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Mumz [18]
3 years ago
13

Your annual salary is $100,000. You are offered two options for a severance package. Option 1 pays you 6 months' salary now. Opt

ion 2 pays you and your heirs $6,000 per year forever (first payment at the end of this year.) If you are required return is 11%, which option should you choose?
1. How much is the value for alternative 1?
2. How much is the value of alternative 2?
Business
1 answer:
kotegsom [21]3 years ago
7 0

Answer:

Option 1 is more convenient.

Explanation:

Giving the following information:

The annual salary is $100,000. You are offered two options for a severance package. Option 1 pays you 6 months' salary now. Option 2 pays you and your heirs $6,000 per year forever

The present value of option 1 is:

PV= 6*100,000= $600,000

To calculate the present value of option 2 we need to use the present value formula of a perpetual annuity:

PV= Cash flow/i

PV= 6,000/0.11= $54,545

There is no doubt that option 1 is better.

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The fiscal 2016 financial statements of nike inc. shows net operating profit margin (nopm) of 11.4%, net operating asset turnove
kolezko [41]
<span>E, there is not enough information without actually having the Return on Equity from which we can subtract the operating return. With only percentages, we cannot extract this answer.</span>
7 0
3 years ago
Is Darby doing anything wrong? If so, what? What ethics traps is she facing?
Rom4ik [11]

Answer:

Hello your  question is incomplete attached below is a screenshot of the question

Answer: i) Darby is doing something wrong

              ii) Ethic traps are : Money and Rationalization

Explanation:

Darby is doing something wrong because she is taking the benefits of H associates company for personal purposes. and this totally unethical behavior been exhibited by Darby

The ethics trap faced by Darby are :

Money ; Money is the most influential trap that makes employees engage in most unethical activities because Human beings want more money always

Rationalization : Darby is using the company's facilities for personal use because she feels that her usage of the facilities for personal use won't affect the company negatively

3 0
3 years ago
A multinational corporation has manufacturing facilities in many Asian countries due to cheaper labor. Which strategy is the cor
tatiyna

Answer:

acquisition of resources

Explanation:

The strategy that this corporation is using would be considered the acquisition of resources. This is what every multinational company does in order to cut down costs as much as possible. By pursuing and obtaining cheaper labor in a foreign country, the company is cutting down its overall costs. This can be done by also importing other resources from locations in which that resource is abundant meaning it is therefore much cheaper.

4 0
3 years ago
A soft peg exchange rate may create additional _______________ as exchange rate markets try to anticipate when and how the gover
sattari [20]

A soft peg exchange rate may create additional volatility as exchange rate markets try to anticipate when and how the government will intervene.

<h3>What is an exchange rate?</h3>

An exchange rate refers to the value of a country's currency in relation to another currency. This entails the rate at which a currency will be exchanged for another.

It is the value of one currency for the purpose of conversion to another.

Learn more about exchange rate here : brainly.com/question/2202418

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7 0
2 years ago
8-12 REQUIRED RATE OF RETURN Suppose rRF 9%, rM 14%, and bi 1 3. a. What is ri, the required rate of return on Stock i? b. Now s
Nat2105 [25]

Answer:

a = 0.74 or 74%

b(1) = 0.75 or 75%

b(2) = 0.73 or 73%

c(1) = 1 or 1%

c(2) = 0.61 or 61%

Explanation:

The stock i has a risk free rate of 9% with a market return of 14% and beta of 13, using the formula we get,

ri = rRF + bi x (rM – rRF)

Where rRF=9/100=0.09

bi =13

rm =14/100=0.14

Putting the values into the formula

= 0.09 + 13 x (0.14 – 0.09)

= 0.74 or 74%

b. (1)

Ri = rRF + bi x (rM – rRF)= 0.10 + 13 x (0.14 – 0.09)= 0.75 or 75%

Here the slope of SML remains constant, meaning the market risk premium will not change. As a result, the required return will increase by 1%.

b(2)

Ri = rRF + bi x (rM – rRF)= 0.08 + 13 X (0.14 – 0.09)= 0.73 or 73%

Here, the slope of SML remains constant, meaning the market risk premium will not change. As a result the required return will decrease by 1%.

c. (1)

Ri = rRF + bi x (rM – rRF)= 0.09 + 13 x (0.16 – 0.09)= 1 or 1%

Here, the slope of SML does not remain constant, meaning the market risk premium will change. As a result, the required return will increase.

(2)Ri = rRF + bi x (rM – rRF)= 0.09 + 13 x (0.13 – 0.09)=0.61 or 61%

Here, the slope of SML remains constant, meaning the market risk premium will not change. As a result, the required return will decrease by 13%.

3 0
3 years ago
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