Answer: d. coupon bond that pays a fixed coupon rate and does not mature.
$3250
Explanation:
A consol is a coupon bond that pays a fixed coupon rate and does not mature. Consols are consolidated annuities that are perpetual. A steady amount of interest is paid for a consol even though they're not redeemable
Price of a consol will be gotten as fixed coupon amount divided by the rate of return. Let's assume that the fixed coupon amount is $65, then the price will be:
= 65/2%
= $3250
Answer:
e. $89.83
Explanation:
Calculation to determine the current share price
First step is to calculate the Value after year 4 using this formula
Value after year 4=(D4*Growth rate)/(Required rate-Growth rate)
Let plug in the formula
Value after year 4=(4*1.05)/(0.1-0.05)
Value after year 4=$84
Now let calculate the current share price using this formula
Current share price=Future dividend and value*Present value of discounting factor(rate%,time period)
Let plug in the formula
Current share price=16/1.1+12/1.1^2+7/1.1^3+4/1.1^4+84/1.1^4
Current share price=$89.83(Approximately)
Therefore the current share price is $89.83
Answer:
Activity based costing says that we must not absorb the Overhead cost on the basis of one absorption basis as this overhead is not generated as a result of this absorption basis(Machine hrs or labor hours). This use of one absorption basis is inappropriate (not fair allocation). We must find a fair basis that drives this cost. Upon investigation the management found that the total overhead cost suppose which is $1,050,000 can be divided into three cost pools (parts) and each part has a cost driver(a basis of allocation) which can be used to allocate this cost.The costs in the ABC system are allocated to unit product on more fair basis than the tradition absorption costing which only assume one fair basis for allocation of overhead costs. ABC criticizes traditional costing technique for using only one basis for absorption of Overheads.
Now following example will help you in understanding the difference between Absorptiion Costing and Activity based costing.
Suppose both Mr. A and Mr. B drank 5 glasses of juices. Each glass of juice costs $4. According to the Traditional absorption costing technique each individual must pay:
(5 Juices/2)*$4=$10
But ABC says its unfair, use a more appropriate basis for cost allocation. So upon investigating we came to know that Mr. A drank 3 glasses of juice and Mr. B drank 2 glasses of juice. So Mr. A must pay $12(3*$4) and Mr. B must pay $8(2*$4). This is more appropriate or fair basis of absorbing the overhead cost to each individual and is Activity Based Costing.
<span>The function of interest is to make lending money worthwhile and profitable for the lender. The government is monitoring the lender and they are not allowed to give a very high interest rate. Credits and loans are not socially acceptable in the society since this only profitable to the lender.</span>
With continuous interest,
where
F=future value
P=principal = 1000
r=rate=5%
t=time=3 years
Answer: The accumulated amount after three years is
$1161.83
