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nlexa [21]
2 years ago
13

Three months ago, Central Supply stock was selling for $51.40 a share. At that time, you purchased five put options on the stock

with a strike price of $52 per share and an option price of $0.60 per share. The option expires today when the value of the stock is $42.70 per share. What is your net profit or loss on this investment
Business
1 answer:
oee [108]2 years ago
7 0

Answer:

$4,350

Explanation:

Calculation to determine your net profit or loss on this investment

Net profit = (-$0.60 - $42.70 + $52) × 100 × 5

Net profit= $4,350

Therefore your net profit or loss on this investment is $4,350

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Your income is $75,000 per year. You cannot set up a ROTH IRA if you earn more than $95,000 per year. If your salary increases b
Alja [10]

Answer:

only one more year

Explanation:

Your income for the current year (year₀) = $75,000

Next year's income (year₁) = $75,000 x 1.2 = $90,000

Year 3's income (year₂)= $90,000 x 1.2 = $108,000

You will only be able to contribute to a ROTH account during the next year (year₁), since your income for year₂ will be higher than $95,000.

6 0
2 years ago
2. Jill would like to plan for her son’s college education. She would like for her son, who was born today, to attend college fo
Semmy [17]

Answer:

$4,531.50

Explanation:

first we must determine the cost of tuition in 18 years (2038):

$12,000 x (1 + 6%)¹⁸ = $34,252 per year

to calculate the total value of college tuition (5 years) in 2038 we can use the annuity due factor (6% and 5 years) 4.4651:

total college tuition = $34,252 x 4.4651 = $152,939

this means that Jill needs to have $152,939 for the moment her son starts college:

we have to calculate the payment:

to calculate the future value of an annuity (since she starts to save at end of the year, it is an ordinary annuity, not annuity due) we use the following formula:

future value = payment x ordinary annuity factor (8% and 17 years)

we know future value ($152,939) and the annuity factor = 33.7502

payment = future value / annuity factor

payment = $152,939 / 33.7502 = $4,531.50

3 0
2 years ago
Patrick Company expects to generate freeminuscash of​ $120,000 per year forever. If the​ firm's required return is 12​ percent,
photoshop1234 [79]

Answer:

$6.3 per share

Explanation:

There are two method of Valuation of the firm

  • Weighted average cost of the capital (WACC)
  • Free cash flow to equity (FCFE)

We have to calculate the value of the firm using FCFE. Free cash flow to equity (FCFE) is the amount of cash flow generated by the business and potentially available for distribution among the stockholders.

Value of firm = Free cash flow / required rate of return = $120,000 / 12% = $1,000,000

Market value of Equity = Total value of firm - Market value of Debt - Market value of Preferred share

Market value of Equity = $1,000,000 - $300,000 - $70,000 = $630,000

Value of​ Patrick's stock = Market Value of equity / shares of stock outstanding = $630,000 / 100,000 = $6.3 per share

4 0
2 years ago
Four investors bought a real estate asset together and decided to divide the profits equally. Investor A invested $200,000; inve
Charra [1.4K]

Answer:

$150,000

Explanation:

If four investors bought a real estate asset together and decided to divide the profits equally.

Investor A invested $200,000;

investor B invested $500,000;

investor C invested $800,000;

investor D invested $500,000. If the net profit for the first year was $1,000,000, investor A receives $150,000 more than if the profits were divided in proportion to how much they invested.

If the profits were divided according to investment percentage he would have gotten 200,000 / (200,000 +500,000 + 800,000+500,000) x $1m = $100,000.

However if profits are shared equally he receives $1m / 4 investors = $250,000.

Therefore $250,000 - $100,000 = $150,000

4 0
2 years ago
Mullen Company purchased a new machine costing $55,200 on January 1, 2017. The machine is expected to have a $3,600 salvage valu
viva [34]
A. 8,600 is the answer
8 0
2 years ago
Read 2 more answers
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