Stanley Roper has $2,300 that he is looking to invest. His brother approached him with an investment opportunity that could give Patrick $4,800 in 4 years. What interest rate would the investment have to yield in order for Stanley’s brother to deliver on his promise? (Answer needs to be stated as a decimal. For example: .1192) Round to four decimal places.

Answers

Answer 1
Answer:

Answer:

20.19%

Explanation:

The computation is shown below:

As we know that

Future value = Present value × (1 + rate)^number of years

where,

Present value = $2,300

Future value = $4,800

Time period = 4 years

So, the interest rate is

$4,800 = $2,300 × (1 + rate)^4

2.086957 = (1 + rate)^4

So after solving this, the interest rate is 20.19%


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A company holds $40,000 of 7% bonds as a held-to-maturity security. Assuming all prior interest entries have been accounted for, the bondholder's journal entry to record receipt of the semiannual interest payment includes a debit to Cash for $2,800 and a credit to Interest Revenue for $2,800. True False
With current technology, suppose a firm is producing 800 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 6 units of labor, 5 units of land, 4 units of capital, and 2 units of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. Required:1. Assume the firm can sell these 800 loaves at $1 per unit, will it continue to produce banana bread?2. What is the firm's total revenue?3. What is the firm's total cost?4. What is the firm's profit or loss?
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. Suppose you buy a five-year zero-coupon Treasury bond for $800 per $1000 face value. Answer the following questions: (a) What is the yield to maturity (annual compounding) on the bond? (b) Assume the yield to maturity on comparable zeros increases to 7% immediately after purchasing the bond and remains there. Calculate your annual return (holding period yield) if you sell the bond after one year. (c) Assume yields to maturity on comparable bonds remain at 7%, calculate your annual return if you sell the bond after two years. (d) Suppose after 3 years, the yield to maturity

Answers

Answer:

(a) What is the yield to maturity (annual compounding) on the bond?

Yield to maturity (YTM) = (face value / market price)¹/ⁿ - 1

  • face value = $1,000
  • market price = $800
  • n = 5

YTM = ($1,000 / $800)⁰°² - 1 =  0.0456 or 4.56%

(b) Assume the yield to maturity on comparable zeros increases to 7% immediately after purchasing the bond and remains there. Calculate your annual return (holding period yield) if you sell the bond after one year.

holding period yield = (end of period value - initial value) / initial value

initial value = $800

end of period value = ?

to determine the end of period value we must solve:

7% = ($1,000 / ?)⁰°²⁵ - 1

1.07 = ($1,000 / ?)⁰°²⁵

1.07⁴ = $1,000 / ?

? = $1,000 / 1.3108 = $762.90

holding period yield = ($762.90 - $800) / $800 = -4.64%

(c) Assume yields to maturity on comparable bonds remain at 7%, calculate your annual return if you sell the bond after two years.

1.07³ = $1,000 / ?

? = $1,000 / 1.225 = $816.30

holding period yield = ($816.30 - $800) / $800 = 2.04%

annualized return = (1 + total return)¹/ⁿ - 1 = (1 + 0.0204)¹/² - 1 = 1.01%

(d) Suppose after 3 years, the yield to maturity on similar zeros declines to 3%.  Calculate the annual return if you sell the bond at that time.

1.03² = $1,000 / ?

? = $1,000 / 1.0609 = $942.60

holding period yield = ($942.60 - $800) / $800 = 17.83%

annualized return = (1 + total return)¹/ⁿ - 1 = (1 + 0.1783)¹/³ - 1 = 5.62%

Final answer:

This business related question deals with the calculation and understanding of yield to maturity and holding period yield related to a zero-coupon Treasury bond. The yield to maturity is the estimated total return if a bond is held until it matures. The holding period yield is dependent on the current market conditions and may alter if the bond is sold before it reaches its maturity.

Explanation:

To answer these questions, you first need to understand key concepts related to bonds. A zero-coupon bond is a bond that doesn't give regular interest payments to the investor. Instead, the investor purchases the bond for a price lower than its face value, then receives the face value when the bond reaches maturity. The difference represents the investor's profit.

Let's handle each sub-question in the context of a five-year zero-coupon Treasury bond that you bought for $800 but has a face value of $1000:

a) The yield to maturity (YTM) is the total return anticipated on a bond if it is held until it matures. Yield to maturity is expressed annually as a percentage. In this case, the equation to solve for yield to maturity is: $1,000 = $800*(1+YTM)^5. Normally, it's impossible to directly solve this equation for YTM (without using calculators or software with financial functions), making it a more complex business topic.

b & c) The holding period yield is different than the yield to maturity and takes into account the current market conditions. In this scenario, if interest rates were to rise to 7%, the bond's value would decrease, impacting your returns if you decided to sell before maturity.

d) The same concept applies if yield to maturity changes after 3 years or at any other time before maturity. An alteration in the market interest rates would affect the price at which you could sell your bond, hence influencing your annual return.

