a. The monthly payment of the mortgage facility would be US$1,862.30 assuming an interest rate of 8% and a loan term of 25 years.
b. Month | Beginning Balance | Payment | Interest | Principal | Ending Balance
1 | $262,500.00 | $1,862.30 | $1,750.00 | $112.30 | $262,387.70
2 | $262,387.70 | $1,862.30 | $1,747.90 | $114.40 | $262,273.30
3 | $262,273.30 | $1,862.30 | $1,745.80 | $116.50 | $262,156.80
4 | $262,156.80 | $1,862.30 | $1,743.60 | $118.70 | $262,038.10
c. Based on the computation of the monthly mortgage repayment, it may be financially beneficial for the company to purchase the house instead of paying rent forever. However, other factors such as the availability of funds for the down payment and the company's long-term plans should also be considered.
d. Three challenges of mortgage acquisition in Ghana include high-interest rates, difficulty in obtaining financing, and lack of transparency in the real estate sector.
e. To make mortgage acquisition more attractive in Ghana, the government should consider implementing policies such as reducing interest rates, providing incentives for mortgage lenders, and improving transparency in the real estate sector.
Additionally, the government could also consider introducing affordable housing schemes to help low and middle-income earners own homes.
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Sardano and Sons is a large, publicly held company that is considering leasing a warehouse. One of the company’s divisions specializes in manufacturing steel, and this particular warehouse is the only facility in the area that suits the firm’s operations. The current price of steel is $784 per ton. If the price of steel falls over the next six months, the company will purchase 725 tons of steel and produce 79,750 steel rods. Each steel rod will cost $13 to manufacture and the company plans to sell the rods for $28 each. It will take only a matter of days to produce and sell the steel rods. If the price of steel rises or remains the same, it will not be profitable to undertake the project, and the company will allow the lease to expire without producing any steel rods. Treasury bills that mature in six months yield a continuously compounded interest rate of 5 percent and the standard deviation of the returns on steel is 45 percent.Use the Black-Scholes model to determine the maximum amount that the company should be willing to pay for the lease. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The maximum amount that the company should be willing to pay for the lease is approximately $1,156,956.38.
How to determine the maximum amount to be paidTo determine the maximum amount Sardano and Sons should be willing to pay for the lease using the Black-Scholes model, we first need to calculate the present value of the expected profits if the price of steel falls.
1. Calculate the profit per steel rod:
Profit per rod = Selling price - Manufacturing cost
Profit per rod = $28 - $13 = $15
2. Calculate the total profit from producing and selling 79,750 steel rods:
Total profit = Profit per rod × Number of rods
Total profit = $15 × 79,750 = $1,196,250
3. Calculate the present value of the total profit using the continuously compounded interest rate of 5%:
[tex]PV = Total \: profit \times {e}^{ - rt} [/tex]
PV = $1,196,250 × e^(-0.05 * 0.5)
PV ≈ $1,156,956.38
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Question:Choose the Commercial Bank of any country and highlights thefollowing points:· Functions· Role inthe economic development of that country
The Commercial Bank of any country and highlights the following points:· Functions· Role inthe economic development of that country is the State Bank of India (SBI), the largest public sector bank in India.
SBI functions are provides a wide range of banking services to customers, it accepts deposits in the form of savings accounts, current accounts, and fixed deposits. The bank also extends loans and advances to individuals, businesses, and industries, thereby facilitating economic growth. SBI offers various financial services such as insurance, asset management, and credit cards. Furthermore, the bank provides international banking and foreign exchange services, facilitating cross-border trade and investment.
SBI plays a crucial role in India's economic development, it supports infrastructure projects, small and medium enterprises (SMEs), and the agricultural sector by providing loans and financial assistance. The bank's extensive network, particularly in rural and remote areas, promotes financial inclusion, empowering individuals and communities with access to banking services. Additionally, SBI helps attract foreign investment by providing a robust banking platform for international businesses. By extending credit and supporting various sectors, the State Bank of India contributes significantly to the country's overall economic growth and development.
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Demo Inc. is expected to generate a free cash flow (FCF) of $13,245.00 million this year (FCF1 = $13,245.00 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Demo Inc.'s weighted average cost of capital (WACC) is 12.78%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) $219,541.28 million $297,727.14 million $263,449.54 million $39,590.99 million
the current total firm value of Demo Inc. is $249,227.14 million. The closest option to this value is option (b) $297,727.14 million.
To calculate the total firm value of Demo Inc., we need to determine the present value of its future free cash flows (FCFs) discounted by the weighted average cost of capital (WACC).
