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zavuch27 [327]
3 years ago
12

Clarissa wants to fund a growing perpetuity that will pay $10,000 per year to a local museum, starting next year. She wants the

annual amount paid to the museum to grow by 5% per year. Given that the interest rate is 9%, how much does she need to fund this perpetuity?
Business
2 answers:
mojhsa [17]3 years ago
8 0

Answer:

$250,000

Explanation:

Perpetuity is a type of payment that has no end. It starts on a particular date and continues endlessly.

Given:

Amount paid per year = $10,000

Annual Growth Rate = 5%

Interest Rate = 9%

Perpetuity = Amount paid/(Interest rate-Growth rate)\\Perpetuity = 10,000/(9/100-5/100)\\ Perpetuity= 10,000/0.04\\Perpetuity =250,000

Clarissa need $250,000

Viefleur [7K]3 years ago
5 0

Answer:

$250,000

Explanation:

In finance, perpetuity refers to an annual payment that does not ever end. This stream of cash is meant to continue forever. Perpetuities still exist, but are very rare. In this case, Clarissa wants to fund a perpetuity that will pay $10,000 per year, grow by 5%, and have an interest rate of 9%.

The formula for this would be:

PV0= 10000 / (0.09 - 0.05) =

PV0= 10000 / 0.04 =

PV0= 250,000

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B. Single II

C. Empty nest I

D. Empty nest II

E. Delayed empty nest

Answer: D. Empty nest II

Explanation: Empty nest syndrome is a term used to describe the feeling of grief and loneliness which

a parent experience when their children live home for the first to some where else either to study or for work etc.

Empty nest syndrome is usually associated with Full time mother's because they are more connected to their children due to the constant Relationship between them.

Empty nest II is the loneliness or grief feelings experienced by parents after when all the children have left home and the parent now stay alone with eachother,most parents in the stage will be of ages around 64years and most are either retired or partially retired.

6 0
3 years ago
Assume that a currency's spot and future prices are the same, and the currency's interest rate is higher than the U.S. rate. The
Andrei [34K]

Answer:

put upward pressure on; put downward pressure on

  • The actions of U.S. investors to lock in this higher foreign return would PUT UPWARD PRESSURE ON the currency's spot rate and PUT DOWNWARD PRESSURE ON the currency's futures price.

Explanation:

If both the spot and the forward price of a currency are the same, it means that it should be worth the same today than in the future. If you can earn higher interest by investing in that foreign currency, then investors will start purchasing higher amounts of the foreign in order to invest and gain higher rates.

Since the demand for the foreign currency increases, that put upward pressure its current price. Simply more investors will want to invest in that currency. While that happens right now, the market will tend to adjust to correct this arbitrage, and the way this can be adjusted is by lowering the future price of the currency. That puts downward pressure on the forward rate.

3 0
3 years ago
Hampton Corporation has a beta of 1.3 and a marginal tax rate of 34%. The expected return on the market is 11% and the risk-free
vekshin1

Answer: 13.1%

Explanation:

Using the Capital Asset Pricing Model, the expected return is;

Expected Return = Risk Free rate + beta(expected return - risk free rate)

= 4% + 1.3( 11% - 4%)

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7 0
3 years ago
Which of the following types of child care is most closely regulated by state and county government? A. Child care center B. Fam
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I think this will be A ;)
6 0
3 years ago
Read 2 more answers
On July 1, Year 4, Pell Co. purchased Green Corp. 10-year, 8% bonds with a face amount of $500,000 for $420,000. The bonds are c
gayaneshka [121]

Answer:

$21,800

Explanation:

The computation of 4-year revenue is as shown below:-

Bond Income of 4th Year = Face amount × Bond × 1 ÷ 2

= $500,000 × 8% × 1 ÷ 2

= $20,000

Interest Revenue = Bond Income + Amount of Discount Amortized

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= $21,800

Therefore for computing the interest revenue we simply bond income with the amount of discount amortized.

6 0
3 years ago
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