Answer:
4.17% or 0.0417
Explanation:
the present value of your investment is $96
the future value of your investment is $100
time period n = 1
using the future value formula:
$100 = $96 x (1 + r)¹
1 + r = $100 / $96 = 1.04167
r = 1.04167 - 1 = 0.04167 = 4.167%= 4.17%
Answer:
$48.2
Explanation:
The increase in dividend is 3.9%
= 3.9/100
= 0.039
The recently paid dividend is $3.62
The required return is 11.7%
= 11.7/100
= 0.117
Therefore the price per share of the company stock can be calculated as follows
= 3.62(1+0.039)/0.117-0.039
= 3.62(1.039)/0.078
= 3.761/0.078
= 48.2
Hence the price per share is $48.2
Answer:
Cash flow will be $12750
So option (B) will be correct answer
Explanation:
We have given return on equity = 15 % = 0.15
Total equity = $85000
We have to find the cash flow
Equity is given by
![equity=\frac{cash\ flow}{return\ on\ equity}](https://tex.z-dn.net/?f=equity%3D%5Cfrac%7Bcash%5C%20flow%7D%7Breturn%5C%20on%5C%20equity%7D)
So ![85000=\frac{cash\ flow}{0.15}](https://tex.z-dn.net/?f=85000%3D%5Cfrac%7Bcash%5C%20flow%7D%7B0.15%7D)
![cash\ flow=85000\times 0.15=12750](https://tex.z-dn.net/?f=cash%5C%20flow%3D85000%5Ctimes%200.15%3D12750)
So cash flow will be equal to $12750
So option (B) will be correct option
Answer:
i. buy put option
ii. Proceeds will be as follows:
$50 : 2,000,000
$60 : 2,400,000
$70 : 2,800,000
$80 : 3,200,000
Explanation:
i. A put is option is one in which buyer of the option has a right to sell the asset at an agreed price at a later date. There can be a premium on the purchase of an option but its safe to buy an option to reduce risk exposure.
ii. $50 : 2,000,000 (40,000 barrels * $50)
$60 : 2,400,000 (40,000 barrels * $60)
$70 : 2,800,000 (40,000 barrels * $70)
$80 : 3,200,000 (40,000 barrels * $80)