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Rina8888 [55]
3 years ago
11

You need to have $30,250 in 17 in years. You can earn an annual interest rate of 4 percent for the first 5 years, 4.6 percent fo

r the next 4 years, and 5.3 percent for the final 8 years. how much do you have to deposit today?
Business
1 answer:
mylen [45]3 years ago
6 0

Answer:

The amount that has to be deposited today is $6205.63

Explanation:

The given parameters are;

The annual interest rate for the first 5 years = 4 percent

The annual interest rate for the next 4 years = 4.6 percent

The annual interest rate for the final 8 years = 5.3 percent

Let the amount deposited be X, we have;

X × (1 + 0.04)⁵ + X × (1 + 0.04)⁵×(1.046)⁴ + X × (1 + 0.04)⁵×(1.046)⁴ ×(1.053)⁸ = $30,250

X ((1.04)^5 + (1 + 0.04)^5×(1.046)^4 + (1 + 0.04)^5×(1.046)^4 ×(1.053)^8) = $30,250

X × 4.875 = $30,250

X = $30,250/$4.875 = $6205.63

The amount that has to be deposited today = $6205.63.

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Michael's, Inc., just paid $1.90 to its shareholders as the annual dividend. Simultaneously, the company announced that future d
sergij07 [2.7K]

Answer:

$44.18

Explanation:

The price can be easily calculated by the simple formula,

Price of stock = Dividend / (rate of return - growth of dividend)

Hence,

Price of stock = 1.90 / (0.085 - 0.042)

Price of stock = $44.18.

Hope you understand this simple equation

Thanks buddy.

6 0
3 years ago
Assume that you manage a $10.00 million mutual fund that has a beta of 1.05 and a 9.50% required return. The risk-free rate is 4
Svetradugi [14.3K]

Answer:

The required rate of return on new portfolio is 8.83%. So, option a is the correct answer.

Explanation:

To use the CAPM approach to calculate the new required rate of return, we first need to determine the beta for the new portfolio.

Portfolio beta is the weighted average of the individual stock betas that form up the portfolio. The weightage is assigned based on the investment in the stocks as a proportion of the total investment.

Total investment in new portfolio = 10 + 5 = 15 million

New portfolio beta = 10/15 * 1.05 + 5/15 * 0.65  

New portfolio beta = 0.9167

We need to calculate the market risk premium, using the old required rate of return, to use in CAPM.

r = rRF + Beta * rpM

0.095 = 0.042 + 1.05 * rpM

0.095 -0.042 = 1.05rpM

(0.053) / 1.05 = rpM

rpM = 0.05047 or 5.047% rounded off to 5.05%

The new required rate of return using CAPM,

r = 0.042 + 0.9167 * 0.0505

r = 0.08829 or 8.829% rounded off to 8.83%

5 0
3 years ago
Assume Ireland and Mauritania can both produce grain and dates, and that the only limited resource is the farming labor force, m
vesna_86 [32]

Answer:

Mauritania has an absolute advantage in the production of dates

Neither countries have an absolute advantage in the production of grains

Explanation:

A country has an absolute advantage in the production of a good or service if it produces more quantity of a good when compared to other countries

Ireland and Mauritania produces 10t grains. None of the countries have an absolute advantage in the production of grains

Mauritania produces 25t of dates while Ireland produces 5t of dates. 25 is greater than 5, so Mauritania has an absolute advantage in the production of dates

4 0
3 years ago
Boba, a Taiwanese tea drink, because boba is popular with students. The market for boba on the UCI campus is very competitive. I
navik [9.2K]

Answer:

1. c. has no control over the price it pays, or receives,in the market

2. c. firms are at the mercy of market forces.

3. buyers can expect to find consistently low prices and wide availability of the good that they want.

Explanation:

A competitive market has the following characteristics.

1. Firms are price takers. They do not set the price for their goods and services. They accept the price set by market forces. Price is set where the demand curve intersects the supply curve.

2. There are no product differentiation. All sellers sell identical goods and services.

3. There are no barriers to entry or exit of firms in the industry.

4. Firms make zero economic profit in the long run.

5. There are many sellers and buyers.

I hope my answer helps you.

6 0
3 years ago
Olsen Company paid or collected during 2014 the following items:
Karolina [17]

Answer:

A.  $26,400

Explanation:

Prepaid insurance beginning balance       $3,000

Add: Insurance paid during year                <u>$25,800</u>

                                                                     $28,800

Less: Prepaid insurance Ending balance   <u>$2,400  </u>

Insurance expense                                      <u>$26,400</u>

4 0
3 years ago
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