Answer:
The second option which 5 years to maturity exhibited a lower price of
$523.95
Explanation:
In order to ascertain the option with lower, it is important we determine the price of each investment based on the fact the price of an investment opportunity today is the present value of its future cash flow is the maturity value of $1000 in both cases:
a.
PV=FV/(1+r)^n
PV=price of investment
FV=future value=$1000
r= 13.80%.
n=4 years
PV=$1000/(1+13.80%)^4
PV=$596.25
b.
PV=FV/(1+r)^n
PV=price of investment
FV=future value=$1000
r= 13.80%.
n=5 years
PV=$1000/(1+13.80%)^5
PV= $523.95
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
Answer:
Demand relationship is the relationship between the dominant prices of a good and the quantity that will be bought at that price.
Explanation:
Demand can be defined as the quantity of a good that consumers are ready to purchase at different prices at a given period of time.
The basic demand relationship is between potential prices of a good and the quantities that would be bought at those prices. The relationship is always a negative one, this implies that an increase in price will lead to a decrease in the quantity demanded. This negative relationship is represented in the downward slope of the consumer demand curve. Take for instance, if the price of a bag of rice rises from $10 to a price of $20, this is a huge price increase. This increase forces the consumer to demand less of that product at the price of $20 because the new price is more expensive and also very unreasonable for a bag of rice.
Answer:
strengths
Explanation:
A SWOT analysis includes strengths, weaknesses, opportunities and threats:
- strengths: analyses what does your company do well and distinguish it from the competition.
- weaknesses: analyses what are your company's weak spots and what does your competition do better than you.
- opportunities: new situations that can favor your company.
- threats: situations that can negatively affect your company.