1: Calculate the FCFs for years 2 and 3
FCF2 = FCF1 x (1 + g) = $13,245.00 million x (1 + 26.20%) = $16,722.69 million
FCF3 = FCF2 x (1 + g) = $16,722.69 million x (1 + 26.20%) = $21,100.90 million
2: Calculate the FCF for year 4 and beyond using the perpetuity formula
FCF4 = FCF3 x (1 + g) / (WACC - g) = $21,100.90 million x (1 + 4.26%) / (12.78% - 4.26%) = $303,321.11 million
3: Calculate the present value of the FCFs for years 1 to 4
[tex]PV(FCF1-4) = FCF1 + FCF2 / (1 + WACC)^2 + FCF3 / (1 + WACC)^3 + FCF4 / (1 + WACC)^3[/tex]
[tex]PV(FCF1-4) = $13,245.00 million + $16,722.69 million / (1 + 12.78%)^2 + $21,100.90 million / (1 + 12.78%)^3 + $303,321.11 million / (1 + 12.78%)^3[/tex]
PV(FCF1-4) = $13,245.00 million + $13,710.70 million + $15,474.14 million + $206,797.30 million
PV(FCF1-4) = $249,227.14 million
4: Calculate the total firm value
Total firm value = PV(FCF1-4)
Total firm value = $249,227.14 million.
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An oil company is willing to pay the following dividends: Year 1: €4; Year 2: €5; Year 3 and following years (4, 5, 6...infinite): €2. The required rate of return for firms in this sector is 11%. Compute the price at which one share of INCARSA Corp is expected to trade in the secondary market: a. 22.42 b. 23.45 C. 20.35 d. None of the above
The correct answer is A: 22.42. The price of a share of INCARSA Corp expected to trade in the secondary market can be calculated by using the present value of dividends formula.
This formula takes into account the expected dividends that will be paid out and the required rate of return for firms in this sector.
Since the dividends paid out in Year 1 and Year 2 are higher than the subsequent dividends of €2, the present value of dividends formula takes this into account by assigning a higher value to the earlier years.
By plugging in the given dividend amounts and the required rate of return of 11%, we can calculate that the share price is expected to be 22.42.
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Consider a project with a life of 4 years with the following information initial fixed asset investment = $410,000, straight-line depreciation to zero over the 4-year life; zero salvage value: price = $26: variable costs = $19; fixed costs = $192,700, quantity sold = 84,788 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? Multiple Choice w $5.39 $3.83
The sensitivity of OCF to changes in quantity sold is $5.39.
Calculate the annual cash flows for the project?First, we need to calculate the annual cash flows for the project, using the given information:
Annual sales revenue = Price * Quantity sold = $26 * 84,788 = $2,204,888
Annual variable costs = Variable cost per unit * Quantity sold = $19 * 84,788 = $1,610,852
Annual fixed costs = $192,700
Annual depreciation = Fixed asset investment / Life = $410,000 / 4 = $102,500
Therefore, annual operating cash flow (OCF) = EBIT (Earnings before Interest and Taxes) + Depreciation - Taxes
= (Annual sales revenue - Annual variable costs - Annual fixed costs - Annual depreciation) + Annual depreciation * Tax rate
= ($2,204,888 - $1,610,852 - $192,700 - $102,500) + ($102,500 * 0.23)
= $314,338
Now, we can calculate the sensitivity of OCF to changes in quantity sold using the following formula:
Sensitivity = (Change in OCF / Initial OCF) / (Change in Quantity sold / Initial Quantity sold)
Let's assume that the quantity sold increases by 1%. Then, the new quantity sold will be:
New quantity sold = 84,788 * 1.01 = 85,635
The new annual sales revenue and variable costs will be:
New annual sales revenue = $26 * 85,635 = $2,222,110
New annual variable costs = $19 * 85,635 = $1,628,565
The new OCF can be calculated using the same formula as before:
New OCF = (New annual sales revenue - New annual variable costs - Annual fixed costs - Annual depreciation) + (Annual depreciation * Tax rate)
= ($2,222,110 - $1,628,565 - $192,700 - $102,500) + ($102,500 * 0.23)
= $328,473
Now, we can calculate the sensitivity:
Sensitivity = (New OCF - Initial OCF) / Initial OCF / (New quantity sold - Initial quantity sold) / Initial quantity sold
= ($328,473 - $314,338) / $314,338 / (85,635 - 84,788) / 84,788
= 5.39
Therefore, the sensitivity of OCF to changes in quantity sold is $5.39.
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On your own paper, in the working papers, or using a spreadsheet, prepare the following:
a. Prepare a multiple-step income statement for the year ended December 31, 20Y5, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. (Round earnings per share to the nearest cent.) Save your calculations and enter the requested amounts below.
The EPS calculation would be: [tex]= ($xxx - $100,000) / 100,000= $x.xx per share[/tex]
To prepare a multiple-step income statement for the year ended December 31, 20Y5, follow these steps:
1. Determine the company's total sales revenue for the year. This should be listed at the top of the income statement.
2. Subtract the cost of goods sold (COGS) from the total sales revenue to arrive at the gross profit. This is the second line of the income statement.
3. List all operating expenses, such as salaries, rent, utilities, and depreciation, below the gross profit. Subtract the total operating expenses from the gross profit to arrive at the operating income.
4. Next, list any non-operating income, such as interest earned on investments or gains from the sale of assets. Add this income to the operating income to arrive at the total income before taxes.
5. Subtract the income tax expense from the total income before taxes to arrive at the net income. This should be listed at the bottom of the income statement.
