Answer:
Arbitrage opportunity may exists as the ZCBs selling at different price at same time due to change in their YTM .
The PV of 100 face value zcb with different ytm are different , in this case.
for one year maturity with face value 100 current price = fv/ pv at 8% = 92.59
for Two year maturity with face value 100 current price = fv / Pv at 9% for two years = 84.167 , if the bond holder sell the bond after 1 year only, the price = 91.74 .
a) The arbitrage opportunity exist with buy two bond with face value 100 with maturity of 1 year and face value 110 with maturity of 2 years.
b) profit 0.01 , as difference between PV of both bond at their YTM rate.
Answer:
<em>King </em><em>George</em><em> </em><em>lll </em><em>sent </em><em>British </em><em>soldiers</em><em> </em><em>to </em><em>the </em><em>colonies</em><em> </em><em>to </em><em>enforce</em><em> </em><em>payment</em><em> </em><em>of </em><em>taxes,</em><em> </em><em>because</em><em> </em><em>colonist</em><em> </em><em>sometimes</em><em> </em><em>smuggled </em><em>goods </em><em>into </em><em>colonies</em><em> </em><em>to </em><em>avoid</em><em> </em><em>paying</em><em> taxes</em><em>.</em><em> </em><em>.</em><em>.</em><em>.</em><em> </em><em>The </em><em>items </em><em>were </em><em>marked </em><em>with </em><em>a </em><em>stamp </em><em>to </em><em>show </em><em>the </em><em>tax </em><em>was </em><em>paid.</em>
Answer: Machine B because it has the lower Present Value
Explanation:
<h2>
Machine A</h2>
= Present Value of income - Present Value of Costs
Present value of Income;
Sold for $5,000 after 10 years.
= 5,000/ (1 + 8%)^10
= $2,315.97
Present Value of Costs;
Purchased for $48,000.
Maintenance of $1,000 per year for years.
Present value of maintenance= 1,000 * Present value factor of annuity, 10 years, 8%
= 1,000 * 6.7101
= $6,710.10
Machine A Present Value
= 2,315.97 - 6,710.10 - 48,000
= -$52,394
<h2>
Machine B</h2>
No salvage value.
Present Value of costs
Purchased for $40,000.
Present value of maintenance = (4,000 / (1 + 8%)^3) + (5,000 / ( 1 + 8)^6) + (6,000 / ( 1 + 8%)^8)
= -$9,567.79
Present Value = -40,000 - 9,567.79
= -$49,568
Answer:
A) Accounts receivable turnover ratio = Net credit sales / Average accounts receivable
The following table shows the accounts receivable turnover ratio of MCB and ABI:
Particulars MCB ABI
Net sales $8320 $17400
Average Accounts Receivable $720 $900
Accounts Receivable Turnover rate 11.5 19.3
B)
Day's sale outstanding = Accounts receivable / Total credit sales × 365
The following table shows the days sale outstanding of MCB and ABI:
Particulars MCB ABI
Net sales $8,320 $17,400
Average Accounts Receivable $720 $900
Day's sale outstanding 31.58 18.88
Explanation:
