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3 years ago

14

Solomon has a balance of $4,000 on his credit card account, which has a minimum payment requirement of 4 percent. What is the mi

nimum payment on his account?

2 answers:

Allushta [10]3 years ago

8 0

Answer:

$1,000

Explanation:

dolphi86 [110]3 years ago

7 0

Answer:

160$

Explanation:

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An insurance policy written after 1988 that fails to pass the seven-pay test is known as

Zigmanuir [339]

The answer to this question is a modified endowment contract. A modified endowment contract or MEC is a type of life insurance policy where in the policy/ insurance is being funded with more money or the insurance premium payment exceeds the amount allowed under the federal law. The modified endowment contracts are taxable.

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3 years ago

Compare revolving credit and closed-end credit.

jolli1 [7]

The lender and borrower agree to the amount borrowed, the loan amount, the interest rate and the monthly payment, which depend on the borrower's credit rating.Generally, real estate and auto loans are closed-end credit, but home-equity lines of credit and credit cards are revolving lines of credit or open-end.

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3 years ago

Johnson Battery Systems recently reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depr

muminat

Answer:

$1,100

Explanation:

EBIT = Sales - Costs - Depreciation

= $9,000 - $6,000 - $1,500

= $1,500

Net income = EBIT - Tax @ 40%

= $1,500 - $600

= $900

Operating cash flow = Net income + Depreciation

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Free cash flows:

= Operating cash flow - Increase in working capital - Capital expenditure

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3 years ago

Universal Laser, Inc., just paid a dividend of $3.10 on its stock. The growth rate in dividends is expected to be a constant 6 p

Vadim26 [7]

Answer:

Ans. The current price of the stock is $56.82

Explanation:

Hi, well, the problem here is that we have different discount rates, in other words the required rate of return for the stock changes several times, therefore we are going to break this problem in 3 parts, or bring to present value all the cash flows in 3 steps. Let´s start with the value of the dividends.

We have to use the following formula.

$Dn=D_{(n-1)} *(1+g)$

Where, D(n-1) is last dividend and Dn is the dividend that we are looking for, for example, D1 = 3.10*(1+0.06)=3.29, D2=3.29*(1+0.06)=3.48, and so forth. The amount to pay on dividends per share is,

D1=3.29; D2=3.48; D3=3.69; D4=3.91; D5=4.15; D6=4.40; D(7)=4.66

Since the first 3 years are to be discounted at a 15%, this is how the formula should look like.

$PV(1)=\frac{D1}{(1+r(1))^{1} } +\frac{D2}{(1+r(1))^{2} } +\frac{D3}{(1+r(1))^{3} }$

$PV(1)=\frac{3.29}{(1+0.15)^{1} } +\frac{3.48}{(1+0.15)^{2} } +\frac{3.69}{(1+0.15)^{3} }=7.92$

Now, for the second part, we have to bring all cash flows to year 3 at r(2)=13% and then bring it to present value at r(1)=15%. This is because we have 2 different discount rates, this is as follows.

$PV(2)=(\frac{D4}{(1+r(2))^{1} } +\frac{D5}{(1+r(2))^{2} } +\frac{D6}{(1+r(2))^{3} })*\frac{1}{((1+r(1)^{3} }$

$PV(2)=(\frac{3.91}{(1+0.13)^{1} } +\frac{4.15}{(1+0.13)^{2} } +\frac{4.40}{(1+0.13)^{3} })*\frac{1}{(1+0.15)^{3} } =6.42$

Finally, we need to bring all the future cash flows from year 7 and beyond, notice that we need to use the return rate r(3) to bring everything to year 6, then we have to bring it to year 3 and then to present value, everything as follows.

$PV(3)=(\frac{D7}{(r(3)-g)} )*(\frac{1}{(1+r(2))^{3} } )*(\frac{1}{(1+r(1))^{3} } )$

$PV(3)=(\frac{4.66}{(0.11-0.06)} )*(\frac{1}{(1+0.13)^{3} } )*(\frac{1}{(1+0.15)^{3} } )=42.48$

So, the price of the stock is PV(1) + PV(2) + PV(3), or:

$Price=7.92+6.42+42.48=56.82$

Price= $56.82/share

Best of luck.

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