Mustang Corporation had 100,000 shares of $2 par value common stock outstanding. On December 31, 2015, the company's board of di
1 answer:
You might be interested in
Answer:
a) 27.2%
b) No
Explanation:
Given:
Monthly gross income = $2,000
Federal, state, and local income taxes = $400
Social Security taxes per month = $160
IRA per month = $80
Monthly credit payments for Visa, = $35
Monthly credit payments for MasterCard, = $30
Monthly credit payments for Discover cards = $20
Automobile loan payment = $285
Now,
Net income of Louise = Gross income - Total Taxes - IRA
= $2,000 - ( $400 + $160 ) - $80
= $1,360
Total debt payments = Credit card payments + Automobile loan payment
= ( $35 + $30 + $20 ) + $285
= $370
Therefore,
Debt payments-to-income ratio =
=
= 0.272
or
= 0.272 × 100% = 27.2%
(b) An individual should not spend more than 20% of their net income as debt to be within the means.
Since, the debt payments-to-income ratio exceeds 20 percent of her net income.
Hence, Louise is not living within her means
Answer:
The plot of the yields is attached.
Explanation:
i) 6%, 7%, 8%, 7%, 6%
Interest rate on 1 year maturity = 6%/1 = 6%
Interest rate on2 year maturity = (6%+7%)/2 = 6.5%
Interest rate on 3 year maturity = (6%+7%+8%)/3 = 7%
Interest rate on 4 year maturity = (6% + 7% + 8% + 7%)/4 = 7%
Interest rate on 5 year maturity = (6% + 7% + 8% + 7% + 6%)/7 = 6.8%
ii)6%, 5%, 4%, 5%, 6%
Interest rate on 1 year maturity = 6%/1 = 6%
Interest rate on 2 year maturity = (6% + 5%)/2 = 5.5%
Interest rate on 3 year maturity = (6% + 5% + 4%)/3 = 5%
Interest rate on 4 year maturity = (6% + 5% + 4% + 5%)/4 = 5%
Interest rate on 5 year maturity = (6% + 5% + 4% + 5% + 6%)/5 = 5.2%
