QUESTION How is compound interest computed? What is a future value? What is a present value? To calculate the value of a sum of money at a future date, compounding technique is used. Using compounding, FV = PV*(1 r)^t; where, FV is the Future Value, PV is the Present Value, r is the interest rate […]
Date: September 2nd, 2020
QUESTION Gary Kornig will be 30 years old next year and wants to retire when he is 65. So far he has saved (1) $6,950 in an IRA account in which his money is earning 8.3 percent annually (2) $5,000 in a money market account in which he is earning 5.25 percent annuallyGary wants to […]
Date: September 2nd, 2020
QUESTION Explain how the future value of an ordinary annuity interest table is converted to the future value of an annuity due interest table. Annuity is a stream of cash flows at equal intervals. Cash flows could be either receipts (as in case of interest on investments) or payments (as in case of loan payments). […]
Date: September 2nd, 2020
QUESTION Ed Summers expects to invest $10,000 for 25 years, after which he wants to receive $108,347. What rate of interest must Summers earn? (Use Table B.2.) ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
Date: September 2nd, 2020
QUESTION Cyclone Rentals borrowed $15,550 from a bank for three years. If the quoted rate (APR) is 6.75 percent, and the compounding is daily, what is the effective annual interest rate (EAR)? 365*3) A = $ 19040 Interest = A Borrowed amount = $ 19040 15550 = $3490 ANSWER: CLICK REQUEST FOR […]
Date: September 2nd, 2020
QUESTION Clean Corporation manufactures and sells dishwashers. Clean provides all customers with a two-year warranty guaranteeing to repair, free of charge, any defects reported during this time period. During the year, it sold 100,000 dishwashers for $325 each. Analysis of past warranty records indicates that 12% of all sales will be returned for repair within […]
Date: September 2nd, 2020
QUESTION Andrew Bogut just received a signing bonus of $1,000,000. His plan is to invest this payment in a fund that will earn 8%, compounded annually.Instructions(a) If Bogut plans to establish the AB Foundation once the fund grows to $1,999,000, how many years until he can establish the foundation?(b) Instead of investing the entire $1,000,000, […]
Date: September 2nd, 2020
QUESTION : Northrop Real Estate Company is planning to fund a development project by issuing 10-year zero coupon bonds with a face value of $1,000. Assuming semiannual compounding, what will be the price of these bonds if the appropriate discount rate is 14 percent? Face value of the bond= $1000 Coupon interest rate= 0% So […]
Date: September 2nd, 2020
QUESTION What is the meaning of the if-converted method of computing EPS? the securities is not exercised. Under this method the securities where the stock price is above the exercise are assumed to be converted into the equity shares and the earnings per share is calculated after taking this conversion into consideration. ANSWER: CLICK […]
Date: September 2nd, 2020
QUESTION Last year Gator Getters, Inc. had $50 million in total assets. Management desires to increase its plant and equipment during the coming year by $12 million. The company plans to finance 40% of the expansion with debt and the remaining 60% with equity capital. Bond financing will be at a 9% rate and will […]
Date: September 2nd, 2020