6. To calculate earnings per share (EPS), divide the net income by the average number of common shares outstanding. In this case, the average number of common shares outstanding is 100,000 and the preferred dividends were $100,000.
Therefore, the EPS calculation would be:
Net income - preferred dividends / average number of common shares outstanding
[tex]= ($xxx - $100,000) / 100,000= $x.xx per share[/tex]
Remember to round EPS to the nearest cent.
Once you have completed these steps, you should have a complete multiple-step income statement for the year ended December 31, 20Y5, including earnings per share.
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fixed-price contracts are considered which of the following? very flexible very rigid always cheaper than any other option useless when considering a systems design always the best option for any project
Fixed-price contracts are considered a strangle includes holding both a put and a call on the same underlying asset. The correct answer is a. very flexible very rigid always.
Holding a call and a put on the same underlying asset is a typical option strategy known as a strangle. A strangle protects investors who anticipate a swift move in an asset but are unsure of the direction. A strangle is profitable only when the price of the underlying asset swings sharply.
You take a considerable price risk if you write short strangles on particular stocks. On an index, selling strangles is significantly safer. The worst scenario for traders may be a short strangle on Infosys or Reliance before the quarterly results.It is untrue that it is always preferable to enter into long-term contracts because they are normally less expensive and to avoid using any flexible capacity since it is more expensive because the choice depends on the type of industry and the situation. There are various market segments and industries, and each one has unique traits and elements that influence how decisions are made.
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when then number of needed items are computed based on the number of higher-level items produced, one is operating in a(n)
When the number of needed items are computed based on the number of higher-level items produced, one is operating in a bill of materials (BOM) system.
A bill of materials (BOM) is a comprehensive list of raw materials, assemblies, sub-assemblies, components, and parts needed to manufacture a finished product. It contains information about the quantity, unit of measure, and order of usage of each component in the manufacturing process.
When the number of needed items are computed based on the number of higher-level items produced, it means that the BOM system is used to determine the required quantity of each raw material, assembly, sub-assembly, component, and part based on the production order of the finished product.
The BOM system is commonly used in manufacturing, engineering, and supply chain management to ensure the accurate and efficient production of products.
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You are considering making a movie. The movie is expected to cost $10.6 million up front and take a year to produce. Afterthat, it is expected to make $4.9 million in the year it is released and $1.7 million for the following four years.
What is the payback period of this investment? If you require a payback period of two years, will you make the movie?
Does the movie have positive NPV if the cost of capital is 10.5%?
The payback period of the movie investment is 3.17 years and the NPV of the movie investment is negative (-$1.41 million)
The payback period is the amount of time it takes for an investment to generate enough cash flows to recover the initial investment. To calculate the payback period for the movie investment, we need to sum up the expected cash flows until the total is equal to or greater than the initial investment.
The expected cash flows for the movie investment are as follows:
Up-front cost: -$10.6 million (negative because it is an expense)
Year 1: $4.9 million
Year 2: $1.7 million
Year 3: $1.7 million
Year 4: $1.7 million
Year 5: $1.7 million
To calculate the payback period, we sum up the expected cash flows starting from the up-front cost until we reach a total that is equal to or greater than $10.6 million:
Payback period = Year of initial investment + (Remaining cash flow to reach $10.6 million / Cash flow in the following year)
Payback period = 1 + ($10.6 million / $4.9 million) = 3.17 years (rounded to two decimal places)
Since the payback period of the movie investment is 3.17 years, which is less than the required payback period of 2 years, the movie investment does not meet the payback period requirement and would not be considered a viable investment based on this criterion.
To determine if the movie has a positive Net Present Value (NPV) at a discount rate of 10.5%, we need to calculate the present value of all expected cash flows and subtract the initial investment. If the resulting value is positive, then the investment has a positive NPV, which indicates that it may be a worthwhile investment.
The present value of expected cash flows can be calculated using the formula:
PV = CF / (1 + r)^t
where:
PV = Present Value
CF = Cash Flow
r = Discount rate
t = Time period
Using this formula, we can calculate the present value of all expected cash flows for the movie investment:
Year 1: $4.9 million / (1 + 0.105)^1 = $4.43 million
Year 2: $1.7 million / (1 + 0.105)^2 = $1.38 million
Year 3: $1.7 million / (1 + 0.105)^3 = $1.24 million
Year 4: $1.7 million / (1 + 0.105)^4 = $1.12 million
Year 5: $1.7 million / (1 + 0.105)^5 = $1.02 million
Sum of Present Values = $4.43 million + $1.38 million + $1.24 million + $1.12 million + $1.02 million = $9.19 million
Now, we subtract the initial investment of $10.6 million from the sum of present values to get the Net Present Value:
NPV = Sum of Present Values - Initial Investment
NPV = $9.19 million - $10.6 million = -$1.41 million (negative because it is a loss)
Since the NPV of the movie investment is negative (-$1.41 million), the movie investment does not have a positive NPV at a discount rate of 10.5%. Therefore, based on the payback period and NPV criteria, the movie investment may not be considered a worthwhile investment. Further analysis and consideration of other factors would be necessary to make a final decision.
