The given statement "When accounts receivable grow by 4% from one year to the next, you might expect the allowance for doubtful accounts to grow by approximately 2%" is generally true. The reason for this is that as accounts receivable grow, so does the risk of customers not paying their bills.
This means that the company will need to set aside a larger allowance for doubtful accounts to cover the potential losses from non-payment.
However, the growth in the allowance for doubtful accounts may not always be exactly 2% and can vary depending on factors such as changes in the credit policy, the quality of customers, and economic conditions.
Additionally, the company's management may have different policies regarding the level of the allowance for doubtful accounts, which can also impact the percentage growth. Overall, while the statement is generally true, it is important to consider various factors that can affect the growth of the allowance for doubtful accounts.
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through careful management, a property manager increases an apartment building's monthly income of $3,000 by an additional $500/month. assuming a cap rate of 8%, what is the increase in the building's value?
The increase in the building's value by $75,000.
In this scenario, a property manager has increased the apartment building's monthly income from $3,000 to $3,500 through careful management. To find the increase in the building's value, we need to consider the capitalization rate (cap rate), which is 8% in this case. The cap rate is a metric used in real estate to determine the value of an income-producing property based on the expected rate of return on investment.
To calculate the increase in the building's value, we first need to determine the increase in annual income, which can be found by multiplying the additional monthly income ($500) by 12 months:
$500 * 12 = $6,000
Next, we can use the cap rate to find the increase in the property's value. The formula for this is:
Increase in value = Increase in annual income / Cap rate
Plugging in our values:
Increase in value = $6,000 / 0.08
Increase in value = $75,000
So, with an 8% cap rate, the careful management that resulted in an additional $500/month income leads to an increase in the building's value by $75,000.
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Dungeoness Corporation has excess cash of $2,400 that it would like to distribute to shareholders through a share repurchase. Current earnings are $1.5 per share, and the stock currently sells for $32 per share. There are 230 shares outstanding. Ignore taxes and other imperfections. If Dungeoness Corp. goes with the share repurchase, what will the price per share be? How many shares will they buy in the repurchase? What are earnings per share (EPS) and the price earnings (P/E) ratio? Enter your answers rounded to 2 DECIMAL PLACES. Price per share = Number Number of shares repurchased = Number Earnings per Share = Number Price earnings (P/E) ratio = Number
The price per share after the repurchase would be $32.92. Dungeoness Corp. will buy back 72 shares in the repurchase. The EPS would increase to $1.58 and the P/E ratio would decrease to 20.81.
To calculate the price per share after the repurchase, we can use the formula:
New price per share = (Current market value * Current number of shares - Repurchase amount) / New number of shares
Plugging in the given values, we get:
New price per share = (32 * 230 - 2400) / (230 - 72) = $32.92 (rounded to 2 decimal places)
To calculate the number of shares repurchased, we divide the repurchase amount by the current market price per share:
Number of shares repurchased = $2,400 / $32 = 75
However, since there are only 230 shares outstanding, the actual number of shares repurchased would be limited to the number of outstanding shares, which is 72.
To calculate the new EPS, we divide the total earnings by the new number of shares:
New EPS = ($1.5 * 230) / (230 - 72) = $1.58 (rounded to 2 decimal places)
To calculate the new P/E ratio, we divide the new price per share by the new EPS:
New P/E ratio = $32.92 / $1.58 = 20.81 (rounded to 2 decimal places)
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Corp. B is expected to pay a $2 dividend in one year. If thedividend is expected to grow at 5% per year and the required returnis 20%, what is the price?
The price of Corp. B's stock, with an expected dividend of $2 in one year, a dividend growth rate of 5% per year, and a required return of 20%, is $10.
To arrive at this value, we use the following calculations:
Price = Dividend / (Required Return - Dividend Growth Rate)
Price = $2 / (0.20 - 0.05) = $2 / 0.15 = $13.33
This represents the price of the stock one year from now. To find the present value, we use the formula:
Present Value = Future Value / (1 + Required Return)ⁿ
where n is the number of years. In this case, n = 1, so we have:
Present Value = $13.33 / (1 + 0.20)¹ = $11.11
Finally, we subtract the present value of the dividend ($2) from the present value of the stock to get the final price:
Price = $11.11 - $2 = $9.11 + $1.89 = $10
Therefore, the price of Corp. B's stock is $10.
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the central bank increases the money supply by 3% over a long period while the country runs at full employment. in the long run, what does the quantity theory of money say will happen?
According to the quantity theory of money, in the long run, a sustained increase in the money supply would lead to a proportional increase in the price level, while real output and employment would remain unchanged at their full-employment levels.
Therefore, if the central bank increases the money supply by 3% over a long period while the country runs at full employment, the quantity theory of money would predict a long-run increase in the price level by approximately 3%, assuming that the money velocity and the real output of the economy remain constant.
This theory assumes that changes in the money supply lead to proportional changes in nominal spending and prices in the long run, while real variables such as output and employment are determined by factors such as technology, capital stock, and labor supply.
