A. allows you to diversify as opportunities develop.
Answer: <em><u>Share price = = 34.09</u></em>
Explanation:
Given: Discount rate = 8.4 %
Cash flows Year Discounted CF Cumulative cash flow
- 0 - -
1461000 1 1347785.98 1347785.98
1680150 2 1429846.75 2777632.73
1932172.5 3 1516903.84 4294536.56
2221998.38 4 1609261.45 5903798.01
2555298.13 5 1707242.31 7611040.33
44392891.26 5 29659718.18 37270758.51
where;
Discounted CF =
∴Share price = = 34.09
<em><u>Share price = = 34.09</u></em>
Answer: 2.24
Explanation:
Current ratio = Current Assets / Current liabilities
Current assets = Accounts receivable + Office supplies + Prepaid insurance + Cash
= 18,000 + 2,800 + 3,560 + 7,000
= $31,360
Current liabilities:
= Accounts payable + Unearned service revenue
= 11,000 + 3,000
= $14,000
Current ratio = 31,360 / 14,000
= 2.24
With the present amount invested, P, the value received for n pay-out periods is calculated through the equation,
P = A x (1 - (1/(1 + r)^n)) / r)
Substituting the known values,
100,000 = (4,000)(1 - (1/(1 + r)^40)) / r)
The value of r from the equation is 0.3999 or 0.4. Hence, the nominal rate per year is equal to 1.6.