Answer:
B. The value of a perpetuity is equal to the sum of the present value of its expected future cash flows.
C. The current value of a perpetuity is based more on the discounted value of its nearer (in time) cash flows and less by the discounted value of its more distant (in the future) cash flows.
Explanation:
A Perpetuity is a financial instrument that pays the holder forever or in perpetuity. For example, a bank paying you $800 per year for ever because you invested $40,000.
There are certain characteristics
Option B
The Perpetuity like most financial Securities has its value based on the underlying cashflows that it can accumulate. This means that it's value is based on the present value of it's future cashflow so the other the cash payments, the higher the present value.
Option C.
As the discounted cashflows in the nearer future will be discounted less by the discount rate as opposed to the cash flows further in future, the cashflows nearer to the present in time will contribute more to the Perpetuity than the cashflows further in time.
For example using that first example, $800 per year at a rate of 5% will be discounted to $762 in the first year but in year 10 will be discounted to $491.
Answer:
a. 4.91
b. 2.50 days
Explanation:
a. Inventory turnover
= Cost of goods sold / Average inventory
Average inventory =( Ending inventory + Opening inventory) / 2
= (4,676,000 + 4,190,000) / 2
= $4,433,000
Inventory turnover = 21,766,030 / $4,433,000
= 4.91
b. Days' sales in average receivables
= Average Account Receivables / Average daily sales
Average account receivables = (Ending receivables + Opening receivables) / 2
= (100,800 + 378,500) / 2
= $239,650
Average daily Sales = Sales / 365
= 34,988,900 / 365
= $95,860
Days' sales in average receivables = 239,650 / 95,860
= 2.50 days
Answer: See explanation
Explanation:
Trade restrictions simply means a way of protecting the local industries. This can be through imposition of tariffs on foreign goods, use of quota etc. The importance of trade restrictions are:
1. Trade restrictions are important in the protection of the infant indutries, that is, the young industries in a country that are just growing.
2. Trade restrictions is necessary to prevent dumping of goods. This mean selling of goods at lower prices or of low quality in a country. This gives such products an unfair advantage over other goods produced in the home country.
3. Trade restrictions is vital on order to protect the strategic indutries.
4. Trade restrictions is also vital in order to protect the jobs of the people in the country. When goods are imported rather than supporting local businesses, this can lead to unemployment as workers will lose their jobs.
