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True [87]
2 years ago
5

something people buy to protect themselves from losing a lot of money in the event something happens to them or their property i

s known as:
Business
1 answer:
Artemon [7]2 years ago
4 0

Answer:

it is known as: Insurance

You might be interested in
What are durable goods?
JulsSmile [24]
They're the opposite of perishable goods. 

Meaning, that durable goods can be left on the shelf for a while, and don't need to be imediately consumed.

Hope this helps!
6 0
3 years ago
You are given the following information concerning Parrothead Enterprises: Debt: 9,300 7.4 percent coupon bonds outstanding, wit
Law Incorporation [45]

Answer:

a. Cost of debt = 5.03%.

b. Cost of equity = 11.47%

c. Cost of preferred stock = 4.90%

Explanation:

a. Calculation of cost of debt

The bond's Yield to Maturity is the before tax cost of debt and it can be calculated using the following RATE function in Excel:

YTM = RATE(nper,pmt,-pv,fv) * 2 .............(1)

Where;

YTM = yield to maturity = ?

nper = number of periods = number of semiannuals to maturity = Number of years * Number of semiannuals in a year = 21 * 2 = 42

r = semiannual coupon rate = Annual coupon rate / 2 = 7.4% / 2 = 0.074 / 2 = 0.037

pmt = semiannual coupon payment = semiannual coupon rate * Face value = 0.037 * $2,000 = $74 = 74

pv = present value = quoted bond price = 108.75% * fv = 108.75% * 2000 = 2,175 = 2175

fv = face value or par value of the bond = 2000

Substituting the values into equation (1), we have:

YTM = RATE(42,74,-2175,2000) * 2 ............ (2)

Inputting =RATE(42,74,-2175,2000)*2 into excel (Note: as done in the attached excel file), the YTM is obtained as 6.62%.

Therefore, we have:

After tax cost of debt = YTM * (100% - Tax rate) = 6.62% * (100% - 24%) = 5.03%

Therefore, cost of debt is 5.03%.

b. Calculation of cost of equity

Based on the information in the question, the return on equity can be calculated using the dividend discount model and capital asset pricing model (CAPM) formulae.

b-1. Using the dividend discount model formula, we have:

P = D1 / (r – g) ………………………. (3)

Where:

P = Common stock selling price per share = $66.40

D1 = Next year dividend = $4.60

r = return on equity = ?

g = dividend growth rate = 5.4%, or 0.054

Substituting the value into equation (3) and solve for r, we have:

66.40 = 4.60 / (r – 0.054)

66.40(r – 0.054) = 4.60

66.40r - 3.5856 = 4.60

66.40r = 4.60 + 3.5856

66.40r = 8.1856

r = 8.1856 / 66.40

r = 0.1233, or 12.33%

b-2. Using CAMP formula, cost of equity can be calculated as follows:

Return on equity = Risk free rate + Stock beta(Expected return – Risk free rate) = 4.55% + (1.09 * (10.1% - 4.55%)) = 10.60%

b-3. The cost of equity can therefore be calculated as the average of the returns of equity from the two formulae is as follows:

Cost of equity = (12.33% + 10.60%) / 2 = 11.47%

c. Calculation of cost preferred stock

Note that since the preferred stock selling price per share is $95.90, it indicates that it par value is $100 and is being sold at a discount. Therefore, we have:

Cost of preferred stock = (Preferred stock dividend rate * Preferred stock par value) / Preferred stock selling price per share = (4.70% * 100) / 95.90 = 0.0490, or 4.90%

Download xlsx
4 0
2 years ago
If a congressional leader passes a bill favorable to a particular pharmaceutical firm, then resigns to take a consultant positio
umka21 [38]

The answer to this question is that it is an example of regulatory capture.

<span>Regulatory capture is a situation where in the interest of the business or firm is being prioritized by the firm in order for them to advance and succeed. There are two types of regulatory capture; a materialistic capture and non-materialistic capture.</span>

5 0
3 years ago
Your uncle has $340,000 invested at 7.5%, and he now wants to retire. He wants to withdraw $35,000 at the end of each year, star
timama [110]

Answer:

17.27 years

Explanation:

For this question we use the NPER formula that is shown on the attachment below:

Provided that  

Present value = $340,000

Future value = $25,000

PMT = $35,000

Rate of interest = 7.5%

The formula is shown below:

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

The present value come in negative

So, after solving this, the number of year is 17.27 years

5 0
3 years ago
Purchased goods for $4,100 from Diamond Inc. with terms 2/10, n/30. 5 Returned goods costing $1,100 to Diamond Inc. for credit o
bazaltina [42]

Answer: $3,940

Explanation:

Purchase from Diamond

The company received a discount of 2% because they paid within 10 days as per the terms of the sale.

Cost of inventory from Diamond:

= (Cost of goods - Returns) * (1 - 2%)

= (4,100 - 1,100) * 98%

= $2,940

Purchase from Club

Discount period expired so the full $1,000 is paid.

Total inventory cost:

= 2,940 + 1,000

= $3,940

4 0
2 years ago
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