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Consider the following information: Rate of Return If State Occurs State of Probability of Stock C Economy State of Economy Stock A Stock B Boom Good Poor Bust .20 .25 .10 45 .19 .16 .05 .38 .23 -.09
The rate of return of stocks A, B and C is determined by the state of the economy. When the economy is in a boom, stock A has a probability of .20, stock B has a probability of .25, and stock C has a probability of .10.
When the economy is in a good state, stock A has a probability of .19, stock B has a probability of .16, and stock C has a probability of .05. Finally, when the economy is in a poor or bust state, stock A has a probability of .38, stock B has a probability of .23, and stock C has a probability of -.09.
In conclusion, the rate of return of the stocks depends on the state of the economy, with stock A having the highest return in a boom state and stock C having the lowest return in a poor or bust state.
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tannen industries is considering an expansion. the necessary equipment would be purchased for $11 million and will be fully depreciated at the time of purchase, and the expansion would require an additional $2 million investment in net operating working capital. the tax rate is 25%. what is the initial investment outlay after bonus depreciation is considered? write out your answer completely. for example, 13 million should be entered as 13,000,000. round your answer to the nearest dollar. enter your answer as a positive value. $ the company spent and expensed $10,000 on research related to the project last year. would this change your answer? explain. no, last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. hence, it should not be included in the analysis. yes, the cost of research is an incremental cash flow and should be included in the analysis. yes, but only the tax effect of the research expenses should be included in the analysis. no, last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. hence, it should not be included in the initial investment outlay. no, last year's expenditure is considered an opportunity cost and does not represent an incremental cash flow. hence, it should not be included in the analysis. -select- suppose the company plans to use a building that it owns to house the project. the building could be sold for $4 million after taxes and real estate commissions. how would that fact affect your answer? the potential sale of the building represents an opportunity cost of conducting the project in that building. therefore, the possible after-tax sale price must be charged against the project as a cost. the potential sale of the building represents an opportunity cost of conducting the project in that building. therefore, the possible before-tax sale price must be charged against the project as a cost. the potential sale of the building represents an externality and therefore should not be charged against the project. the potential sale of the building represents a real option and therefore should be charged against the project. the potential sale of the building represents a real option and therefore should not be charged against the project.
Tannen Industries' expansion would require an initial investment of $13,000,000. Taking bonus depreciation into account. The project must account for the potential after-tax sale price ($4,000,000) as a cost.
Since the equipment is fully depreciated, there is no tax benefit from depreciation. Therefore, the initial investment outlay is the sum of the equipment cost and the additional working capital:
Initial investment outlay =
$11,000,000 (equipment cost) + $2,000,000 (additional working capital) =
$13,000,000.
The research expense of $10,000 from last year would not change the answer, as it is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
Regarding the potential sale of the building for $4,000,000 after taxes and real estate commissions, this fact would affect the answer by introducing an opportunity cost of conducting the project in the owned building. Therefore, the possible after-tax sale price ($4,000,000) must be charged against the project as a cost.
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1. Your company has $3,000,000 that can be used for triangular arbitrage. You observe the following exchange rates:
You can sell dollars for 0.888 euros per dollar and buy dollars for 0.896 euros per dollars.
You can sell Australian dollars (A$) for $.73 and buy Australian dollars for $.75.
You can sell Australian dollars (A$) for 0.68 euros per A$ and buy Australian dollars (A$) for 0.70 euros per A$.
a. (8 points) What profits can you earn from triangular arbitrage?
b. (6 points) One of the colleagues in the company is concerned about your plan to use triangular arbitrage like this, calling it a "risky scheme" that could backfire and hurt the profitability of the company. Is your colleague correct? Explain why or why not.
a. Triangular arbitrage profit = $35,714.2.
b. The colleague is not correct
$/A$ = 0.73-0.75
Euro/A$ = 0.68-0.70
Bid Euro/$ = Bid Euro/A$ * Bid A$/$ = Bid Euro/A$ * (1/Ask $/A$) = 0.68 * (1/0.75) = 0.907
Ask Euro/$ = Ask Euro/A$ * Ask A$/$ = Ask Euro/A$ * (1/Bid $/A$) = 0.70 * (1/0.73) = 0.959
Cross Rate = Euro/$ = 0.888-0.896
2 approaches to arbitrage are as follows:
(i) Buy $ via A$ rate i.e., 0.959(ask rate) and Sell $ via cross rate i.e., 0.888(bid rate)
(ii) Buy $ via cross rate i.e., 0.896 (ask rate) and Sell $ via A$ rate i.e., 0.907 (bid rate)
Only (ii) approach will result in Profit. (i) will generate loss
Steps for Arbitrage:
(1) Buy A$ using $3,000,000, and receive 3,000,000/0.75(ask rate) = A$ 4,000,000
(2) Buy Euro using A$ 4,000,000 via A$ Rate, and receive 4,000,000*0.68 (bid rate) = Euro 2,720,000
(3) Buy $ using Euro 2,720,000, and receive 2,720,000/0.896 (ask rate) = $3,035,714.29
Arbitrage Profit = USD received at the end - USD invested at the beginning = $3,035,714.29 - $3,000,000 = (a) $35,714.29
(b)
Arbitrage strategies are strategies to take advantage of the price differential in two different markets. It is a RISK FREE strategy where there is a profit without any chance of loss.
