Answer:
The man will made 15 drawins for 31,468 at their retirement age.
Explanation:
We solve for the future value of the annuity-due (deposits at the beginning)
C 1,000.00
time 25
rate 0.04
FV $375.1168
Now, we calcualte the amount of the withdrawals considering the new rate:
C $ 31.468
Answer:
a. 9,50%
b. $47.09
Explanation:
a) Discount rate on the stock
Average Risk Premium of Stock = 7.60%
Current risk-free rate = 1.60%
Discount Rate = 7.60% + 1.90%
Discount Rate = 9.50%
b) Current Price = ($41 + $2) / (1 + 9.50%)^1
Current Price = $43 / (1.0950)^1
Current Price = $43 / (1.0950)^1
Current Price = $43 / 0.91324
Current Price = $47.0851035872278
Current Price = $47.09
Note: Stock price equals the present value of cash flows for a 1-year horizon (Fv + Dividend)/(1+ Discount rate)^n
Answer:
So, in 2010, out of the dividends of $12000, $5000 was distributed to preferred stockholders.
Explanation:
A non cumulative preferred stock is a kind of stock that has a preference in terms of dividend payment over ordinary/common stock. This means that the dividend on the preferred stock is paid first and any remaining amount after dividend payment to this stock is distributable among common stockholders. Furthermore, in case dividends are not paid in a particular year, that year's dividends are not payable in future in case the stock is a non cumulative one. So, the dividends paid to non cumulative preferred stock in 2010 will be,
Dividend per year - Preferred stock = 10000 * 10 * 0.05 = $5000
So, in 2010, out of the dividends of $12000, $5000 was distributed to preferred stockholders.
Answer:
1) 6% , 2) 5% , 3) As inflation rate ise higher than expected inflation rate, real interest rate would be lower than expected real interest rate
Explanation:
Real Interest Rate is the interest rate, which accounts for the impact of inflation.
Real Interest Rate = Nominal Interest Rate - Inflation
1) 14% - 8% = 6%
2) 14% - 9% = 5%
3) In case of variation in expected & actual inflation rate
1 + nominal interest rate = (1 + real interest rate) (1 + expected inflation rate)
1 + 14% = (1 + r) (1 + 3%)
1.14 = (1 + r) (1.03)
1.14 = 1.03 + 1.03r
0.11 = 1.03r
r = 8.82 {If inflation is higher at 9%}
If inflation could have been at expected 3%, real interest rate could have been 14% - 3% = 11%.
So : As inflation rate turned out to be higher than expected inflation rate, real interest rate turned out to be lower than expected real interest rate
Answer: Option (D) is correct.
Explanation:
A good is said to be rival in nature if the consumption of that good by one individual will impact the availability of good for the others. This means that less quantity will be available for the others.
For instance, if a city has only one fire station, two fire trucks and four firefighters then it is characterized as rival in consumption because consumption of fire protection by one individual will make the fire protection unavailable for the others, due to its limited availability.
Suppose if there is an emergency call received from about 15 houses then the fire protection have to choose 3 or 4 houses among them because of limited resources. This shows that fire protection is unavailable for others.