Learn more about Bond Yield Calculations here:

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Trade-offs must be made among space, labor, and ____ with respect to warehousing design. Group of answer choices Construction materials Speed Mechanization Cost

Answers

Answer:

Mechanization

Explanation:

When a ware house is being setup, the aim is to get an efficient one that can service demand in a timely manner.

In order to minimise cost and maximise efficiency there is need to space, labour, and mechanisation that will be used on the production process.

Various analysis like capacity analysis and equipment analysis are carried out to ensure fast and cheap operation of the warehouse.

Inefficient warehouse designs leads to delay in service delivery and extra cost to the business.

The Perez Company had a 12.5% return on a $100,000 investment in new equipment. The investment resulted in increased sales, and the resultant increase in income amounted to 5% of sales. The turnover (asset utilization) was:

Answers

Answer: 2.5

Explanation:

The Turnover (Asset Utilization) is calculated by dividing the business Turnover (Sales) by it's Assets.

We have the amount of assets (Investment). Now we have to calculate the Sales.

The Net Income was 12.5% of $100,000 so solving for that would be,

= 0.125 * 100,000

= $12,500

$12,500 was the Net Income.

It was said that the Net Income was 5% of sales so using algebra we have,

12,500= 0.05x

x = 12,500/0.05

= $250,000

With sales of $250,000 we can calculate the Turnover as,

Asset Turnover = Sales / Assets( Investment)

= 250,000/100,000

= 2.5

If you need any clarification do react or comment.

Answer:

The Turnover = 2.5

Explanation:

Step 1 : Find Net income

Return on Investment (ROA) = Net income/ Assets

12.5%=Net Income/$100,000

Net income = $100,000*12.5%

Net income= $12,500

Step 2 : Calculate Sales

Net income = Sales *5%

Therefore substitute known values

Sales = $12,500 *100/5

Sales = 250,000

Step 3 : Calculate Turnover ratio

Turnover = sales/ Assets

               = 250,000/100,000

              =2.5

After a few years of work in the marketing department of a small firm, you are placed in charge of the firm's inbound marketing. What are you most likely to be in charge of? Group of answer choices

Answers

Answer:

Ensure that customers can find the firm when they search for information on products and services.

Explanation:

Inbound marketing involves attracting customers to a business's products and services by improved customer service and building trust.

Various channels that can be used for inbound marketing are social media, content marketing, search engine optimisation, and branding.

Outbound marketing on the other hand involves pushing out of various products an services to customers via various channels.

Steps in inbound marketing are:

Define the customer

Understanding customer purchase cycles

Establish potential customer

Build loyalty

Use customer relationship management (CRM)

Content management

initial cash investment of $388,000. The project will produce no cash flows for the first two years. The projected cash flows for years 3 through 7 are $69,000, $88,000, $102,000, $140,000, and $160,000, respectively. How long will it take the firm to recover its initial investment in this project?

Answers

Answer:

6.92 years

Explanation:

The payback period measures how long it takes for the amount invested in a project to be recovered.

The total cost of the project is $388,000.

Because the project generates no cash flow in the first and second year , the amount recovered would be 0.

In the third year, the amount recovered of $388,000 is $69,000. This reduces the cost of the project to $319,000.

In the fourth year , the amount recovered is $88,000. This reduces the cost of the project to $231,000.

In the fifth year, the amount recovered is $102,000. This reduces the cost of the project to $129,000.

In the sixth year, the amount recovered is $140,000. This covers the cost of the project and generates a profit of $11,000.

The amount is recovered in the 6th year + 129000/ 140,000 = 6.92 years

I hope my answer helps you

Zap Power Company pays an annual dividend on its preferred stock of $4.54 per share. The investors have an 8% required rate of return. What is the price of the stock

Answers

Answer:

The price of the stock is $56.75.

Explanation:

This can be calculated using the following formula:

P = d /r ……………………………………… (1)

Where;

P = price of the stock = ?

d = preferred stock dividend = $4.54

r = required rate of return = 8%, or 0.08

Substituting the values into equation (1), we have:

P = $4.54 / 0.08

P = $56.75

Therefore, the price of the stock is $56.75.

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