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mixas84 [53]
3 years ago
10

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $31,000 per year fo

rever. Suppose a sales associate told you the policy costs $476,000. At what interest rate would this be a fair deal?
Business
1 answer:
Whitepunk [10]3 years ago
3 0

Answer: 6.51%

Explanation:

To get the interest rate at which the deal will be fair

Annual payment per year/ cost × 100

Perpetuity = D/r

476000 = 31000/r

r = 31000÷ 476000

r = 0.06512

r = 0.06512 × 100

r = 6.512%

Where D is the dividend

r is the rate

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You got asked to analyze a 5 year project for your firm. The project produces an annual revenue of $28,500, but requires an annu
hram777 [196]

Answer:

15,300

72.70%

Explanation:

After tax cash flow = (revenue - cost - depreciation) (1 - tax rate) + depreciation

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

($20,000 - $5,000) / 5 = $3,000

($28,500 - $5,000 - $3000) x (1 - 0.4) + $3000 = $15,300

Terminal year cash flow = after tax cash flow + salvage value

$15,300 + $5,000 = $20,300

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator  

Cash flow in year 0 = $20,000.

Cash flow in year 1 - 4= $15,300

Cash flow in year 5 = $20,300

IRR = 72.70%

To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

8 0
3 years ago
The major difference between nominal GDP and real GDP is: nominal GDP measures the value of output with constant output levels,
Andrei [34K]

Answer:

The correct answer is "nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices."

Explanation:

The real GDP growth is the value of all goods produced in a given year; nominal GDP is the value of all the goods taking price changes into account.

The nominal GDP is the value of all the final goods and services that an economy produced during a given year. It is calculated by using the prices that are current in the year in which the output is produced. The nominal GDP takes into account all of the changes that occurred for all goods and services produced during a given year. For example, a nominal value can change due to shifts in quantity and price.

The real GDP is the total value of all of the final goods and services that an economy produces during a given year, accounting for inflation. It is calculated using the prices of a selected base year.

The correct answer is "nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices."

7 0
3 years ago
Stryder, Inc., has 3 million shares outstanding at a current price of $15 per share. The book value of the shares is $10 per sha
KengaRu [80]

Answer:

Answer:

                                                                                         $

Market value of shares (3,000,000 x $15)           = 45,000,000

Market value of bonds (30,000,000 x $101/100) = 30,300,000

Market value of the firm                                            75,300,000

The correct answer is D

Explanation:

Market value of the firm is the sum total of market value of shares and market value of bond. The market value of each stock is equal       to number of stocks issued multiplied by current market price of each stock.

Explanation:

6 0
3 years ago
What do individual shareholders gain when they buy shares of a companies stock?
baherus [9]
Share Ownership by Individuals.
Did you know owning shares means tax advantage. Your tax situation can benefit from using the tax advantage that come with fully franked dividends.owning shares also means you are a company owner. When you are buying shares you are buying the company`s asset and its profits. All that told there many advantages that come along with purchase of shares by an individual who wishes to invest his capital in shares.
Benefits of Owning Shares.

1. Stock Owners Take Advantage of a Growing Economy.
As the economy grows so do cooperates earning that is because economic growth creates income this will create a consumer demand that will automatically drive more revenue into companies register an lead to rise company`s share value.
2. Easy to Buy.
The stock market has made it easy to by shares from companies. They can be purchased through  a broker, financial planner or online. Once you have set up an account you can stock at any minute. The stock market runs 24 hours, five days a week making the market reliable and sufficient.
3.They are the Best Way to Stay Ahead of Inflation.
Historically stocks have averaged an annual return of 10%. That is better than the annual inflation of 3.2%. It  means you have a longer time horizon. That way a stock owner is limited to the risks aligned with the stock market.
4. They are easy to sell.
The stock market allows you to sell your shares at anytime. That will surely help if you really need the cash in a hurry. One disadvantages related to this is that the prices are really volatile so the shareholder runs the risk to make losses when the make haste decisions.
5. You make money in two ways. 
Many investors tend to by shares when they have low prices and sell when they are high. They invest in companies that appreciate in value at at either a fast rate or moderate rate. This attracts both day traders and buy-hold investors and  this bridges the gap in making money in to ways.  
 
Summery.
A well defined portfolio will provide most benefits and fewer risk arising to stock ownership. to exchange you shares at a limited risk and get to earn more experts advice apart from stock ownership alone have a mix of stock bonds and commodities. This has proven to be the best way to make highest returns at lower risk. It is important to note that shareholders in stock market contribute close to 80% of the revenue in the market.

 
6 0
2 years ago
Naumann Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Se
vova2212 [387]

Answer:

An  increase in net operating income of $127,200

Explanation:

Consider the variable effect of the changes.

Sales ($400 x 400)                                    $160,000

Less Variable expenses ( $82 x 400)      ($32,800)

Contribution                                               $127,200

therefore,

An  increase in net operating income of $127,200

4 0
3 years ago
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