A company currently retains 65% of its earnings ($5.5 a share this year). It earns an ROE of 14%, and you assume a required rate of return of 11%. Calculate the forward P/E of the company. Present your answer as a number and round the answer to 2 decimal places, e.g. 10.23. Answer: Growth stocks consistently outperform value stocks. Select one: O True O False

Answers

Answer 1

The forward P/E of the company, in this case, is 18.42. In the statement "Growth stocks consistently outperform value stocks," the answer is false. Growth and value stocks can outperform each other depending on market conditions, investor sentiment, and economic factors.

To calculate the forward P/E of the company with a 65% retention rate, $5.5 earnings per share, 14% ROE, and an 11% required rate of return, you need to follow these steps:

1. Calculate the growth rate (g) using the retention rate and ROE:

g = Retention Rate * ROE

[tex]= 0.65 \times 0.14 = 0.091 (or 9.1%)[/tex]

2. Calculate the forward P/E ratio using the dividend discount model formula:

P/E = (1 - Retention Rate) / (Required Rate of Return - Growth Rate)

= (1 - 0.65) / (0.11 - 0.091) = 0.35 / 0.019 = 18.42

So, the forward P/E of the company is 18.42.

Regarding the statement "Growth stocks consistently outperform value stocks," the answer is false. Growth and value stocks can outperform each other depending on market conditions, investor sentiment, and economic factors.

Growth stocks have the potential for higher returns due to their rapid growth and future earnings potential. However, they also carry higher risks and can underperform during economic downturns or when growth expectations are not met.

Value stocks, on the other hand, are considered undervalued and can provide consistent returns with lower risk. The performance of growth and value stocks varies over time, and a balanced investment approach is recommended for long-term success.

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Complete Question:

A company currently retains 65% of its earnings ($5.5 a share this year). It earns an ROE of 14%, and you assume a required rate of return of 11%. Calculate the forward P/E of the company.

Growth stocks consistently outperform value stocks. True or False.


Related Questions

a client is taking tolcapone for parkinson's disease. what blood test will the nurse perform often on this client?

Answers

The nurse will likely perform regular liver function tests on the client taking tolcapone for Parkinson's disease.

These tests measure the levels of certain enzymes and proteins in the blood that indicate how well the liver is working. Elevated levels of these enzymes and proteins can indicate liver damage. It is important to monitor these levels as tolcapone has been known to cause liver damage in some people.

The nurse may also test for creatine kinase levels, which can also be elevated due to tolcapone use. Other tests such as complete blood count, blood urea nitrogen, and creatinine levels may also be performed to monitor for any abnormal changes in the blood that may be caused by tolcapone. Regular monitoring of these tests is necessary to ensure the safety of the client taking tolcapone for Parkinson's disease.

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A portfolio consists of the following two investments:
a bond with face value of $100.00 paying annual coupons of 9% maturing in 5 years
an annuity with payments of $40.00 at the end of each year for 5 years
The portfolio is comprised of 46% bonds and 54% annuities.
The term structure is flat and the current yield is 12% pa effective.
Calculate the duration (D) of the portfolio. Give your answer to 2 decimal places.
D = ______ years

Answers

The duration of the portfolio is 3.57 years.

To calculate the duration of the portfolio, we can use the following formula:

D = w1D1 + w2D2

where w1 and w2 are the weights of the bond and annuity in the portfolio, and D1 and D2 are the durations of the bond and annuity, respectively.

First, let's calculate the duration of the bond. Since the term structure is flat, the yield to maturity is equal to the current yield of 12%. Using the formula for the duration of a bond, we get:

D1 = (1 + y) * [ (1 - (1 + y)) / y ] - n * [ (1 + y) ]

where y is the annual yield to maturity, n is the number of years to maturity, and D1 is the duration of the bond.

Plugging in the values, we get:

D1 = (1 + 0.12) * [ (1 - (1 + 0.12) / 0.12 ] - 5 * [ (1 + 0.12) ]

= 3.87 years (rounded to 2 decimal places)

Next, let's calculate the duration of the annuity. Since the payments are made at the end of each year, we can use the formula for the duration of an annuity due and subtract 1 to get the duration of the annuity:

D2 = [ (1 + r) * (1 - (1 + r)) / r ] - 1

where r is the discount rate, n is the number of years, and D2 is the duration of the annuity.

