Your bank account pays an interest rate of 8 percent. You are considering buying a share of stock in XYZ Corporation for 110. After 1, 2, and 3 years, it will pay a dividend of 5.
You anticipate selling the stock after 3 years for $120. Is XYZ a wise investment? Support your response with calculations.
To determine if this is a wise investment, we can calculate the present value for each of the three years, add them together and then compare the total present value to the $110 share price:
Sum of all present values:
Since this PV is less than the price of the stock ($110), we can conclude that this is not a worthwhile investment.
Based on our calculation within, the would not be a good investment.
Answer: It is NOT a good investment.
Your bank account pays an interest of 9% per annum. This can be used as a discount rate to discount the dividends and the final Sales price to the present to see if the present value of Future benefits is more than what the stock is valued at now.
If the Present Value of the future benefits is higher than the cost now, XYZ is a good investment.
$4 are expected every year for 3 years and then on the third year, the stock will be sold for $100.
Discounting therefore gives us,
The Present Value of the future benefits including the future sales price is $87.34 which is less than the current cost of the stock at $90.
XYZ is NOT a good investment.
At the beginning of an environmental study, ad forest covered an area of .Since then, this area has decreased by 4.25% each year.Let t be the number of years since the start of the study.Let y be the area that the forest covers in .
Write an exponential function showing relationship between y and t.
Some friends tell you that they paid $25,000 down on a new house and are to pay $525 per month for 30 years. If interest is 7.8% compounded monthly, what was the selling price of the house? How much interest will they pay in 30 years?
t e^-4t sin3t
Find all whole number solutions of the congruence equation.
3x ≡ 8 mod 11
Use a direct proof to show that the product of two rational numbers is rational.
what is vertex
axis of symmetry
Stairs- Each step of a set of stairs has a tread depth of 11.5 inches and a riser height of 6.5 inches. What is the slope of the set of stairs?
A ball of mass 5 kg is attached to a string of length 10 cm, forming a pendulum. If the string is raised horizontally as shown and released from point A, then what is the v
assume that the random variable Xand Y have the joint pdf f(x,y)=1/2x^3
5=20 mod 4 true or false answer
Pets Plus and Pet Planet are having a sale on the same aquarium. At Pets Plus the aquarium is on sale for 30% off the original price and at Pet Planet it is discounted by 25%.
of Aquarium ($)
If the sales tax rate is 8%, which store has the lower sale price?
, 1 of 1.Select ChoicePets PlusPet Planet has the lower sale price.
Fill in the blank question.
How much will you save by buying the aquarium at the store with the lower sale price? Round to the nearest cent.
Prove that if x is and irrational number and x>0 then route over x is also irrational
A small object has charge Q. Charge q is removed from it and placed on a second small object. The two objects are placed 1 m apart. For the force that each object exerts on the other to be a maximum. q should be: A. 2Q B. Q C. Q/2 D. Q/4 E. 0