When solving a present value equation using a financial calculator, the years for compounding should be entered as the n value on the financial calculator.
This n value from the question tells us is the number of years for compounding. That is also known as the number of periods.
If what the person is calculating is the loan values, then n has to be calculated based on the number of payments.
For example if a person wants to calculate a 12 year loan that that is to be paid monthly,
n would be 12*12 = 144
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Answer:
22,401,500 MXN exit from account
Explanation:
Given:
MXN at 22.4015
Amount = $1,000,000
MXN at short position
Find:
Flow of MXN
Computation:
MXN at short position so, flow is exit
MXN exit = 1,000,000 × 22.4015 )
22,401,500 MXN exit from account
Answer:
Therefore, the UK pound is at a discount against the U.S. dollar, because it is worth less in the One-month forward market than in the spot market.
Explanation:
Given:
Selling price = $1.5137
Spot price = $1.5139
We'll calculate how much pound is worth in the forward market.
We'll use the formula:
(selling - spot price )/spot price * 12/months of contract
= -0.0015853
Therefore, the UK pound is at a discount against the U.S. dollar, because it is worth less in the One-month forward market than in the spot market.
Answer:
Consumers will consume less of the good whose relative price has risen and more of the good whose relative price has fallen.
Explanation:
The substitution effect refers to the change in the consumption of a good, due to the variation in its price, for the consumption of another good that becomes relatively cheaper. Thus, in the substitution effect if prices increase, consumers will consume a smaller amount of a given good, since its price has risen and a larger amount of the good whose relative price has become cheaper.
Answer:
Option (d) 9.59%
Explanation:
Data provided in the question:
Annual dividends paid by the Brown jug
$0.61, $0.64, $0.71, $0.82, and $0.88 per share over the past 5 years
Now,
Present value = $0.61
Future value = $0.88
Time = 4 years [as there is no interest for the year 1]
Now,
Future value = Present value × (1 + r )ⁿ
here,
r is the geometric average dividend growth rate
$0.88 = $0.61 × (1 + r )⁴
or
(1 + r )⁵ = 1.4426
or
1 + r = 1.0959
or
r = 0.0959
or
r = 0.0959 × 100% = 9.59%
Hence,
Option (d) 9.59%
