Question: Rather than $1,000, what is the fair (present) value for the security in the 3rd choice today? (i.e., the security that will pay you $1,300

Rather than $1,000, what is the fair (present) value for the security in the 3rd choice today? (i.e., the security that will pay you $1,300 in five years)

Assume the interest rate is 5%.

Step by Step Solution

★★★★★

3.49 Rating (156 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To calculate the fair present value of the security that w... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Ques 1: What is the major complaint by firms concerning the Sarbanes-Oxley act of 2012? A. the legislative maximum allowable compensation for a CEO. B. the legal requirement to disclose project...

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...

What is the effective annual rate on a loan with an APR of 12.5% if interest is compounded continuously? 2.A bond has 10 years to maturity, a coupon rate of 5% (coupons paid semi-annually), a yield...

Suppose that a decision maker faced with four decision alternatives and four states of nature develops the following profit payoff table: a. If the decision maker knows nothing about the...

1. Identify the change in total revenue (the marginal revenue) from the fourth shirt per day. What price reduction was necessary to sell four rather than three shirts? 2. What is the change in total...

1. Judging from the ERP features, how important is an ERP to the functioning of a business? Explain. 2. What consideration do you think led Altitude Online to decide to host the ERP on its own...

Return to the original GogglesPlus example in Exhibits. Suppose direct labour is $34,000 rather than $21,250. Now what is the conversion cost per equivalent unit? GogglesPlus SHAPING DEPARTMENT Month...

1. What are the primary differences between investments in corporate stock versus corporate bonds? 2. Since bonds pay interest, does that imply the individual's risk exposure is less for investing in...

In the coming year (2010), I look forward to executing a strategy that leverages the reputation of our brands; leads to long-term growth for our shareholders; creates career opportunities for our...

Refer to E8-31A. InteliSystems needs 79,000 optical switches next year (assume same relevant range). By outsourcing them, InteliSystems can use its idle facilities to manufacture another product that...

Rasband Photography has a pension plan covering its 100 employees. Rasband anticipates an 11% return on its pension fund. The fund trustee furnishes Rasband with the following information relating to...

A lease contains a bargain purchase option. In determining the lessees capitalizable cost at the beginning of the lease term, the payment called for by the bargain purchase option would. A. Be added...

On September 9, Wholly Crepe purchased flour at a cost of $4,500 and credit terms of 5/10, n/20. After returning $300 of flour to the seller, what is the correct amount it should pay to the seller on...

Record the following transactions. 1. Pay employee salaries of $600 by issuing checks. 2. Purchase computer equipment of $1,000 using a credit card. 3. Pay for maintenance of $400 for a company...

Taylor Company purchased equipment for $27,500. It depreciated the equipment over a five-year life by the double-declining-balance method until the end of the second year, at which time the asset was...

If Uber were to consider participating in a strategic alliance, what type of firm might be an appropriate partner for Uber and why? If you were a consultant, would you advise Uber to form a strategic...

Describe how Uber's business model works and the role technology has played in its success. What are the arguments for banning these types of businesses? What are the arguments for defending them?

Twin-Cities, Inc., purchased a building for $600,000. Straight-line depreciation was used for each of the first two years using the following assumptions: 25-year estimated useful life, with a...

Question 241 ptsCompensation is positively related to employee motivation, but the link between compensation and organizationalTime Running performance isn't as clear.Attempt due May 5 at of33...

A regional office of Zoom Inc. is expanding and is currently in the process of relocating to a new building. It is looking for 7,000 square feet of usable office space for its 25 employees. A leasing...

Dashboard / My courses / MAC2602-22-S1 / Welcome Message / Assessment 1 Question 6 Not yet answe Marked out of Sparta Pty (Ltd) purchases an average of R100 000 of inventory from its supplier on an...

Iam not able find the answer for Question no. 4 and question no. 3 ACC210 Major Assignment (Task 2) Semester (Trimester) 2 - 2017 Word count: approximately 1,500 words Weighting: 30% This assignment...

KRAYDEN'S CYCLE COMPONENTS INTRODUCTION: COMPANY, PRODUCT, AND SUPPLY CHAIN Krayden's Cycle Components (KCC) is a high-end specialty fabricator that manufactures one product with many variants. The...

Question 3 [25] The owners of Logging (Pty) Ltd intend to list on the Johannesburg Stock Exchange (JSE) with the intent of diversifying the business away from its forestry operations that are...

King Engineering Group Case Study on Management Controls 1. ?Analyze the case 2.Evaluate the performance measurement and incentive systems used in King Engineering Group. What changes would you...