Chapter 16, Problem 8P

(Annual percentage yield) Compute the cost of the following trade credit terms using the compounding formula, or effective annual rate. Note: Assume a 30-day month and 360-day year. a. 3/5, net 30 b. 3/15, net 45 c. 4/10, net 75 d. 3/15, net 45 ... a. When payment is made on the net due date, the APR of the credit terms of 3/5, net 30 is decimal places.) %. (Round to two

Suppose XYZ is a non-dividend-paying stock. Suppose S = $100, σ = 40%, δ = 0, and r = 0.06.   What is the price of a 105-strike call option with 1 year to expiration?   What is the 1-year forward price for the stock?   What is the price of a 1-year 105-strike option, where the underlying asset is a futures contract maturing at the same time as the option?

California Construction Inc. is considering a 15 percent stock dividend. The capital accounts are: Common stock (6,000,000 shares at $10 par) ....... $60,000,000 Capital in excess of par* ...................................... 35,000,000 Retained earnings ................................................  75,000,000  Net worth .........................................................  $170,000,000 *The increase in capital in excess of par as a result of a stock dividend is equal to the shares created times (Market price – Par value). The company’s stock is selling for $32 per share. The company had total earnings of $19,200,000 with 6,000,000 shares outstanding and earnings per share were $3.20. The firm has a P/E ratio of 10.  a. Show the new capital accounts if a 15 percent stock dividend is given.  b. What adjustments would be made to EPS and the stock price? (Assume the P/E ratio remains constant.)  c. How many shares would an investor have if they originally had 80 shares?  d. What…