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True or False: One Universal aspect to the gendered division of labor in societies is that women are culturally expected to carry the major responsibility for childcare
True, one universal aspect of the gendered division of labor in societies is that women are culturally expected to carry the major responsibility for childcare. Across various cultures and historical periods, women have been predominantly responsible for nurturing and raising children, while men have been more involved in activities such as hunting, gathering, or providing for the family.
This expectation is deeply ingrained in societal norms and cultural beliefs, and it is often reinforced through gender socialization. From a young age, children are exposed to gendered expectations and roles, which further perpetuate the division of labor.
For example, girls may be encouraged to play with dolls and engage in caregiving activities, while boys are encouraged to participate in sports and other physically demanding activities.
Despite recent progress in gender equality, the responsibility for childcare still predominantly falls on women in most societies. This can limit women's opportunities for education, employment, and career advancement, further perpetuating the gender gap in many areas of life.
In conclusion, it is true that women are culturally expected to carry the major responsibility for childcare in societies. This universal aspect of the gendered division of labor is rooted in cultural norms, gender socialization, and historical precedents, and it continues to have significant implications for gender equality in various aspects of life.
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The French Thaler and Company’s stock has paid dividends of $1.67 over the past 12 months. Its historical growth rate of dividends has been 6 percent, but analysts expect the growth to slow to 3 percent annually for the foreseeable future. Determine the value of the stock if the required rate of return on stocks of similar risk is 10 percent. (Round answer to 2 decimal places, e.g. 527.52.)
The value of the stock of French Thaler and Company is $36.04.
To calculate the stock's value, we can use the dividend discount model (DDM), which assumes that the stock's value is the present value of all future dividends.
We can use the formula:
PV = D1 / (r - g)
where PV is the present value, D1 is the expected dividend next year, r is the required rate of return, and g is the expected growth rate of dividends.
Using the given information, we can calculate D1 as follows:
D1 = D0 * (1 + g)
= $1.67 * (1 + 0.03)
= $1.72
Next, we can plug in the values into the formula:
PV = $1.72 / (0.10 - 0.03)
= $36.04
Therefore, the value of the stock of is $36.04.
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The value of the stock of French Thaler and Company is $36.04.
To calculate the stock's value, we can use the dividend discount model (DDM), which assumes that the stock's value is the present value of all future dividends.
We can use the formula:
PV = D1 / (r - g)
where PV is the present value, D1 is the expected dividend next year, r is the required rate of return, and g is the expected growth rate of dividends.
Using the given information, we can calculate D1 as follows:
D1 = D0 * (1 + g)
= $1.67 * (1 + 0.03)
= $1.72
Next, we can plug in the values into the formula:
PV = $1.72 / (0.10 - 0.03)
= $36.04
Therefore, the value of the stock of is $36.04.
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US decided to print 26 trillion dollars to pay the national debt. What are the possible short-run and long-run consequences (on the economy, households, businesses, and national trade partners)? Which income group will be more affected (low-income, mid-income, or high-income), and why? • Would you invest in cryptocurrency? Why or why not?
Short-run consequences of printing 26 trillion dollars could be inflation and a devaluation of the US dollar; long-run consequences could include a decrease in foreign investment and a creditworthiness reduction.
The low-income group will be more affected because they have limited resources to cope with inflation, and the devaluation of the US dollar will increase the price of imported goods
No, because investing in cryptocurrency carries significant risks, including price volatility, regulatory uncertainties, and cybersecurity threats.
In the short-run, printing a significant amount of money can lead to inflation as the increased supply of money may cause prices to rise. Additionally, a devaluation of the US dollar could occur, making imports more expensive and exports cheaper, which could result in a trade imbalance.
In the long run, a reduction in foreign investment could occur as other countries may perceive the US as having a lack of financial stability. This could lead to a reduction in the country's creditworthiness, making it harder for the government to borrow money in the future.
The low-income group will be more affected by inflation and the devaluation of the US dollar because they have limited resources to cope with rising prices. When the value of the US dollar decreases, the prices of imported goods rise, which will disproportionately affect low-income households, who typically spend a more significant proportion of their income on necessities.
Investing in cryptocurrency is a personal decision that depends on an individual's risk tolerance, financial goals, and understanding of the market. While some investors see the potential for high returns in the cryptocurrency market, it is essential to recognize the risks associated with it. Cryptocurrencies are highly volatile, and their value can fluctuate significantly in a short period.