Plugging in the values, we get:

D2 = [ (1 + 0.12) * (1 - (1 + 0.12)^(-5)) / 0.12 ] - 1

= 3.37 years (rounded to 2 decimal places)

Finally, we can calculate the duration of the portfolio by weighting the durations of the bond and annuity by their respective weights:

D = 0.46 * 3.87 + 0.54 * 3.37

= 3.57 years (rounded to 2 decimal places)

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BL Corporation, located in the United States, has an accounts payable obligation of ¥1750 million payable in six months to a bank in Tokyo. The current spot rate is ¥118/$1.00 and the six month forward rate is ¥109/$1.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. What is the future dollar cost of meeting this obligation using the money market hedge
a. $14,646,802 b. $7,323,401 c. $15,304,332 d. $15,044,936

Answers

The future dollar cost of meeting this obligation using the money market hedge is $15,044,936 (D).

To determine the future dollar cost of meeting this obligation using a money market hedge, we can use the following steps:

Calculate the yen amount of the accounts payable obligation: ¥1750 million.

Convert the yen amount to dollars using the current spot rate: $14,830,508 ($1 = ¥118).

Calculate the six-month interest rate differential between the US and Japan:

US rate - Japan rate = 6% - 3% = 3% per annum

Calculate the forward discount on the yen:

Forward discount = (Forward rate - Spot rate) / Spot rate

= (¥109/$1 - ¥118/$1) / ¥118/$1

= -7.63%

Calculate the forward exchange rate that will be used to convert dollars to yen in six months:

Forward rate = Spot rate x (1 + Japan rate x time) / (1 + US rate x time)

= ¥118/$1 x (1 + 3% x 0.5) / (1 + 6% x 0.5)

= ¥109/$1

Determine the amount of yen that can be obtained in six months using a money market hedge:

Yen amount = $14,830,508 / ¥109/$1 = ¥161,932,203

Calculate the future dollar cost of meeting the obligation using the money market hedge:

Future dollar cost = Yen amount x Forward rate

= ¥161,932,203 x ¥109/$1

= $15,044,936.

Therefore, the future dollar cost of meeting this obligation using the money market hedge is $15,044,936 ( D).

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Paola has little choice in how to accomplish her work tasks—her company employs strict process control.
-Skill variety
-Task Significance
-Task Identity
-Feedback
-Autonomy

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Paola's work situation involves strict process control, which means her autonomy is limited. This can affect her skill variety, as she may not have the opportunity to use a diverse range of skills.

Autonomy refers to the degree to which an employee has control over how they perform their work tasks. If Paola's company employs strict process control, she likely has little choice in how to accomplish her work tasks, which suggests a low level of autonomy.Skill variety refers to the degree to which a job requires a variety of different skills and abilities. Task significance refers to the degree to which a job has a meaningful impact on the lives or work of others. Task identity refers to the degree to which a job involves completing a whole, identifiable piece of work. Feedback refers to the degree to which employees receive clear and direct feedback on the effectiveness of their performance.Based on the information provided, it is not clear whether Paola's job involves high or low levels of skill variety, task significance, task identity, or feedback.

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identify atleast two reasons that input prices remain fixed in the short run answers

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Fixed input prices in the short run can be attributed to contractual agreements and limited availability of resources. While firms may prefer to have more control over their input costs, fixed input prices can provide stability in the production process and help firms plan for the future.

Input prices can be defined as the cost of the resources that a firm uses to produce its goods and services. These costs include labor, raw materials, and other expenses associated with the production process.

In the short run, firms may experience fixed input prices which means that the cost of resources used in the production process remains constant. This is due to various reasons:

1. Contracts: One of the primary reasons for fixed input prices in the short run is the existence of contracts between firms and their suppliers. Contracts may stipulate fixed prices for a specific period, regardless of changes in market conditions. This ensures a stable supply of inputs and enables firms to plan their production activities accordingly.

2. Limited availability of resources: The short run is a period during which firms may not have the ability to adjust their production processes fully. Therefore, the availability of resources may be limited, and suppliers may have the upper hand when it comes to pricing.

Firms may have to pay a fixed price to secure the resources they need or risk not being able to produce their goods and services at all.

In conclusion, fixed input prices in the short run can be attributed to contractual agreements and the limited availability of resources. While firms may prefer to have more control over their input costs, fixed input prices can provide stability in the production process and help firms plan for the future.

