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morpeh [17]
3 years ago
12

You will receive $500 tomorrow. You will receive an additional nine cash flows growing at the rate of inflation of 2 percent per

year. The nominal interest rate is 10 percent. a. Find the value of the stream of cash flows. Make sure to show your work. b. What is the real value of each cash flow received? Make sure to show your work. c. Find the value of the stream of cash flows, based on real values. Make sure to show your work. d. What do you observe? Explain.

Business
1 answer:
kobusy [5.1K]3 years ago
7 0

Answer:

please find the solution which is defined as follows:

Explanation:

please find the table in the attached file:

  • In point A, The Cashflow value = 5474.86 (premised on the description of cash flows).
  • In point B, the above table the PV of cash flow represents the real cost of its earned cash flow.
  • In point C, its actual value of the cash flow source is 3643.921.
  • In point D, The observation would be that the value of money year after year is depleting and is worth far more as inflation is weak.

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vladimir1956 [14]

A business plan that provides information on a company, its products or services, its market, and critical risks to prospective business or marketing partners or to prospective key employees is called an invention plan.

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4 0
9 months ago
Company A sold merchandise with a list price of $4,200 and costing $2,300 on account to Company B.
kompoz [17]

Answer: d. The invoice amount is greater than $3,300 and less than $3,400.

Explanation:

The terms of the sale are FOB destination, 2/10, n/30. This means that company B will get a 2% discount if they pay in 10 days, if not, they will have to pay in 30 days.

The goods were sold at a list price of $4,200.

Company B returned $750 according to the Credit memo from Company A.

This reduces the transaction amount by that credit memo,

= 4,200 - 750

= $3,450

It is stated that Company B paid within the discount period which was 10 days so they get the discount for a total balance of,

= 3,450 * (1 - 2%)

= $3,381

The answer therefore is option D.

7 0
2 years ago
A municipal bond carries a coupon rate of 4.25% and is trading at par. What would be the equivalent taxable yield of this bond t
max2010maxim [7]

Answer and Explanation:

Municipal bond rate = Taxed bond rate × (1-Tax rate)

4.25 = Taxed bond rate × ( 1 - 0.35)

Taxed bond rate = 6.54

4 0
2 years ago
A company purchased new equipment for $80,000. The company paid cash for the equipment. Other costs associated with the equipmen
rosijanka [135]

Answer:

$93,500

Explanation:

Given that,

Purchased new equipment for cash = $80,000

Transportation costs = $2,000

Sales tax paid = $7,000

Installation cost = $4,500

Cost of equipment:

= Cash purchase price + Transportation cost + Sales tax paid + Installation cost

= $80,000 + $2,000 + $7,000 + $4,500

= $93,500

Therefore, the cost recorded for the equipment was $93,500.

7 0
3 years ago
What is the repricing gap if the planning period is 30 days? 3 months? 2 years? Recall that cash is a noninterest-earning asset.
Tcecarenko [31]

Answer:- -$95 million for 30days,  -$20 million for 3 months, +$55 million for 2 years.

Explanation:

Repricing gap using a 30-day planning period, we have;

$75 - $170 = -$95 million.

Repricing gap using a 3-month planning period, we have;

($75 + $75) - $170 = -$20 million.

Reprising gap using a 2-year planning period, we have;

($75 + $75 + $50 + $25) - $170 = +$55 million.

b) the impact over the next 30 days on net interest income vary. Let us use i) when net income increases by 50 basis points.

      ii) when net income decreases by 75 basis points.

if impact over the next 30 days on net interest income increases by 50 basis points, we would have that  net interest income will decrease by $475,000, see below:

ΔNII = CGAP(ΔR) = -$95m.(0.005) = -$0.475m

If  impact over the next 30 days on net interest income decrease by 75 basis points, net interest income will increase by $712,500.  This is because:

ΔNII = CGAP(ΔR) = -$95m.(-0.0075) = $0.7125m

7 0
3 years ago
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