1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
timofeeve [1]
3 years ago
11

Assume that you would like to purchase 100 shares of preferred stock that pays an annual dividend of $6.00 per share. However, y

ou have limited resources now, so you cannot afford the purchase price. In fact, the best you can do now is to invest your money in a mutual fund that offers an average return of 6% compounded monthly. Because the preferred stock is riskier, it has an annual rate of return of 12% (assume that this rate will remain constant into the foreseeable future). For you to be able to purchase this stock at the end of 5 years, how much must deposit in your bank account today?
Business
1 answer:
butalik [34]3 years ago
5 0

Answer:

$267.1211

Explanation:

return on preference share per unit is $6  , thus at 12% annual rate of return. Initial value of preference shares will be $50 per unit ( $6 divided by 12%).

Total value of preference shares = $50 multiplied by 100 preference shares = $5000

Future value of preference shares = 5000 (1.12)^5  = $8,811.7084

to find the value of money to be deposited to be able to buy the preference shares at the end of 5 yrs.

we work back to get the present value using the mutual fund annual rate

$8811.7084 = pv (1.06)^60  the rate is compounded monthly. Hence we shall compound the return 60 times in 5 years

Bank account money = 8811.7084  divided by 32.9877 = $267.1211

You might be interested in
The first step any investor should take before beginning to invest is to __________.
Nataly_w [17]
The first step that an investor should take before  beginning to invest should be to establish investment objectives.
5 0
3 years ago
When Callie developed a detailed description of her ideas for a gym and asked for feedback from women about the proposal, she wa
Korolek [52]
<span>When Callie developed a detailed description of her ideas for a gym and asked for feedback from women about the proposal, she was engaging in? Concept testing. Concept testing is the act of getting opinions/reactions to a product or service prior to the product or service entering the market. This helps gage consumer interest when pulling in a group of potential customers. </span>
3 0
3 years ago
Blowing Sand Company has just received a one-time offer to purchase 10,000 units of its Gusty model for a price of $22 each. The
VLD [36.1K]

Answer:

a. Accept the order

b. Increase in short-term profit of $50,000

Explanation:

<em>Note : Blowing Sand has "enough excess capacity" this means that fixed cost will be the same in the range or they will be ocurred whether or not the special order is accepted.</em>

Therefore fixed costs are Irrelevant for this decision.

<u>Incremental Costs and Revenues - accept the special order</u>

Sales ( 10,000 units × $22 each)                               $220,000

<em>Less</em> Variable Costs ( 10,000 units × $17each)         ($170,000)

Net Income                                                                  $50,000

The special order will result in an increase in short term profit of $50,000. Therefore, Blowing Sand Company should accept the order.

8 0
3 years ago
Read 2 more answers
Anita Job is the new Treasury Secretary, and she is trying to interpret the inflation measures for two consecutive years. In yea
sladkih [1.3K]

Answer:

Anita uses <em>Consumer Price Index (CPI) </em>as the term to describe the change in the price level from year one to year two.

Explanation:

<em>Since Inflation is measured as the rate of change of those prices from 9% in year 1 to 5% in year 2.  The most well-known indicator of inflation is the</em> <em>Consumer Price Index (CPI), which measures the percentage change in the price of a basket of goods and services consumed by households.</em>

<em>Therefore, the Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them</em>

4 0
3 years ago
Which of these portfolio items might assist Susan in answering an interviewer who asks, “What is something you did well in schoo
stepan [7]
A.Diploma Certificatw
7 0
2 years ago
Other questions:
  • I WILL MARK AS BRAINLIEST
    15·1 answer
  • Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based)
    12·1 answer
  • During the past five years, the nation of Andolvia began a massive undertaking: teaching farmers how to successfully grow and ha
    5·2 answers
  • You own a local coffeeshop. recently, you noticed that customers were doodling on your white paper cups. intrigued, you set up a
    11·1 answer
  • Which account has the lowest minimum balance requirement? Bank Account Terms and Conditions Account A Account B Account C Accoun
    13·2 answers
  • An employee can legitimately claim the following exemptions:
    15·1 answer
  • I’m not sure how to do these tbh
    11·1 answer
  • Tobias has a brokerage account and buys on the margin, which resulted in an interest expense of $52,000 during the year. Income
    15·1 answer
  • What is sample size?
    13·2 answers
  • Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!