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zloy xaker [14]
3 years ago
5

Turner, a successful executive, is negotiating a compensation plan with his potential employer. The employer has offered to pay

Turner a $600,000 annual salary, payable at the rate of $50,000 per month. Turner counteroffers to receive a monthly salary of $40,000 ($480,000 annually) and a $180,000 bonus in 5 years when Turner will be age 65.
a. If the employer accepts Turner's counteroffer, Turner will recognize $660,000 at the time the offer is accepted.
b. If the employer accepts Turner's counteroffer, Turner will recognize as gross income $55,000 per month [($480,000 + $180,000)/12].
c. If the employer accepts Turner's counteroffer, Turner will recognize $40,000 income each month for the year and $180,000 in year 5.
d. If the employer accepts Turner's counteroffer, Turner must recognize imputed interest income on the $180,000 to be received in 5 years.
e. None of these.
Business
1 answer:
zzz [600]3 years ago
6 0

Answer:

b. If the employer accepts Turner's counteroffer, Turner will recognize as gross income $55,000 per month [($480,000 + $180,000)/12].

Explanation:

Given that

Turner annual salary = $600,000

Counteroffer to received a monthly salary = $40,000 or $480,000 annually

And, $180,000 bonus in 5 years at the age of 65

So the benefit he will be getting would be after accepting the counter offer is

= ($480,000 + $180,000) ÷ 12 months

= $660,000  ÷ 12 months

= $55,000

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Suppose that an investor with a 10-year investment horizon is considering purchasing a 20-year 8% coupon bond selling for $900.
leonid [27]

Answer:

8.67%

Explanation:

PMT (Semi-annual coupon) = par value*coupon rate/2 = 1,000*8%/2 = 40

N (No of coupons paid) = 10*2 = 20

Rate (Semi-annual reinvestment rate) = 7%/2 = 3.5%

Future value of reinvested coupons = FV(PMT, N, Rate)

Future value of reinvested coupons = FV(40, 20, 3.5%)

Future value of reinvested coupons = $1,131.19

FV = 1,000

PMT (Semi-annual coupons) = 40

N (No of coupons pending) = 10*2 = 20

Rate (Semi-annual YTM) = 9%/2 = 4.5%

Price of the bond after 10 years = PV(FV, PMT, N, RATE)

Price of the bond after 10 years = PV(1000, 40, 20, 4.5%)

Price of the bond after 10 years = $934.96

Total amount after 10 years = Future value of reinvested coupons + Price of the bond after 10 years

Total amount after 10 years = $1,131.19 + $934.96

Total amount after 10 years = $2,066.15

Amount invested (Price of the bond now) = $900.

Total Annual Return = [(Total amount after 10 years / Amount invested)^(1/holding period)] -1

Total Annual Return = [($2,066.15/$900)^(1/10)] -1

Total Annual Return = [2.295722^0.1] - 1

Total Annual Return = 1.08665561792 - 1

Total Annual Return = 0.08665561792

Total Annual Return = 8.67%

7 0
3 years ago
Wild Swings Inc.’s stock has a beta of 2.5. If the risk-free rate is 6% and the market risk premium is 7%, what is an estimate o
Bess [88]

Answer:

r = 0.235 or 23.5%

Explanation:

Using the CAPM, we can calculate the required/expected rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.  

The formula for required rate of return under CAPM is,

r = rRF + Beta * rpM

Where,

  • rRF is the risk free rate
  • rpM is the market return

r = 0.06 + 2.5 * 0.07

r = 0.235 or 23.5%

3 0
3 years ago
Melanie is very concerned with avoiding late fees. The table shows her choices for paying her bills. Method Bill Payment Methods
sp2606 [1]
<span>The answer is 3 Set up automatic payments. Automatic payments can be done through direct access to ATM that receives the salary or bank account. This can help people like Melanie to avoid having trouble with late payments that would incur penalties. Paying by check would not be a good option because you should make sure there is enough money to pay for that purchase if not there could be more trouble. Paying through phone or online payments are sometimes delayed before it reaches the concerned company. 

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3 0
3 years ago
Read 2 more answers
The individuals or households that want goods and services for personal consumption or use, and have the resources to buy them a
olga nikolaevna [1]

The individuals or households that want goods and services for personal consumption or use, and have the resources to buy them are part of the consumers

<h3>Who are the consumers?</h3>

Consumers are known as the end users of any produced goods and services. They are crucial in the logistics chain in order to keep production running.

They are the set of individuals that want goods and services for their daily use and consumption purposes.

Learn more on consumers here: brainly.com/question/1213062

#SPJ12

4 0
2 years ago
Today's business environment changes so rapidly that strategic planning is becoming more difficult and subject to change.
xeze [42]

Answer: True

Explanation:

Yes, the given statement is true that the today business field are changing  more rapidly as compared to the strategy planning as the implementation of this type of stage is more difficult in an organization.

As it involves various types of implementing the critical choices for producing the various types of products and the services in an organization.

By properly implementing the specific steps in the strategic planning we can also improve the productivity of the company and also build the revenues.    

   

6 0
3 years ago
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