Answer:
Option 3
Explanation:
Earnings & profits (E&P) is the measure of a corporation’s economic ability to pay dividends to its shareholders. An up-to-date E&P calculation is important for many corporate transactions, including determining whether a distribution to shareholders is a taxable dividend.
The E&P allocated to Andrew's distribution
= 160,000 * 150,000/(350,000+150,000)
= 160,000 * 150,000/500,000
= 48,000
Option C
Answer:
The question is missing some details,however find the complete question with the underlined figures being the missing ones below:
Assume that short-term rate, r1 = 6%, and that the expected market rates
<u>E(r 12 ) = 7 % and E(r 23 )</u> = 9 % . Also assume that the unbiased expectations theory holds such that the forward rates are identical to expected spot rates.
a. What should be the current price of a 3-year, $1000 bond with a 12% coupon rate? Assume annual coupon payments.
b. What is the yield-to-maturity for this bond?
a.The current price of the bond is $ 1,082.87
b.The yield to maturity is 8.74%
Explanation:
Find detailed computations of the bond price and yield to maturity in the spreadsheet attached.
Please note that in calculating the present of the bond i.e current price ,the rate changes from year to year as given in the question.
Answer:
The correct answer is: downward; upward.
Explanation:
A higher inflation rate will put a downward pressure on the value of British pound. The value of British pound will decline in terms of US dollars. This is because inflation means that the price level will rise. This will cause the demand for British goods to decline. Consumers will prefer to purchase American goods. As a result the demand for dollars and supply of pounds will increase decreasing the value of pounds.
As interest rate in UK becomes higher than interest rate in US, the investors will prefer to invest in UK. This will increase the demand for British pounds and supply of dollars. As a result, the value of British pounds will increase.
Answer: Please refer to Explanation
Explanation:
1) You want to have $2 million when you are 65 which is 35 years from now. The interest rate is 5% and you need to know how much to deposit per year to get to that level. The $2 million is therefore the future value of your contributions which makes this an Annuity.
To calculate for the Annuity amount use the following formula,
FV of Annuity = Annuity ( ( (1 + i)^ n -1 )/ i )
2,000,000 = A ( ( ( 1 + 5%) ^ 35 -1 ) / 5%)
2,000,000 = A ( (1.05^35 -1 )/5%)
2,000,000 = A (90.3203074)
A = 2,000,000/90.3203074
A = $22,143
You should set aside $22,143 every year.
2) The major flaw in the calculation is the assumption that the interest rates will remain the same over the 35 years. This is almost impossible and will affect the amount that would need to be deposited every year to achieve the target. If the interest rate should increase then it will increase the amount that you are to get meaning you can get more than $2 million then you would not have to deposit as much to get to $2 million. If it decreases however, you will have to deposit more to get to the required $2 million because the amount earned in interest will not enable you to get to $2 million in that timeframe. .