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You are given information for a delta-hedged portfolio for European options that you have written. For each scenario, compute the number of shares to buy or sell (indicate which action to take) on day 1 to maintain the delta-hedge for a portfolio of one option.
Stock Price Call premium Call delta (A)
Day 0 55 6.50 0.4
Day 1 60 9.50 0.6
Stock Price Put premium Put Elasticity()
Day 0 50 1.00 -5
Day 1 49 0.91 -7

Answers

To maintain the delta-hedge for a portfolio of one European call option, you should buy 0.6 shares on Day 1.


The call delta on Day 0 is 0.4, and on Day 1 it's 0.6. The change in delta (∆delta) is 0.6 - 0.4 = 0.2. Since you have written one option, you need to buy 1 × 0.2 = 0.2 shares to maintain the delta-hedge.

However, since the question asks for maintaining the hedge for a portfolio of one option, it means you need to consider the initial 0.4 delta as well. Thus, you should buy 0.4 + 0.2 = 0.6 shares on Day 1.

To maintain the delta-hedge for a portfolio of one European put option, you should sell 7 shares on Day 1.


The put elasticity on Day 0 is -5, and on Day 1 it's -7. The change in elasticity (∆elasticity) is -7 - (-5) = -2. Since you have written one option, you need to sell 1 × 2 = 2 shares to maintain the delta-hedge.

However, since the question asks for maintaining the hedge for a portfolio of one option, it means you need to consider the initial -5 elasticity as well. Thus, you should sell -5 + (-2) = -7 shares on Day 1.

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You purchased a stock for $175 and sold it for $250 one yearlater. Additionally, you received a dividend payment of $30. Whatwas your total return (yield) on this investment?

Answers

The total return (yield) on an investment which involve purchasing a stock for $175 and selling it for $250 as well as a dividend payment of $30 is 60%.

To calculate the total return (yield) on your investment, we will consider the initial stock purchase price, the selling price, and the dividend payment.

In order to calculate the total return, follow these steps:

1. Calculate the capital gain:

Selling price - Purchase price = $250 - $175 = $75.

2. Add the dividend payment:

Capital gain + Dividend = $75 + $30 = $105.

3. Calculate the total return (yield):

(Total gain / Purchase price) x 100 = ($105 / $175) x 100 = 60%.

So, your total return (yield) on this investment was 60%.

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The
annuties formula is used by mortgage bankers to compute the
amortization schedule of a loan (i.e. the schedule of payment of
principal and interest).
true or false

Answers

True. The annuity formula is commonly used by mortgage bankers and lenders to calculate the amortization schedule of a loan.

An amortization schedule is a table that breaks down each loan payment into its principal and interest components over the life of the loan. This schedule allows borrowers to understand how much of each payment goes towards paying down the principal balance and how much goes toward paying interest.

The annuity formula is based on the concept of level payments, which means that the borrower makes the same fixed payment amount every period (e.g. every month or every year) until the loan is fully paid off. The formula takes into account the loan amount, interest rate, and loan term to determine the fixed payment amount required to fully repay the loan over its term.

Therefore, it is true that the annuity formula is used by mortgage bankers to compute the amortization schedule of a loan.

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the process of moving strawberries, blackberries, and raspberries from portland fresh and ready farms to the farmer's market where customers will purchase them, is a marketing activity called

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The process of moving strawberries, blackberries, and raspberries from Portland Fresh and Ready Farms to the farmer's market where customers will purchase them is a marketing activity called "distribution."

Distribution is a critical marketing activity that involves moving products from the manufacturer or producer to the end customer. In this case, the strawberries, blackberries, and raspberries are being transported from the farm to the farmer's market, where they will be sold directly to customers.

Effective distribution is important because it ensures that products are available in the right place at the right time, and in the right quantities. This can help to maximize sales and customer satisfaction while minimizing waste and inefficiency.

In the case of fresh produce like strawberries, blackberries, and raspberries, efficient and timely distribution is particularly important to ensure that the products arrive at their destination in good condition and are available for customers to purchase when they want them.

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suppose that an insurance agent offers you a policy that will provide you with a yearly income of $40,000 in 30 years. what is the comparable annual salary today, assuming an annual inflation rate of 5% (compounded annually)? (round your answer to the nearest cent.)

Answers

The comparable annual salary today, adjusted for inflation, is $3,691.81 rounded to the nearest cent

To calculate the comparable annual earnings today, we want to adjust the future income of $40,000 for inflation using the present value method.

