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3 years ago

14

What is the value today of receiving $4,500 at the end of each year for the next four years, assuming an interest rate of 12% co

mpounded annually?

1 answer:

vlada-n [284]3 years ago

8 0

Answer: The correct answer should be: a. $118.

References: Solution: A = P(A/P , i, n)

A = 4,500(A/P, 1%, 48) = (4,500)(0.0263) = $118.35

(im sorry if im wrong)

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You have accepted a job as the president and CEO of a large transportation conglomerate. Over the years, the conglomerate has ac

rjkz [21]

Answer: a. Railroad loading

Explanation:

This question relates to the BCG matrix which allows a company with multiple divisions to know how to deal with its various divisions based on their growth rate and market share.

The question specifically relates to a matrix called "Cash cows". Cash cows are divisions that have a significant market share but a low growth rate. These divisions are stable and bring more money into the company than they cost to run.

This allows us to take profits from them and invest in other. The Railroad loading controls a significant market share of 75% but has a low growth rate so is a Cash cow.

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3 years ago

At the beginning of the period, the Cutting Department budgeted direct labor of $52,350 and supervisor salaries of $42,150 for 3

xxTIMURxx [149]

Answer:

$77,000

Explanation:

Direct Labor = $52,350 (Its varies with the number of Production hours). Hence, $52,350 for 3,490 hours

For 3,800 hours, (52,350/3,490) * 3,800 = $57,000

Supervisor Salaries = $20,000 (Since the Supervisor Salary is not an incremental cost, it is a fixed one). So, the Supervisor Salaries remain $20,000

Net budget (flexible) = $57,000 + $20,000

Net budget (flexible) = $77,000

4 0

3 years ago

1. The beta for Eastman Kodak is 1.10. The current six-month treasury bill rate is 3.25%. Estimate the cost of equity for Eastma

Afina-wow [57]

Answer:

1) Cost of equity is 12.501%

2) Price of bond is $935.82

3) Price of semi-annual bond is $934.96

Explanation:

1) Given:

Beta = 1.1

Risk free rate (Rf) = 3.25%

Market risk premium (Rp) = 8.41%

Using CAPM to compute cost of equity:

Re = Rf + β (Rp)

= 3.25 + 1.1(8.41)

= 12.501%

2) Price of bond is present value of bond.

Face value (FV) = $1,000

Maturity (nper) = 10 years

Coupon rate = 8%

Coupon payment (PMT) = 0.08× 1000 = $80

Discount rate (rate) = 9% or 0.09

Using spreadsheet function =PV(rate,nper,pmt,FV)

Price of bond is $935.82. It is negative as it's cash outflow

3) Price of semi-annual bond is present value of bond.

Face value (FV) = $1,000

Maturity (nper) = 10×2 = 20 periods

Coupon rate = 8% ÷ 2 = 4%

Coupon payment (PMT) = 0.04× 1000 = $40

Discount rate (rate) = 9% ÷ 2 = 4.5% or 0.045

Using spreadsheet function =PV(rate,nper,pmt,FV)

Price of semi-annual bond is $934.96

7 0

3 years ago

Your grandparents would like to establish a trust fund that will pay you and your heirs $215,000 per year forever with the first

Tju [1.3M]

Answer:

They should invest $5,119,047.619 today.

Explanation:

The trust fund will pay a fixed amount forever thus it is a perpetuity. The value of perpetuity or Price of perpetuity is the amount that the perpetuity is worth in today's terms based on the cash flows it will generate in future.

The formula for the value or price of perpetuity is,

P0 or V = Cash Flow / r

Thus,

P0 or V = 215000 / 0.04 = $5,119,047.619

7 0

2 years ago

"A customer has an existing short margin account and wants to write five covered puts against 500 shares of stock that are short

Aleksandr-060686 [28]

Answer: 0

Explanation:

From the question, we are informed that a customer has an existing short margin account and wants to write five covered puts against 500 shares of stock that are short in the account.

Based on the above scenario, the margin requirement to write the puts will be zero. This is due to the fact that there is no risk that is attached to the short calls.

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3 years ago