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Anton [14]
2 years ago
15

You just won a national sweepstakes! For your prize, you opted to receive never-ending payments. The first payment will be $12,5

00 and will be paid one year from today. Every year thereafter, the payments will increase by 3.5 percent annually. What is the present value of your prize at a discount rate of 8 percent?
Business
1 answer:
maw [93]2 years ago
5 0

Answer:

The present value of your prize at a discount rate of 8 percent is  $277,777.78

Explanation:

In order to calculate the present value of your prize at a discount rate of 8 percent we would use the DDM to compute the present value today as follows:

   

As per ddm model value today = Expected earning next year / (required rate - growth rate)  

expected cash flow after 1 year =$12,500      

Growth = 3.50%      

required rate =8%      

Therefore, Value today =$12,500/(8%-3.5%)

Value today = $277,777.78    

The present value of your prize at a discount rate of 8 percent is  $277,777.78

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Compare the results of your personal time allocation to your ideal time allocation. Are you close to your ideal allocation? If n
miv72 [106K]

Answer:

As an individual, I am not close to my ideal time allocations as such allocation got affected by many factors that are beyond the control of an individual. One has to depend on the external environment which is composed of other individuals receding near you.

The sleeping schedule, health both mental and physical affects the time allocation significantly. Due to distress and overload panics one serves more time in sleeping than adequate.

 

3 0
2 years ago
Over the years, Zebra Productions has been slow making payments to its bank. Now it is in need of financing. Based on past exper
NISA [10]

Answer:

D) prime rate plus 4 percent

Explanation:

<em>Zebra Productions</em> will now be qualified as a sub-prime customer as it has been slow making payments to its bank. This has made its credit rating and quality lower. The lower credit rated customers are charged <em>sub-prime lending </em>rates which is charging interest rates higher than the prime lending rate ( lower interest rate for good credit rating customers). This is due to the fact that the bank is taking <em>higher risk</em> on the borrower's account and thereby should get <em>higher return</em> for taking higher risk.

Thus, <em>option no. D) prime rate plus 4 percent </em>would be charged to Zebra Productions.

3 0
2 years ago
What are some financial consequences that could happen to a borrower if he or she cannot pay back a car loan from a financial in
Cerrena [4.2K]

The bank can repossess the car and if anything is used as collateral they can claim that as well. It is best to not get yourself in debt you cannot pay off.

One way to calculate debt is to figure out what your income is per week, and divide that by the weekly payments for the car. Lets say you make 3200, and your debt is 450 a week.

As shown below

<em>Income ÷ Payments </em>

3200 ÷ 450 = 0.14

Now multiply that by 100 to get your percentage,

0.14 x 100 = %14

Financial advisors recommend that you keep your debt-to-income ratio under 30%.

3 0
2 years ago
Donny, of Donny's Doughnuts, bakes and sells 100 dozen doughnuts a day using one mixer and one fryer. His rival, Sunshine, of Su
Svetlanka [38]

Answer:

Which shop will benefit the most from its expansion?

  • B. Donny, because his workers currently have less available capital to work with

The law of marginal returns applies here, that is why Sunshine donuts didn't produce twice as many by using more machines

How much should Donny realistically expect his production to increase with the new equipment?

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Similar to the additional production that Sunshine had in the past.

How much should Sunshine realistically expect her production to increase with the new equipment?

  • A. about 50 dozen

Maybe even a little more than 50 dozen, but definitely less than 80 or 100.

7 0
2 years ago
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olga_2 [115]

Loan commitment or credit line.

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A loan advancement is a bank's guarantee to offer an advance or credit of a predefined sum to a borrower. Likewise called a dedication letter, it incorporates the entirety of the terms and states of the credit.  

A credit line is the measure of cash that can be charged to a Mastercard account. The size of a credit line, and its amount has been obtained, impact purchaser FICO assessments. Low credit usage — that is, a credit line on which little has been obtained — prompts a higher FICO rating.

8 0
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