why does an increase in the discount rate resuce the present value?

Q: is expected to "shrink" at the a) Suppose a firm has a current dividend ofD,- SS, which percent for…

A: Stock Price: The price of a stock can be estimated using the dividend growth model where the stock…

Q: Duela Dent is single and had $181,600 in taxable income. Using the rates from Table 2.3, calculate…

A: The average income tax rate is the tax rate that is derived as an average of total taxes paid. The…

Q: What is meant by the term private placement? What are it ́s advantages and disadvantages within the…

A: Private placement is the mode of raising capital for the company where the capital is raised from a…

Q: 3 Hour 8 Minute 24 Second Part E Question 1 Part E Question 2 Part E Question 3 Part E.Question 4…

A: The band is expecting the Taiwan Dollars to depreciate hence it will Borrow in foreign currency (…

Q: A certified financial planner notes that with an unsubsidized student loan, the borrower has the…

A: Normally, interest is the revenue income on a loan amount and it is shown under the head of the…

Q: The January 2023 S&P 500 cash index is 3950 points while the S&P 500 futures March 2023 index is…

A: The question posted by you has 5 sub parts. Only the first three sub parts have been answered.…

Q: XYZ National Bank is one of the largest banks in the country. The bank has a significant amount of…

A: An interest rate swap is a financial instrument that allows two parties to exchange periodic…

Q: Find the amount needed to deposit into an account today that will yield a typical pension payment of…

A: The calculation of present value of future cash flows is reflective of calculation of present sum of…

Q: A stock is currently trading at €40. An investor holds the following portfolio, long 250 shares of…

A: An option contract indicates an agreement to buy or sell an underlying in the future at a specified…

Q: Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an…

A: The present value of the free cash flows will give us the enterprise value.   We can find the stock…

Q: A company would like to figure out if a 9-year project is worth it. The company is in the 40% income…

A: A company's capital structure includes the proportionate funds acquired from multiple sources. The…

Q: Give typed solution with explanation You are interested to buy a Ferrari car worth RM250,000. You…

A: The concept of money's time worth implies that any sum is currently worth more than what it would be…

Q: QUESTION ONE The following are monthly percentage price changes for four markets. Month DJA (R%) S&P…

A: The expected return of the portfolio refers to the average amount that investors earn for investing…

Q: The firm is contemplating the following (base case): Vehicle acquisition cost…

A: The goal of uncertainty analysis is to quantify the output variability that results from input…

Q: Three six-month call options are traded on Hogswill stock: Exercise Price Option Price $5 $ 90 100…

A: The cash inflow is given by Nc=(2×11) −(5+15) Nc=22− 20 Nc=$2

Q: At the end of 2011, Jose Reyes signed a six-year contract to play shortstop for the Miami Marlins…

A: The present value is the today's value of a future sum of money. This is calculated as the…

Q: The term structure of interest rates has the following annual effective rates of interest for…

A: Bonds that are regular coupon-bearing and are issued at a discount to their par value and do not pay…

Q: A stock is currently trading at €40. An investor holds the following portfolio, long 250 shares of…

A: A portfolio comprising of stocks, call and put option has been given. Greeks for various call and…

Q: a) The market values of Alpha Corporation and Gamma Corporation are $2,500 and $900, respectively.…

A: Hi student Since there are multiple questions, we will answer only first question.  Merger is one of…

Q: Which of the following statements about the FASEA Code of Ethics are TRUE: A financial adviser…

A: The Financial Adviser Standards and Ethics Authority (FASEA) is the professional standards body for…

Q: Ross's compensation is to be changed from an hourly rate of $31.50 for a 40-hour week to a salary…

A: The annual earnings are paid to an employee based on the hourly earnings rate. This may be paid out…

Q: If a principal of P3840 earns interest of P204 in 3 years and 5 months, what is the simple interest…

A: Simple interest is the method that is used in calculating the percentage of interest paid on a sum…

Q: Jackie has a margin account with a balance of $150,000. The initial margin deposit is 60 per cent…

A:

Q: For an ordinary annuity with 5 annual payments of $100 and a 10% interest rate, for how many years…

A: The ordinary annuity is a payment plan where the holder of the annuity receives a periodic amount at…

Q: Cushing Corporation is considering the purchase of a new grading machine to replace the existing…

A: According to bartleby guidelines, if question involves multiple sub parts , then 1st sub 3 parts…

