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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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Answer:

The correct option is A, an asset's value is inversely related to the rate of return investors require to purchase it

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Ultimately, the higher the required return, the lower the present value of the investment whose price is being determined and the lower the discount the rate of return used in discounting relevant cash flows to present values the higher the present values.

7 0
2 years ago
suppose that aggregate demand is falling for several months in a row. describe how the economy will adjust in the long run.
Salsk061 [2.6K]

If aggregate demand in the long run is falling for several months in a row, it will make aggregate market results in an increase in the price level but no change in real production. The level of real production resulting from the aggregate demand shock is full-employment real production.

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4 0
1 year ago
The blurring of the lines separating the subsets of the financial industry started in the 1970s. 1990s. 1960s. 1940s.
telo118 [61]
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Alexxandr [17]

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These policies would not contribute at all to the preservation of threatened species. Species in danger of extinction, due to their small number, must be preserved from all human acts that limit their expansion, which is why in this sense any hunting authorization of these species is unfeasible.

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6 0
3 years ago
Given the following information, calculate the effective gross income multiplier: sale price: $950,000; potential gross income:
Paul [167]

Answer:

D. 3.6

Explanation:

The effective gross income multiplier (EGIM) is the ratio between the sale price (SP) and the effective growth income (EGI)

EGIM = \frac{SP}{EGI}

Sales Price (SP) = $950,000

Potential gross income (PI) = $250,000

Vacancy and collection losses (VC)= 15% = 0.15 * $250,000 = $37,500

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Thus, the effective gross income multiplier is:

EGIM = \frac{\$950,000}{\$262,500} \\EGIM = 3.6

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