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You bought 100 shares of Apple inc on October 5th, 2020 at the closing price. You sold your shares on October 5, 2021 at the opening price. Answer the following:
Cost when purchased
Income when sold
Dividend income
Cap gain/loss
Total gain =
The total gain from buying 100 shares of Apple on October 5th, 2020, and selling them on October 5, 2021, was $2,387, which includes a capital gain of $2,299 and a dividend income of $88.
How to calculate the gain from buying and selling 100 shares of Apple on specific dates?To answer your question about buying 100 shares of Apple on October 5th, 2020 and selling them on October 5, 2021, I will provide a step-by-step explanation for each term:
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TRUE OR FALSE
Corporate bonds do not have default risk.
The statement "Corporate bonds do not have default risk." is false because Corporate bonds do have default risk, which refers to the possibility that a bond issuer may not be able to make interest payments or repay the principal amount on time.
Companies that issue corporate bonds are subject to various factors such as economic conditions, industry trends, and their own financial performance. These factors can affect a company's ability to meet its debt obligations. As a result, there is always a risk that the issuer may default on their bond payments.
Investors should consider the credit rating of a corporate bond, as it indicates the creditworthiness of the issuer and the associated default risk. Higher-rated bonds typically have lower default risk, while lower-rated bonds have higher default risk.
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Identify your business
Pick a business you want to operate in the future.
Determine the initial cost, and whether you want to start a loan.
Determine the maintaining and operation cost (e.g. materials, equipment, rent, labor and other expenses)
Determine your target customer and estimate the revenue
Use present worth, uniform cash flow and rate of return analysis for your project. You do not need to consider tax at this point. Come up with at leas two options for your business.
Please give the details of your reasonable estimate cost and benefits.
Profits are not estimated from the sale of one unit but are estimated over a given time period. The level of production should be estimated where the volume generates sufficient gross income to cover fixed costs plus variable costs.
The analysis for a new business includes calculating the money needed for a long-tern loan to buy equipment and buildings. Initial investment capital can be obtained from several sources with the interest rate as a factor for accepting the loan.
In your report, please show the REASONABLE details of
Inventory
Fix cost
Variable cost
Labor cost
Shipping cost (if applicable)
Price per unit
Units sold per period
Unit production per year
Unit storage
Estimate 1-10 years MARR
Predict current and future economic environment impact (e.g. Covid-19)
Identify your business
Pick a business you want to operate in the future.
Determine the initial cost, and whether you want to start a loan.
Determine the maintaining and operation cost (e.g. materials, equipment, rent, labor and other expenses)
Determine your target customer and estimate the revenue
Use present worth, uniform cash flow and rate of return analysis for your project. You do not need to consider tax at this point. Come up with at leas two options for your business.
Please give the details of your reasonable estimate cost and benefits.
Profits are not estimated from the sale of one unit but are estimated over a given time period. The level of production should be estimated where the volume generates sufficient gross income to cover fixed costs plus variable costs.
The analysis for a new business includes calculating the money needed for a long-tern loan to buy equipment and buildings. Initial investment capital can be obtained from several sources with the interest rate as a factor for accepting the loan.
In your report, please show the REASONABLE details of
Inventory
Fix cost
Variable cost
Labor cost
Shipping cost (if applicable)
Price per unit
Units sold per period
Unit production per year
Unit storage
Estimate 1-10 years MARR
Predict current and future economic environment impact (e.g. Covid-19)
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which of the following statements about external auditors are true? (check all that apply.) multiple select question. they often have lucrative consulting contracts with the firms they audit. they are appointed by the federal government. they are nonprofit organizations. they often fail to catch accounting irregularities.
Based on the given options, the following statements about external auditors are true:
They often have lucrative consulting contracts with the firms they audit.They often fail to catch accounting irregularities.External auditors are typically hired by companies to provide an independent evaluation of their financial statements. These auditors may have consulting contracts with the firms they audit, which can be financially beneficial for them. However, it is important to note that auditor independence is crucial for maintaining the integrity of the audit process.
Additionally, external auditors may sometimes fail to catch accounting irregularities due to various factors such as the complexity of the financial information, time constraints, or limitations in their audit scope. This highlights the importance of having a robust internal control system in place for companies.
The other two options are incorrect, as external auditors are not appointed by the federal government (they are usually hired by the company's management or board of directors), and they are not necessarily nonprofit organizations (many external auditing firms are for-profit entities).
So, these option is correct;
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Freddie bought a stock for $25 last year. The stock la now wonin 532, and over the year, he received total areal vidends d' 51.40 persone. What is the dicend you this holding period a. 43.8%
b. 33.6%
c. None of the seed toms is correct d. 5.6%
e. 28%
The correct answer is not listed in the options provided. The closest answer is e. 28%, which is the dividend yield for one year only, not for the entire holding period.
