Microsoft stock price peaked at 6118% of its IPO price more than 13 years after the IPO† Suppose that $15,000 invested in Micros
1 answer:
Answer:
37% compounded annually
Explanation:
To find the answer we need to follow this formula:
Where:
- P = Present value of the stock
- I = Initial value of the stock
- r = Interest rate
- n = number of compounding periods
Now we plug the amounts into the formula:
900,000 = 150,000 (1 + r)^13
900,000 / 150,000 = (1 + r)^13
60 = (1 + r)^13
Ln60 = 13 Ln(1 + r)
4.09 / 13 = Ln(1 +r)
0.31 = Ln(1 + r)
e0.31 = Ln(1 + r)
1.37 = 1 + r
1.37 - 1 = r
0.7 = r
Thus, the annual interest rate is 37%
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Answer:
Option (a) is correct.
Explanation:
Contribution margin per marketing plan = Sales - Variable cost
= $3,000 - $2,000
= $1,000
A.
(1)
Break even in marketing plan = 400
(2) Break-even in dollars:
= Break-even in marketing plan × Average rate per plan
= 400 × 3,000
= 1,200,000
(3) Margin of safety = Actual sales - Break-even sales in dollars
= 1,500,000 - 1,200,000
= 300,000
= 20%
B.
(1) Contribution margin per marketing plan = Sales - Variable cost
= $4,000 - $2,000
= $2,000
Break even in marketing plan = 200
(2) Break-even in dollars:
= Break-even in marketing plan × Average rate per plan
= 200 × 4,000
= 800,000
(3) Margin of safety = Actual sales - Break-even sales in dollars
= 1,500,000 - 800,000
= 700,000
= 47%
Therefore, option (a) would achieve the margin of safety ratio more than 45%.