Answer: $35,000
Explanation:
The payments of $1,033.34 at the end of every month is a constant amount which makes it an annuity.
Present value of annuity:
= Annuity * (1 - (1 + rate) ^-no. of periods) / rate
Rate needs to be made a monthly rate:
= 4%/12
= 4/12%
= 1,033.34 * ( 1 - ( 1 + 4/12%) ⁻³⁶/ 4/12%
= $35,000
Purchase price = Down payment + Present value of annuity
= 4,000 + 35,000
= $39,000
Answer:
The answer is A. £0.699/$; £0.699/$
Explanation:
The direct quote for British investor is the same as the indirect quote for the U.S. investor.
Calculation is as follows; 1/1.43 = 0.699
Answer:
It will take 51 months.
Explanation:
As we know the constant payment of $290 monthly is the annuity payment to pay $12,000 with interest rate of 0.84% per month. The Number of Months can be calculated by following formula.
Loan amount = PV = $12,000
Rate of interest = r = 0.84 %
Monthly Payment = P = $290
PV of annuity = P x [ ( 1- ( 1+ r )^-n ) / r ]
$12,000 = $290 x [ ( 1 - ( 1 + 0.84% )^-n / 0.84% ]
$12000 x 0.84% / $290 = 1 - ( 1 + 0.84% )^-n
0.347586 = 1 - ( 1 + 0.84% )^-n
0.347586 - 1 = - ( 1 + 0.84% )^-n
-0.652414 = - ( 1 + 0.84% )^-n
1 / 0.652414 = 1.0084^n
1.532769 = 1.0084^n
Log 1.532769 = n x log 1.0084
n = Log 1.532769 / log 1.0084
n = 51
Answer: (D).
According to the real business cycle, "changes in the level of technology are the main causes of inflation and fluctuations in real GDP".
Explanation:
The "real business cycle" states that an economy during its lifetime will go through all the various stages of a business cycle which include; expansion, peak, recession, depression, trough and recovery. There will be periods where economic activities will be high and other periods when they will be low.
According to the real business cycle, technological innovation or shocks, which determine the extent to which inputs are converted to outputs, are responsible for the changes in the economy (such as inflation and real GDP fluctuations).
Answer:
Price to be paid today = $118.35
Explanation:
<em>The price of a share can be calculated using the dividend valuation model </em>
<em>According to this model the value of share is equal to the sum of the present values of its future cash dividends discounted at the required rate of return. </em>
The model can applied as follows:
PV of dividend = D×(1+r) ^(-n)
D- dividend , r - required rate , n- number of year
D- 9.25, r - 16%, n = 2
PV of dividend = 9.25 × (1.16)^(-2)= 6.9
PV of disposal value
PV of dividend = F × (1+r) ^(-n)
D- disposal value , r - required rate , n- number of year
PV of disposal value = 150 × (1.16)^(-2)= 111.47
Price to be paid today
Total present value = 6.9 + 111.47 = 118.35
Price to be paid today = $118.35