To calculate the dividend yield for Freddie's stock holding period, we need to divide the total dividends received by the original purchase price of the stock. The original purchase price was $25, and the total dividends received were $51.40. Therefore, the dividend yield for the holding period is:
$51.40 / $25 = 2.056
To convert this to a percentage, we need to multiply by 100. So the dividend yield for the holding period is:
2.056 x 100 = 205.6%
However, the answer choices provided are in percentages, so we need to subtract 100 to get the actual dividend yield percentage for the holding period:
205.6% - 100% = 105.6%
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Two years ago, Pierre and Jane purchased a home for $300,000. It has increased in value over the past two years and is currently worth $400,000. Their current mortgage balance is $150,000. Calculate the credit limit they would receive on a home equity loan. Assume that the financial institution they deal with will provide home equity loans of up to 80% of the market value of the home, less outstanding mortgages.
a) $170,000
b) $75,000
c) $300,000
d) $225,000
The credit limit that Pierre and Jane would receive on a home equity loan can be calculated by using the formula: (Market value of the home x 80%) - outstanding mortgage balance.
Using the given information, the market value of their home is $400,000 and their outstanding mortgage balance is $150,000. Therefore, the credit limit they would receive on a home equity loan is:
($400,000 x 80%) - $150,000 = $230,000 - $150,000 = $80,000
So the correct answer is not listed among the options given. The credit limit they would receive on a home equity loan is $80,000.
A home equity loan is a type of loan in which the borrower uses the equity of their home as collateral. The equity of a home is the difference between the market value of the home and the outstanding mortgage balance. Home equity loans are a popular option for homeowners who need access to funds for home improvements, debt consolidation, or other financial needs.
In this case, Pierre and Jane have built up $250,000 ($400,000 - $150,000) in equity in their home over the past two years. Based on the assumption that their financial institution provides home equity loans of up to 80% of the market value of the home, less outstanding mortgages, they would be eligible for a credit limit of up to $80,000.
It's important to note that the credit limit they receive may not necessarily be the full amount they are eligible for. Financial institutions will take into account the borrower's creditworthiness, income, and other factors when determining the actual amount they will lend.
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Bruce deposits 500 into a bank account. His account is credited interest at a nominal rate of interest a i convertible semiannually. At the same time, Peter deposits 500 into a separate account. Peter's account is credited interest at a force of interest S. After 10.25 years, the value of each account is 1500. Calculate (i-δ).
a. 0.20% b. 0.29% c. 0.12% d. 0.25% e. 0.16%
The correct answer is b. 0.29%. The force of interest is the effective interest rate paid on the account.
It is calculated by taking the nominal rate of interest a and subtracting the compounding frequency, or the number of times interest is compounded in a given period,
commonly denoted by δ. In this case, the nominal rate of interest a is convertible semiannually, meaning it is compounded twice a year, therefore δ is 0.5. To calculate the force of interest, we subtract δ from a. In this case, a would be 0.5, so the force of interest S is equal to 0.5 - 0.5 or 0.29%.
In other words, the force of interest is the actual rate of interest paid on the account, taking into account the compounding frequency.
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true or false? offering consumers the opportunity to pay with a credit card provides the value of possession utility.
True, offering consumers the opportunity to pay with a credit card provides the value of possession utility.
Possession utility refers to the increased value or satisfaction a consumer gains when they are given the ability to use a product or service immediately or when it is most convenient for them. By offering credit card payment options, businesses enhance the customer's purchasing experience and overall satisfaction.
Credit cards enable customers to make purchases without having the full amount of money at the time of purchase. This convenience allows them to acquire the desired product or service immediately and pay later, thus increasing the possession utility. Additionally, credit cards offer security and flexibility, as customers can track their expenses, benefit from reward programs, and have protection against fraudulent transactions.
Moreover, businesses that accept credit card payments are more likely to attract a larger customer base, as many consumers prefer the convenience of using credit cards. This, in turn, increases sales and revenue for the company.
In summary, offering consumers the opportunity to pay with a credit card does provide the value of possession utility. The convenience, flexibility, and security that come with using credit cards enhance the overall customer experience, leading to higher satisfaction and increased business opportunities.
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6) Baldwin Corp. just paid a dividend of $2.00. Over the next two years, this dividend is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. If the required rate of return on Baldwin stock is 12%, what should be the price of Baldwin stock today?
Baldwin Corp. paid a dividend of $2.00 which is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. Given the required rate of return on Baldwin stock is 12%. The price of Baldwin stock today should be $162.90.
To calculate the price of Baldwin stock today, we need to use the dividend discount model (DDM), which states that the current stock price is equal to the present value of all future dividends.