The present value formula for a future payment can be expressed as:

[tex]PV = FV / (1 + r)^n[/tex]

Where:

PV is the present price

FV is the future price

r is the interest fee or discount charge

n is the range of periods

In this example, the future profits is $forty,000 in 30 years, and the annual inflation rate is five% compounded yearly. consequently, we are able to use the present value system with the following values:

FV = $40,000

r = 5%

n = 30

[tex]PV = $40,000 / (1 + 0.05)^{30[/tex]

PV = $40,000 / 10.835

PV = $3,691.81

Therefore, the comparable annual salary today, adjusted for inflation, is $3,691.81.

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true or false: to segment the rights to which certain common shareholders are entitled, companies often separate common equity into more than one class of shares called classified stock. false true consider this case: mario hathaway is a majority shareholder of wizard inc. he owns class a shares, with larger-than-proportionate voting rights, of wizard inc. based on this example, which of the following statements is true? classified shares are issued to provide super voting rights to a certain class of investors. classified shares are not issued with the purpose of providing super voting rights to a certain class of investors.

Answers

The statement "Companies often separate common equity into more than one class of shares called classified stock to segment the rights to which certain common shareholders are entitled" is true because the use of classified stock to grant different rights and privileges to various classes of shareholders.

Mario Hathaway owns Class A shares with larger-than-proportionate voting rights, which indicates that the company has issued classified shares to provide super voting rights to a certain class of investors.
In the case of Mario Hathaway, who owns Class A shares of Wizard Inc. with larger-than-proportionate voting rights, the statement that is true is: "Classified shares are issued to provide super voting rights to a certain class of investors." This demonstrates the use of classified stock to grant different rights and privileges to various classes of shareholders.

Common shareholders are granted six rights: voting power, ownership, the right to transfer ownership, dividends, the right to inspect corporate documents, and the right to sue for wrongful acts.

If a company liquidates, creditors are the first to have their debts paid from the company's assets.

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which of the following is the best strategy to make sure people who are participating remotely in a video call are included in the meeting?responsesturn the speaker volume up high so that participants can hear the meeting betterturn the speaker volume up high so that participants can hear the meeting betterturn off the phone microphone to avoid feedbackturn off the phone microphone to avoid feedbackaim the camera at an angle that has a view of everyone present in the room

Answers

The best strategy to make sure people who are participating remotely in a video call are included in the meeting is to D) aim the camera at an angle that has a view of everyone present in the room.

Turning up the speaker volume or turning off the phone microphone can create audio problems such as feedback or not being able to hear participants clearly.

On the other hand, aiming the camera at an angle that captures everyone in the room ensures that remote participants can see and hear everyone present, making them feel included and engaged in the meeting. It also allows them to read body language and other nonverbal cues, which can be important in communication.

Overall, ensuring remote participants are included in the meeting helps to promote effective communication and collaboration among all participants and D is correct option.

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gatorade is a well-known drink brand that almost every active person is familiar with, whether you are a professional athlete, hiker, or regular at the gym. the best distribution strategy for this product would be multiple choice intensive. specialized. selective. multichannel. exclusive.

Answers

The best distribution strategy for Gatorade would be a multichannel approach to reach a wide range of customers.

The target market for Gatorade comprises physically active people who need energy and hydration while exercising. The ideal strategy for this brand would be a multichannel distribution plan. Reaching as many clients as possible entails using a variety of distribution channels, including supermarkets, convenience shops, vending machines, internet merchants, and direct selling.

Gatorade can easily access its product by employing a multichannel strategy, which is crucial for a company that caters to consumers who need to keep hydrated and energised while on the road.

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this entity is responsible for reviewing change requests, reviewing the analysis of the impact of the change, and determining whether the change is approved, denied, or deferred.a. corrective actionsb. defect repairsc. performance correctionsd. preventive actions

Answers

The entity  is responsible for reviewing change requests and determining their approval, denial,  deferral is commonly known as a change control board (CCB).

A CCB is typically comprised of cross-functional team members who are responsible for evaluating the impact of proposed changes on different areas of the organization, including technical, operational, financial, and regulatory considerations.

The CCB's primary responsibility is to ensure that changes are made in a controlled and consistent manner to minimize risks, maintain quality, and support business objectives. The CCB must review all proposed changes and assess their impact before approving or denying them. The CCB must also ensure that proper testing and validation procedures are in place to guarantee the stability and integrity of the organization's systems and processes.

The CCB's role is crucial in ensuring that changes are implemented smoothly and with minimal disruption to business operations. By conducting thorough assessments of change requests and their potential impact, the CCB can provide the necessary guidance and oversight to ensure that changes are executed efficiently and effectively. As such, the CCB is an essential component of any organization's change management framework, and its decisions can have far-reaching consequences for the success of the organization.

