The board of directors of a corporation is calculating the price to pay for a business that
Question:
The board of directors of a corporation is calculating the price to pay for a business that is forecast to yield a continuous flow of profit of $500,000 per year. The money will earn a nominal rate of 5% per year compounded continuously. What is the present value of the business
(a) For 20 years?
(b) Forever (in perpetuity)?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 85% (7 reviews)
a b 500000e 0...View the full answer
Answered By
Amit Choudhary
I'm new in this profession regarding online teaching but previously i used to teach students near my college. I am teaching on online platform since last year and got good support from the students. I'm teaching on platforms like chegg and vedantu and also at my home in free time.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Mathematics questions
-
What measures can the board of directors of a corporation take to discourage unethical (and illegal) behavior, such as the mail and wire fraud by E. F. Hutton managers described in the chapter?
-
The board of directors of a major symphony orchestra has voted to create a committee for the purpose of handling employee complaints. The committee will consist of the president and vice president of...
-
The Board of Directors of a publicly traded company says that a proposed amendment to their bylaws is likely to win approval in the upcoming election because a poll of 1505 stock owners indicated...
-
Economists are difficult to understand. They claim that they can put a monetary value on premature death, but not on human life. They also claim that they can value ecosystem services (such as a...
-
Suppose call and put prices are given by What no-arbitrage property is violated? What spread positionwould you use to effect arbitrage? Demonstrate that the spread position is an arbitrage. Strike...
-
How much energy is dissipated in the collision of Checkpoint 7.11? Data from Checkpoint 7.11 A 1000-kg compact car and a \(2000-\mathrm{kg}\) van, each traveling at \(25 \mathrm{~m} / \mathrm{s}\),...
-
Discuss the following concepts: preservation of life with limits, euthanasia, advance directives, futility of treatment, withholding and withdrawal of treatment, and do-not-resuscitate orders.
-
McTaggart-Hicks transactions as operating (O), investing (I), financing (F), non-cash investing and financing (NIF), or a transaction that is not reported on the statement of cash flows (N). Indicate...
-
Drawing S-0503 calls for a field weld. What is the size of the weld? Image transcription text 4X4 CONTINUOUS STRUCTURAL GRADE (2) #12 WOOD SCREWS, 7" LONG CONNECTING LUMBER RAILS BETWEEN MESH TO RAIL...
-
Jaylen has asked you to make a retirement planning presentation to the employees at Troy Metals Inc. as part of a financial literacy day. Your presentation will last approximately 60 minutes with...
-
The Gamma Function (n) is defined in terms of the integral of the function given by (x) = x n e -x , n > 0. Show that for any fixed value of n, the limit of (x) as x approaches infinity is zero.
-
Find the volume of the solid generated by revolving the region bounded by the graphs of y = xe -x , y = 0, and x = 0 about the x-axis.
-
Ricardo's offers customer's two kinds of pizza crust, Roman (R) and Neapolitan (N). All pizzas have cheese but not all pizzas have tomato sauce. Roman pizzas can have tomato sauce or they can be...
-
A record player turntable initially rotating at \(33 \frac{1}{3} \mathrm{rev} / \mathrm{min}\) is braked to a stop at a constant rotational acceleration. The turntable has a rotational inertia of...
-
An automobile accelerates from rest at \(t=0\) such that its tires undergo a constant rotational acceleration \(\alpha=5.8 \mathrm{~s}^{-2}\). The radius of each tire is \(0.33 \mathrm{~m}\). At...
-
The rotational inertia of any flat object about an axis perpendicular to the object is equal to the sum of the rotational inertias about two mutually perpendicular axes in the plane of the object, if...
-
You want to walk down your icy driveway without sliding. If the incline of the driveway is \(15^{\circ}\) from the horizontal, what must the coefficient of static friction be between your shoes and...
-
A man is crossing a roof that is inclined at an angle of \(30^{\circ}\) above the horizontal. His path takes him parallel to the roof ridge but \(4.0 \mathrm{~m}\) (along the roof surface) below the...
-
Some infrared radiation has a wavelength that is 1000 times larger than that of a certain visible light. This visible light has a frequency that is 1000 times smaller than that of some X radiation....
-
You purchase a bond with a coupon rate of 6.7 percent, a par value $1,000, and a clean price of $905. Assume a par value of $1,000. If the next semiannual coupon payment is due in two months, what is...
-
Make up a rational function that has y = 2x + 1 as an oblique asymptote. Explain the methodology that you used.
-
For what positive numbers will the cube of a number be less than the number?
-
In problem, solve each equation in the real number system. x 4 + 4x 3 + 2x 2 - x + 6 = 0
-
What is urban economics and what components of a city usually results in higher demand of a city's real estate. Describe at least three
-
I need to find out how to calculate the 3-year % rate of return. The information I have is a $10,000 investment and a 12-month yield percentage (1.138 for AB company, 1.894 for AIG company, 0.679 for...
-
Anna has an investment that will bring her $100 with a 30% probability and $40 with a 70% probability. Anna's Utility function is U = Y (1/2) . Where Y= income. Anna is considering selling this...
Study smarter with the SolutionInn App