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3 years ago

If you buy an investment for $800 and then sell it for

Business

1 answer:

kirill [66]3 years ago

3 0

Answer: 18.75%

Explanation:

Since the investment is bought for $800 and then sold for $950 a year later, then the annual return on investment will be:

= (Selling price - Cost price) / Cost price × 100

= ($950 - $800)/$800 × 100

= $150/$800 × 100

= 18.75%

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Which of the following investments would have the highest future value at the end of 10 years? Assume that the effective annual

LenaWriter [7]

Answer:

The investment that will have the highest future value is option b.

Explanation:

First lets suposse the effective annual rate is 10%

a. Future value= $2,500

c. First you must obtain the net present value of all cash flows with the formula attached, for example:

NVP= ($250/(1+10%)^1)+($250/(1+10%^2)+($250/(1+10%^3)... and so on until year 10

With the excel formula "NPV" you can calculate the net present value specifying the interest rate, the cash flows.

The NPV= $1,536.14

And then you calculate the future value of this answer with this formula:

VF=VP(1+i)^n

VF= $1,536.14*(1+10%)^10

VF=$3,984.36

b. If payments are due at the beginning of every year means that at year 0 you start with $250. You must calculate the NPV in this way

NPV= $250+($250/(1+10%)^1)+ )+($250/(1+10%^2)+($250/(1+10%^3)... and so on until year 10

NPV= $1,786,14

And then you calculate the future value of this answer:

VF= $1,786,14*(1+10%)^10

VF=$4,632.79

d. First, you must convert the annual interest rate into semi-annually interest

10% Annually effective is 4,88% Semi-anually effective

NPV=$125+($125/(1+4,88%)^1)+ )+($125/(1+4,88%^2)+($125/(1+4,88%^3)... and so on until period 20

NPV=$1,698.75

And then you calculate the future value of this answer:

VF= $1,698 *(1+10%)^10

VF=$4,405.37

The investment that will have the highest future value is option b.

3 0

3 years ago

In 2016, due to a change in marketing forecasts, Barney Corporation reduced the projected life of its patent for producing round

Effectus [21]

Answer:

Explanation:

This is a change in estimate. No prior period adjustment is needed.

3 0

3 years ago

How experiences will help in picking a career?

alexdok [17]

Answer:

well to be honest the more you are focused and stuff and get used to like any subject that can help you in the near future.

Explanation:

3 0

2 years ago

Read 2 more answers

Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. when he arrived he disco

inysia [295]

The answer is The income effect.
Income effect is described as the change in demand of a service or good brought on by change in the income of a consumer.It is observed in two cases first is when income of person increases and second is when price of goods or service decreases.
The scenario given in the question is an example of second case as the price of burger was less than normal Steve perceived his income to be able to buy more product in same price

8 0

3 years ago

Your investment portfolio consists of $15 comma 000 invested in only one stocklong dashAmazon. Suppose the risk-free rate is 5

Kay [80]

Answer:

The CAPM hypothesis states that the effective market is utilized place in the market and has the maximum eminent expected return of any assortment for a given randomness and the smallest variability for a assumed expected return. By allotment utilized place in the market assortment, you can achieve a standard return,

Thus,

Expected Rate of Return = [Risk free Rate + Beta × (Market Risk - Risk free Rate)]

Beta = [Expected Rate of Return – Risk Free Rate] / [Market Risk - Risk free Rate]

Beta = [12% - 5%] / [10% -5%]

Beta = 7/5

Beta =1.4

The final possible instability while taking the same estimated rate of return as Amazon is $21,000 ($15,000 × 1.4) which indicate that it borrows $6,000 ($21,000 - $15,000). Now the -$6,000 is specified as strength benefit. So the volatility of the asset is,

Volatility = [Volatility of Asset x Beta]

Volatility = [18% × 1.4]

Volatility = 0.252 or 25.20%

Therefore the volatility is less than the volatility of Amazon.

The market share has a instability of "n". The corresponding instability of Amazon will be 2.22 (40%/18%). So the assortment with the most notable predictable give back that has a faint variability from Amazon is $33,333.33 ($15,000x 2.22) which will be the market assortment and it also uses $18,333.33 ($33,333.33 - $15,000). Here the -$18,333.33 is specified as strength asset. So the return is,

Expected Return = [Risk free Rate + Beta × (Market Risk – Risk free Rate)]

Expected Return = [5%+ 122 × (10% - 5%)]

Expected Return = [5%+ 122 × 5%]

Expected Return = [0.05+0.111111]

Expected Return = 0.161111 or1 6.11%

Therefore the volatility is higher than the expected return of Amazon.

8 0

3 years ago