Answer:
The second option is the cheapest.
Explanation:
Giving the following information:
The first company offers free installation and equipment, but will charge you $401.00 per year forever. The second company charges $783.00 for installation, but will charge you $204.00 per year forever. Assume that payments are at the END of the year. Your personal interest rate is 5.00% per year
To calculate the present value, we need to use the formula for a perpetual annuity:
PV= Cf/i
Cf= cash flow
i= interest rate
Option 1:
PV= 401/0.05= $8,020
Option 2:
PV= 204/0.05 + 783/1.05= $4,825.71
The second option is the cheapest.
The correct answer should be 30 because you don't want too much pressure .
Ethically probably harder,
Answer:
Explanation:
- The bond has 8% coupon paid semiannually, and those bonds sell at their par value.
- Since the bond sales at par value, Market rate (Yield) = Coupon rate =8%
<u>Second bond:</u>
- Semiannual coupon amount = 1000 x 8%/2 = $40
- Time to maturity = 6 years = 12 semiannual periods
- Semiannual Yield = 8%/2 = 4%
To get price of this bond we will use PV function of excel:
= PV (rate, nper, pmt, fv, type)
= PV (4%, 12, -40, -1000, 0)
= $1053.32
- Price of this bond = $1,053.3
Answer:
Correct answer is TRUE
Explanation:
Non-cash assets are expected to produce cash over time but the amount of cash they eventually produce could be higher or lower than the values at which the assets are carried on the books. Some factors that affects the value of non-cash assets are the general economic forces such as inflation or deflation, amortization or impairement itself of the assets. It maybe realized at favorable side (gain) or unfavorable (loss) side.
