Which one of the following is most apt to create a situation where an agency conflict could arise?A. increasing the size of a fi
2 answers:
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Answer: D. 2.2%
Explanation: Equity Dividend Rate is calculated by dividing the Before Tax Cash Flow by the Acquisition price. If you need the answer in percentage form, you then multiply by 100.
Here, before-tax cash flow = $11,440
Acquisition price = $520,000
So Equity Dividend Rate = X 100
Equity Dividend Rate = 2.2%
In this question, you do not need the Net Operating Income (NOI). You only need the NOI if the Before Tax Cash Flow is not given and the debt service payment is. If this is the case, you subtract the debt service payment from the NOI to get the Before Tax Cash Flow.
Answer:
$108,583.98
Explanation:
Given:
Initial deposit = $3,500
Rate = 9.652%
You also plan on depositing $4,500 at the end of years 5 through 10.
Required:
What will be the value of the account at the end of 20 years, assuming you earn your expected rate of return?
First calculate the future value of first installment, $3500 at end of year 20, since the amount was not deposited at once:
Calculate the future value of annual deposits at end of year 10:
Given, N = 6 years )i.e from 5 to 10 years)
I/Y = 9.652%
PV = 0
PMT = $4,500
FV(9.652%, 6, 4500, 0)
FV = $34,416.63
Calculate the future value of annual deposits at end of year 20:
Given, N = 10 Years (from end of year 10, to year 20)
PV = 34,416.43
I/Y = 9.652%
FV = 34,416.43 * PVIF(0.9652, 10)
FV = $86,483.63
The total future value at end of year 20:
Future value of initial deposit + Future Value of annual deposits
= $22,100.35 + $86,483.63
= $108,583.98
The value of the account at the end of 20 years = $108,583.98