Juliette's small business has grown faster andbeen more profitable than she expected. Aninvestor in her business is due to be paid$3,200 on December 31. How much shouldthat investor be willing to accept as an earlypayment on March 15 of the same calendaryear if money is worth 6.15%?The investor should accept?

Investor's money is due on December 31. However Juliette is willing to make an early payment on…

Answered: The investor should accept?

Business

Accounting

The investor should accept?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: - explain what would you take to compare the worthness of two different fianancial investments? how…

A: Solution- Meaning of economic Investment A Financial Investment is AN plus or instrument purchased…

Q: What does it mean to “manage” risk? Should itsstockholders want a firm to “manage” all of therisks…

A: Company is not certain about few things which cannot be predicted exactly. In that case, there will…

Q: 76. You often hear about the trade-off between risk and reward. Is this trade-off part of decision…

A: Higher risk usually leads to higher profits. An investor will be able to make only a risk-free rate…

Q: Are you agree with the phrase(sentence): "The indifference (exchange) risk - return curve slop of a…

A: Exchange rate indifference curve indicates that the change in demand for goods and services with…

Q: Explain why the following statement is true: In general, the more uncertainty thereis about future…

A: An option which provides the holder an opportunity to delay or postpone the decision to invest until…

Q: Show that options are riskier than the underlying assets

A: Options are financial instruments that give the holder the right, but not the obligation, to buy or…

Q: Suppose that the price of an asset equals its fundamental value. What behavioral features might then…

Q: Which of the following is a true statement regarding the future worth of a single investment…

A: Introduction: This question is related to the concept of time value of money. The time value of…

Q: When considering multiple possible investments, why are rates of return preferable than monetary…

A: An investment's net profit or loss over a certain period expressed as a percentage of the…

Q: are there methodologies by which the investor can bring to bear against adverse investment decision…

A: There are several methodologies that an investor can use to counteract the adverse effects of…

Q: When Decision making is affected by both personal perspective and characteristics this phenomenon…

A: Decision making is referred to as the process of making choices through an identification of the…

Q: You might want to sell an option to prevent further losses if its market price is dropping. True…

A: Selling an option to prevent further losses when its market price is dropping is not a good…

Q: What major concerns should investors consider when making an investment with a syndication?

A: The major concern that the investors results in investment with syndication is given below as,

Q: is passive stock investing the superior approach?

A: Active investing is when the money is invested in investment stocks that have been selected by a…

Q: Why would anyone want to purchase an F or IF derivative type of investment?

A: Floater tranche(f) It refer to that type of security whose coupon rate copy the movement of index on…

Q: Why is noncumulative preferred stock often considered anunattractive form of investment?

A: The expression "noncumulative" depicts a kind of preferred stock that doesn't pay investors any…

Q: Taking the Efficient Market Hypothesis into consideration, do you think we still need to study…

A: The efficient market hypothesis (EMH) explains the performance of the stock market as a reflection…

Q: now about common stock valuation if there is already an efficient market

A: Efficient market theory is theoretical concepts only and use in academics only.

Q: Do you believe on the principle-higher risk provides higher return? Can we achieve high return with…

A: Return is the reward which an investor will get by investing money in return and risk is the chance…

Q: What is the maximum value that a call can take? Why? Explain which option (i.e. put or call)…

A: Options are of 2 types:1) Call Option2) Put Option

Q: Are investors really made whole with a make-whole call provision?

A: Companies are considering the value of investment for the purpose of gains and losses. Two parties…

Q: One of the easiest method of differentiating Alternative Investments from the Traditional Investment…

A: Traditional Investments are regular long positions in stocks, bonds, and cash. Both cash and bonds…

Q: Why must real options have positive value? (Select all the choices that apply.) A. Having the…

A: Real options might have positive worth for the reason that they are only work out if doing so would…

Q: What are the gains and purposes of being a neutral investor?

A: The investor earns profit in case of both price increases as well as decreases in a market and…

Q: Are you agree with the - return curve slop of a risky has a negative slop."? explain why?**…

A: The exchange rate indifference curve is the curve between the exchange rate and demand for given…

Q: Do you think we still need to study common stock valuation, given the Efficient Market Hypothesis?…

A: Efficient Market Hypothesis represents the stock prices after considering all the information…

Q: Differentiate between “buying a security on a margin” and “selling a security short”. When would an…

A: Buying assets on margin, also known as margin trading, is putting up collateral, usually with your…

Q: Why is the reporting of investments and fair value required? Justify your response.

A: Investment refers to the deposits made in securities to earn a regular income and capital…

Q: Consider the following statement: “In contexts of increased uncertainty, the usefulness of real…

A: A real option allows a company's executives the option, but not the responsibility, to pursue…

Q: Why might recognizing the existence of a real option raise, but not lower, a project’sNPV as found…

A: Real Options are rights which enable the management to take decisions regarding business…

Question

Juliette's small business has grown faster and
been more profitable than she expected. An
investor in her business is due to be paid
$3,200 on December 31. How much should
that investor be willing to accept as an early
payment on March 15 of the same calendar
year if money is worth 6.15%?
The investor should accept?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Calculation of amount that Investor would be willing to accept

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

if you were in the opposite position, as an individual investor, which of the most innovative investment options would you choose
Which of the following statements is inaccurate under perfect capital markets? A. The NPV of a project determines whether it is worth investing in it B. How much an investor should invest in a particular project does not depend on the investor’s risk preferences C. Whether an investor should invest in a project or not does not depend on the investor’s intertemporal preferences D. Whether a long term project should be undertaken does not depend on whether the investor is patient or impatient
4 What is counter party risk? Which financial contracts does it apply to?
What are the weaknesses of the payback method? What other options do you have?
A simple investment will always be pure. True or false?
Given the Efficient Market Hypothesis, do you think we still need to study common stock valuation?
Doing nothing is a viable investment alternative. True or False?
AAR is biased in favour of liquid investments. Select one: True O False