Answer:
The correct answer is option (A) $519,799.59.
Explanation:
According to the scenario, the given data are as follows:
Payment 1st year = $218,000
Payment 2nd year = $224,000
Payment 3rd year = $238,000
Rate of interest = 14.5%
So, We can calculate the amount Southern Tours willing to pay by using following formula:
We add the payment for 3 years by simple interest as:
= 
+
+ 
= 
+ 
+ 
= $519,799.59
Hence, the amount Southern Tours willing to pay is $519,799.59.
Answer:
The balance of Eve's Prepaid Insurance account as of December 31, 2021 is $28,200
Explanation:
Computation of prepaid Insurance
Insurance 1 ($55,800*6/18) = $18,600
Insurance 2 ($19,200*12/24) = <u>$9,600</u>
Total Prepaid Insurance <u>$28,200</u>
Answer:
Reward to volatility ratio = 0.71
Explanation:
Given the expected risk premium = 10%
Standard deviation = 14%
The rate on treasury bills = 6%
The investment amount that the client chooses to invest = $60000
Expected return of equity = the expected risk premium + The rate on treasury bills
Expected return of equity = 10% + 6% = 16%
Standard deviatin = 14%
Reward to volatility ratio = (expected return - risk free rate) /standard deviation
Reward to voltality ratio = (16% -6%)/14%
Reward to voltality ratio = 0.71
Answer:
The futures price of the pound for a one-year contract be to prevent arbitrage opportunities would be $1.63/BP.
Explanation:
In order to calculate the the futures price of the pound for a one-year contract be to prevent arbitrage opportunities we would have to make the following calculation:
futures price of the pound for a one-year contract=Spot rate*(1+United Kingdom risk free rate)/(1+United States risk free rate)
futures price of the pound for a one-year contract=$1.60/BP*(1+6%)/(1+4%)
futures price of the pound for a one-year contract=$1.63/BP
The futures price of the pound for a one-year contract be to prevent arbitrage opportunities would be $1.63/BP.