In this case, we can calculate the present value of the dividends over the first two years using the following formula:
PV of Dividends (Years 1-2) = D1 / (1 + r) + D2 / (1 + r) ^ 2
where:
D1 is the expected dividend at the end of the first year
D2 is the expected dividend at the end of the second year
r is the required rate of return
We are given that D1 = $2.00 * 1.2 = $2.40 and D2 = $2.40 * 1.2 = $2.88. Plugging in these values and r = 12%, we get:
PV of Dividends (Years 1-2) = $2.40 / (1 + 0.12) + $2.88 / (1 + 0.12) ^ 2
= $2.14 + $2.26
= $4.40
Next, we can calculate the present value of all future dividends beyond the second year using the Gordon growth model, which states that the price of the stock is equal to the next dividend divided by the difference between the required rate of return and the growth rate. In this case, the growth rate is 10% after the first two years, so we have:
PV of Future Dividends = D3 / (r - g)
where:
D3 is the dividend in the third year, which is equal to D2 * (1 + g) = $2.88 * 1.1 = $3.17
g is the long-term growth rate, which is 10%
Plugging in these values and r = 12%, we get:
PV of Future Dividends = $3.17 / (0.12 - 0.1)
= $158.50
Finally, we can calculate the price of the stock today by adding the present value of the dividends over the first two years to the present value of all future dividends beyond the second year:
Price of Baldwin Stock Today = PV of Dividends (Years 1-2) + PV of Future Dividends
= $4.40 + $158.50
= $162.90
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Firms with high_ratios are well positioned to pay off unexpected expenses quickly. A. turnover O B. leverage O C. liquidity OD. P/E
Firms with high liquidity ratios are well positioned to pay off unexpected expenses quickly: A liquidity ratio. The correct option is C.
A liquidity ratio measures a company's ability to pay off its short-term liabilities using its short-term assets. Higher liquidity ratios indicate that a company can more easily cover its obligations, making it better prepared for unexpected expenses.
A. Turnover ratio measures how efficiently a company is utilizing its assets, such as inventory or accounts receivable. It is not directly related to paying off unexpected expenses.
B. Leverage ratio measures the proportion of a company's debt to its equity. A higher leverage ratio may indicate a higher risk, as the company relies more on borrowed funds. This is not directly related to covering unexpected expenses.
C. Liquidity ratio, as explained earlier, measures a company's ability to meet its short-term liabilities using its short-term assets.
D. P/E (price-to-earnings) ratio measures the valuation of a company by comparing its current market price to its earnings per share. This is more relevant for investors evaluating the value of a company's stock, not its ability to pay off unexpected expenses.
In summary, firms with high liquidity ratios are well positioned to pay off unexpected expenses quickly because they have the necessary short-term assets to cover their short-term liabilities.
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Complete question:
Firms with high____ratios are well positioned to pay off unexpected expenses quickly.
A. turnover
B. leverage
C. liquidity
D. P/E
when performing a disaster recovery audit, which of the following would be considered the most important to review? the organization has a hot site reserved which is available when needed the organization has developed a business continuity manual that is available and up to date the organization has purchased adequate disaster insurance coverage, and premiums are paid the organization performs backups in a timely manner, which are then stored offsite
The most important item to review when performing a disaster recovery audit is to ensure that the organization has a hot site reserved which is available when needed.
A hot site is a pre-arranged facility that is ready for use in the event of a disaster. This is essential for the organization to continue operations in the event of a disaster. It should also be verified that the organization has a business continuity manual that is available and up to date.
The manual should have the necessary steps and procedures to follow in the event of a disaster. Additionally, it is important to verify that the organization has purchased adequate disaster insurance coverage, and premiums are paid.
Finally, it is important to verify that the organization performs backups in a timely manner, which are then stored offsite. This will ensure that any data or information that is lost due to a disaster can be recovered. By performing these reviews, the organization can ensure that they have the proper measures in place to recover from a disaster.
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When performing a disaster recovery audit, all of the options mentioned are important to review. However, the most important factor to review would depend on the specific needs and circumstances of the organization.
That being said, if we have to choose one from the options provided, the most important to review would be the organization's backups and their offsite storage. This is because, in the event of a disaster, the organization's ability to restore its data and systems is critical to its recovery. If backups are not performed in a timely manner, or if they are not stored offsite, then the organization may not be able to recover its data and systems, which could result in significant business disruptions and losses.
Having a hot site, a business continuity manual, and adequate disaster insurance coverage are all important elements of a disaster recovery plan. However, without timely and properly stored backups, these other elements may not be effective in helping the organization recover from a disaster. Therefore, the backups and their storage are often considered the most critical aspect of disaster recovery planning and should be carefully reviewed during a disaster recovery audit.
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_____ is the percentage of net profit the owners' equity earns, before taxes. multiple choice return on equity surplus value return on net assets profit margin'
Return on equity (ROE) is the percentage of net profit the owner's equity earns, before taxes. ROE is a financial performance ratio that measures the ability of a company to generate profits from its shareholders' investments.
It is calculated by dividing the net profit (before taxes) by the owner's equity. The result is expressed as a percentage, indicating how effectively the company is using the invested funds to generate profits.
a. Return on equity - This is the correct answer because it specifically measures the percentage of net profit generated by the owner's equity before taxes.
b. Surplus value - This is not the correct answer as surplus value is an economic concept used in Marxist theory, referring to the excess value produced by workers over and above their wages.
c. Return on net assets - This is not the correct answer because it measures the efficiency of a company's management in using its net assets to generate profits, not specifically the owner's equity.
d. Profit margin - This is not the correct answer because the profit margin refers to the ratio of net profit to revenue, which shows the percentage of revenue that is converted into profit, not specifically related to owner's equity.
In conclusion, the correct answer is return on equity (ROE), as it directly measures the percentage of net profit the owner's equity earns before taxes. It is a key indicator for investors to assess the profitability and efficiency of a company in using its invested capital.
