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Dafna1 [17]
3 years ago
6

An arithmetic cash flow gradient series equals $600 in year 1, $700 in year 2, and amounts increasing by $100 per year through y

ear 9. At i = 9% per year, determine the present worth of the cash flow series in year 0.
The present worth of the cash flow series in year 0 is $
The question is properly stated and nothing is wrong with it!
Business
1 answer:
Scrat [10]3 years ago
7 0

Answer:

Present value ofthe annuity 6,163.14

Explanation:

We build the schedule of the annuity:

#  Beginning / Installment / Total / Interst / Ending

1                       600 600 1.09      654

2    654         700         1354 1.09     1,475.86

3   1475.86 800 2275.86 1.09    2,480.69

4  2480.69 900 3380.69 1.09    3,684.95

5  3684.95 1000 4684.95 1.09    5,106.6

6  5106.6 1100 6206.6 1.09    6,765.19

7  6765.19 1200 7965.19 1.09    8,682.06

8 8682.06 1300 9982.06 1.09   10,880.45

9 10880.45 1400 12280.45 1.09   13,385.69

Then we discount the future value at 9% to get the present value:

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  $13,385.6900

time  9.00

rate  0.09000

\frac{13385.69}{(1 + 0.09)^{9} } = PV  

PV   6,163.1435

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The Baldwin company will sell 100 units (x1000) of capacity from their Buddy product line. Each unit of capacity is worth $6 plu
stiv31 [10]

Answer:

Amount received =   $2,210,000

Explanation:

given data

sell  = 100 units (x 1000)

capacity =  $6 + $4 per automation rating

sell capacity = 35%

to find out

how much they receive when the capacity is sold

solution

we consider here Automation rating is 7.0

we get here first Cost per unit that is here as

Cost per unit = 6 + 4 × 7

Cost per unit = 34

and capacity worth will be here as

capacity worth = Cost per unit × sell units

capacity worth = 34 ×  100000

capacity worth = 3,400,000  

so that here Amount received will be as

Amount received =  capacity worth × ( 1 - sell capacity )

Amount received =  3400000 × ( 1 - 35% )  

Amount received =   $2,210,000

6 0
3 years ago
The following statements are true. Explain why. a. If a bond’s coupon rate is higher than its yield to maturity, then the bond w
krok68 [10]

Answer:

A Bond's current market value represented by B_{0} is the present value of a bond as on today. Present value of a bond is it's future cash flows in the form of coupon payments and principal repayment discounted at investor's expectation in the market also referred to as Yield to maturity(YTM).

Present value of a bond is given by the following equation,

B_{0} = \frac{C}{(1\ +\ YTM)^{1} }  +\ \frac{C}{(1\ +\ YTM)^{2} } \ +\ ......+\ \frac{C}{(1\ +\ YTM)^{n} } \  +\ \frac{RV}{(1\ +\ YTM)^{n} }

where C= Annual coupon payments

YTM = Yield to maturity/ cost of debt/ market rate of return on similarly priced bonds

RV = Redemption value of bond

n = number of years to maturity

<u>a. A bond's coupon rate is higher than it's yield to maturity, then the bond will sell for more than face value.</u>

Hence, if the company pays more interest than what is paid in the market on similarly priced bonds, such bonds shall sell at more than their face value.

<u>b. If a bond's coupon rate is lower than it's yield to maturity, then the bond's price will increase over it's remaining maturity.</u>

Similarly, if a bond pays lower rate of interest than the market rate of interest on similarly priced bonds, the bond shall sell at lower than it's face value and the price will increase over the remaining life of such bonds.

         

6 0
3 years ago
The telecom industry in the country of Andalus is an industry characterized by the presence of strong network effects, high bran
scoundrel [369]

Answer:

The answer is B.

Explanation:

In the telecom industry, the threat of new entrants is most likely low. Why? - Because:

1. High brand loyalty meaning that the existing customers are unlikely to switch to any competitors be it existing or potential. This will discourage any new entrant.

2. High economies of scale. They are enjoying low cost of inputs with high outputs. New entrants will find it difficult initially to produce at low cost. This will also discourage new entrants.

Also, the presence of strong network effects and proprietary technology among the existing firms will deter new entrants.

6 0
3 years ago
Read 2 more answers
An investor originally paid $22,000 for a vacant lot twelve years ago. If the investor is able to sell the lot today for $62,000
MArishka [77]

Answer:

b.9%

Explanation:

Formula for annual rate of return formula is as follows;

Annual rate of return = [ (New value/ Initial value)^(1/t) ] -1

t = the total holding period of investment = 12 years

Old value = 22,000

New value = 62,000

Next, plug in the numbers to the formula;

Annual rate of return; r = [ (62,000/22,000) ^(1/12) ] -1

r = [2.8182 ^(1/12)] - 1

r = 1.0902 -1

r = 0.0902 or 9%

4 0
3 years ago
Suppose the supply and demand for a certain textbook are given by ​supply: p equals one fourth q squared comma ​demand: p equals
Llana [10]

Answer:

the demand quantity and the supply quantity at a price of ​$15 is 8 units

Explanation:

Supply, P = 1/4 Q²

Demand, P = - 1/4 Q²+30

If P = 15

Quantity Demanded will be 15 = -0.25Q²+30;

if we move 30 across the equality sign.

Therefore -0.25Q²=-15; divide both sides by -0.25;

Q² = 60, Q = 7.746, approximately 8 units

Quantity Supplied will be 15 =  1/4 Q², dividing both sides by 1/4

Q² = 60, Q = 7.746, approximately 8.

6 0
3 years ago
Read 2 more answers
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