Answer:
It will take 11.7 years to reach the objective
Explanation:
Giving the following information:
PV= $4,100
FV= $5,500
i= 0.0063
n= ?
To calculate the time required to reach the future value, we need to use the following formula:
n= ln(FV/PV) / ln(1+i)
n= ln(5,500/4,100) / ln(1.0063)
n= 46.78
in years= 46.78/4= 11.70
It will take 11.7 years to reach the objective
Answer:
The blank spaces are not easy to spot here but I found a similar question with their correct locations. The answers for each blank will be as follows respectively;
new; new ; after-tax cost of debt ; after-tax cost of debt ; after-tax cashflows; new debt; not outstanding debt ; irrelevant ;new capital; yield to maturity; coupon rate; yield to maturity; long term debt ; long-term projects.
Explanation:
The cost of new debt is the before-tax cost of debt and does not reflect the cost of outstanding debt. Interest paid on the new debt is tax-deductible and that's why you calculate the after-tax cost of debt to use in the firms WACC formula. Since the main goal of a business managers is to increase a firm value, you use the after tax cashflows to valuate the business. Additionally, the cost at which the firm borrowed in the past is irrelevant in WACC calculation because the cost we need to know is of the new capital.
"Gross pay"
Gross pay is <em>before </em>taxes and withholdings, net pay (aka take-home pay) is what is left over <em>after </em>taxes/etc are taken out.
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