Answer:
The answer is $475.
Explanation:
We have the writer of the put contract has the obligation to buy the share at $50 ( as the put is the at-the-money put) in 3 months time. The writer of the put also has received the premium at $650 for assuming the obligation to buy at the predetermined price.
Thus, the expected returns is calculated as below:
-[0.60 x 100 x Max[$0,$50 - ($50)(1.1)] + 0.30 x 100 x Max[$0,$50 - ($50)(0.95)] + 0.10 x 100 x Max[$0,$50 - ($50) (0.80)] + $650 = - [0.6 x 100 x 0 + 100 x 0.3 x 2.5 + 0.1 x 100 x 10] + 650 = $475.
Answer:
Nominal rate of return= 0.0596 = 5.96%
Explanation:
Giving the following information:
Inflation averaged 3.46%
The real rate of return was 2.5%
<u>To calculate the nominal rate of return, we need to use the following formula:</u>
Real rate of return= nominal rate of return - inflation rate
Nominal rate of return= real rate of retunr + infaltion rate
Nominal rate of return= 0.0346 + 0.025
Nominal rate of return= 0.0596 = 5.96%
The $3,700 (PV: $25,166.26) cash flow stream has the higher present value than the $5,500 (PV: 23,168) cash flow stream if the discount rate is 6 percent. The $5,500 (PV: 15.750.02) cash flow stream has the higher present value than the $3,700 (PV: $14,009.25) cash flow stream if the discount rate is 22 percent.
Answer:
Land 594,500
Explanation:
We must include all cost necessary to acquire the land and lelave it ready to use.
But, the demolition cost are associate with the old warehouse thus, as thsis asset is being destroyed It will be considered period cost, It will not be capitalized through land.
Acquisition cost 550,000
broker commission 35,000
title insurance 2,500
closing cost <u> 7,000 </u>
Total cost 594,500
Answer:
The annual benefits will be$8,581.05
Explanation:
The applicable formula is the present value of an ordinary annuity,which is given as;
PV=A*(1-(1+r)^-N)/r
PV is the amount that would be in the plan at retirement which is $100,000
A is the annual benefits which is unknown
n is the number of years the investment would take which is 25 years
r is the rate of return on investment which is 7%
A=PV/(1-(1+r)^-N)/r
A=100000/(1-(1+7%)^-25/7%
A=100000/1-(1.07)^-25/0.07
A=100000/(1-0.184249178
)/0.07
A=100000/11.65358317
A=$8581.05
