1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
tester [92]
3 years ago
8

Recall British Consols first issued in 1700s are considered perpetuities. If a British Consol will pay 100 GBP annually starting

one year from now and interest rate is 5%.
Required:
a. What is this asset worth today?
b. If interest rate is always 5%, what is the asset worth 3 year from now?
c. Does the asset appreciate or depreciate in value?
d. Do you have any return if you are holding an asset that does not change in value? What is your rate of return?
Business
1 answer:
Sav [38]3 years ago
6 0

Answer:

a. Present value of perpetuity today = Perpetuity amount / Interest rate  = 100 / 0.05 = 2,000GBP. Thus, this asset worth 2,000GBP today

b. Value of perpetuity 3 years from now = Perpetuity amount / Rate = 100/.05 = 2000GBP. The asset worth 3 year from now is 2,000GBP.

c. Since this is a perpetuity; it neither appreciate nor depreciate in value provided the interest rate is constant.

d. There will be a return since we are getting cash-flows in a yearly basis; rate of return will be the interest rate = 5%

You might be interested in
You wish to retire in 14 years, at which time you want to have accumulated enough money to receive an annual annuity of $17,000
bagirrra123 [75]

Answer:

Annual contribution = $5873.06

Explanation:

First we will find the present value at the time of retirement and then we will find the annual contribution during the years of working. Below is the calculation to find the present value

Present value at the time of retirement = Annuity (P/A, r, n)

Present value at the time of retirement = $17000 (P/A, 10%, 19)

Present value at the time of retirement = $17000 (8.365)

Present value at the time of retirement = $142205

Now find the annual contribution:

Annual contribution = Future value (A/F, r, n)

Annual contribution = 142205 (A/F, 8%, 14)

Annual contribution = 142205(0.0413)

Annual contribution = $5873.06

4 0
3 years ago
You borrow $8000 to buy a car, at an annual interest rate of 6%. Assume interest is compounded continuously. You make monthly pa
hram777 [196]

Answer:

We should pay $243.3 each month to pay of the loan.

Explanation

The present value of the loan is 8,000, the number of compounding periods are (3*12) =36 because payment is going to be made monthly for 3 years, the future value of the loan is 0 as there will be no lump sum payment at the end of the loan and equal payments each month, the monthly interest rate is 6%/12= 0.5%. We input these 4 values to find the monthly payment.

PV= 8,000

FV=0

N=36

I=0.5

Compute PMT= 243.3

8 0
3 years ago
True or false: The role of the government in the free market is limited
MAVERICK [17]

This statement is TRUE

Hope this helps

-AaronWiseIsBae

3 0
3 years ago
CAAT Traders acquired machinery on 1 July 20.18 for an amount of R175 300. This machinery was only available for use from 1 Sept
Ilia_Sergeevich [38]

The depreciation expenses to be shown in the statement of profit or loss and other comprehensive income for the year ended (31-05-2019) is R26,295.

<h3>What is depreciation?</h3>

Depreciation can be defined as a process in which the monetary (financial) value of an asset decreases or falls over time, especially due to wear and tear.

<h3>How to determine the depreciation expenses?</h3>

First of all, we would calculate the expected number of units produced by CAAT as follows:

Expected number of units produced = 15,000 + 13,000 + 11,000 + 10,500 + 10,500

Expected number of units produced = 60,000.

Mathematically, the depreciation expenses is given by:

Depreciation expenses = Actual units produced/expected units produced × cost price

Substituting the given parameters into the formula, we have;

Depreciation expenses = 9,000/60,000 × 175,300

Depreciation expenses = R26,295.

Read more on depreciation expenses here: brainly.com/question/25806993

#SPJ1

7 0
2 years ago
People often use products or services that are _________, to indicate who or where they are in the social hierarchy
Setler79 [48]

Answer:

Status Symbols

Explanation:

According to Oxford dictionary; a status symbol is "a possession that is taken to indicate a person's wealth or high social or professional status."

Hence status Symbols are external displays of the possessors' wealth and social status. These goods can not be possessed by people who do not belong to that social status or profession.

5 0
3 years ago
Other questions:
  • The owner of Fido's Pet Supplies wants to know how much dry dog food to stock in her new location. On her customer questionnaire
    6·1 answer
  • Sunny Corporation began the year with cash of $ 141, 000 and land that cost $ 55, 000. During the year Sunny earned service reve
    14·1 answer
  • Raindrop gear utilizes job-order costing for production of customized umbrellas. each division establishes its own estimates reg
    13·1 answer
  • When a company needs precise answers about the effects of various proposed marketing actions on important outcomes, what type of
    15·1 answer
  • On July 1, Jerome received $200 in dividends from Melina Corporation on which it owns less than 20% of the voting stock. Complet
    9·1 answer
  • What is the effective annual rate​ (EAR) of a mortgage that is advertised at 8.5​% ​(APR) over the next twenty years and paid wi
    8·1 answer
  • Answer please... I need it fast.. please​
    13·1 answer
  • Betty operates a beauty salon as a sole proprietorship. Betty also owns and rents an apartment building. This year Betty had the
    12·1 answer
  • Cactus Company purchased a new machine on August 1, 2017. At that time, the original cost of the machine was recorded at $180,00
    6·1 answer
  • The weighted average cost method uses the Blank______ cost for Cost of Goods Sold on the income statement and the Blank______ co
    10·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!