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In: Accounting

Exxon Mobil has preferred shares with a yield of 5.14%. If the quarterly dividend is $1.92, what is the value of a share?


6. Exxon Mobil has preferred shares with a yield of 5.14%. If the quarterly dividend is $1.92, what is the value of a share?
7. You have accumulated $1,145 in debt by buying things on Amazon during quarantine.  The minimum monthly payment is $22, If you make only the minimum payment, it will take you 94 months to pay it off. How much total interest will you pay?
8. You are buying a house and will take out a 30-year mortgage of $577,105. If the interest rate is 4.33% per year, what will be your monthly payment?
10. You will invest $209.86 per month. If your investment will grow to $17,955.73 in 5 years, how much total interest did you earn?
11. Annuity A and B are exactly the same except that annuity A has an interest rate of 4% and annuity B has an interest rate of 5%, which one has the higher present value?

Solutions

Expert Solution

6
Preferred yield Dividend/Price of share
5.14% (1.92*4)/Price of share
5.14% 7.68/Price of share
Price of share 7.68/5.14%
Price of share $149.42
7
Total interest paid Total amount paid - Value of debt
Total interest paid (22*94) - $1145
Total interest paid 2068 - 1145
Total interest paid $923
8
Monthly payment Loan value/(1-(1+r^-n)/r)
r is monthly interest rate and n is number of payments
Monthly interest rate 0.36% 4.33%/12
No of payments 360 30*12
Monthly payment 577105/((1-(1.0036^-360))/0.0036)
Monthly payment 577105/201.3553
Monthly payment $2,866.10
10
Total interest earned Total investment value - Amount invested
Total interest earned 17955.73 - (209.86*5*12)
Total interest earned 17955.73 - 12591.60
Total interest earned $5,364.13
11
The higher the interest rate the lower is the present value.
Annuity A has lower interest rate of 4% then annuity B and thus would provide higher present value

ekkarill92 answered 2 years ago
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