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This entity is responsible for reviewing change requests, reviewing the analysis of the impact of the change, and determining whether the change is approved, denied, or deferred.

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the first national bank receives an extra $100 of reserves but decides not to lend out any of these reserves. how much deposit creation takes place for the entire banking system?

Answers

No deposit creation occurs if the bank doesn't lend the extra reserves. The deposit creation process requires banks to use excess reserves for lending.

The First National Bank may utilise the additional $100 in reserves to make loans, generating new deposits in the process. However, no new deposits will be created for the whole banking system if the bank decides not to lend any of these reserves.

Banks employ their excess reserves to fund loans, which results in the formation of new deposits. Without lending, there would be no new deposit generation, and the money supply would remain constant.

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the arrival rate at a parking lot is 6 veh/min. vehicles start arriving at 6:00 p.m., and when the queue reaches 36 vehicles, service begins. if company policy is that total vehicle delay should be equal to 500 veh-min, what is the departure rate?

Answers

The departure rate in context to the given question is 6.75 veh/min.

the arrival rate is already given in the question, now we need to find the departure rate

Given,

Arrival rate = 6 veh/min

Total vehicle delay = 5000 veh/min

therefore, we need to implement the formula

Total vehicle delay =  total number of vehicles in the line x time spend in the line

adding the  given values in the given formula

restructuring the formula concerning the departure rate

500 = 36x (1/departure rate - 1/ arrival rate)

500/36 = 1/departure rate - 1/6

departure rate = 36/500 - 1/6

departure rate = 6.75 veh/min

The departure rate in context to the given question is 6.75 veh/min.

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A retailer received a written firm offer signed by a supplier. The offer committed the supplier to providing the retailer with up to 10,000 tubes of toothpaste over the next 45 days at $1 a tube. Thirty days later, the supplier informed the retailer that the price per tube of toothpaste would be $1.10. The next day the retailer ordered 6,000 tubes of toothpaste from the supplier, which the supplier promptly shipped. Sixty days after the receipt of the offer, the retailer ordered another 4,000 tubes of toothpaste, which the supplier also promptly shipped.
What price is the supplier permitted to charge the retailer for the toothpaste?

Answers

The supplier is permitted to charge the retailer $1 per tube of toothpaste for all 10,000 tubes that were ordered by the retailer within the 45-day time frame of the original offer.

The supplier is permitted to charge the retailer $1 per tube of toothpaste for the first 10,000 tubes. This is because the offer committed the supplier to providing the retailer with up to 10,000 tubes of toothpaste over the next 45 days at $1 a tube, and the retailer ordered a total of 10,000 tubes within that time frame.

However, the supplier is not permitted to charge the retailer $1.10 per tube of toothpaste, as they informed the retailer of this price increase after the retailer had already placed an order for 6,000 tubes at the original price of $1 per tube. Therefore, the supplier must honor the original price of $1 per tube for the remaining 4,000 tubes that the retailer ordered.

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valpar company produces four types of laundry hampers and uses abc to allocate overhead costs to products. during the upcoming period the company expects to produce 72,000 total units with the following costs and cost drivers: activities unit-level batch-level product-level facility-level cost $16,000 $8,000 $15,000 $36,000 cost driver 4,000 labor hours 200 set-ups % of use 72,000 units production of 20,000 units of its popular foldable hamper required 1,200 labor hours, 50 setups, and consumed 20% of the product-level cost pool. what amount of unit-level costs will be allocated to the product? multiple choice question. $3,200 $4,800 $4,000 $4,445

Answers

The amount of unit-level costs allocated to the product is $4,800.

How to determine the unit-level costs

Valpar Company produces four types of laundry hampers and uses Activity-Based Costing (ABC) to allocate overhead costs to products.

They expect to produce 72,000 total units with the following costs and cost drivers:

- Unit-level cost: $16,000; Cost driver: 4,000 labor hours

- Batch-level cost: $8,000; Cost driver: 200 set-ups

- Product-level cost: $15,000; Cost driver: % of use

- Facility-level cost: $36,000; Cost driver: 72,000 units

Production of 20,000 units of the foldable hamper required 1,200 labor hours, 50 set-ups, and consumed 20% of the product-level cost pool.

To find the amount of unit-level costs allocated to the product, we first need to calculate the cost per labor hour:

$16,000 / 4,000 labor hours = $4 per labor hour

Next, we multiply the cost per labor hour by the number of labor hours used for the foldable hamper:

$4 per labor hour × 1,200 labor hours = $4,800

The correct answer is $4,800.

