Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help me 1. A benchmark index has three stocks priced at $25,$38, and $52 yesterday. The number of outstanding shares for each is 100,000
please help me
1. A benchmark index has three stocks priced at $25,$38, and $52 yesterday. The number of outstanding shares for each is 100,000 shares, 500,000 shares, and 200,000 shares, respectively. If this index is value weighted and had a value of 1250 yesterday and the prices changed to $20,$41, and $55, what is the new index value? (Hint: First multiply the shares outstanding of each stock by its price to the total market capitalization of each stock. Next, sum up the market capitalizations of all stocks in the index. Then find the market capitalizations of all stocks in the index with the new stock prices. Finally, use the formula: New index value = (New total index market capitalization / Original total index market capitalization) Original index value.) a. 1297 b. 1302 c. 1313 d. 1326 2. Warren's Diner needed a new location. This establishment spent $150,000 to refurbish an old shop and create the current facility. The firm borrowed 60 percent of the refurbishment cost at 3.2 percent APR for 20 years. What is the amount of each monthly payment? a. $495 b. $508 c. $514 d. $523 3. You want to retire early so you know you must start saving money. Thus, you have decided to save $6,000 a year, starting at age 25 . You plan to retire as soon as you can accumulate $1,250,000. If you can earn an average of 9.5 percent APR on your savings, how old will you be when you retire? (Hint: It may be easier to find the correct answer by trial 3. You want to retire early so you know you must start saving money. Thus, you have decided to save $6,000 a year, starting at age 25 . You plan to retire as soon as you can accumulate $1,250,000. If you can earn an average of 9.5 percent APR on your savings, how old will you be when you retire? (Hint: It may be easier to find the correct answer by trial and error, especially if you do not have a financial calculator.) a. 55.1 years b. 56.9 years c. 57.3 years d. 58.4 years 4. CNP, Inc. is considering a project that will produce cash inflows of $55,000 in year one, $39,000 in year two, and $48,000 in year three. What is the present value of these cash inflows if the company assigns the project a discount rate of 5.6 percent? a. $127,818 b. $128,329 c. $129,113 d. $130,694 5. Super Star, Inc. gives out an "employee of the year" award every year. This employec receives a bonus of $1,000 on the day he or she is selected and another $1,000 for every year he or she remains with the firm, up to a maximum of 40 years. At a 4.7 percent APR, what is the maximum value of this award at the time the recipient is selected? a. $16,118 b. $17,231 c. $18,728 d. $19,420 Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started