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Complete Question:
_____ is the percentage of net profit the owner's equity earns, before taxes.
multiple choice
a. return on equity
b. surplus value
c. return on net assets
d. profit margin.
A cohesive marketing mix and the comprise a marketing program, Multiple Choice core competencies organizational structure basic marketing evaluation criteria traditional market related budget
A cohesive marketing mix refers to the combination of product, price, promotion, and place that work together to create a consistent and effective marketing message.
This mix is an important part of a marketing program, which is a comprehensive plan that outlines a company's marketing strategies and tactics to achieve its business objectives. To implement a successful marketing program, an organization must have the core competencies necessary to execute its strategies effectively.
This includes having a strong understanding of customer needs, a deep knowledge of the industry and competition, and the ability to create compelling messaging and creative materials.
Additionally, the organizational structure must be aligned to support the marketing program, with clear roles and responsibilities for all team members involved.
Finally, the program must be evaluated using basic marketing evaluation criteria, such as return on investment and customer satisfaction, and supported by a traditional market-related budget.
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A global positioning system (GPS) receiver is purchased for $6,000. The IRS informs your company that the useful (class) life of the system is six years. The expected market (salvage) value is $450 at the end of year six a. Use the straight line method to calculate depreciation in year two b. Use the 200% declining balance method to calculate the cumulative depreciation through year three c. Use the MACRS method to calculate the cumulative depreciation through year four d. What is the book value of the GPS receiver at the end of year three when straight line depreciation is used?
a. Year 2 straight line depreciation: $925.
b. Cumulative depreciation through Year 3, 200% declining balance method: $3,332.
c. Cumulative depreciation through Year 4, MACRS method: $3,450.68. d. Book value at end of Year 3 using straight-line method: $3,791.67.
a. Straight-line depreciation method:
Annual depreciation = (cost - salvage value) / useful life
Annual depreciation = ($6,000 - $450) / 6 = $925
Depreciation in year two = $925
b. 200% declining balance method:
Depreciation rate = 2 * (1 / useful life) = 2 * (1 / 6) = 0.3333
Year 1 depreciation = cost * depreciation rate = $6,000 * 0.3333 = $2,000
Year 2 depreciation = (cost - year 1 depreciation) * depreciation rate = ($6,000 - $2,000) * 0.3333 = $1,332
Cumulative depreciation through year three = year 1 depreciation + year 2 depreciation = $2,000 + $1,332 = $3,332
c. MACRS method:
MACRS allows for more accelerated depreciation in the early years of an asset's life. The depreciation percentage depends on the asset's class life and recovery period.
Class life for GPS receiver = 6 years
Recovery period for GPS receiver = 5 years
Using the MACRS table for 5-year recovery period and 6-year class life, the depreciation percentages are:
Year 1 = 20.00%
Year 2 = 32.00%
Year 3 = 19.20%
Year 4 = 11.52%
Year 5 = 11.52%
Year 6 = 5.76%
Depreciation in year one = $6,000 * 20% = $1,200
Depreciation in year two = ($6,000 - $1,200) * 32% = $1,824
Depreciation in year three = ($6,000 - $1,200 - $1,824) * 19.20% = $776.83
Cumulative depreciation through year four = $1,200 + $1,824 + $776.83 + ($6,000 - $1,200 - $1,824 - $776.83) * 11.52% = $3,450.68
d. Book value of the GPS receiver at the end of year three using straight line depreciation:
Depreciation in year one = ($6,000 - $450) / 6 = $925
Depreciation in year two = ($6,000 - $450 - $925) / 6 = $725
Depreciation in year three = ($6,000 - $450 - $925 - $725) / 6 = $558.33
Book value at the end of year three = $6,000 - $925 - $725 - $558.33 = $3,791.67
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A 4-year project with an initial cost of $119,000 and a required rate of return of 17 percent has a chance of success of 9 percent. If the project succeeds, the annual cash flow will be $1,591,000. If the project fails, the annual cash flow will be −$214,000. The project can be shut down after the first two years, but all money invested will be lost. None of the initial cost can be recouped after four years. What is the net present value of this project at Time 0?
Answer:
The net present value of the project at Time 0 is $83,062.72. This means that the project is expected to generate a positive return, and it is worth investing in.
Explanation:
To calculate the net present value (NPV) of the project at Time 0, we need to find the present value of all cash flows associated with the project using the required rate of return of 17 percent.
First, let's calculate the expected cash flows for the project:
Chance of success = 9%
Chance of failure = 91% (100% - 9%)
If the project succeeds, the annual cash flow will be $1,591,000, and it will continue for four years. Therefore, the total cash flow for the project's life will be:
Total cash flow if the project succeeds = $1,591,000 x 4 = $6,364,000
If the project fails, the annual cash flow will be -$214,000, and it will also continue for four years. Therefore, the total cash flow for the project's life will be:
Total cash flow if the project fails = -$214,000 x 4 = -$856,000
Now, we can calculate the expected value of the project's cash flows:
Expected value = (Chance of success x Total cash flow if the project succeeds) + (Chance of failure x Total cash flow if the project fails)
Expected value = (0.09 x $6,364,000) + (0.91 x -$856,000) = $415,320
This means that the expected value of the project's cash flows is $415,320.
