Hi, first we need toconvert that 9.80 percent, compounded quarterly into an effective quarterly rate, that is just by dividing by 4, since there are 4 quarters in a year, that is:

r(effective quarterly)= 9.8%/4 =2.45%

Now, since the rate is effective quarterly, the periods (time of the invesmet) has to be in quarters, so we multiply 2 years by 4 and we get 8 quarters.

With all the above information, we can go ahead and use the following formula in order to find the future value of this investment.

$FutureValue=PresentValue*(1+r)^{n}$

It should all look like this.

$FutureValue=2,600*(1+0.0245)^{8}=3,155.51$

So, the future value of this investment is $3,155.51

Best of luck.

8 0

3 years ago

Ezra runs a gyro stall at a farmers market

olga nikolaevna [1]

The rest of the question?

8 0

2 years ago

A video game manufacturer is planning to market a new machine. The fixed costs are $550,000 and the variable costs are $120 per

tresset_1 [31]

Divide 550,000 by 140 and thats the amount need to break even, anything greater will earn $20 in profit per machine

6 0

3 years ago

The Digital Electronic Quotation System (DEQS) Corporation pays no cash dividends currently and is not expected to for the next

malfutka [58]

Answer:

a) $94.88

b) in 1 year, the intrinsic price of the stocks should increase to $109.11

Explanation:

year dividend EPS

0 0 $10

1 0 $12

2 0 $14.40

3 0 $17.28

4 0 $20.736

5 0 $24.8832

6 $11.45 $28.61568

growth rate up to year 5 = 20%

ROE growth rate starting year 6 = 15%

dividend growth rate starting year 6 = 15% x (1 - 40%) = 9%

cost of equity = 15%

horizon value at year 5 = $11.45 / (15% - 9%) = $190.83

current intrinsic value per stock = $190.83 / 1.15⁵ = $94.88

intrinsic price in 1 year = $190.83 / 1.15⁴ = $109.11

8 0

3 years ago