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4 years ago

What is an extrinsic value

Business

1 answer:

AleksandrR [38]4 years ago

7 0

Extrinsic value is the portion of the worth that has been assigned to an item by external factors.

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Based on the following data, would you recommend buying or renting? Rental Costs- Annual costs- Annual rent $7,380, Insurance $1

dalvyx [7]

Answer:

net annual cost of renting is less than that of purchase

so we can say it is beneficial to rent the property

Explanation:

we know that that Costs Associated with Buying a Property

Annual Mortgage Payment = $ 9800 ( out of $9575 is interest payment)

Property Taxes = $ 1780

Down Payment = $ 4500

Insurance / Maintenance = $1050

Total Costs = 17,130

minus here Tax Savings on Mortgage Interest = $2,681

that is ( 9575 × 28%)

Tax Savings on Property Taxes = $498.40 i.e (28% of 1780)

Growth in Equity = $225.00

Estimated Annual appreciation= $ 1,700.00

Net Annual cost on purchase= $ 12,025.60

Costs Associated with Renting a Property Annual Rent = $ 7,380.00

Security Deposit = $ 650.00

Insurance = $ 145.00

Total Costs = $ 8,175.00

Less Interest receivable on Down payment amt invested = $ 270.00

i.e (4500 6% after tax rate)

Net Annual Cost on Renting = $7,905.00

so that here net annual cost of renting is less than that of purchase

so we can say it is beneficial to rent the property

8 0

3 years ago

To help them estimate the company's cost of capital, Smithco has hired you as a consultant. You have been provided with the foll

Zarrin [17]

Answer:

Option (D) is correct.

Explanation:

Cost of common stock:

= (Expected dividend at the end of Year 1 ÷ Price of stock) + Growth rate.

= (1.45 ÷ 22.50) + 0.065

= 0.0644 + 0.065

= 0.1294 i.e., 12.94%

Conclusion:-

Cost of common stock = 12.94%

Note:-

D1 = Expected dividend at the end of Year 1,

P0 = Current price of common stock, and

gL = Growth level i.e., growth rate in dividend.

3 0

4 years ago

Automation has improved the quality and efficiency of repetitive tasks. True or False

denis-greek [22]

Answer:True

Explanation:

8 0

3 years ago

Read 2 more answers

Scenario 34-1. Take the following information as given for a small, imaginary economy: When income is $10,000, consumption spend

laiz [17]

Answer:

0.75

Explanation:

Marginal Propensity to Consume (MPC) is the change in consumption due to change in income

Change in consumption = $7,250 - $6,500 = $750

Change in income = $11,000 - $10,000 = $1,000

MPC = Change in consumption / Change in income

MPC = 750 / 100

MPC = 0.75

6 0

3 years ago

Pierce Chocolates and Berry Sweets both have new projects that require an initial investment of $450,000 and will have annual ca

Rom4ik [11]

Answer:

Explanation:

Using a financial calculator, input the following using the "CF" button;

Pierce Chocolates has 5 years of cash inflows;

Initial investment ; CF0 = - 450,000

Yr1 Cashflow; CF1 = 110,000

Yr2 Cashflow; CF2 = 110,000

Yr3 Cashflow; CF3 = 110,000

Yr4 Cashflow; CF4 = 110,000

Yr5 Cashflow; CF5 = 110,000

Then compute Internal rate of return; IRR CPT = 7.09%

Berry Sweets has 6 years of cash inflows;

Initial investment ; CF0 = - 450,000

Yr1 Cashflow; CF1 = 110,000

Yr2 Cashflow; CF2 = 110,000

Yr3 Cashflow; CF3 = 110,000

Yr4 Cashflow; CF4 = 110,000

Yr5 Cashflow; CF5 = 110,000

Yr6 Cashflow; CF6 = 110,000

Then compute Internal rate of return; IRR CPT = 12.18% hence higher.

6 0

3 years ago