Answer: $118,304
Explanation:
Given the following:
End of year cashflow of portfolio is either :
$70000 or $195,000
Probability of either equals = 0.5
With a riskless investment in T-bills of 4% and a risk premium of 8%, then the expected rate of return = 12%
Therefore ;
Amount of portfolio × (1 + expected rate of return) = expected cashflow.
Expected cash flow = probability × end of year cashflow
Expected cashflow = (0.5 × 70000) + (0.5 × 195000)
= 35000 + 97500 = $132500
Therefore ;
Amount of portfolio × (1 + 0.12) = 132500
Amount of portfolio × 1.12 = 132500
Amount of portfolio = 132500/1.12
Amount of portfolio = $118,303. 57
=118,304
This is known as Data Visualization
Answer:
9%
Explanation:
Calculation to determine What annual interest rate is Consolidated Freightways paying
Based on the information given we would be using Financial calculator to determine the ANNUAL INTEREST RATE
PV= $60,000
PMT= -$13,375
N= 6
I/Y=?
Hence:
I/Y = 9%
Therefore annual interest rate that Consolidated Freightways is paying will be 9%
Answer:
$1,242,000
Explanation:
The new machine is to be recorded at its Fair Value which is $1,242,000 because the exchange has a commercial substance. Asset forgone is credited by its original cost, and accumulated depreciation till date of exchange is debited. Cash paid and loss or gain is adjusted as required. But the new asset is debited by the amount of its Fair Value on the day of exchange.