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
Answer: c. Demand decreases and supply decreases.
Explanation:
When demand for tablets decrease, the demand curve shifts to the right. The price and quantity declines. At the same time, when supply also falls, the supply curve shifts to the left leading to an increase in price and a fall in quantity.
Since, decrease in demand and supply have opposite effect on the price there is no change in the price of tablets.
Both the forces work towards reducing quantity to quantity will fall unambiguously.
Thus, the correct option is c, Demand decreases and supply decreases.
Answer: $4.24
Explanation:
According to the Put-Call Parity, the value would be expressed by;
Put Price = Call price - Stock price + Exercise price *e^-(risk free rate *T)
T is 90 days out of 365 so = 90/365
= 2.65 - 26 + 28 * 2.71 ^ (-0.06 * 90/365)
= $4.24
Answer:
They should be reported in 2 different parts, first under current liabilities as:
Then under long term liabilities:
- Notes payable expected to be refinanced $1,044,000
Explanation:
the total short term notes payable on December 31 = $1,313,000
- $1,044,000 were paid off by issuing common stocks, so that portion of the debt must be reported as notes payable expected to be refinanced (or refinanced debt)
- the remaining $269,000 which were paid using cash reserves must be reported as current notes payable