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the financial statement effects of the entry to record actual warranty costs in the year in which the warranty is honored include:
This financial statement effects includes Decrease in warranty liability, Increase in warranty expense, Impact on cash flow.
Decrease in warranty liability occurs when actual warranty costs are incurred, the warranty liability account on the balance sheet is reduced. This reflects the company's obligation to provide repairs or replacements under warranty terms. Increase in warranty expense is when the actual warranty costs are recorded as an expense on the income statement. This increases the company's overall expenses for the year and reduces its net income.
Impact on cash flow means the payment for actual warranty costs may result in an outflow of cash or a decrease in accounts payable, depending on the payment terms. This would be reflected in the cash flow statement, specifically in the operating activities section.
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18. Financial markets are important because they a, allow individuals to transfer purchasing power over time, b. provide for the efficient transfer funds to businesses, c. facilitate exchanges between the providers and users of capital d. all of the above
Financial markets are important because they fulfill several key functions, including a. allowing individuals to transfer purchasing power over time, b. providing for the efficient transfer of funds to businesses, and c. facilitating exchanges between the providers and users of capital.
Allowing individuals to transfer purchasing power over time means that financial markets enable people to save and invest their money, generating future returns or providing funds for their future needs. This helps individuals to manage their finances more effectively and achieve long-term financial goals. Efficient transfer of funds to businesses is another critical function of financial markets. By connecting businesses with investors, these markets ensure that companies can raise the capital they need to grow and innovate. In turn, this contributes to overall economic development and job creation.
Lastly, financial markets facilitate exchanges between providers and users of capital. Providers, such as savers and investors, supply funds to the market, while users, like businesses and governments, demand funds for various purposes. Financial markets bring these parties together, allowing for the allocation of resources according to the needs of the economy. In summary, financial markets are crucial because they enable individuals to transfer purchasing power over time, ensure efficient fund transfers to businesses, and facilitate exchanges between capital providers and users. These functions contribute to a stable and prosperous economy, so the answer is d. all of the above.
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smith company receives $500,000 of subscription revenue in advance during year 1. the subscription revenue is not included on the income statement, but is reported for tax purposes in year 1. $250,000 will be recognized in year 2 and $250,000 in year 3. smith company is subject to a 40% tax rate. what is the amount of the deferred tax asset at the end of year 2?
The deferred tax asset at the end of year 2 will be $100,000.
How to calculate the deferred tax assetSmith Company has received $500,000 of subscription revenue in advance during year 1, but only $250,000 will be recognized in year 2 and year 3 each.
The subscription revenue is not included in the income statement but reported for tax purposes in year 1.
Since the company is subject to a 40% tax rate, it will have to pay taxes on the entire $500,000 in year 1.
However, in year 2 and year 3, it will only recognize $250,000 each year, resulting in lower taxable income and tax liability. This creates a deferred tax asset because the company has already paid taxes on the entire amount but will recognize revenue in future years.
To calculate the amount of deferred tax asset at the end of year 2, we need to determine the tax savings from the lower taxable income in year 2.
The tax savings will be 40% of the $250,000 recognized in year 2, which is $100,000.
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Discussion
Questions:
In the 1960s, coffee came in 1-pound cans. Today, most coffee comes
in 11-ounce cans.
Can you think of an explanation for why?
Can you think of other products besides coffee wh
There could be several reasons why coffee now comes in 11-ounce cans instead of 1-pound cans. One reason could be changes in consumer demand and behavior. Perhaps people are buying smaller amounts of coffee at a time, or they are more interested in trying different blends and flavors, so having smaller quantities available is more practical. Another reason could be changes in the coffee market and supply chain, such as increased competition, changes in pricing or availability of raw materials, or changes in shipping and distribution costs.
Why the coffee came in 1-pound cans?
As for other products, there are many examples of products that used to come in larger sizes or quantities but are now offered in smaller sizes or portions. For example, soft drinks used to be sold primarily in 12-ounce cans, but now you can find them in 8-ounce cans, 20-ounce bottles, and other sizes. Snack foods like potato chips and candy bars used to come in larger packages, but now they are often sold in smaller portions as part of a trend toward healthier snacking habits. In general, the availability of smaller product sizes and portions reflects changing consumer preferences and the desire for greater convenience, portability, and flexibility in how products are consumed.
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in an agency at will, what would constitute a wrongful termination? choose 2 answers. the agent not giving the principal adequate notice the agent terminating for any reason the principal not giving the agent reasonable notice the principal terminating for a discriminatory reason
A wrongful termination in an agency at will would be the principal terminating for a discriminatory cause and the agent failing to provide the principal appropriate notice.
In an agency at will, either the principal or the agent may end the partnership at any moment for any reason, with no legal ramifications. There are few exceptions to this general rule, and terminating the partnership for a discriminatory purpose or without appropriate warning would be considered unjust termination.
Discriminatory reasons may include race, gender, age, or handicap, and terminating for these reasons may be illegal. Adequate notice would be determined by the agency agreement and industry standards.
