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BaLLatris [955]
3 years ago
14

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $27,000 per year fo

rever. If the required return on this investment is 6.3 percent, how much will you pay for the policy? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g. 32.16.) Present value $ ________
Business
1 answer:
liberstina [14]3 years ago
5 0

Answer:

Present value = $428571.4286 rounded off to $428571.43

Explanation:

To determine how much should be paid for the policy today, we must calculate the present value of perpetuity. The policy returns are in the form of a perpetuity as they are paid in a constant amount after equal intervals of time and for an indefinite time period. The formula for the present value of perpetuity is,

Present value = Cash flows / r

Where,

  • r is the required rate of return

Present value = 27000 / 0.063

Present value = $428571.4286 rounded off to $428571.43

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Name the institution that investigates anti-competitive behaviour on companies in south africa​
HACTEHA [7]

Explanation:

the competition committee of southafrica, set up in the year 1989 by the southafrica government under the competition act to empower to investigate, control and restrict business, abuse of dominant positions and merges in order to achieve equity and efficiency in the southafrica economy.

4 0
3 years ago
Roy's Welding has annual sales of $96,700, a profit margin of 7.45 percent, and a payout ratio of 40 percent. The firm has $11,5
grin007 [14]

Answer: 11.26%

Explanation:

From the question, we are told that Roy's Welding has annual sales of $96,700, a profit margin of 7.45 percent, and a payout ratio of 40 percent ans that the firm has $11,500 of debt and owners' equity of $31,200.

The internal growth rate for this firm assuming the payout ratio remains constant goes thus:

We have to calculate the net income first and this will be:

= $96700 × 7.45%

= $7204.15

The total assets will be debt plus the equity. This will be:

= $11500 + $31200

= $42700

ROA will now be net income divided by

the total assets which will be:

=7204.15/42700

= 0.1687

Retention ratio will be:

= 1-payout ratio

= 1 - 40%

= 1 - 0.4

= 0.6

Therefore, internal growth rate will be:

=(ROA × Retention ratio)/[1-(ROA × Retention ratio)]

=(0.1687 × 0.6)/[1-(0.1687 × 0.6)]

= 0.10122/(1 - 0.10122)

= 0.10122/0.89878

= 0.1126

=11.26%

7 0
3 years ago
Determine the weighted cost of capital for the Mills Company that will finance its optimal capital budget with $120 million of l
g100num [7]

Answer:

The company's weighted cost of capital is 12.6%

Explanation:

Weighted average cost of capital (wacc) is calculated using the following formula:

wacc = [ kd x (1-tax) x weight of debt] + [ke x weight of equity]

in which: kd is the cost of debt = 12.5%

               ke is the cost of equity = 16%

Weight of debt = $120m / ($120m+$180m) = 40%

Weight of equity = $180m / ($120m+$180m) = 60%

--> wacc = [0.125 x ( 1-0.4) x 0.4] + [0.16 x 0.6]

              = 12.6%

8 0
3 years ago
In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary’s books: Inventory by $5,000, La
DedPeter [7]

This question is incomplete.

The complete question, answer & explanation for this question is given in the attachment below.

7 0
3 years ago
Which of the following is NOT regulated by the government?
Olin [163]

Answer:

Funding for the retraining of workers

Explanation:

Funding for the retraining of workers is a function internal to an organization that has to do with the retraining of workers towards a continuous profession development in upgrading and acquisition of new skills .

While other options in the question are under the regulation of the government, the funding for retraining of workers is left at the discretion of the employer or organization. This is why we have discrepancies in the approaches of different organization to this function.

7 0
3 years ago
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