Answer:
Explanation:
We will apply the annuity formula because payments are made equally at year end for 40 years. we would have applied compound formula if total payment was made at year 40.
Total Payment = $40 mill.
Annual Payment = 2 mill.
Total time for payments =20
Ir = 8%
A)
Present Value of innings applying annuity formula
P=R(1-(1+i)^-n)/i
P=2(1-(1+8%)^-20)/8%
P=2(1-0.2145)/8%
P=2*9.8181
P=19.6362
B)
Present Value of innings applying annuity formula with Advance payment
Value of the first payment is same because it is paid at day 1 so present value is same i.e $2 mill.
Present Value of other 19 Payments with 19 years time from today
Applying the same formula
P=R(1-(1+i)^-n)/i
P=2(1-(1+8%)^-19)/8%
P=2(1-0.2317)/8%
P=2*9.6035
P=19.207
Present value of 1st payment at Year.0 = 2 mill
Present value of 19 payment at Year.0 = 19.207
Total Value =2+19.207 = $21.02 mill
Answer:
(a)
Mathematical Equation for break-even
F = QP - QV
Where
F = fixed cost
Q = Break-even quantity
P = Selling price
V = Variable cost
F = Q ( P - V )
Q = F / ( P - V )
Q = $327,030 / ( $630 - $300 )
Q = $327,030 / $330
Q = 991 units
(b)
Contribution Margin = Price per unit - Variable cost per unit
Contribution Margin = $630 - $300 = $330
Break-even Point in Units = Fixed Cost / Contribution margin per unit
Break-even Point in Units = $327,030 / $330 = 991 units
Explanation:
Mathematical equation use the the break-even equation which represent the behavior of each element towards the break-even point.
Contribution per unit method use the contribution of each unit to calculate the break-even point.
Answer:
Markup percentage= 900%
Explanation:
Giving the following information:
I sell shoes for $250 per pair. They cost me $25 to produce.
<u>To calculate the markup percentage, we need to use the following formula:</u>
Markup percentage= [(selling price - unitary cost)/unitary cost]*100
Markup percentage= [(250 - 25)/25]*100
Markup percentage= 900%
Answer:
yield to maturity = 7.06%
Explanation:
yield to maturity (YTM) is calculated using the following formula:
YTM = {C + [(FV - PV) / n]} / [(FV + PV) / 2]
- FV = $2,000
- PV = $1,902.14
- C = $2,000 x 6.48% x 1/2 = $64.80
- n = 12 x 2 = 24
YTM = {64.80 + [(2,000 - 1,902.14) / 24]} / [(2,000 + 1,902.14) / 2] = (64.80 + 4.0775) / 1,951.07 = 0.0353 or 3.53% semianually or 7.06% annually
Since the bond sells at a discount, its yield to maturity will be higher than the coupon rate.
Answer:
The answer is: the <u>supply of</u> sugar to <u>decrease</u> and its price to <u>increase</u>.
Explanation:
Factories that process sugarcane have to decide what quantities will they produce of sugar and ethanol. If they produce sugar, they can'y produce ethanol, and vice versa.
So when the price of ethanol increases, sugarcane factories will increase the quantity supplied of ethanol, therefore reducing the quantity supplied of sugar. Since the quantity supplied of sugar decrease by external factors not related to its demand, then the price of sugar will increase since the quantity demanded will be more than the quantity supplied.