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tandra is setting up a campaign to drive awareness of her brand's new booklight. she wants to reach the community of readers on goodreads. considering only this information, where should her ads be placed?

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To drive awareness of Tandra's brand's new booklight, she should place her ads on the Goodreads platform.

What's Goodreads?

Goodreads is a social media platform designed for book lovers, where users can discover new books, read reviews, and connect with other readers.

It provides an ideal platform for Tandra to promote her brand's new booklight and raise awareness among a highly engaged audience who are likely to be interested in her product.

By targeting Goodreads, Tandra can effectively reach potential customers who are interested in reading and who may be looking for a new booklight to enhance their reading experience.

This will allow her to reach the community of readers who are interested in books and are more likely to be interested in a booklight.

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the cost of a firm’s internal common equity is generally higher than the costs of a firm’s external common equity due to issuance costs. (True or False)

Answers

True. The cost of a firm's internal common equity is generally higher than the cost of a firm's external common equity due to the issuance costs associated with internal equity, such as the costs of stock option plans, stock purchase plans, and other incentives.

External equity, on the other hand, involves fewer issuance costs since it is generally acquired through public offerings or private placements. The statement is generally true. The cost of a firm's internal common equity, which is the return required by the firm's shareholders on the equity they have invested in the company, is generally higher than the cost of external common equity, which is the return required by new investors in the company's stock. This is because the cost of internal common equity includes not only the cost of the equity capital itself, but also the opportunity cost of retaining earnings rather than distributing them as dividends to shareholders. Additionally, internal common equity may be subject to higher taxes than external equity, further increasing the cost of internal equity financing. On the other hand, external common equity may be subject to issuance costs such as underwriting fees, legal and accounting expenses, and listing fees. However, the magnitude of these costs may vary depending on the size and type of the company and the nature of the external financing used.

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what is the maximum value that can be reached using the hhi? group of answer choices 100 1,000 10,000 100,000

Answers

The maximum value that can be reached using the HHI is 10,000. This occurs when there is a pure monopoly, and one firm holds 100% of the market share.

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to measure the effectiveness of advertising as a promotional tool, the sport marketer can evaluate impact on sales, image, and consumer awareness. a. true b. false

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The statement "to measure the effectiveness of advertising as a promotional tool, the sport marketer can evaluate impact on sales, image, and consumer awareness" is true.

Evaluating the impact of advertising on sales, image, and consumer awareness is a common way to measure the effectiveness of advertising as a promotional tool.

Sales are a direct indicator of how effective an advertisement has been in generating revenue for the business. If sales have increased following an advertising campaign, it can be an indication that the advertisement has been effective in promoting the product or service.

Image refers to how the advertisement has impacted the brand image of the product or service being advertised. A successful advertisement can help to establish a positive image of the brand in the minds of consumers, which can lead to increased sales and brand loyalty.

Consumer awareness measures how well an advertisement has reached its target audience and how well it has been received.

By measuring consumer awareness, the sport marketer can determine if the advertisement has successfully reached its intended audience and if it has had a positive impact on their perception of the product or service being advertised.

In summary, evaluating the impact of advertising on sales, image, and consumer awareness can help the sport marketer to determine the effectiveness of advertising as a promotional tool.

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Q10. (8 points) The organization My Accounting Course ("accounting education for the rest of us") analyzed two mutually exclusive projects. Project A has a total life of 3 years with a cost of capital of 12%. Project B has a total life of 3 years with a cost of capital of 15% .
The expected cash flows of the projects are:
Year Project A Project B
0 -$1,000 -$800
1 -$2,000 -$700
2 $4,000 $3,000
3 $5,000 $1,500
They concluded that "Given that these are mutually exclusive projects project B should be undertaken because it has a higher IRR than project A".
Do you agree with this decision? If so, why; if not, why not?
Hint: Please read this question carefully.

Answers

Based on these calculations, we can see that Project B has a higher IRR than Project A. However, choosing a project based solely on its IRR can be misleading because it does not take into account the size of the investment or the actual dollar amounts of the cash flows.

To determine whether we agree with the decision to choose Project B over Project A based on their respective IRRs, we need to calculate the IRRs for both projects and compare them.

To calculate the IRR for Project A, we need to find the discount rate that makes the present value of the expected cash flows equal to zero. Using Excel or a financial calculator, we find that the IRR for Project A is approximately 22.31%.

