Suppose you have the option to extend a loan to a friend this year for $1000 in exchange for repayment next year of $1100 (the $1100 is the principal plus interest). Every year, however, the friend has the option to borrow $1000 again in exchange for $1100 repayment one year later, i.e. the friend can roll over the debt. You know this friend well and know that he will always roll over the debt and will never default.
a. Assume neither of you will ever die. What is the NPV of this infinite stream of loans if you have a discount rate of 8%?
b. Now assume your friend today is t=0 and your friend will die immediately after paying back his loan at t=60. What is the NPV of this finite stream of loans if you have a discount rate of 8%?
In: Finance
The December 31, Year 1, unadjusted trial balance for a company
is presented below.
| Accounts | Debit | Credit | |||||||
| Cash | $ | 9,900 | |||||||
| Accounts Receivable | 14,900 | ||||||||
| Prepaid Rent | 7,080 | ||||||||
| Supplies | 3,900 | ||||||||
| Deferred Revenue | $ | 2,900 | |||||||
| Common Stock | 10,000 | ||||||||
| Retained Earnings | 5,900 | ||||||||
| Service Revenue | 51,480 | ||||||||
| Salaries Expense | 34,500 | ||||||||
| $ | 70,280 | $ | 70,280 | ||||||
At year-end, the following additional information is available:
The balance of Prepaid Rent, $7,080, represents payment on October 31, Year 1, for rent from November 1, Year 1, to April 30, Year 2.
The balance of Deferred Revenue, $2,900, represents payment in advance from a customer. By the end of the year, $725 of the services have been provided.
An additional $600 in salaries is owed to employees at the end of the year but will not be paid until January 4, Year 2.
The balance of Supplies, $3,900, represents the amount of office supplies on hand at the beginning of the year of $1,650 plus an additional $2,250 purchased throughout Year 1. By the end of Year 1, only $790 of supplies remains.
Required:
1. Update account balances for the year-end information by recording any necessary adjusting entries. No prior adjustments have been made in Year 1. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
In: Accounting
| Earnings per common share of ABC Industries for the next year are expected to be $2.25 and to grow 7.5% per year over the next 4 years. At the end of the 5 years, earnings growth rate is expected to fall to 6.25% and continue at that rate for the foreseeable future. ABC’s dividend payout ratio is 40%. If the expected return on ABC's common shares is 18.5%, calculate the current share price. (Round your answer to the nearest cent.) | |
| Current share price $ | |
In: Finance
Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $94.34, while a 2-year zero sells at $84.99. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 12% per year.
a) What is the yield to maturity of the 2-year zero?
b) What is the yield to maturity of the 2-year coupon bond?
c) What is the forward rate for the second year?
d) According to the expectations hypothesis, what are (i) the expected price of the coupon bond at the end of the first year and (ii) the expected holding-period return on the coupon bond over the first year?
In: Finance
sami is planning on buying a car after five years. the current price of the car is 50,000 dollars and inflation rate is 3 percent. sami currently has 11,000 dollars in a bank account that pays an annual interest rate of 8 percent, compounded semi-annually. he wants to save for the balance by making semi annual payments in the account, at the end of each period. 1.compute the amount of the payments
End of year two, sami withdrew 3200 dollars, and he deposited 2100 dollars end of year three. compute the last two payments.
In: Finance
Perpetual preferred stock has:
Par value- $50/share
dividend rate- 7%/year
investors require- 9.5% per year return to hold pref. stock.
what is its value per share?
In: Finance
The market price for Microsoft Corporation closed at $55.48 and $46.45 on December 31, current year, and previous year, respectively. The dividends per share were $1.24 for current year and $1.12 for previous year.
a. Determine the dividend yield for Microsoft on December 31, current year, and previous year. Round percentages to two decimal places.
b. Interpret these measures
In: Accounting
Reddick Enterprises' stock is going to pay a dividend of $5 in the next year. Since then the dividend is projected to increase at a constant rate of 5.50% per year. The required rate of return on the stock, r, is 9.00%, what is the present value of the 3rd year dividend? What is the price of the stock at the end of the 3rd year? (6 points Hint: to solve for Pa you need to use Div4)
In: Finance
|
(I)Age |
(II)Physician Visits in the Past Year |
(III)Monthly Income |
(IV)Case Contacts in Past Year |
(V)Gender |
|
74 |
8 |
$2,347 |
10 |
M |
|
81 |
7 |
2,434 |
8 |
M |
|
83 |
11 |
1,636 |
13 |
F |
|
77 |
4 |
1,963 |
7 |
M |
|
76 |
5 |
2,358 |
6 |
F |
|
79 |
13 |
1,968 |
15 |
F |
|
79 |
7 |
2,683 |
6 |
M |
3. Suppose you are a caseworker for Eldergarden, an agency that provides social services to the elderly. You are assigned to provide some descriptive statistics for the agency's caseload for the month.
a. Compute the mean, median, and modal age (column I of the table).
b. Compute the range of ages and use it to estimate the standard
deviation.
c. Compute the standard deviation of ages using both the direct
and
shortcut methods.
d. Compare the answers to parts (b) and (c) and comment
***Do (a) through (d) of exercise 3 for case contacts in Past year (column IV of the table). (this is the question)***
In: Statistics and Probability
Mean of stock price = 1117.64
STDEV (Population) = 67.61
If a person bought 1 share of Google stock within the last year, what is the probability that the stock on that day closed within $50 of the mean for that year (round to two places)? (Hint: this means the probability of being between 50 below and 50 above the mean).
If a person bought 1 share of Google stock within the last year, what is the probability that the stock on that day closed at less than $1050 per share (round to two places)? Would this be considered unusual? Use the definition that an unusual value is more than 2 standard deviations above or below the mean.
At what prices would Google have to close in order for it to be considered statistically unusual or statistically significant outliers? You will have a low and high value. There are several possible definitions for unusual in statistics, but for our project let's use the definition that an unusual value is more than 2 standard deviations above or below the mean.
In: Statistics and Probability