PLEASE ANSWER FAST please answer like.

Of the following investments, which would have the lowest present value? Assume that the effective annual rate for all investmen

frozen [14]

Answer:

The investment with the lowest Present Value is D= $936.86

Explanation:

Giving the following information:

Assume that the effective annual rate for all investments is the same and is greater than zero. We will assume an effective rate of 10%.

A) Investment A pays $250 at the end of every year for the next 10 years.

First, we need to find the final value.

FV= {A*[(1+i)^n-1]}/i

A= annual payment

FV= {250*[(1.10^10)-1]}/0.10= 3984.36

Now, we can find the present value.

PV= FV/(1+i)^n

PV= 3,984.36/1.10^10= $1,536.14

B) Investment B pays $125 at the end of every 6 months for the next 10 years.

FV= {125*[(1.05^20)-1]}/0.05= 4,133.24

PV= 4,133.24/(1.05^20)= 1,557.77

C) pays $125 at the beginning of every 6 months for the next 10 years

It is the same as B, but it generates interest for one more period.

PV= 1,557.77*1.05= 1,635.67

D) pays $2,500 at the end of 10 years

PV= 2500/1.10^10= $963.86

E) Investment E pays $250 at the beginning of every year for the next 10 years.

It is the same as A, but it generates interest for one more period.

PV= 1,536.14*1.10= $1,689.75

5 0

3 years ago

Quantum Inc. has warrants outstanding that allow the holder to purchase 1.5 shares of stock per warrant at $30 per share (exerci

svet-max [94.6K]

Answer:

A. $9.00

B. $3.00

C. Decrease

Explanation:

a. Calculation to determine the intrinsic (minimum) value of this warrant

Using this formula

I = (M – E) × N

Where,

I represent Intrinsic value of a warrant

M represent Market value of common stock

E represent Exercise price of a warrant

N represent Number of shares each warrant entitles theholder to purchase

Let plug in the formula

I=($36 – $30) *1.5

I=$6*1.5

I = $9.00

Therefore the intrinsic (minimum) value of this warrant is $9.00

b. Calculation to determine the speculative premium on this warrant

Using this formula

S = W – I

Where,

S representSpeculative premium

W represent Warrant price

I represent Intrinsic value.

Let plug in the formula

S=$12-[($36 – $30) *1.5]

S=$12 – $9

S = $3.00

Therefore the speculative premium on this warrant is $3.00

c.What should happen to the SPECULATIVE PREMIUM as the expiration date approaches is for it to DECREASE and thereby approach $0.

6 0

3 years ago

Suppose Hunt Corporation has Accounts receivables of $65,000, Furniture totaling $205,000, and Cash of $52,000. The business has

Rzqust [24]

Answer:

Stockholders’ equity is $132,000

Explanation:

Assets

Accounts receivables = $65,000

Furniture totaling = $205,000

Cash = $52,000

Total Assets = $322,000

Equity and Liabilities

Equity

Stockholders’ equity = $132,000

Liabilities

Note payable = $109,000

bank = $81,000

Total Equity & Liabilities= $322,000

* Equity=Total Assets-Liabilities=$322,000-($109,000+$81,000)=$132,000

5 0

3 years ago

If a society decides to produce consumer goods from its available resources, it is answering the economic question

riadik2000 [5.3K]

What is the question?

4 0

3 years ago

A plumber and his assistant work together to replace the pipes in an old house. The plumber charges $40 an hour for his own labo

Margaret [11]

Answer:

The plumber worked 70 hours and his assistant 35 hours.

Explanation:

To solve this problem, we will use the substitution method. Step by step explanation:

1. Defining the variables:

P: For plumber
A: For assistant

2. Defining the equations:

P = 2A (As the plumber works exactly double what the assistant works)
$40P + $15A = $3325

3. Replacing P in equation 2:

$40(2A) + 15A = 3325\\80A + 15A = 3325\\95A = 3325\\A = \frac{3325}{95} \\A = 35$

4. Replacing A in equation 1 to find the value of P:

$P = 2(35)\\P = 70$

This means the plumber worked 70 hours and his assistant 35 hours for a final bill of $3325.

6 0

3 years ago