To calculate the IRR for Project B, we need to find the discount rate that makes the present value of the expected cash flows equal to zero. Using Excel or a financial calculator, we find that the IRR for Project B is approximately 25.44%.

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The demand function for an imported vegetable is QD = 212 – 20P. The supply function is QS = 20 + 4P

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The equilibrium price is $12 per unit and the equilibrium quantity is 52 units. This is because at the equilibrium price of $12, the quantity demanded and the quantity supplied is equal to 52 units.

To find the equilibrium price and quantity, we need to set the quantity demanded equal to the quantity supplied and solve for the price.

QD = QS

212 - 20P = 20 + 4P

212 - 20P - 4P = 20

192 - 16P = 0

16P = 192

P = 12

So the equilibrium price is $12 per unit.

To find the equilibrium quantity, we substitute the equilibrium price into either the demand or supply equation and solve for the quantity.

QD = 212 - 20P

QD = 212 - 20(12)

QD = 52

Therefore, the equilibrium quantity is 52 units.

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The complete question is:

The demand function for an imported vegetable is QD = 212 - 20P. The supply function is QS = 20 + 4P. What is the equilibrium price and quantity?

Fred invests 1200 at a nominal rate of 4.8% compounded monthly. After one year, his balance is X. Jane invests 1200 at a nominal rate of 4.8% compounded annually. After one year, her balance is Y. Sam invests 1200 at a continuous force of interest of 4.8%. After one year, his balance is Z. Which of the following is true?
a. X < Y < Z
b. Z < X < Y
c. Z < Y < X
d. Y < X < Z
e. Y < Z < X

Answers

Compound interest is the interest earned on both the principal amount and any previously accumulated interest on a sum of money.

The correct answer is option e. Y < Z < X. The formula for compound interest is:A = P(1 + r/n)^(nt)
Where:
A = final amount
P = principal amount
r = nominal annual interest rate (as a decimal)
n = number of times the interest is compounded per year
t = time (in years)

For Fred:
P = $1200
r = 4.8% = 0.048
n = 12 (monthly compounding)
t = 1

Using the formula, we get:
X = 1200(1 + 0.048/12)^(12*1)
X = $1270.06

For Jane:
P = $1200
r = 4.8% = 0.048
n = 1 (annual compounding)
t = 1

Using the formula, we get:
Y = 1200(1 + 0.048/1)^(1*1)
Y = $1257.60

For Sam:
P = $1200
r = 4.8% = 0.048
n = continuous compounding
t = 1

Using the formula, we get:
Z = 1200e^(0.048*1)
Z = $1258.96

Therefore, the order of balances from lowest to highest is:
Y < Z < X

So the correct answer is option e. Y < Z < X.

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A banker's acceptance is:
an order to pay.
without maturity.
a large funding source for banks.
a type of credit card.
an interest bearing money market instrument.

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A banker's acceptance is an interest-bearing money market instrument and an order to pay. In essence, it is a short-term debt instrument issued by a company with a guarantee from a bank. The bank's acceptance ensures that the payment will be made as specified in the agreement, adding credibility and reducing the risk for the parties involved.

As an order to pay, a banker's acceptance is created when a bank commits to pay a specific amount to a beneficiary on behalf of its client at a future date. This typically occurs in international trade transactions, where a buyer's bank provides assurance of payment to the seller's bank.

Banker's acceptances have a specified maturity date, usually ranging from 30 to 180 days, and are considered a relatively low-risk investment. They are not without maturity, as they come with a predetermined maturity date when the bank is obligated to pay the specified amount.

While banker's acceptances are used in international trade finance and can provide liquidity for banks, they are not considered a large funding source for banks. Banks use various other funding sources such as deposits, loans, and capital markets for their primary funding needs.

Lastly, a banker's acceptance is not a type of credit card. Credit cards are revolving credit facilities issued by financial institutions, allowing cardholders to borrow money for purchases or cash advances, while banker's acceptances are short-term debt instruments used primarily in international trade transactions.

In summary, a banker's acceptance is an interest-bearing money market instrument and an order to pay, with a specified maturity date. It is commonly used in international trade to provide assurance of payment, but it is not a large funding source for banks or a type of credit card.

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You receive a 3-year $14,000 loan with an interest rate of 13% p.a., to be repaid in three annual installments. The loan requires that you make two equal total payments of $3,000 at t = 1 and t = 2, with the remaining loan balance paid at maturity. What is the total payment amount at t = 3, rounded to the nearest dollar?

