Answer:
the net present value of the investment is
$15289,6
Explanation:
VPN=INVESTMENT+SUM(FT)/(1+K)>N
VPN=150000+80000/(1+10%)++75000/(1+10%)>2
VPN=-150000+72727+61983,4
VPN=15289,6
Answer:
Cost of equity = 10.6%
Explanation:
<em>According to the dividend valuation, the value of a stock is the present value of expected future dividends discounted at the required rate of return.</em>
<em>The model can me modified to determined the cost of equity having flotation cost as follows:</em>
Cost of equity = D(1+r )/P(1-f) + g
d- dividend, p- price of stock , f - flotation cost , - g- growth rate in dividend
D-1.00, p - 20, f- 10%, g- 5%
Applying this to the question;
cost of equity - 1.00/(20×(1-0.1) )+ 0.05
= 10.6%
Cost of equity = 10.6%
Answer:
Part A: Liability Coverage
Explanation:
The automobile insurance policy that does not cover the insured in person but his liability to third party for bodily injury and property damage caused by him fall under liability coverage.
An automobile accident. Liability claims for pain and suffering can sometimes be urge, The liability coverage. helps in shielding the insured from payments that would ordinarily be paid by him.
Answer:
1. What was the issue price on January 1 of this year?
since the coupon rate was 6% and the market rate was the same, the bonds will be sold at par, so their issue price = $240,000
2. What amount of interest expense should be recorded on June 30 and December 31 of this year?
interest expense = coupon rate = $7,200 (for both June 30 and December 31)
3. What amount of cash is owed to investors on June 30 and December 31 of this year?
Face value = $240,000
4. What is the book value of the bonds on December 31 of this year, December 31 of next year?
Face value = $240,000
Answer:
9.68 percent
Explanation:
Calculation to determine the firm's cost of equity
Using this formula
Cost of equity=[(Annual dividend×Increase in dividends×/Current price of common stock]+Dividends
Let plug in the formula
Cost of equity=[($1.22 × 1.024)/$17.15] + 0.024
Cost of equity=($1.24928/$17.15)+0.024
Cost of equity=0.0728+0.024
Cost of equity=0.0968*100
Cost of equity=9.68 percent
Therefore the firm's cost of equity is 9.68 percent
