In an emergency, you used your credit card for a $500 cash advance. You just received your statement and your total balance du
2 answers:
Answer:
$560 will apply to the cash advance.
Explanation:
Given : $500 in cash advance is owed to the credit card therefore this is the present value Pv
The Annual percentage rate is 12% which will be i
The number of years that i will pay off this advance is not given therefore we see that i pay $700 because I want to make sure I pay for the cash advance therefore this will be paid over 1 year or less.
Then we will use the Future value formula as to check how much will I be owing the bank for the cash advance only after taking into consideration the annual percentage rate.
which the future value formula is as follows:
Then substitute the above mentioned values into this formula:
Fv = $500(1+12%)^1
Fv = $560
therefore after a year this is the amount that i will be owing the credit card even if I decide to pay it in less than a year still they will count the interest on Annual Percentage Rate basis so therefore in the $700 i paid the $560 was for the cash advance that I took most recently.
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Answer:
cost of equity = 13%
Explanation:
With the info given, we will use cost of equity formula from Dividend Growth Model. THis is given by:
Where D_1 is the next year dividend or D_1 = D_0(1+g)
P_0 is current stock price
g is the growth rate
Since D_0 (dividend this year) is 4.20 and g = 6.4% or 0.064, we can calculate D_1:
Current share price is 68, so we can now calculate cost of equity:
Hence,
cost of equity = 13%