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Natasha_Volkova [10]
3 years ago
6

Identify the simplifying assumptions usually made in net present value analysis. (You may select more than one answer. Single cl

ick the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) All cash flows other than the initial investment occur at the end of periods. unanswered All cash flows generated by the inv
Business
1 answer:
Evgesh-ka [11]3 years ago
3 0

Answer:

You didn't post the complete information of the exercise, I searched the exercise online and tried to ask the most useful question.

Explanation:

The net present value method is based on two assumptions. These are:

1.The cash generated by a project is immediately reinvested to generate a return at a rate that is equal to the discount rate used in present value analysis.

2. The inflow and outflow of cash other than initial investment occur at the end of each period.

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Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 perc
pashok25 [27]

Answer:

$1,500

Explanation:

Relevant data provided

Annual cash flow = $150

Current Stock percentage = 10%

The computation of today value of Dynamo is shown below:-

Today value of Dynamo = Annual cash flow ÷ Current Stock percentage

= $150 ÷ 10%

= $150 ÷ 0.10

= $1,500

Therefore for computing the today value of Dynamo we simply divide the annual cash flow by current stock percentage.

6 0
3 years ago
Sure Tea Co. has issued 6.3% annual coupon bonds that are now selling at a yield to maturity of 9.20% and current yield of 8.777
alina1380 [7]

Answer:

Ans. 26 years is the remaining maturity of this bond.

Explanation:

Hi, we have to find the price of the bond, so we use the following formula.

CurrentYield=\frac{Coupon}{Price}

This means that:

Price=\frac{Coupon}{CurrentYield} =\frac{63}{0.08777} =717.79

Let´s not forget that the Coupon is calculated by the following formula.

Coupon=FaceValue*CouponRate=1,000*0.063

Now that we found that the price of the bond is $717.79, we have to bring to present value the remaining coupons and the principal that is paid at the end, so we have to solve for "n" the following equation, discounted at the yield to maturity.

Price=\frac{Coupon((1+YTM)^{n}-1) }{YTM(1+YTM)^{n} } +\frac{FaceValue}{(1+YTM)^{n} }

Let´s fill up what we can

717,79 =\frac{63((1+0.092)^{n}-1) }{0.092(1+0.092)^{n} } +\frac{1,000}{(1+0.092)^{n} }

But to solve for "n" is pretty painful, so we can use a financial calcultator o MS Excel. Please find the MS Excel sheet that I used with the "Seek Goal" formula instruccions as follow.

Set Cell: $C$19

To Value: 717,79

By Changing cell: $C$14

So the answer is 26

Best of luck.

Download xlsx
4 0
4 years ago
Kim's Kayak Tours initially identified active retirees living in the retirement community nearby as one of its target markets. K
galina1969 [7]

Answer:

Geodemographic; Lifestyle.

Explanation:

Geodemographics is the study of the population and its characteristics, divided according to regions on a geographical basis.

Lifestyle marketing is a process of establishing relationships between products offered in the  market and targeted lifestyle groups.

6 0
3 years ago
When a change in quantity is very
sveta [45]

Answer:

An elastic demand or elastic supply is one in which the elasticity is greater than one, indicating a high responsiveness to changes in price. An inelastic demand or inelastic supply is one in which elasticity is less than one, indicating low responsiveness to price changes

8 0
3 years ago
Read 2 more answers
Brown Co. pays weekly salaries of $10,500 on Friday for a five-day work week ending on that day. Assuming the end of the account
algol [13]

Answer:

Explanation:

The adjusting entry is shown below:

Wages Expense A/c Dr $6,300

     To Wages payable A/c $6,300

(Being the wages are adjusted)

The computation is shown below:

= Five days salaries ÷ number of days in a week × given days

= $10,500 ÷ 5 days × 3 days

= $6,300

So, the wages expense is debited for $6,300 and wages payable is credited for $6,300

4 0
4 years ago
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