A balance sheet includes all of the following except

a stock broker allocated $100,000 to an account earning 4% per year compounded continuously. if no withdrawals are made, how muc

Lisa [10]

$100,000 was allocated by a stockbroker to a portfolio yielding 4% annually compounded. If no withdrawals are taken, there will be $117,352 left in the account after four years.

Given a certain rate of return, present value (PV) is the current value of a future financial asset or stream of cash flows. A discount rate or the interest rate that could be obtained through investment is applied to the future value to get the present value.

According to the continuously compounded interest formula,

FV = PV $e^{it}$

Here,

Present Investment Value, or PV

the interest rate, I

T = time in years

So,

In light of the specified

PV = $ 100,000

I = 4% = 0.04

t = 4 years

Hence

FV stands for "Final Investment Value"

Then,

FV = 100,000 * e⁰.⁰⁴ˣ⁴

FV = 100,000*e⁰.¹⁶

FV = 100,000 * 1.173510871

FV = 117351.0871

FV = 117351

Hence

The balance in the account after four years was = $117,352

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7 0

1 year ago

Daimler AG agreed to sell 30 trucks to Romania in exchange for 150 Romanian-made Jeeps, which is an example of

Effectus [21]

Daimler AG agreeing to sell 30 trucks to Romania in exchange for 150 Romanian-made Jeeps, is an example of countertrade

<h3>What is Countertrade?</h3>

Countertrade is the means by which good and services is being paid for, with other goods or services, instead of with money.

Examples of countertrade include:

Barter
Counter purchase
Offsets

From the question, since Daimler AG agreed to sell 30 trucks to Romania in exchange for 150 Romanian-made Jeeps, hence countertrade has occurred.

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8 0

3 years ago

To help finance a new plant, Roxxon, Inc. just sold a noncallable 40 year bond. This $1,000 par bond sells for $1,155 and has a

murzikaleks [220]

Answer:

4.96%

Explanation:

In order to determine the component after-tax cost of debt first we need to compute the before tax cost of debt by applying the RATE formula which is to be shown in the attachment below:

Given that,

Present value = $1,155

Future value or Face value = $1,000

PMT = 1,000 × 8.25% ÷ 2 = $41.25

NPER = 40 years × 2 = 80 years

The formula is shown below:

= Rate(NPER;PMT;-PV;FV;type)

The present value come in negative

So, after applying the above formula

1. The pretax cost of debt is 3.54% × 2 = 7.08%

2. And, the after tax cost of debt would be

= Pretax cost of debt × ( 1 - tax rate)

= 7.08% × ( 1 - 0.30)

= 4.96%

8 0

4 years ago

Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time horizon of a customer who purchases a new v

motikmotik

Answer:

the average profit from selling a car = $25,500 x 9% = $2,295

the average profit from providing 1 service = $122

customer lifetime value = (Annual profit per customer x customer relationship in years) - customer acquisition cost

the current CLV = $2,295 + ($122 x 8 x 81%) = $3,085.56

if you are able to increase the probability of using the company's maintenance services by 5% (from 815 to 86%), then the new CLV = $2,295 + ($122 x 8 x 86%) = $3,134.36

the difference = $3,134.36 - $3,085.56 = $48.80

Theoretically, you can spend up to $48.80 in the service loyalty program. But this analysis is incomplete, since providing a good service should also increase the possibility of selling a new car to the same customer after 5 years. This should extend the customer relationship for many years. E.g. that has been a major factor in the success of Honda and Toyota.

8 0

3 years ago

Titan Mining Corporation has 6.3 million shares of common stock outstanding, 220,000 shares of 3.6 percent preferred stock outst

Shkiper50 [21]

The firm’s market value capital structure is $503,910,000.

The rate the firm should use to discount the project’s cash flows is 9.33%.

a.

We will begin by finding the market value of each type of financing. We find:

Market value of debt = MVD = 105,000*($1,000)*(1.07) = $25,750,000

Market value of preferred cost = MVP = 220,000*($83) = $18,260,000

Market value of equity = MVE = 6,300,000*($73) = $459,900,000

And the total market value of the firm is:

V = $25,750,000 + 18,260,000+ 459,900,000

V = $503,910,000

b.

So, the market value weights of the company's financing are:

D/V = $25,750,000/$503,910,000 = 0.0511

P/V = $18,260,000/$503,910,000 = 0.0362

E/V = $459,900,000/$503,910,000 = 0.9127

For projects equally as risky as the firm itself, the WACC should be used as the discount rate.

First, we can find the cost of equity using the CAPM. The cost of equity is:

RE = .031 + 1.15(.071)

RE = 0.1030, or 10.03%

The cost of debt is the YTM of the bonds, so:

P0 = $1,070 = $26.50(PVIFAR%,34) + $1,000(PVIFR%,34)

R = 2.228%

YTM = 2.228% × 2

YTM = 4.46%

And the aftertax cost of debt is:

RD = (1 - .22)(.0446)

RD = .0348, or 3.48%

The cost of preferred stock is:

RP = $3.60/$73

RP = .0493, or 4.93%

Now we can calculate the WACC as:

WACC = 0.0511(.0348) + 0.0362(.0493) + 0.9127(.1003)

WACC =0.0933, or 9.33%

Hence, The firm’s market value capital structure is $503,910,000.

The rate the firm should use to discount the project’s cash flows is 9.33%.

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7 0

2 years ago