A ten-year annuity pays $2,500. Based on the discount rates applied by investors today, the market price is $22,000. If the price increases to $22,500 tomorrow, that means:
a) the discount rate is higher
b) the discount rate is lower
c) the discount rate is unchanged
d) question cannot be answered without knowledge of today's discount rate
Ans: b) the discount rate is lower
You might also like to view...
A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order:
A) all 4000 units at one time. B) 200 units per order. C) every 20 days. D) 10 times per year. E) none of the above
Robert Inc uses the standard costing method. The company's main product is a fine-quality headphones that normally takes 0.5 hour to produce. Normal annual capacity is 5,000 direct labor hours, and budgeted fixed overhead costs for the year were $8,750. During the year, the company produced and sold 5,800 units. Actual fixed overhead costs were $6,000. Using the information provided for Robert
Inc, compute the fixed overhead cost variance. A) $2,750 (F) B) $925 (U) C) $3,675 (U) D) $5,800 (U)