Requiring companies to disclose financial information.
Answer:
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Answer: The maturity value of the note is $5,66,533.
We can arrive at the answer with the steps below:
The formula we use to calculate Maturity Value is:
In this question,
Principal = $560,000
Interest = 7% per year
Time period = 60 days.
Number of days in a year = 360 days (given in the question).
Substituting the value of the time period calculated above in the Maturity Value formula we have:
Maturity Value = $560,000 × (1+(0.07×60/360))
Maturity Value = $560,000 × (1+(0.07×1/6))
Maturity Value = $560,000 × 1.011666667
Maturity Value = $566533.3333
Answer:
What is the present value of the payments if they are in the form of an ordinary annuity?
Discount all cash flows
12,000/1.09=11,009
12,000/1.09^2=10,100
12,000/1.09^3=9,266
12,000/1.09^4=8,501
12,000/1.09^5=7,799
Add all these discounted cash flows= $46,675 is the present value of ordinary annuity
a-2. What is the present value of the payments if the payments are an annuity due?
In an annuity due payment is made at the beginning of the year so we subtract one from each compounding period so,
12,000/1.09^0=12,000
12,000/1.09=11,009
12,000/1.09^2=10,100
12,000/1.09^3=9,266
12,000/1.09^4=8,501
add all these discounted cash flows = $50,876= PV of annuity due
FV of ordinary annuity
PV= 0
PMT=12,000
I= 9
N= 5
FV=? Put these in financial calculator= $71,816
Fv of annuity due=
12,000+
PV=0
PMT=12,000
I=9
N=4
FV=?=66,877
Pv of annuity due is higher and FV or ordinary annuity is higher.
Explanation:
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Explanation:
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