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zvonat [6]
2 years ago
8

What is the maximum amount you would pay for an asset that generates an income of $250,000 at the end of each of five years, if

the opportunity cost of using funds is 8 percent?
Business
1 answer:
OleMash [197]2 years ago
8 0
To get the maximum amount of this asset we shall use the formula:
A=p(1+r/100)^n
where:
 A=future amount
p=principle amount
r=rate
n=time;
from the question: p=$250000, r=8%,n=5
thus;
A=250000(1+5/100)^5
A=250000(1.05)^5
A=$ 319,070.40
Thus, we conclude that at the end of 5 years the amount generated will be $319,070.40
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8. A pension fund manager is considering three mutual funds, a stock fund with expected return of 15% and standard deviation of
iragen [17]

Answer:

The lowest risk combination is at : expected return = 12%

                                                         standard deviation = 17.44%

Explanation:

Three mutual funds

stock fund : 15% expected return,  23% standard deviation

Bond fund : 9% expected return , 23% standard deviation

money market : sure rate of 5.5%

correlation between stock and bond fund = 0.15

variance for stock fund = 0.5 ( solved using excel )

variance for bond fund = 1 - variance for stock = 1 - 0.5 = 0.500

attached below is the table and

6 0
2 years ago
Which of the following is not an input to the aggregate planning process? A. demand forecast B. cost information C. policies on
ale4655 [162]

Answer:

The correct answer is E. master production schedules.

Explanation:

Master production schedules is not an input to the aggregate planning process  all other options are its input,

Aggregate planning process is an attempt to respond to predicted demand within the constraints set by product, process and location decisions.

Hence, master production schedules is not a relevant input for this planning process but can be a result of the aggregate planning process. In other words master production schedule is formed after aggregated planning has been completed.

6 0
2 years ago
Read 2 more answers
The 6.3 percent, semi-annual coupon bonds of PE Engineers mature in 13 years and have a price of $992. These bonds have a curren
ludmilkaskok [199]

Answer:

6.35, 6.39 and 6.49

Explanation:

6.3% = 0.063

yield = 0.063 ×$1,000/ 0.992 yield = 0.063 ×$1,000)/ 0.992 ×$1,000)

Current yield = 0.0635, or 6.35 percent PV = $992 = 0.063× $1,000 / 2) ×{(1 - {1 / [1 + (r / 2)]26}) / (r/ 2)} + $1,000 / [1 + (r / 2)]26 r = .0639, or 6.39 percent EAR = [1 + .0639 / 2)]2 - 1 EAR = .0649, or 6.49

7 0
2 years ago
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Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received
marin [14]

Answer:

$11,560

$5666.661

Explanation:

Given the following :

Bill received from accountant = $17,000

This year's marginal tax rate = 32%

Next year's marginal tax rate = 37%

After tax return on investment = 11%

After tax cost of bill is paid in December :

Billed amount * this year's tax rate

$17,000 * ( 1 - 0.32)

= $17,000 * 0.68

= $11,560

B) After tax cost of bill was paid in January:

Billed amount * next year's tax rate * PV factor

From the present value factor table;

PV factor (1 years, 11%) = 0.9009

Hence,

$17,000 * 0.37 * 0.9009 = $5666.661

4 0
2 years ago
Cakery Bakery received $1,000 from a customer on August 5, 2016 for a wedding cake to be delivered on September 19, 2016. What w
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September 19, 2020 because that is when the cake successfully delivered
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