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The owner of a national software company has been watching current economic information for the past two quarters and a rapid ri

LuckyWell [14K]

The owner is making this long-run decision based on his rational expectations of economic growth to meet future demands.

<h3 /><h3>What are long term decisions?</h3>

They are a strategic process that means designing an economic scenario based on perspectives, vision and organizational goals, with short-run decisions being the actions present to achieve long-run objectives.

Therefore, the owner is making long-run decisions in line with his expectations for the future of the business by looking at the current economic scenario.

Find out more about long-run decisions here:

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4 0

1 year ago

Helen Ashley is expecting cash flows of $50,000, $75,000, $125,000, and $250,000 from an inheritance over the next four years. I

romanna [79]

Answer:

Present value of Helen's inheritance is $361,997.25

Explanation:

We know,

Present value of cash flows = ∑ $\frac{Cash flow for n periods}{(1 + i)^{n} }$

Given,

Cash flows for 1st, 2nd, 3rd, and 4th year = $50,000, $75,000, $125,000, and $250,000.

Interest rate, i = 11% = 0.11

Number of period, n = 4

Therefore,

Present value of cash flows = [$50,000 ÷ $(1 + 0.11)^{1}$ ] + [$75,000 ÷ $(1 + 0.11)^{2}$ ] + [$125,000 ÷ $(1 + 0.11)^{3}$ ] + [$250,000 ÷ $(1 + 0.11)^{4}$ ]

Present value of cash flows = ($50,000 ÷ 1.11) + ($75,000 ÷ 1.2321) + ($125,000 ÷ 1.3676) + ($250,000 ÷ 1.5181)

Present value of cash flows = $45,045.05 + $60,871.68 + $91,400.99 + $164,679.53

Present value of cash flows = $361,997.25

Therefore, Present value of Helen's inheritance is $361,997.25

5 0

3 years ago

You bought one of Lambert Sandblasting Company's 15-year bonds one year ago for $960. These bonds pay 7 percent annually, have a

maksim [4K]

Answer:

Real return on investment: 22.9465%

Explanation:

Okay let's explain each concept we have given:

Face Value $1,000

This is the ammount Lambert will pay at maturity

Purchase Value $ 960

This is the Ammount we pay for the bond

Market Value of the bond today $ ???

This is what we need to determinate to see the return we got

Once we got the market Value we will do:

Market Value / Purchase Value - 1 = rate of return

Now the market value today will be the present value of the bond, and the bond has the following data:

Mature in 14 year

bond rate 7% annualy.

So each year we receive the 7% of the face value ($1,000) = $70

And at the end of the bond life we receive 1,000

We need to bring this numbers at present day using the real market rate, because the economy is having inflation:

market rate 8%

inflation rate 2.7%

real rate:

(1+rate)/(1+inflation) -1 = real rate

$\frac{1.08}{1.027} -1 = real rate$

real rate = 5.16%

To know the present value of the bond we will have to consider:

present value of an annuity of 70$ during 14 year at a rate of 5.16% =
present value of the 1,000 that will be pay at maturity at a rate of 5.16%

The annuity will be

$70 * \frac{1-(1+0.0516)^-14}{0.0516} = 685.87$

$C * \frac{1-(1+rate)^-time}{rate} = present value$

$685,87

The present value of the 1,000 will be

face value/(1+rate)^time

1,000/(1+0.0516)^14 = $494,42

for a total of $1.180,29

Now we will calculate the real return on the investment:

we receive 1.180,29 for 960 so the rate is

1.180,29 /960 - 1 = 0.229465 = 22.9465%

8 0

3 years ago

Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 7.4% with semiannual payments of

frutty [35]

Answer:

Current yield is 6.17%

YTD is 5.43%

YTC is 4.26%

Explanation:

Tenor: 15 years

-> number of payment (NPer) is 30 (= 15 years * 2 for semiannual)

Coupon rate: 7.4%

- > semiannual payments (PMT): $37 = ($1000*7.4%/2)

Future value (FV): $1000

Present value (PV): $1200

Current yield = annual coupon/ current price = $37*2/$1200 = 6.17%

Extra: 

We use excel to calculate yield to date (YTD) or nominal yield:

= Rate(Nper, PMT, - PV,FV) = Rate(30,37,-1200,1000) = 2.717% semiannual

-> annual rate is 5.43%

The bond issue is callable in 5 years at a call price of $1,074, then FV is $1074

Yield to call = rate(10,37,-1200,1074) = 2.13% semiannual

-> annual rate is 4.26%

5 0

3 years ago

Suppose that a firm produces 10 units of output. Its Average Variable Cost (AVC) = $25, Average Fixed Cost (AFC) = $5, and Margi

Andreyy89

Answer:

Total Cost = $300

Average Total Cost = $30

correct option is a.) Total cost is $300

Explanation:

given data

produces output = 10 units

Marginal Cost = $30

Average Variable Cost = $25

Average Fixed Cost = $5

solution

first we get here total cost that is

Total Cost = Total Variable Cost + Total Fixed Cost .................................1

so here Total Variable Cost = Average Variable Cost × Output

Total Variable Cost = $25 × 10

Total Variable Cost = $250

and total fix cost is = Average Fixed Cost × Output

total fix cost = $5 × 10 =

total fix cost = $50

so Total Cost is here

Total Cost = $250 + $50

Total Cost = $300

A) is correct

and

Average Total Cost will be

Average Total Cost = $\frac{total\ cost}{out\ put}$ ...................2

Average Total Cost = $\frac{300}{10}$ = $30

Average Total Cost = $30

3 0

3 years ago