2) Consider the following information Billions of BHD Transfer Payments Made by Household 50 Personal Inferest Payments 10 Personal Income 500 Personal Consumption Expenditures 100 a) If the income tax rate is 20%, calculate the personal savings and personal saving rate

Q: 14 Calculate the term of each annuity: Future Value Present Value Size of Payment a. 50 $8,500 $675…

A: Present value of annuity: Present value of annuity is the value of all the future cash payments as…

Q: At 10% per year interest, how much does he have to invest each year (starting in year 1) to reach…

A: A stream of equal cash flows (CF) paid or received periodically is termed as annuity. Annuity due…

Q: Sean expects to receive $300,000 in 5 years from a trust fund. If a bank loans money at an interest…

A: In the given case, Seam is expected to receive $300,000 in 5 years from a trust fund. He can borrow…

Q: A man borrows money from a bank but he only received 83% of the amount requested. He signs a…

A: Simple interest rate is computed on the principal portion of the amount borrowed. Unlike compound…

Q: Your company has two divisions: One division sells software and the other division sells computers…

A: The Weighted Average Cost of Capital WACC is calculated with the help of following formula  WACC =…

Q: The National Lottery decided to make 2020 a year of CHARITIES. They gave a big donation of R42 345…

A: Given, The donation amount is R 42,345,335

Q: a. The going rate on student loans is quoted as 8 per cent APR. The terms of the loans call for…

A: As per Bartleby Honor Code, when multiple independent questions are asked, the expert is required…

Q: what is the difference between an investment grade bond and a junk bond?

A: Solution:- There are various companies like S&P etc, which give credit ratings to the companies…

Q: David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity…

A: Weighted average cost of capital, WACC, is a company’s average cost of capital. A company gets…

Q: The pricing efficiency of financial markets can be expected to decrease if the cost of skillful…

A: Skilled financial manpower is very important in financial sector and valuation of assets in…

Q: Aldi has $823,000 in sales. The profit margin is 3.9 percent and the firm has 7,500 shares of stock…

A: The Price Earnings Ratio is calculated with the help of following formula  Price Earnings Ratio =…

Q: ​Laurel, Inc., has debt outstanding with a coupon rate of 5.8%and a yield to maturity of 7.1%.Its…

A: For the calculation of effective after tax cost of debt we will use the below formula   After tax…

Q: a) 9.0% b) 12.0% c) 10.5%

A: The weighted average cost of capital is considering the weight of equity and weight of debt also.

Q: Using the data from the following​ table,calculate the return for investing in this stock from…

A: Given:   Stock price Dividend 1-Jan $50.18   31-Mar $51.11 $0.58 30-Jun $49.56 $0.58…

Q: Below shows some financial data on General Mills versus Campbell Soup, you collected the following…

A: Days sales outstanding (DSO): It identifies the firm's ability in collecting its cash from…

Q: Mr Ahmad wants to borrow $30,000 for a delivery Van for his Bakery business, which is rovided by…

A: Amount to borrow is $30,000 Interest rate is 9% per year Compounded monthly Time period is 5 year To…

Q: Diddy Corp. stock has a beta of 1.3, the current risk-free rate is 3 percent, and the expected…

A: The Capital Asset Pricing Model (CAPM) refers to the model which tells us how the financial markets…

Q: How to calculate r value

A: The interest rate: The rate that is used to compute the simple or compound interest is known as the…

Q: Explain what is meant by forward contracts and futures using examples. List the main advantages /…

A: An option offers the holder of it the right, and not the responsibility, to buy or to sell an asset…

Q: (Calculating rates of​ return)  On December   17​, ​2007, the common stock of Google Inc.​ (GOOG)…

A: Solution:- Rate of return means the percentage of extra amount earned on initial amount invested.…

Q: A stock that pays no dividends is worth So = 50 curos today. The risk-free interest rate with…

A: The binomial options pricing model is used to find the price of the option when there is no clarity…

Q: 8. Assume that the CAPM is a good description of stock price returns. The market expected return is…

A: Solution:- Expected alpha of a stock means excess return of a stock over the market.

