Answer:
(a). For every additional square foot of area of a house, the price is predicted to increase by $61
(b) The asking price is $145410 and the residual is a negative $4100
Explanation:
As per the data given in the question,
a) From regression equation Slope = 0.061
So slope = (0.061 × 1,000) ÷ 1 sq. ft.
= $61 per sq. ft.
For every additional square foot area price is increased by $61
b) If size of the house is = 1600 square foot then
Price = 47.81 + 1600*0.061
=$145,410
The asked price is $4,100 less than estimated price and residual is not positive
Hence,
Asking price = $145,410
Residual price = a negative $4,100
Answer:
A) $56.5
Explanation:
Data:
Project S
Initial cost $10,000
Y1 CF = $6,000
y2 CF = $8,000
Project L
Initial Investment = $10,000
Y1-Y4 CF = $4,373
Solution:
<u>For Project S</u>
We shall prolong the project to four years so it can be easily compared to project L
Following shall be the cashflow stream:
Y0=-$10,000 Y1=$6,000 Y2=-$2,000($8,000 CF - $10,000 outlay for prolonging the project second time) Y3=$6,000 Y4=$8,000
Now to discount the cashflow
<u>For Project L</u>
In order to calculate present value of the annuity, following formula will be used:
<em>NPV = Initial outlay - PV</em>
Now, we can easily calculate how much value will the firm gain or lose if Project L is selected over Project S
<em>*all figures are rounded off to two decimal points*</em>
Answer: (B) Demand for products
Explanation:
The demand for the products is basically refers to the process in which the amount of the specific products are get purchased for the particular price so that the one business organization increase their productivity and the other business meets its specific requirement.
There are basically five factors which determine the demand of products function in an organization are as follows:
- Income of the buyer
- Price
- Customer choice
- The actual price of the related other products
- Future supply expectations
Therefore, Option (B) is correct.
Answer: Price of stock at year end =$53
Explanation:
we first compute the Expected rate of return using the CAPM FORMULAE that
Expected return =risk-free rate + Beta ( Market return - risk free rate)
Expected return=6% + 1.2 ( 16%-6%)
Expected return= 0.06 + 1.2 (10%)
Expected return=0.06+ 0.12
Expected return=0.18
Using the formulae Po= D1 / R-g to find the growth rate
Where Po= current price of stock at $50
D1= Dividend at $6 at end of year
R = Expected return = 0.18
50= 6/ 0.18-g
50(0.18-g) =6
9-50g=6
50g=9-6
g= 3/50
g=0.06 = 6%
Now that we have gotten the growth rate and expected return, we can now determine the price the investors are expected to sell the stock at the end of year.
Price of stock = D( 1-g) / R-g
= 6( 1+0.06)/ 0.18 -0.06
=6+0.36/0.12
=6.36/0.12= $53
Answer: John's Savings account balance declined by $50 and his Checking account balance increased by $50
Explanation:
The checking account statement shows that there was an online funds transfer from Savings into the checking account.
The checking account will therefore increase by $50 because money was transferred into it and therefore added to its balance. The savings account on the other hand, will reduce by the same amount because it transferred the money into another account.