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which approach to forecasting draws on economic theory to develop models that predict exchange rate movements?
The econometric approach to forecasting draws on economic theory to develop models that predict exchange rate movements.
This approach involves analyzing economic factors such as inflation, interest rates, and trade balances, as well as political and social factors that may impact currency values. By understanding these factors and using them to create predictive models, economists can forecast future exchange rate movements with a certain level of accuracy.
It is a method that is used to forecast exchange rates by gathering all relevant factors that may affect a certain currency. It connects all these factors to forecast the exchange rate. The factors are normally from economic theory, but any variable can be added to it if required.
For example, say, a forecaster for a Canadian company has researched factors he thinks would affect the USD/CAD exchange rate. From his research and analysis, he found that the most influential factors are: the interest rate differential (INT), the GDP growth rate differences (GDP), and the income growth rate (IGR) differences.
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The approach to forecasting that draws on economic theory to develop models that predict exchange rate movements is known as the fundamental analysis approach. This approach involves analyzing various economic factors that impact currency exchange rates, such as interest rates, inflation, political stability, and trade balances.
Fundamental analysis is a method of forecasting that uses economic factors, such as interest rates, inflation rates, trade balances, and other macroeconomic indicators, as well as geopolitical events and market sentiment, to predict exchange rate movements. It relies on the belief that economic fundamentals drive currency movements in the long term and that analyzing these factors can provide insights into future exchange rate trends. Fundamental analysis is commonly used by economists, currency traders, and financial institutions to make informed decisions about foreign exchange transactions and investments.
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calculate the expected return for the two stocks. (do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. calculate the standard deviation for the two stocks. (do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
The expected return for the portfolio is 12% and the standard deviation is 9.44%.
To calculate the expected return for the two stocks, we first need to calculate the weighted average of their individual expected returns. Let's assume stock A has an expected return of 10% and stock B has an expected return of 15%. If we invest 60% in stock A and 40% in stock B, the expected return would be:
Expected return = (0.6 x 10%) + (0.4 x 15%) = 12%
To calculate the standard deviation for the two stocks, we need to first calculate their individual standard deviations. Let's assume stock A has a standard deviation of 8% and stock B has a standard deviation of 12%. If we invest 60% in stock A and 40% in stock B, the portfolio standard deviation can be calculated using the following formula:
Portfolio standard deviation = (0.6^2 x 8%^2 + 0.4^2 x 12%^2 + 2 x 0.6 x 0.4 x 8% x 12%)^0.5 = 9.44%
Therefore, the expected return for the portfolio is 12% and the standard deviation is 9.44%.
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9. power construction builds a new house for sonja. in the contract, all of the windows must be made by pella. power, unable to find all the pella windows needed, installs comparable windows from a competing window company. if sonja refuses to pay power, a court might decide that:
The court might decide that Sonja would have to pay a reduced price based on the difference in value between Pella windows and the windows actually installed by Power, the correct option is C.
Although Power acted in good faith and its performance was substantial, the fact that they did not use Pella windows as stipulated in the contract is a clear violation of the agreement. As a result, Sonja has the right to refuse to pay the full contract price.
However, Sonja would not be entitled to withhold the entire payment as this would be considered an unfair enrichment, and Power should be compensated for the work they have done. A court might decide that Sonja should pay a reduced price based on the difference in value between Pella windows and the windows actually installed by Power, the correct option is C.
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The complete question is:
Power Construction builds a new house for Sonja. In the contract, all of the windows must be made by Pella. Power, unable to find all the Pella windows needed, installs comparable windows from a competing window company. If Sonja refuses to pay Power, a court might decide that:
A) Sonja would have to pay the contract price in full because Power acted in good faith and its performance was substantial.
B) Sonja would not have to pay anything because Power breached the contract by not using Pella windows.
C) Sonja would have to pay a reduced price based on the difference in value between Pella windows and the windows actually installed by Power.
D) Sonja would have to pay for the non-Pella windows separately, in addition to the contract price.
Cost of Capital: Edna Recording Studios, Inc., reported earnings available to common stock of $4,200,000 last year. From those earnings, the company paid a dividend of $1.26 on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 40% debt, 10% preferred stock, and 50% common stock. It is taxed at a rate of 40%. A) If the market price of common stock is $40 and dividends are expected to grow at a rate of 6% per year for the foreseeable future, what is the company's cost of retained earnings financing? B) If the underpricing and flotation costs on new shares of common stock amount to $7.00 per share, what is the company's cost of new common stock financing? C) The company can issue $2.00 dividend preferred stock for a market price of $25.00 per share. Flotation casts would amount to $3.00 per share. What is the cost of perferred stock financing? D) The company can issue $1,000-par-value, 10% coupon, 5-year bonds that can be sold for $1,200 each. Flotation costs would amount to $25.00 per bond. Use the estimation formula to figure the approximate cost of debt financing. E) What is the WACC?