Q: PROVIDE - PRESENT VALUE, FUTURE VALUE, AND internal rate of return (IRR)

A: Present and Future Value: The current value of a cash flow that is expected to occur at some time in…

Q: escribe the necessity, purpose and potential makeup of a board of director

A: For public companies having a proper board of directors is important. This is because public…

Q: 45) If a bond is considered "Below Investment Grade", what could its rating be? a) AAA b) CCC+ c)…

A: Rating of bonds reflect the level of risks in investing in that particular bond. Higher the credit…

Q: Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,…

A: Required Return = 17% Dividend in year 3 = 0.50 Dividend growth rate in year 4 and 5 = 19% Perpetual…

Q: Relion Insurance Solutions (RIS) borrowed from Farm Credit Services of America (FCSA) for their…

A: Simple Interest is the method in which we calculate the interest on a specific principal amount at a…

Q: What is forward points?

A: Forward points are nothing but basis points added or subtracted from the spot rate of an underlying…

Q: CX Enterprises has the following expected dividends: $1.11 in one year, $1.19 in two years, and…

A: Here we will use the dividend discount model. As per the dividend discount model the price of stock…

Q: Mateo deposits $5,000 at the end of years 2, 4 and 6. If interest is 8.2% compounded annually,…

A: Amount of deposits made is $5,000 Interest rate is 8.2% Compounded annually Total number of deposits…

Q: ______ ratios are used to measure the speed in which various assets are converted into sales or cash

A: A firm can convert its assets into cash. Those assets that can be converted into cash within a short…

Q: 8. Ace Ltd. Manufactures a product and the following particulars are collected for the year ended…

A: 8.   i) Formula for Re-order quantity= √2x A x P /S Where, A= Annual consumption (units) during the…

Q: 1. Which of the following investment has the highest effective annual rate ( EAR)? a. An investment…

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

Q: If P44,873 is deposited each year for 6 years at an interest rate of 14.225% compounded semi…

A: Here we will use the concept of time value of money. The concept of time value of money states that…

Q: A firm expects to make payments of 1.1, 1.5, 1.2, 1.4 and 1.9 million for a particular supply over…

A: Solution:- Present value means the value in today’s terms after discounting the future cash flows to…

Q: Q.2 You deposit 1000 each year in an account for 5 years. At the time of the last deposit, the bank…

A: The time value of the concept is used in calculating the rate of return earned by an investor from…

Q: 60,000, increasing linearly at the rate of P5000 a year. If the money is worth 10%, determine his…

A: Annual equivalent salary is equivalent annual salary considering the all increased salaries…

Q: What is the present value of a $1,000 60-month annuity, starting 6 months from today, if r is 6% APR…

A: Present Value of Deferred Annuity refers to the concept which dictates the discounted value of a sum…

Q: Our clients saved $2,500,000 for retirement.  They wish to withdraw $20,000 from the fund each month…

A: Present Value of Ordinary Annuity refers to the concept which gives out the discounted or today's…

Q: Answer question 34

A: Intermediate Bonds also known as medium term funds are a type of debt funds  that invest in debt…

Q: 8-year bond issue selling for 99 percent of par that pays an annual coupon of 8.05 percent. What…

A: The before tax cost of debt can be computed by calculating the yield to maturity of the bond. Ytm =…

Q: Your employer, a mid-sized human resources management company, is considering expansion into related…

A:

Q: Wilson Bryant Air Conditioning, a Middle Georgia HVAC company, wanted to build a web-based project…

A: Interest rate = 14% N = 5 years Loan = 5,000,000 Profit in year 2 - 4 = 1,500,000 80% of profit will…

Q: Common stock value-Variable growth Personal Finance Problem Home Place Hotels, Inc., is entering…

A:

Q: Given that the current ratio is 2:1 and the assets and liabilities are $20,000 and 510,000…

A: Solution:- Current ratio shows the liquidity of an entity. It is the ratio of current assets to…

Q: Table 1 has the following plans: Plan 1 with interest expense of R25000, Preferred dividend of 3000…

A: Solution:- Financial leverage is the ratio of company’s earnings before and after the finance cost…

Q: What is the real interest rate given a nominal rate of 8.7​% and an inflation rate of 1.5​%? A.…

A: The real interest rate is inflation adjusted interest rate. It will be a reflective of the real…

Q: if P20,879 is deposited each year for 8 years at an interest rate of 10.257% compounded bi-monthly,…

A: The concept of the time value of money states that the same amount of money is worth more today than…

Q: Holt Enterprises recently paid a dividend, D0, of $3.50. It expects to have nonconstant growth of…

A: Horizon date is the date when the Growth rate becomes Constant. Horizon or Continuing Value is…

Q: You are considering the following two projects and can take only one. Your cost of capital is 10.7%.…

A: IRR refers to internal rate of return. It is that rate of return at which NPV is nil.

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.