If the interest rate is 5%, what is the present value of a security that pays you $1,050 next year and $1,102.50 two years from now? If this security sold for $2,200, is the yield to maturity greater or less than 5%? Why?
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Ответ:
2000
iT IS LESS THAN 5%. It is -1.43%
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 = 1050
Cash flow in year 2 = 1102.50
pv = 2000
IRR is the same as YTM
Cash flow in year 0 = $-2,200
Cash flow in year 1 = 1050
Cash flow in year 2 = 1102.50
IRR = -1.43
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Ответ:
The Definition of free enterprise would be competition is allowed to flourish with a minimum of government interference.
So the weak points or cons of this economy would be
the risk when creating a new product, profit is also a risk. Business owners don't know if their product will be a success or a fail. (Efficiency at a Cost)
- inflation. This is the biggest danger of economic growth. When the demand outgrows supply, it sets the scene for companies raising prices. This sort of disparity can have a very bad chain reaction (Economic Growth Rates)
Hope this helped.
Cody