Q: Kirk is getting a raise of 5% due to inflation. His normal salary is $56,000 per year. His normal…

A: In contrasts to a fee that the borrower may pay the lender or another party, interest is a payment…

Q: Abraham, 28 years old has graduated five years ago from one reputable university in UK. His majoring…

A: The money's time worth concept reveals that a sum of money is worth more currently than what it…

Q: The most recent financial statements for Locke, Inc., are shown here:   INCOME STATEMENT   BALANCE…

A: External Financing Needed: It refers to the funds required by the firm from external/outside…

Q: The New Energy Company is trying to decide whether to lease or buy a new computer- assisted control…

A: Given: Particulars Amount Annual pretax cost $2,900,000 Life 5 Costs $6,000,000 Tax rate…

Q: You are a shareholder in an S corporation. The corporation earns $2.24 per share before taxes. As a…

A: Marginal tax rate: It is the rate that is paid on additional income earned per dollar. This system…

Q: Before-tax cost of debt and after-tax cost of debt David Abbot is buying a new house, and he is…

A: The interest rate is a percentage rate. The loan provider collects money from the borrower in the…

Q: 10. Problem 12-10 H Problem 12-10 It is April 2, 2018, and you are considering purchasing an…

A: The yield of a bond at any particular time is frequently determined by a coupon payment. A payment…

Q: 2. 15. (6) The probability distribution of returns on two (02) assets are given as follows:…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: 4. You have an outstanding fixed-for-fixed NOK/NZD swap for NOK 100m, based on a historic sport rate…

A: As per the given information: NOK/NZD swap for NOK - 100mHistoric spot rate of NOK/NZD 4Initial…

Q: The RBA had previously reduced the official cash rate to a new record low - is the RBA creating a…

A: The Reserve Bank of Australia is the central bank of Australia which is responsible for formulating…

Q: Normal Probability Table Z 0.00 0.01 0.02 0.03 0.04 0.0 0.5000 0.5040 0.5080 0.5120 0.5160 0.1…

A: By attempting to mitigate or hedge the directional risk brought on by changes in the price of the…

Q: The current price of KD Industries stock is $22.4. In the next year the stock price will either go…

A: The replicating portfolio method is a process used to price options by considering their payoffs as…

Q: Some time ago a swap dealer entered into a Forward Rate Agreement (FRA) that has a notional value of…

A: FRA: FRA (Forward rate agreements) represents the over-the-counter between some parties that define…

Q: Show the solution in a handwritten format/way.

A: Working Note #1 Working Note #2   Working Note #3

Q: b) The Cheung Company has a beginning receivables balance on January 1st of $930. Sales for January…

A: When the firm sold its finished goods on a credit basis, then they have to collect payments from its…

Q: Tommy’s Woodworking had sales of $4 million this past year.  Its COGS was $2.75 million and its…

A:

Q: 6. A phone company offers an Android phone for P47,000. The sales tax is 12% of the purchase price.…

A: Sales tax refers to the tax that is charged over and above the purchase price. The sales tax is…

Q: 1. Suppose the CAPM holds. The expected return on the market portfolio is 6% and RF = 4%. Assume…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Find the time for an account earning interest at the annual rate of 6% (compounded annually) to grow…

A: The number of years it takes for an investment to increase in value depends upon the rate of…

Q: Find the deprecation equation and corresponding domain using the given information. (Let V be the…

A: Depreciation refers to the fall in the value of an asset throughout its useful life. It is used in…

Q: Question 3 The spot dollar-euro rate is $1.20/€1 and the forward rate is $1.15/€1. You expect the…

A: Forward contract: It is the contract that is entered by a trader to hedge its risk by entering into…

Q: Use the below information to answer the following questions:       2020 2021 Sales $11,573 $12,936…

A: Income statement is one of the financial statement being prepared in business and it is for the…

Q: Month 12345 3 4 5 Sugita Corp. 2.2% -0.8 1.0 - 1.0 6.0 Market 1.2% 4.0 3.0 - 1.0 6.0

A: Capital asset pricing model (CAPM) With risk free rate (rf), beta and market return (M(R)), the…

Q: (c) Suppose you are paying off your new fridge by monthly instalments of £25 paid in arrears over…

A:

Q: Asset Asset A Asset B Rate of Return 12% 5% Beta 9.1% 1.00 0.00 Asset C 1. Draw the security market…

A: A security market line is a graphical demonstration of the CAPM formula. The capital asset pricing…