Purchase Solution

If Mr. Moore's opportunity cost is 10% what is the present value of his consulting contract?

Not what you're looking for?

Ask Custom Question

Les Moore retired as president of GoodmanSnack Foods company but is currently on a consulting contract for $35,000 per year for the next 10 years.

If Mr. Moore's opportunity cost is 10% what is the present value of his consulting contract?

Assuming Mr. Moore will not retire for two more years and will not start to receive his 10 payments until the end of the third year, what would be the value of his deferred annuity?

2. Static Electronic Co. currently pays a $2.10 annual cash dividend. It plans to maintain the dividend at this level for teh foreseable future as no future growth is anticipated. If the required rate of return by common stockholders is 12 percent, what is the price of the common stock?

Bioscience inc. will pay a common stock dividend of $3.20 at the end of the year. The required return on common stock is 14 percent. The firm has a constant growth rate of 9 percent. Compute the current price of the stock.

Purchase this Solution

Solution Summary

Computations are completed with formula (no Excel or financial calculator).

Solution Preview

1.a. Les Moore retired as president of GoodmanSnack Foods company but is

currently on a consulting contract for $35,000 per year for the next 10 years.
If Mr. Moore's opportunity cost is 10% what is the present value of his

consulting contract?

Annual payment = 35000
n = 10
Discount Rate = 10%
FV = 0
Thus, we compute PV = $215,059.85
(by a financial calculator or EXCEL command ...

Purchase this Solution


Free BrainMass Quizzes
Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.