of a new machine costing $420,000. The company's desired rate o
liraira [26]

Answer:

b.1.08.

Explanation:

The computation of the present value index is shown below;

As we know that

Present Value Index = Present value of Net Cash Inflow ÷ Initial Cash outflow

where,

Initial investment = $420,000

And, the present value of net cash inflows are

Year        Cash Flow (in $)       PVF at 10%            Present Value (in $)

1               180,000                   0.909                     163,620

2              120,000                   0.826                      99,120

3               100,000                  0.751                        75,100

4                90,000                   0.683                      61,470

5                90,000                   0.621                       55,890

TOTAL                                                                       455,200

So, the present value index is

= $455,200 ÷ $420,000

= 1.08

4 0
3 years ago
An emergency management agency uses youtube top post videos on how to prepare for transition does this fall under? 
Yuri [45]
Answer - A. (Monitor)

Monitor is typically the first Level in the stages of development in the use of social media where <span>emergency management agencies watch and listen to messages streaming through social media to better understand the medium and the message. </span>
4 0
3 years ago
George consumes two goods, milk and cookies. He has maximized his utility given his income. Milk costs $2 per gallon and he cons
olga nikolaevna [1]

Answer:

George buys 5 bags of cookies each month

Explanation:

Given

Milk = \$2 (per gallon)

Marginal\ Utility\ (milk) = 4

Cookies = \$4 (per bag)

Required

Determine the number of bags of cookies he buys

First, we need to determine the marginal utility of cookies

To solve this, we make use of the following formula:

\frac{MU\ of\ Milk}{Cost\ of\ Milk} = \frac{MU\ of\ Cookies}{Cost\ of\ Cookies}

Substitute values for

<em>MU of Milk = 4</em>

<em>Cost of Milk = 2</em>

<em>Cost of Cookies = 4</em>

<em />

This gives:

\frac{4}{2} = \frac{MU\ of\ Cookies}{2}

2 = \frac{MU\ of\ Cookies}{2}

MU\ of\ Cookies = 2 * 2

MU\ of\ Cookies = 4

From the given table:

The corresponding bags of cookies for marginal utility of 4 is 5

Hence:

George buys 5 bags

8 0
3 years ago
If the marginal propensity to consume is two thirds, then an increase in personal income taxes of $100 will most likely result i
rosijanka [135]

When personal income taxes is increased, there would be a decrease in consumption of $67.

<h3>What is the MPC?</h3>

The marginal propensity to consume is the proportion of the disposable income that is spent. When personal income taxes are increased, there would be a decrease in the disposable income. The decrease in disposable income would reduce the income avalialbe for consumption.

Decrease in consumption = 2/3 x $100 = $67

To learn more about marginal propensity to consume, please check: brainly.com/question/19089833

#SPJ1

4 0
2 years ago
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