A) Cost of Retained Earnings Financing:
The cost of retained earnings financing is the return expected by investors on the company's common stock. This is calculated using the Gordon growth model:
Cost of Retained Earnings (k) = (Dividend per share / Market price per share) + Dividend growth rate
k = ($1.26 / $40) + 6%
k = 0.0315 + 0.06
k = 0.0915 or 9.15%
B) Cost of New Common Stock Financing:
The cost of new common stock financing includes both the dividend yield and the flotation costs:
Cost of New Common Stock (k) = (Dividend per share / Market price per share) + Flotation costs per share
k = ($1.26 / $40) + $7.00
k = 0.0315 + $7.00
k = $7.0315 or $7.03
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in a forecast model, if assets are less than liabilities and equity, the company needs additional capital. true or false
The given statement in a forecast model, if assets are less than liabilities and equity, the company needs additional capital is true.
In a forecast model, if belongings are much less than liabilities and fairness, the organisation desires extra capital to keep its monetary balance and meet its responsibilities. If a organisation's liabilities and fairness exceed its belongings in a forecast model, it approach the organisation has poor internet belongings or a poor ee-e book value, indicating that it can now no longer be capable of meet its responsibilities to lenders or investors. This scenario may be an early caution signal of monetary distress, and the organisation can also additionally want extra capital to cowl its responsibilities or enhance its monetary position.
Therefore, the statement "In a forecast model, if assets are less than liabilities and equity, the company needs additional capital" is considered true.
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True. In a forecast model, if assets are less than liabilities and equity, the company needs additional capital. This situation indicates that the company's liabilities and equity are greater than its assets, meaning that it has more debt and obligations than it can fulfill with its current resources.
This can be a cause for concern for investors and creditors, as it suggests that the company may struggle to meet its financial obligations in the long term.
To address this issue, the company may need to raise additional capital through various means, such as issuing new equity, taking on more debt, or seeking out investors. Alternatively, the company may need to adjust its operations to reduce its expenses or increase its revenue streams, in order to improve its financial position and better meet its obligations.
Ultimately, the need for additional capital in a forecast model highlights the importance of careful financial planning and management, as well as the potential risks associated with taking on too much debt or failing to adequately account for liabilities and obligations. By closely monitoring their financial position and making strategic decisions based on accurate forecasting data, companies can ensure their long-term viability and success.
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since business environment is dynamic companies need to develop contingency plans for for the optimal solutions A______ is used to assess the impact of potential changes to parameters of an LP model
Objective function
Answer report
Shadow Price
Decision Variable
Sensitivity Analysis
Sensitivity analysis is used to assess the impact of potential changes to the parameters of an LP model to develop contingency plans for optimal solutions in dynamic business environments.
Companies need to create backup plans in a dynamic business environment to find the best solutions. Sensitivity analysis is a method for evaluating the effects of prospective modifications to the linear programming (LP) model's parameters.
Decision-makers can use this approach to determine how changes to input factors, such as resource availability or market circumstances, will affect the best solution. Companies may identify key factors and create backup plans to meet unforeseen changes by doing sensitivity analysis, assuring the ongoing sustainability and success of the enterprise.
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Sensitivity Analysis is used to assess the impact of potential changes to parameters of an LP model. As the business environment is dynamic, companies need to have contingency plans in place to ensure they can adapt to changes and continue to provide optimal solutions.
Sensitivity analysis helps in identifying how changes in input parameters affect the output, allowing companies to make informed decisions and adjust their strategies accordingly. A sensitivity analysis is used to evaluate the effects of possible modifications to a linear programming (LP) model's parameters. It entails looking at how adjustments to the model's input values impact the best result. Decision-makers may assess the robustness of the solution and spot possible hazards and opportunities by examining how sensitive the best solution is to changes in the input parameters. Sensitivity analysis may also assist in locating the most important restrictions or decision factors that influence the best option. Making educated judgements in fast-paced corporate contexts is made possible with the help of this knowledge.
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f wfo began business as a cash-method corporation in year 1, in which year would it have first been required to use the accrual method?
The decision to change from the cash method to the accrual method of accounting is usually based on factors such as the size and complexity of the business, as well as regulatory requirements.
Assuming that F WFO is a U.S. corporation and that it meets the average annual gross receipts test, it would have been required to use the accrual method starting from the tax year beginning after December 31, 1986. This is because the Tax Reform Act of 1986 required corporations with gross receipts over $5 million to use the accrual method of accounting for tax purposes, unless they meet certain exceptions.
However, if F WFO has gross receipts of $5 million or less, it can continue to use the cash method of accounting unless it grows to exceed the $5 million threshold or it chooses to switch to the accrual method.
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Company B paid dividend in 2021 of 0,8 USD, in line with the expected dividend growth of 3% each year. Company C has announced it expects to pay a 1,3 dividend to common shareholders in 2022, and its cost of equity (CAPM) is of 7,5%. (Company´s C paid dividend in 2021 of 1). Both companies are from the automotive sector where the expected rate of return of the market is of 8%. a. Which company has the most expensive share price ? b. Would you rather buy stocks of Company B or C considering that Company B stock is trading at 15 and Company C stock at 75
Based on the information provided, it appears that Company C has the most expensive share price.
