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3 years ago

What is the future value of a $500 annuity payment over eight years if interest rates are 14 per 14 percent

Business

1 answer:

Charra [1.4K]3 years ago

6 0

Answer:

FV= $6,616.38

Explanation:

Giving the following information:

Annual cash flow= $500

Number of periods (n)= 8

Interest rate= 14%

<u>To calculate the future value, we need to use the following formula:</u>

FV= {A*[(1+i)^n-1]}/i

A= annual cash flow

FV= {500*[(1.14^8) - 1]} / 0.14

FV= $6,616.38

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Targaryen Corporation has a target capital structure of 65 percent common stock, 5 percent preferred stock, and 30 percent debt.

Juli2301 [7.4K]

Answer:

a. What is the company’s WACC?

R_Wacc = 13% (65%) + 5% (5%) + 6% (30%) * (1-0,25) = 10,05%

b. What is the aftertax cost of debt?

The aftertax cost of debt is:

R_Debt : (1 - 0,25) x 6% = 4,50%

Explanation:

The WACC it's defined by the formula :

WACC: E/V*Re + D/V*Rd *(1-0,25)

Re: 13,00% Cost of Common Equity

Re: 5,00% Cost of Preferred STOCK

Re: 6% Cost of Debt

E/V: 65% Percentage of financing that is Common Equity

PS/V: 5% Percentage of financing that is Preferred Stock

DB/V: 30% Percentage of financing that is Debt

Tax: 25% Corporate tax rate

Now we have all of the components to calculate the WACC.

The WACC is:

R_Wacc = 13% (65%) + 5% (5%) + 6% (30%)*(1-0,25) = 10,05%

The aftertax cost of debt is:

R_Debt : (1 - 0,25) x 6% = 4,50%

5 0

3 years ago

Which following statement about FAFSA process are TRUE?

aleksklad [387]

FAFSA stands for Free Application for Federal Student Aid. It is a form that can be prepared annually by current and prospective college students in the United States to determine their eligibility for student financial aid. Hope this helps.

3 0

3 years ago

A company has decided to discontinue a component of its business but, when the reporting period ends, the component has not yet

azamat

Answer: income from operations for the year and the amount by which the component’s fair value less cost to sell is less than book value

Explanation:

Discontinued operations is simply and accounting term which means the parts of the core business of a company that have either been shut down or divested.

With regards to the question, the amount that the company would report as income from discontinued operations would be the income or loss that was gotten from operations, that is revenues, the expenses, gains and the losses and the impairment loss.

Therefore, the correct answer will be option B "Income from operations for the year and the amount by which the components fair value less cost to sell is less than the book value".

5 0

2 years ago

The Terrence Co. manufactures two products, Baubles and Trinkets. The following are projections for the coming year: Baubles Tri

MAXImum [283]

Answer:

Bauble to be sold for break even = 5484

Explanation:

Sales Mixture = 16000 : 8000 = 2:1 2 : 1

Bauble Trinkets

Selling Price P.u (16/16) : (16/8) = 1 2

Variable Cost (6400/16000) : ( 11520/16000) = (0.4) (0.72)

Contribution margin Per unit (Sp-Vc) = 0.6 1.28

Com-posit Cm 2 baubles 1 trinkets = 0.6*2+1.28*1 = 2.48

Fix Cost Total = 3200+3600 = 6800

Break-Even units = 6800/2.48 = 2741

Baubles 2742*2 = 5484*0.6 = 3290.4

Trinkets 2742*1 = 2742*1.28 = 3509.7

5 0

3 years ago

"During the current year, Stern Company had pretax accounting income of $48 million. Stern's only temporary difference for the y

Naddik [55]

Answer:

$59 milliom

Explanation:

Calculation to determine what Stern's taxable income for the year would be:

Using this formula

Stern's taxable income=Accounting income +Rent received temporary difference

Let plug in the formula

Stern's taxable income=$48 million+ $11 million

Stern's taxable income=$59 million

Therefore Stern's taxable income for the year would be:$59 million

5 0

2 years ago