Answer:
The rate of return on the investment if the price fall by 7% next year is -22% which is shown below.
The price of Telecom would have to fall by $71.43($250-$178.57), before a margin call could be placed.
Lastly,if the price fall immediately,the margin price would $178.57 as shown below
Explanation:
Total shares bought=$40000/$250=160 shares
Interest on amount borrowed=8%*$20000=$1600
When the price falls by 7% the new price =$250(1-0.07)=$232.50
Hence rate of return=(New price*number of shares-Interest-total investment)/initial investor's funds
=($232.50*160-$40000-$1600)/$20000=-22%
Initial margin=investor's money/total investment=$20000/$40000=50%
maintenance margin=30%
Margin call price=Current price x (1- initial margin)/ (1- maintenance margin)
=$250*(1-0.5)/(1-0.3)
=$178.57
Answer:
The PV is 125,000
Explanation:
We need to solve for the present value of a perpetuity:
The yearly amounts are 10,000
while the current interest rate is 8% = 8/100 = 0.08
10,000 / 0.08 = 125,000
the perpetuity is worth 125,000 dollars
Note, when the market rate changes the value of the perpetuity also changes as the constant cash flow is dividend over a larger or lower rate generating smaller or higher amounts, respectively
Answer:
a. - $3,100
b. $17,300
Explanation:
Changes in working capital = (ending balance of current assets - ending balance of current liabilities) - (beginning balance of current assets - beginning balance of current liabilities)
where,
Beginning current assets = Account receivable + inventory
= $25,200 + $12,600
= $37,800
Ending current assets = Account receivable + inventory
= $23,600 + $13,700
= $37,300
And, the current liabilities is given
= ($37,300 - $17,700) - ($37,800 - $15,100)
= $19,600 - $22,700
= - $3,100
b. The computation of the cash flow is shown below:
= Sales - costs + decrease in accounts receivable - increase in inventory + increase in accounts payable
= $36,600 - $24,600 + $1,600 - $1,100 + $2,600
= $17,300
The decrease and increase in current assets and liabilities shows a difference between the beginning and ending year amounts
Answer: One of the costs of not having insurance is the cost of repairing. Another cost is paying insurance premiums. Losses caused by a lack of insurance are the price of not having insurance.
Answer:
d. A fixed price of $2200/month.
Explanation:
A landlord is an owner of the house or property which is rented to a person called Tenant on lease or rent. The landlord in the question is renting an apartment. He has 3 Potential Tenants who are willing to rent his property. The greatest revenue will be generated if the apartment is rent out to the second tenant who is willing to pay $3000 per month. The revenue of the landlord will maximize if he uses option D to rent out his apartment. A fixed price of $2200 will generate greatest revenue.