Based on the given states, their probability of occurrence, and the investment returns, the expected return would be 8.72%.
<h3>What is the expected return for this investment?</h3>
This can be found by the formula:
= ∑ (Probability of occurrence x Investment returns if state occurs)
Solving gives:
= (18% x 20%) + (42% x 16%) + (30% x 3%) + (10% x -25%)
= 3.60 + 6.72 + 0.90 - 2.50
= 8.72%
Question:
Find the expected value of the investment.
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Answer:
The PV is 125,000
Explanation:
We need to solve for the present value of a perpetuity:
The yearly amounts are 10,000
while the current interest rate is 8% = 8/100 = 0.08
10,000 / 0.08 = 125,000
the perpetuity is worth 125,000 dollars
Note, when the market rate changes the value of the perpetuity also changes as the constant cash flow is dividend over a larger or lower rate generating smaller or higher amounts, respectively
Answer:
are costs that do not vary with production or sales level
Explanation:
Fixed cost can as well be regarded as overhead cost they are expenses in the company that does not depends on the change in the amount of goods and services produced in the company. They are time- related cost such as
salaries, property taxes, interest as well as insurance. It should be noted that fixed costs are costs that do not vary with production or sales level
When a
common goal is pursued by individuals performing separate but related tasks the
division of labor occurs. Just like Martha, Marvin, Kit and Tina who performs the
dusting, vacuums, bathrooms and kitchen cleaning separately and simultaneously for Martha’s
house to be cleaned on Monday.
Answer: $1,495.92
Explanation:
The amount you plan to borrow from the bank is:
= Cost of house - down payment
= 127,242 - 30,313
= $96,929
The amount to be paid is constant and so is an annuity. The loan amount is the present value of this annuity.
Term = 20 * 12 = 240 months
Interest = 18% / 12 = 1.5% monthly
Present value of annuity = Annuity * ( 1 - (1 + rate) ^-number of periods) / rate
96,929 = Annuity * (1 - (1 + 1.5%) ⁻²⁴⁰) / 1.5%
96,929 = Annuity * 64.79573209
Annuity = 96,929 / 64.79573209
= $1,495.92