Answers

The total payment amount at t=3 is $0.

To calculate the total payment amount at t=3, we first need to find the remaining loan balance at the end of t=2.

At t=1, you make two equal total payments of $3,000, so $6,000 is paid off the loan. The interest charged for the first year is 13% of the original loan amount, which is $1,820. Therefore, the remaining loan balance at the end of t=1 is:

$14,000 - $6,000 - $1,820 = $6,180

At t=2, you make two equal total payments of $3,000, so another $6,000 is paid off the loan. The interest charged for the second year is 13% of the remaining loan balance at the end of t=1, which is $801.40. Therefore, the remaining loan balance at the end of t=2 is:

$6,180 - $6,000 - $801.40 = $-621.40

Since the remaining balance is negative, it means that you have overpaid the loan and there is no payment required at t=3.

Therefore, the total payment amount at t=3 is $0.

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On her 18th birthday, Riley deposits $9,000 per year into a retirement account with an estimated 9.5% rate of return. She will stop making deposits after her 61st birthday (i.e., she will make her final deposit on her 61st birthday), and her investment will continue to grow until she retires at age 75. Assuming her deposits occur at the beginning of each year, how much money will Riley have in her retirement account on her 75th birthday?

Answers

Riley will have approximately $3,086,367.19 in her retirement account on her 75th birthday.

Based on the given information, Riley will make 44 deposits into her retirement account, starting on her 18th birthday and ending on her 61st birthday. Each deposit is $9,000, so the total amount of money she will deposit into her account is:

44 deposits x $9,000 per deposit = $396,000

Assuming an estimated 9.5% rate of return, her investment will grow each year. To calculate how much money she will have in her retirement account on her 75th birthday, we need to use the formula for the future value of an annuity:

FV = Pmt x (((1 + r)^n - 1) / r)

Where:
- FV is the future value of the annuity
- Pmt is the amount of the regular payments (in this case, $9,000 per year)
- r is the annual interest rate (9.5%)
- n is the number of periods (in this case, 57, since she will make her final deposit on her 61st birthday and retire at age 75)

Plugging in the numbers:

FV = $9,000 x (((1 + 0.095)^57 - 1) / 0.095) = $3,086,367.19
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You have $45,589.25 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $280,000. You expect to earn 10% annually on the account. How many years will it take to reach your goal? Do not round intermediate calculations. Round your answer to the nearest whole number.

Answers

It will take approximately 19 years (rounded to the nearest whole number) to reach the goal of $280,000 in the account.

How to find the years will it take to reach the goal of $280,000 in a brokerage account with a deposit of $5,000 per year and an interest rate of 10%?

We can use the formula for the future value of an annuity to solve this problem:

[tex]FV = PMT x [(1 + r)^n - 1]/r[/tex]

where FV is the future value, PMT is the payment per period, r is the interest rate per period, and n is the number of periods.

In this case, we have:

PMT = $5,000

r = 10% = 0.1

FV = $280,000 - $45,589.25 = $234,410.75

Substituting these values into the formula, we get:

[tex]$234,410.75 =[/tex] [tex]$5,000 x [(1 + 0.1)^n - 1]/0.1[/tex]

Simplifying the equation, we get:

[tex](1.1)^n = 1 + $234,410.75/$5,000 x 0.1[/tex]

[tex](1.1)^n = 48.88215[/tex]

Taking the natural logarithm of both sides, we get:

n ln(1.1) = ln(48.88215)

n = ln(48.88215) / ln(1.1)

n = 18.74

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boards of directors have responded to financial crises, corporate scandals, regulator obligations, and investor requests for structural changes. in the 2011 harvard business review study of the changes in configuration of boards since 1987, which change has been brought about by government legislation? group of answer choices percentage of boards that have an average age of 64 or older has increased. average pay for directors has increased. percentage of boards with 12 or fewer members has increased. percentage of the directors that are independent has increased.

Answers

According to the 2011 Harvard Business Review study, the change in configuration of boards that has been brought about by government legislation is the increase in the percentage of directors that are independent.

What's the change in configuration of boards

The change was likely a response to financial crises and corporate scandals, as regulators and investors called for greater transparency and accountability in corporate governance.

Independent directors are those who do not have any affiliations or relationships with the company or its executives, and are therefore more likely to provide unbiased oversight and hold management accountable.

The increase in independent directors on boards is a positive development for corporate governance, as it helps to ensure that boards are able to effectively oversee the company's strategy, risk management, and financial performance.

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