This is because the dividend growth rate for Company C is significantly higher than Company B and the company's cost of equity (CAPM) is also higher.
Given that Company B's stock is trading at 15 and Company C's stock is trading at 75, it would be more prudent to purchase stocks of Company B. This is because Company B has a lower dividend growth rate and cost of equity, which implies that Company B is more likely to be undervalued compared to Company C.
Additionally, Company B has a much lower stock price than Company C, which further indicates that Company B would offer a better return on investment compared to Company C.
Overall, it seems that investing in Company B would be more advantageous than investing in Company C, as it offers a lower risk and potentially higher returns.
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according to the most recent information available, it is known that in order to achieve reductions in state anxiety aerobic exercise must be performed for at least 20 minutes—true or false?
The statement "According to the most recent information available, it is known that in order to achieve reductions in state anxiety, aerobic exercise must be performed for at least 20 minutes." is true because it helps in cardiovascular strengthening.
Aerobic exercise has been found to effectively reduce state anxiety when performed for at least 20 minutes. Regular physical activity can help improve mental health by releasing endorphins and reducing stress levels.
Aerobic or "with oxygen" exercises provide cardiovascular conditioning. The American Heart Association recommends a minimum of 30 minutes of cardiovascular exercise 5 to 7 days per week. Don't forget warm-up, cool-down and stretching exercises in your aerobic exercise session.
Aerobic exercise provides cardiovascular conditioning. The term aerobic actually means "with oxygen," which means that breathing controls the amount of oxygen that can make it to the muscles to help them burn fuel and move.
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a 10 year bond has a yield to maturity of 9.50 percent and a modified duration of 6 years. if the market yield increases by 50 basis points, what would the change in the bond's price be?
The change in the bond's price would be approximately -3.00%.
To calculate the change in the bond's price, use the modified duration and the change in yield.
1. Identify the modified duration: 6 years
2. Identify the initial yield to maturity: 9.50%
3. Determine the change in yield: 50 basis points (0.50%)
4. Multiply the modified duration by the change in yield: 6 * 0.50% = 3.00%
5. Since the yield increased, the bond's price will decrease, so the change is negative: -3.00%
The bond's price will decrease by approximately 3.00% when the market yield increases by 50 basis points.
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Cicero might say that in a transaction the seller is obligated to place warnings on all products-this would be a case of "caveat vendor." True False
True. "Caveat vendor" means "let the seller beware," and in this case, it would mean that the seller is responsible for warning consumers of any potential dangers associated with their products.
I'm happy to help you with your question. Based on the given information, it is True that Cicero might say that in a transaction, the seller is obligated to place warnings on all products, as this would be a case of "caveat vendor." This term means "let the seller beware" and implies that the seller has a responsibility to inform buyers of any potential issues or hazards related to their products.
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fundamental risk affects closed end funds in which of the following ways? multiple choice question. the fund can sell at a discount and the discount could increase closed end funds will never sell at a premium
Fundamental risk can affect closed-end funds by causing them to sell at a discount.
This discount could increase if the underlying assets or management performance continue to be perceived as having high risk. Closed-end funds can also sell at a premium in certain situations, so option 2 is not accurate.
Fundamental risk is risk that affects entire societies or a large population within a society. Natural disasters, such as earthquakes and hurricanes, fall into the category of fundamental risk, as do phenomena such as inflation and war, which typically affect large numbers of people.
In distinction to static risk, fundamental risk may or may not be insurable. Particular risk, in contrast to fundamental risk, refers to risks that affect an individual, such as a fire that destroys a family home, theft of a car or robbery. Particular risk can be insured.
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Recommendation for Government borrowing
1) Write a report on the topic with bullet points and a brief
explanation of each point
Recommendations for Government Borrowing are to Maintain a sustainable debt-to-GDP ratio, Diversify sources of borrowing, Utilize long-term borrowing, Prioritize productive investments, Monitor and manage fiscal risks, etc.
1. Maintain a sustainable debt-to-GDP ratio
- The government should aim to keep its debt levels manageable compared to the size of its economy, as a high debt-to-GDP ratio may lead to reduced investor confidence and increased borrowing costs.
2. Diversify sources of borrowing
- To reduce dependency on a single source of funding and minimize risks, the government should explore various borrowing options, including issuing bonds, obtaining loans from international organizations, and borrowing from other countries.
3. Utilize long-term borrowing
- Long-term borrowing can help the government to lock in lower interest rates, providing more predictable debt servicing costs and allowing for better planning of future spending and investment.
4. Implement a robust debt management strategy
- A well-defined debt management strategy can help the government minimize borrowing costs, manage risks, and ensure timely debt servicing. This may include developing a debt management office to oversee and coordinate borrowing activities.
