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SSSSS [86.1K]
3 years ago
8

Which of the following statements are correct concerning the present value of​ $1.00 five years from today discounted at​ 5%? I.

The present value is equal to​ $1.00 divided by 1.05 to the 5th power. II. If the discount rate were less than​ 5%, the present value would be smaller. III. If the discount rate were more than​ 5%, the present value would be smaller. IV. If the​ $1.00 were to be received 6 years from​ today, the present value would be larger.
Business
2 answers:
andre [41]3 years ago
6 0

Answer:

1 and 3 option

Explanation:

Which of the following statements are correct concerning the present value of​ $1.00 five years from today discounted at​ 5%?  The present value is equal to​ $1.00 divided by 1.05 to the 5th power and If the discount rate were more than​ 5%, the present value would be smaller.

To calculate present value:The present value is equal to​ $1.00 divided by 1.05 to the 5th power, Therefore

Present value= the future value/(1+r)n    where n=5, r= 0.005 or 0.006

which will be 1/(1+0.05)5

                           =0.78

Note:The present value interest factor for a single sum is always equal to or less than 1 and the further in time, the smaller the present value interest factor

harina [27]3 years ago
5 0

Answer:

<u>Statements I and III</u>

Explanation:

I)

Using the formula

Present value= Future value/(1+r)^n

where:

future value= $1

r is the interest rate,

n is the investment time period

Present value= 1/(1+5%)^5 (raise to the 5th power)

=$0.78

Note that ideally the value of a dollar should be less in the future using the time call value of money factor. Thus this statement is correct.

III)

If the discount rate is less than 5% to achieve a future value of $1.00 at the end of 5 years, the present value should be bigger.

Assume the discount rate is 4.9%

Present value=

1/(1+4.9%)^5 (raise to the 5th power)

=1/(1+0.045)^5

=1/1.049^5

<u>=$1.27 (Correct since the present value is bigger)</u>

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Answer:

Explanation:

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going by the question Upon issuance, Ozark should

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Because face value of bonds =  $10 million but issue price is  $10 million * 101 % i.e $ 10100000

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3 years ago
Read 2 more answers
Acquiring Company is considering the acquisition of Target Company in a stock for stock transaction in which Target Company woul
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Answer:

1) 0.8333

2) 16,666

3) 2.33

4) 56.40

5) 2.2

Explanation:

Share Exchange Ratio = Price per share for Target Company / Market price per share for Acquiring Company  = $50 / $60  =  0.8333

New shares issued by Acquiring Company = Shares of Target Company x Exchange ratio (20,000 x 0.8333) = 16,666

Total shares outstanding of the combined companies = 60,000 + 16,666  = 76,666

Post-merger EPS of the combined companies = ($150,000 + $30,000)/ 76,666 = $2.35

Pre-merger EPS of Acquiring Company = $150,000 / 60,000 = $2.50

Post-merger share price = $2.35 x 24 (pre-merger P/E = $60.00/$2.50) = $56.40

Purchase price = 50 * 20,000 = 1,000,000

Interest expense = 1,000,000 * 8% = 80,000

Post-merger earnings = 150,000 + 30,000 – 80,000 * (1-0.4) = 132,000

Therefore, Post-merger EPS of the combined companies = 132,000/60,000 = 2.2

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3 years ago
When you receive an assignment to write a report, you should begin the report-writing process by
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G according to the neoclassical theory of distribution, the real wage earned by any worker equals that worker's marginal product
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<span>A. According to the neoclassical theory, technical progress that increases the marginal product of farmers causes their real wage to rise. B. The real wage in (a) is measured in terms of farm goods. That is, if the nominal wage is in dollars, then the real wage is W/PF, where PF is the dollar price of farm goods. C. If the marginal productivity of barbers is unchanged, the their real wage is unchaged. D. The real wage in (c) is measured in terms of haircuts. That is, if the nominal wage is in dollars, then the real wage is W/PH, where PH is the dollar price of a hair-cut. E. If workers can move freely between being farmers and being barbers, then they must be paid the same wage W in each sector. F. If the nominal wage W is the same in both sectors, but the real wage in terms of farm goods is greater than the real wage in terms of haircuts, then the price of haircuts must have risen relative to the price of farm goods.</span>
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uzz Appliances manufactures two products: Food Processors and Espresso Machines. The following data are available: ​ Food Proces
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Answer:

It will produce 1,500 espresso

and 1,800 food processors

Explanation:

\left[\begin{array}{ccc}&$processors&$espresso\\$Sales&155&245\\$Variable&90&180\\$CM&65&65\\$Constrain resource usage&0.5&0.333\\$CM per constrain&130&195\ \end{array}\right]

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1,400 - 500 = 900 hours to produce food processors

outcome: 900 x 2 = 1,800 units

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3 years ago
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