Complete question:
Today is January 1, 2009. The state of Iowa has offered your firm a subsidized loan. It will be in the amount of $10,000,000 at an interest rate of 5 percent and have ANNUAL (amortizing) payments over 3 years. The first payment is due today and your taxes are due January 1 of each year on the previous year's income. The yield to maturity on your firm's existing debt is 8 percent. What is the APV of this subsidized loan? If you rounded in your intermediate steps, the answer may be slightly different from what you got. Choose the closest.
A. -$3,497,224.43 B. $417,201.05 C.$840,797 D. None of the above
Answer:
$840,797 is the APV of this subsidized loan
Solution:
Input the loan in a financial equation first and resolve the payment:
PV=10,000,000
N= 3I = 5%
PMT = 3,672,085
Now, find the APV of the loan:
CF0 = $10,000,000
CF1= -$3,502,085
= -$3,172,085 - .66 * $500,000CF2
= -$3,556,011CF3
= -$3,612,632I
= 8%
APV = $840,797
<span>Suggest careers for which the person might be well suited.</span>
Answer:
the depletion would be recorded is $1,575,000
Explanation:
The computation of the depletion would be recorded is shown below;
Cost of land $5,000,000
Investment on land $1,100,0000
Less: Residual value -$250,000
Depreciable value $15,750,000
Now the depletion should be
= ($15,750,000 ÷ 500,000) × 50,000
= $1,575,000
Hence, the depletion would be recorded is $1,575,000
Answer:
Present value is $74,116.62
Explanation:
Giving the following information:
The machine pays= $2,655.00 every six months
n= 27 years= 54 semesters
Interest rate= 0.13/2= 0.065
First, we need to calculate the final value using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual pay
FV= {2,655*[(1.065^54)-1]}/0.065= $1,183,854.61
Now, we can calculate the present value using the following formula:
PV= FV/(1+i)^n
PV= 1,183,854.61/(1.065)^44= $74,116.62
Answer:
Both supply and demand are elastic.
Explanation:
Demand or supply elasticity is defined as elasticity or responsiveness with more than one numerical value, which indicates their high response to the change in price.
Elastic demand: It is the percentage change in quantity demanded due to the change in price in absolute value of the product.
The elasticity of supply: It is defined as the response of the quantity of a good supplied to a change in the price of the good. Likely to be positive in output.
FORMULA; Elasticity of supply= 
Due to the decrease in the supply of goods in the market, it leads to the scarcity of goods, therefore there is an increase in the price of goods.