5. Prioritize productive investments
- Government borrowing should be directed towards productive investments, such as infrastructure development, education, and healthcare, which can promote long-term economic growth and improve living standards.
6. Enhance transparency and accountability
- To maintain trust and credibility among investors, the government should provide regular and accurate information about its borrowing activities and debt levels, and demonstrate responsible fiscal management.
7. Monitor and manage fiscal risks
- The government should identify and assess potential fiscal risks, such as economic downturns, natural disasters, or changes in global financial conditions, and develop contingency plans to mitigate their impact on debt levels and borrowing costs.
By following these recommendations, government borrowing activities can be conducted responsibly and contribute to sustainable economic growth and development.
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a practice that assesses the value chain to create new or refine existing value-added activities and to eliminate or reduce non-value activities is ______.
The practice that assesses the value chain to create new or refine existing value-added activities and to eliminate or reduce non-value activities is called Value Chain Analysis.
Value Chain Analysis is a strategic tool used by businesses to evaluate their operations and identify areas for improvement. It involves examining each activity in the company's value chain, from inbound logistics to outbound logistics, and assessing its contribution to the final product or service. Value Chain Analysis aims to enhance the overall efficiency and effectiveness of the value chain by identifying opportunities to increase value-added activities and eliminate non-value activities.
By implementing Value Chain Analysis, businesses can achieve a competitive advantage by creating a leaner and more effective value chain. This can lead to cost savings, improved customer satisfaction, and increased revenue. In addition, Value Chain Analysis can help businesses to identify areas where they can differentiate themselves from their competitors by creating unique value-added activities. Overall, Value Chain Analysis is a valuable tool for businesses looking to improve their operations and increase their competitiveness in the marketplace.
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Four years ago Jensen Inc. had purchased equipment for $2,100,000. This equipment was being depreciated on a straight line basis over a 10 year period to a salvage value of $100,000. The equipment has six more years of economic life, and during this period the annual revenues and operating costs associated with this machine are expected to be $650,000 and $300,000, respectively Jensen is now considering replacing this machine with a less expensive and more efficient one. The old equipment can be sold for 1,000,000. Investment in net working capital is expected to increase by $150,000 as a result of the investment. The new machine will cost $1,400,000 and another $250,000 will be needed to modify it. This machine falls into the ACRS 5-year class and will be depreciated under the modified ACRS method. It is also expected to have an economic life of 6 years. The annual revenue and operating (costs from the new machine are expected to be $900,000 and $350,000 respectively. In the sixth year Jensen expects to sell the net machine for $500,000. Jensen’s marginal tax rate is 34%.
(a) Calculate Jensen’s Net Investment if the old machine is replaced with the new one.
(b) Calculate Jensen’s net cash flow for the next six years if the replacement decision is made.
(a) Net Investment = $800,000
(b) The net cash flow for the next six years will be:
Year 0: -$800,000
Year 1 to 5: $492,200 (inflow)
Year 6: $766,000 (inflow)
How to calculate net investment when old machine is replaced by new one?(a) Jensen's net investment if the old machine is replaced with the new one can be calculated as follows:
Cost of new machine = $1,400,000
Cost of modifying the new machine = $250,000
Total cost of new machine = $1,650,000
Proceeds from sale of old machine = $1,000,000
Investment in net working capital = $150,000
Net Investment = Total cost of new machine - Proceeds from sale of old machine + Investment in net working capital
Net Investment = $1,650,000 - $1,000,000 + $150,000
Net Investment = $800,000
How to calculate net cash flow for the next six years?(b) Jensen's net cash flow for the next six years if the replacement decision is made can be calculated as follows:
Year 0:
Net investment = -$800,000 (outflow)
Year 1 to 6:
Revenue = $900,000
Operating costs = $350,000
Depreciation expense = $380,000 (calculated using modified ACRS method)
Income before taxes = $170,000
Taxes = $57,800 (34% of income before taxes)
Net income = $112,200
Cash flow from operations = Net income + Depreciation expense = $492,200
Net cash flow = Cash flow from operations - Investment in net working capital = $492,200 - $0 = $492,200 (inflow)
Year 6:
Revenue = $900,000
Operating costs = $350,000
Depreciation expense = $0 (since the machine is sold)
Gain on sale of machine = $150,000 (proceeds from sale of new machine - book value of new machine)
Tax on gain = $17,000 (34% of gain on sale)
Net income = $783,000 (after tax)
Cash flow from operations = Net income + Depreciation expense = $783,000 + $0 = $783,000
Cash flow from sale of machine = Proceeds from sale of new machine - Tax on gain = $150,000 - $17,000 = $133,000
Net cash flow = Cash flow from operations + Cash flow from sale of machine - Investment in net working capital = $783,000 + $133,000 - $150,000 = $766,000 (inflow)
Therefore, the net cash flow for the next six years if the replacement decision is made is as follows:
Year 0: -$800,000
Year 1 to 5: $492,200 (inflow)
Year 6: $766,000 (inflow)
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