A company is expected to earn $50,000 a year, at a continuous rate, for 8 years. You

Question:

A company is expected to earn $50,000 a year, at a continuous rate, for 8 years. You can invest the earnings at an interest rate of 7%, compounded continuously. You have the chance to buy the rights to the earnings of the company now for $350,000. Should you buy? Explain.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Applied Calculus

ISBN: 9781119275565

6th Edition

Authors: Deborah Hughes Hallett, Patti Frazer Lock, Andrew M. Gleason, Daniel E. Flath, Sheldon P. Gordon, David O. Lomen, David Lovelock, William G. McCallum, Brad G. Osgood, Andrew Pasquale

See More Books

Question Posted: Apr 12, 2023 04:04 AM

1. Suppose that you are tasked with managing a liability of $5,000 worth of 6% 4-year, annual coupon bonds when the interest rate is 4.5%. You want to minimize the interest rate risk by immunizing...
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
1. Assume that you sell short 350 shares of a stock when the market price is 32.10-32.15. Your broker demands a 20% haircut for collateral and pays a short rebate of 3%. You borrow all needed cash...
A utilization greater than one suggests that the mean service time is higher than the mean inter-arrival time. True False QUESTION 3 It costs five times more money to retain a current customer than...
Briefly define each of the following and note the conditions that would suggest the market is technically strong. a. Breadth of the market b. Short interest c. Relative strength index d. Theory of...
In trials of an experimental Internet-based method of learning statistics, pre-tests and post- tests were given to two groups: traditional instruction (22 students) and Internet-based (17 students)....
Regional Hospital is a 500-bed hospital and several associated clinics in a major East Coast metropolitan area. It has been an aggressive adopter of computing technologies in efforts to decrease...
The following table shows the revenue and average net fixed assets (in millions) for a recent fiscal year for Best Buy and Circuit City Stores, Inc.: a. Compute the fixed asset turnover for each...
Multi-Star, Incorporated, had sales of $890,000; cost of goods sold and operating expenses of $450,000 and $225,000, respectively. and 10,000 shares of common stock outstanding. Calculate the amount...
Evaluate the integrals in Problem both exactly [e.g. ln(3)] and numerically [e.g. ln(3) 2.243]. zp z_az 10 0.
Find the integrals in Problems. Check your answers by differentiation. [x(x x(x - 4)7/ dx
Chai is self-employed and travels to New Orleans for a business conference. The following facts are related to the trip: Round trip airfare ...... $375 Hotel daily rate for single ... 120 Conference...
You have decided to purchase a small tract of land for building a new home on the outskirts of town. You have some money available but need a loan of $$18$,000 to make the purchase. The land will...
Refer to Problem 3. For each of the five payment schedules, determine the present worth of the loan payments made by the borrower. Use an Excel spreadsheet and program it such that you can enter...
A contact engineer in petrochemicals wishes to buy a new home costing $$200$,000, make a 5 percent down payment, and finance the remaining $$190$,000. The rate quoted for a conventional 30-year...
The Chopras wish to purchase a new house, even though they plan to be in it for only 6 years. The house costs $$550$,000, and they will make a $$55$,000 down payment, leaving $$495$,000 to be...
Aerotron Electronics has just bought a used delivery truck for $$15$,000. The small business paid $$1$,000 down and financed the rest, with the agreement to pay nothing for the entire first year...
What are the benefits of enforcing the integrity constraints as part of the database design and implementation process (instead of doing it in application design)?
Citing a scientific article, explain in your own words, how DNA fingerprinting has been used in forensic science to solve crimes and why it may not always be accurate or effective.
The manager of a chain of electronic products retailers is trying to decide on a location for its newest store. After a thorough analysis, the choice has been narrowed to three possibilities. An...
Ten judges were asked to test the quality of four different brands of orange juice. The judges assigned scores using a 5-point scale where 1 = Bad, 2 = Poor, 3 = Average, 4 = Good, and 5 = Excellent....
Applicants to MBA programs must take the Graduate Management Admission Test (GMAT). There are several companies that offer assistance in preparing for the test. To determine whether they work, and if...
Discussion question it doses not have to be long (minimum 250 words and, at least, one source current) Textbook Fitzsimmons, J., Fitzsimmons, M., & Bordoloi, S. (2014). Service management:...
Define a class modeling a Queue of Objects implemented as a singly-linked list with the following methods: a constructor to creat.e an empty Queue, a method to insert a given Object into...
program in java using the Queue API please note that the example input should deliver the output shown all of operations on the queue is already in Queue API code which I submitted below like enqueue...

A company is expected to earn $50,000 a year, at a continuous rate, for 8 years. You

Question:

Step by Step Answer:

We compute the present value of the companys earnings over the next 8 years Using a calcula...View the full answer

Applied Calculus

Students also viewed these Mathematics questions