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8090 [49]
3 years ago
12

Regina Henry deposited $20,000 in a money market certificates that provides interest of 10% compound and quarterly if the amount

is maintained for 3 years. How much will Regina have at the end of 3 years? Will Smith will receive $80,000 5 years from now, from a trust fund established by his father. Assuming the appropriate interest rate for discounting is 12% (compound that semiannually), what is the present value of this amount today?

Business
1 answer:
Andrews [41]3 years ago
5 0

Answer:

Regina: Final amount=$62,769

Will Smith: Present value:  $213,216

Explanation:

Regina:

Compound quarterly means that each quarter of the year ( every three months) she will receive a 10% interest rate of her deposit. To convert this periodic rate to an annual rate( because the problem ask you about years) you use this formula :

Annual rate= ((1+Periodic rate)^(# periods))-1

In this case the number of periods means the number of quarters a year have, which is 4

Annual rate= ((1+10%)^(4))-1= 46.41%

To find the final amount Regina has after 3 year we use this formula:

Final Capital (FC)= Initial Capital (IC)*[(1+interest(i))]^(number of periods(n))

FC= $20,000*[(1+46.41%)^3]

FC=$62,769 I attached an excel figure which shows a more detailed data.

Will Smith

Semiannually means that every 6 months Will Smith will receive a 12% interest rate of the initial investment. To convert this periodic rate to an annual rate you use the same above formula:

Annual rate= ((1+Periodic rate)^(# periods))-1

In each year Will will receive twice the interest rate over the initial investment

Annual rate = ((1+12%)^(2))-1

Annual rate= 25.44%

The present value of $80,000 from now to 5 years is calculated using the formula attached, but I used Excel. First you have to copy all the cash flows of the 5 years. Then, you set the interest rate that in this case is the one that you found above( 25.44%). Finally you use the financial formula "NPV" in this way:

"=NPV(25.44%;C4:C8)" I used C4:C8 because in those excel cells i copied the cash flows.

I got that the present value of this amount is $213,216

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An equivalent description of the holding of a receive-floating pay-fixed swap is as follows: A. An exchange of a long position i
serious [3.7K]

Answer:

The correct answer is

A)  An exchange of a long position in a fixed-rate bond for a short position in a floating-rate note.

Explanation:

Swapping a fixed interest for a floating one can occur if the fixed interest tenure in comparison to a floating exchange rate becomes less expensive for the entity who took the loan.

Also executing a swap in interest rates (that is giving up the fixed tenure for the floating tenure) helps to ensure that liabilities are kept at minimum whilst assets are maximised.

It is important to note that the capital remains unmodified.

Cheers

4 0
2 years ago
A manufacturing company reports the following items:
QveST [7]

Answer:

The cost of goods sold is  $ 4,800.

Explanation:

This problem requires us to calculate cost of good sold. The opening and closing balance of finished goods is given in the question. The cost of good manufactured is also provided in the question.

The cost of good sold can be calculated by finding the amount transferred from finished good account. Detail calculation is given below.

Finished good inventory begining       $ 1,000

Cost of good manufactured                  $ 5,000

Finished good inventory ending           ($ 1,200)

Cost of good sold                                   $ 4,800

5 0
3 years ago
On January 2, 2014, Indian River Groves began construction of a new citrus processing plant. The automated plant was finished an
9966 [12]

Answer:

the expenditures are missing, so I looked for a similar question:

  • 1/2/2014 $400,000
  • 7/1/2014 $1,200,000
  • 12/31/2014 $1,200,000
  • 3/31/2015 $1,200,000
  • 9/30/2015 $800,000

Weighted average expenditures for 2014:

January 1 = $400,000 x 1 = $400,000

July 1 = $1,200,000 x 1/6 = $600,000

December 31 = $1,200,000 x 0 = $0

total = $1,000,000

Since the company borrowed $2,200,000 specifically for this construction project, then capitalized interests = $1,000,000 x 12% = $120,000

7 0
3 years ago
Suppose that Japan is considering placing trade restrictions on imports of U.S. pharmaceuticals. It could choose either a tariff
Mamont248 [21]

Answer:

1) Japanese buyers of pharmaceuticals.

Instead of focusing on U. S pharmaceuticals, we can look for Japanese buyers of pharmaceuticals. The fact should be acknowledged that if both the policies result in the same quantity which is being imported, then the price paid by the Japanese buyers will be identical as well.

2) Japanese producers of pharmaceuticals.

If both policies are resulting in the same quantity of the import, then the Japanese producers should be indifferent to which trade restriction is selected.

8 0
3 years ago
On December 1, Miser Corporation exchanged 6,000 shares of its $25 par value common stock held in treasury for a parcel of land
Bond [772]

Answer:

Capitalized value $582.000.

Explanation:

Step 1. Given information.

  • The common share of Miser had a fair value of $50 per share.

Step 2. Formulas needed to solve the exercise.

  • Fair value of shares = Price per share * (Amount by selling scrap -        exchanged shares)
  • Capitalized value = fair value of shares - value of scrap.

Step 3. Calculation.

Fair value of shares = $50 * (18.000 - 6.000) = $600.000

<em />

<em>Land should be capitalized by fair market value of share exchanged less any recovery of scrap as land will be developed for future plant.  </em>

Step 4. Solution.

<em />

Fair value of shares = $50*12.000 = $600.000  

Less: value of scrap = $18.000  .

Capitalized value = $600.000   - $18.000 = $582.000.

4 0
3 years ago
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