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solniwko [45]
3 years ago
8

Racing Motors wants to save $825,000 to buy some new equipment three years from now. The plan is to set aside an equal amount of

money on the first day of each quarter starting today. How much does the company need to save each quarter to achieve its goal if it can earn 4.45 percent on its savings
Business
1 answer:
Salsk061 [2.6K]3 years ago
8 0

Answer:

It will have to save 51,224.05 to reach their financial goal of 825,000 in thre years at the given market rate

Explanation:

We have to solve for the annuity-due future value installment

FV \div \frac{(1+r)^{time} -1}{rate}(1+r) = C\\

FV $825,000.0000

time 12 (4 quartes x 3 years )

rate 0.0445

825000 \div \frac{1-(1+0.0445)^{-12} }{0.0445} = C\\

C  $ 51,224.043

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No it will not, the statement is incorrect.

Explanation:

if the firm is making a profit, then it means it is growing, so we must determine the firm's growth rate:

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since we are not given ROA, we must calculate it first:

ROA = net profit x asset turnover =  6% x 2 = 12%

now we go back, firm's growth rate = return on assets (ROA) x (1 - dividends paid) = 12% x (1 - 40%) = 12% x 0.6 = 7.2%

The firm can manage to support an annual growth rate of up to 7.2% before it needs to borrow money or issue new stocks.

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3 years ago
QUESTION 1 When several alternative investment proposals of the same amount are being considered, the one with the largest net p
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Answer:

The answer is option B) If the alternative proposals involve different amounts of investment, it is useful to prepare a relative ranking of the proposals by using a present value index.

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However, If the alternative proposals involve different amounts of investment, it is useful to prepare a relative ranking of the proposals by using a present value Index.

3 0
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Laura has an equity portfolio valued at $11.2 million that has a beta of 1.32. She has decided to hedge this portfolio using SPX
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Answer:

Explanation:

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Make - Use - Dispose

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