The u. s. treasury issued a 10-year bond on november 16, 1998, paying 6.47% interest. thus, if you bought $600,000 worth of these bonds, you would receive $38,820 per year in interest for 10 years. at investor wishes to buy the rights to receive the interest on $600,000 worth of these bonds. the amount the investor is willing to pay is the present value of the interest payments, assuming a 6% rate of return. if we assume (incorrectly, but approximately) that the interest payments are made continuously, what will the investor pay?
Answers
The investor will pay $ 21,304.88to receive an annuity of $38,820 each year for 10 years at 6% interest compounded continuously.
Given :
Interest on $600,000 worth of bonds = $38,820 per year
No. of years = 10 years
Discount rate = 6%
Compounding interval = Continuous compounding ( as given in the question)
We use the following formula to arrive at the Present Value:
PV = $ 21,304.88
Related Questions
Which of the following statements is NOT one of the differentiation strategy decisions? A. Modular design to aid product differentiation. B. Gather and communicate market research data. C. Use buffer stocks to ensure speedy supply. D. Minimize inventory to avoid product obsolescence.
Mira Mesa Appliances makes and sells kitchen equipment for offices and hotel rooms. Mira Mesa management believes that a new model of refrigerator made out of a synthetic material would sell well at a price of $260 per unit. Labor costs are estimated at $32 per unit and overhead costs would be $24 per unit. The major uncertainty is the price of the synthetic material. Mira Mesa is in negotiations with several suppliers for the material. Because of the risk associated with the new product, Mira Mesa will only proceed if the estimated return is at least 30 percent of the selling price.Required:What is the most Mira Mesa can pay for the synthetic material per unit (refrigerator) and meet its profitability goal?
In the context of web marketing the _____ is computed by dividing the number of clicks on an ad
A form of government spending that is not made in exchange for a currently produced good or service is called
Answers
Answer:
Explanation:
Own price elasticity of demand is the degree of the responsiveness of the quantity demanded due to some change in price, keeping other factor constant. Price elasticity of demand on a linear demand curve will fall continuously as the curve slopes.
The four reasons are:
1. Medical aid is enivatble: Because medical services are a necessity for every human beings to live a healthy life, and if their is high change in price with respect to quantity demanded, person cannot ignore to take medical services in bad times or when seriously ill.
2. Comparing the actual size of the population, the number of doctors are compartively less.
3. The services of medical cannot be prolonged or postponed.
4. Love among people- One can be miser in food and clothing, but in diseases they have to take medical help and people will put in the whole money to save his closer one's life, this is the love we people have.
Answers
Answer:
it cannot be used to settle debts
Explanation:
The assets are said to be liquid when it is convertible into cash and the liquid asset we called as a current asset. The liquidity of an asset is important to pay off the short term debt or obligations arise.
It can be in terms of account payable, inventory, prepaid insurance, etc
The asset that said to be illiquid when it is not be used for settling the debts
Hence, the first option is correct
b. If the maintenance margin is 30%, how low can Xtel's price fall before you get a margin call?
c. How would your answer to (b) would change if you had financed the initial purchase with only $12,500 of your own money?
d. What is the rate of return on your margined position (assuming again that you invest $17,500 of your own money) if Xtel is selling after one year at (i) $56; (ii) $50; (iii) $44?
e. Continue to assume that a year has passed. How low can Xtel's price fall before you get a margin call?
Answers
Answer:
The value of the 500 shares at the time of the purchase is $25,000 therefore $7500 had to be borrowed from the broker. With an immediate price change, we don’t need to worry about the interest rate on the loan. If the price
of Xtel stock jumps to p, say, the return on the investment, denoted rp, is given
by;
Explanation:.A) rp =
p × 500−7,500−17,500/17,500
=
500p − 25, 000/15, 000
Hence: r56 =500(56)-25,000/15,000= 28000-25,000/15,000 =20%
r50
= 500(50)-25,000/15,000= 25,000-25,000/15,000= 0%
r44 = 500(44)-25,000/15,000= 22,000-25,000/15,000= -20%
B) For a price p, the margin ratio is
500p − 7,500/500p
A margin ratio 0.3 implies that
500p − 7,500/500p= 0.3=>500p − 7,500=150p
=>p= 7500/350= 21.43
C)For a price p, the margin ratio is
500p − 12,500/500p
A margin ratio 0.3 implies that
500p − 12,500/500p= 0.3=>500p − 12,500=150p
=>p= 12,500/350= 35.71
D). Let p denote the price of Xtel’s stock at the end of the year. The return on this investment, rp, is then
rp =500p − (1.08)7,500 − 17,500/17,500=
500p − 25, 400/17,500
Thus r56= 500(56)-25,400/17,500= 14.86%
r50 = 500(50)-25,400/17,500 = -2.29
and
r44= 500(44)-25,400/17,500= -19.43%
E) For a price p, the margin ratio is then
500p − 7,900/500p
Thus a margin ratio 0.3
implies that;
500p − 5,900/500p
= 0.3 => 500p − 5,900 = 150p
=> p = 5,900/350
= 16.86
Answers
Answer:
The correct answers are letters "A", "B", and "C": Explaining the resolution to the problem; Preventing a recurrence of the problem; Communicating compliance.
Explanation:
Adjustment letters are communications with legal nature from companies to customers who filed a claim. The main purpose of the letter is to politely inform the client that the claim was received, what steps were taken to analyze the situation, what is the final resolution after the study and what will be done as a result. The ultimate goal of the adjustment letter is to keep a good relationship with the customer so they can continue doing business.
Final answer:
An adjustment letter should focus on explaining the resolution to the problem, preventing a recurrence of the issue, communicating compliance, and issuing an apology to the customer.
Explanation:
An adjustment letter should focus on several key elements to ensure effective communication and customer satisfaction. These include:
- Explaining the resolution to the problem: The letter should clearly state what actions have been or will be taken to solve the issue. This is to reassure the customer that their issue is being handled properly.
- Preventing a recurrence of the problem: The letter should detail the steps that are taken by the business in order not to let the issue occur again in the future, thereby showing concern for customer experience.
- Communicating compliance: This involves ensuring that all the procedures, policies and regulatory requirements have been complied with, by apprising the customer about the same in detail.
- Apologizing: An important part of an adjustment letter is an apology to the customer for the inconvenience they've experienced. The apology should sound sincere and indicate that the business values the customer.
The focus of the letter should never be blaming the customer. Rather, it should be centered around finding a resolution and preventing the recurrence of the problem.
Learn more about Adjustment Letter here:
#SPJ3
Answers
Answer:
$1428
Explanation:
Profit = Total Revenue - total cost
total revenue = price x quantity sold
total cost = variable cost + fixed cost
total revenue = 223 x $12 = $2676
Variable cost = $5 x 223 = $1115
total fixed cost = $103.00 + $30.00 = $133.00.
Total cost = $1115 + $133 = $1248
profit = $2676 - $1248 = $1428
Answers
Answer:
Callie's Gross Profit is $562000
Explanation:
Gross profit is the profit earned by a business after deducting the costs associated with producing or selling its goods (for manufacturing and trading businesses) or the costs associated with providing the services (for service businesses) from the net revenue.
It is the profit from the trading section of the business before deducting the operating and financing expenses of the business and before adding any other income.
The gross profit is simply calculated as follows,
Gross Profit = Net Revenue - Cost of Goods Sold
Callie's gross profit = 940000 - 378000
Callie's Gross Profit = 562000