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enyata [817]
4 years ago
14

Your father's employer was just acquired, and he was given a severance payment of $375,000, which he invested at a 7.5% annual r

ate. He now plans to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year. How many years will it take to exhaust his funds, i.e., run the account down to zero?
a. 22.50 b. 23.63 c. 24.81 d. 26.05 e. 27.35
Business
1 answer:
8_murik_8 [283]4 years ago
7 0

Answer: (a) 22.50

Explanation:

Payment severance (PV) = 375,000,

Payment = -35,000,

Interest rate = 7.5%

FV = 0.

Evaluating these numbers using a calculator to solve for number of periods will give us the result as 22.5 years.

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In an efficient market, prices appear to move randomly becauseA) investors do not process new information correctly.B) only new
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Answer:

Correct answer is B.

Explanation:

B is correct. In the Strong-form efficient market hypothesis, all public and private information is reflected in prices and it is impossible for anyone to outperform the market. Only new information affects stock prices, but then, this new information is processed correctly and reflected in the price of an asset so fast before anyone can act on it. As a result, the price action becomes totally unpredictable and prices appear to move randomly.

6 0
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Transnational Strategy

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3 0
3 years ago
Prior to 2008, CBS Corp. owned approximately 18% of Westwood One, Inc., which managed the CBS Radio Network. CBS, in turn, manag
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Answer and explanation:

The influence a company may have over another when one of them has a number of shares that belongs to the other is determined by the percentage of ownership that the number of shares represent. If its lower than 20%, it is said the company has <em>no influence</em> over the other. From 20% to 50% one company has <em>significant influence</em> over the other. Finally, with more than 50% of the outstanding shares in possession, one company has <em>control </em>over the other.

In that case, CBS Corp. has no influence over Westwood One, Inc. since it owns only 18% of the outstanding shares.

4 0
3 years ago
what's the best definition of financial literacy? a. the efficient and effective management of moneyb. the ability to find, eval
san4es73 [151]
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5 0
3 years ago
GenX has a target capital structure of 40 percent common stock, 5 percent preferred stock, and 55 percent debt. Its cost of equi
AVprozaik [17]

Answer:

12.085 %

Explanation:

WACC = Cost of Equity x Weight of Equity + Cost of Preference Stock x Weight of Preference Stock + Cost of Debt x Weight of Debt

Remember to use the after tax cost of debt :

after tax cost of debt = interest x ( 1 - tax rate)

                                   = 8.00 % x (1 - 0.35)

                                   = 5.20 %

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           = 12.085 %

thus

the firm's WACC given a tax rate of 35 percent is 12.085 %

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3 years ago
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