<span>If in December 1994 a man in Ohio decided to deposit all of the 8 million pennies he’d been saving for nearly 65 years, then his transactions deposits will be $8,000,000, his total reserves will be all in all 8 million pennies.</span>
Answer:
1. $146,666.67
2. $129,411.76
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
1. For computing the value of the firm, first we have to compute the Expected rate of return which is shown below:
= 5% + 0.5 × (10% - 5%)
= 5% + 0.5 × 5%
= 5% + 2.5%
= 7.5%
Now the value of firm would be
= Expected cash flows ÷ Expected rate of return
= $11,000 ÷ 7.5%
= $146,666.67
2. If beta is 0.7, then the expected rate of return and the value of firm would be
= 5% + 0.7 × (10% - 5%)
= 5% + 0.7 × 5%
= 5% + 3.5%
= 8.5%
Now the value of firm would be
= Expected cash flows ÷ Expected rate of return
= $11,000 ÷ 8.5%
= $129,411.76
Answer:
When interest rate changes, it will cause a movement along the investment demand curve.
Explanation:
This is because the relation between interest rate and investment is similar to that between product and price (interest rate is price to purchase investment). The quantity of investment demanded is negatively related to the value of interest rate in the market. When the interest rate increases (price increases), the demanded quantity of investment decreases as they have to pay more for investment.
C. Charles should forgo renter's insurance if the premiums will quickly overtake the value of his belongings.
Renter's insurance is a useful and valuable tool to protect tenants against loss or damage of their property, and is a wise purchase in most cases. However, if you are paying more every month in your insurance premiums than the total value of the goods you are protecting, the insurance may no longer be worth the cost.
Answer:
The correct answer is letter "C": SWOT analysis.
Explanation:
The SWOT (<em>Strengths, Weaknesses, Opportunities, and Threats</em>) analysis is a study that aims to identify the internal and external components that can drive a company to success or failure. Internal components are represented by the strengths and weaknesses of the firm while the external factors are represented by opportunities and threats.
Identifying such company factors allows entities of taking action on time and taking advantage of the chances the market can provide. Usually, these factors are recognized during the project planning stage of the enterprise.