Next, we can calculate the NPV of the project at Time 0:
NPV = -Initial cost + PV of expected cash flows
NPV = -$119,000 + (PV factor for 4 years at 17% x $415,320)
NPV = -$119,000 + (0.486 x $415,320)
NPV = -$119,000 + $202,062.72
NPV = $83,062.72
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a brand character statement is a brief description of the evidence that backs up the product promise.
No, a brand character statement is not a brief description of the evidence that backs up the product promise.
A brand character statement is a statement that captures the personality and values of a brand, helping to establish an emotional connection with consumers.
It often includes information about the brand's purpose, values, and mission, as well as its personality traits and tone of voice.
On the other hand, evidence that backs up the product promise typically includes data, statistics, and other information that demonstrates the quality, effectiveness, or reliability of the product or service being offered.
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with an applicant tracking system, employers use job descriptions and job specifications to find job candidates by _____..
A) develop work samples
B) develop specific job descriptions
C) verify a candidate's U.S. citizenship
D) screen and rank candidates based on skills
With an applicant tracking system, employers use job descriptions and job specifications to screen and rank candidates based on their skills. So, the correct answer is D) screen and rank candidates based on skills.
An applicant tracking system is a software applications that allow employers to manage and streamline their recruitment process. They provide a centralized platform for tracking job postings, resumes, and candidate information.
Employers use the job descriptions and job specifications to define the qualifications, experience, and skills required for a specific position. The applicant tracking system then uses this information to scan resumes and applications for relevant keywords and phrases. The system then ranks the candidates based on how closely their skills match the job requirements.
Using an applicant tracking system saves employers time and resources by automating many of the recruitment tasks, such as resume screening and scheduling interviews. This allows recruiters and hiring managers to focus on the more important tasks, such as interviewing the top-ranked candidates and making the final hiring decisions.
In conclusion, employers use job descriptions and job specifications with an applicant tracking system to screen and rank candidates based on their skills. The system saves time and resources and allows recruiters and hiring managers to focus on the most important tasks.
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Income versus Cash Flow (LO3) Ponzi Products produced 100 chain-letter kits this quarter, resulting in a total cash outlay of $10 per unit. It will sell 50 of the kits next quarter at a price of $11, and the other 50 kits in the third quarter at a price of $12. It takes a full quarter for Ponzi to collect its bills from its customers. (Ignore possible sales in earlier or later quarters.) (Negative amount should be indicated by a minus sign.) a. What is the net income for Ponzi next quarter? Net Income in second quarter s 550 b. What are the cash flows for the company this quarter?
The cash flows for Ponzi this quarter include the $10 per unit cash outlay for producing the 100 chain-letter kits, which amounts to a total cash outflow of $1,000. There are no cash inflows this quarter since no kits are being sold. So the cash flow for the company this quarter is a negative $1,000.
a. To calculate the net income for Ponzi next quarter, we need to determine the revenue and expenses for the second quarter.
Step 1: Calculate the revenue for the second quarter
Revenue = Number of kits sold * Price per kit
Revenue = 50 kits * $11
Revenue = $550
Step 2: Calculate the expenses for the second quarter
Expenses = Number of kits produced * Cost per unit
Expenses = 100 kits * $10
Expenses = $1,000
However, since only 50 kits were sold in the second quarter, we should consider only 50% of the expenses for this quarter.
Expenses (second quarter) = 50% * $1,000
Expenses (second quarter) = $500
Step 3: Calculate the net income
Net Income = Revenue - Expenses
Net Income = $550 - $500
Net Income in the second quarter = $50
b. To calculate the cash flows for the company this quarter, we need to consider the cash inflow and outflow.
Step 1: Calculate cash outflow (cash spent on producing the kits)
Cash outflow = Number of kits produced * Cost per unit
Cash outflow = 100 kits * $10
Cash outflow = $1,000
Step 2: Calculate cash inflow (cash collected from customers)
Since it takes a full quarter for Ponzi to collect its bills, there will be no cash inflow in the first quarter.
Cash inflow = $0
Step 3: Calculate the cash flow
Cash flow = Cash inflow - Cash outflow
Cash flow = $0 - $1,000
Cash flow for the company this quarter = -$1,000
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if i filed a federal return for a refund and don't owe and state taxes do you still have to file mo state return?
Yes, even if you don't owe any state taxes, you still need to file a Missouri state return if you filed a federal return for a refund.
Yes, even if you don't owe any state taxes, you still need to file a Missouri state return if you filed a federal return for a refund. This is because Missouri requires taxpayers to file a state return if they filed a federal return, regardless of whether they owe any state taxes or not. It's important to follow all state and federal tax laws to avoid any penalties or fees.
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A firm's bonds have a maturity of 8 years with a $1,000 face value, have an 11% semiannual coupon, are callable in 4 years at $1,154, and currently sell at a price of $1,283.09.
What is their nominal yield to maturity? Round your answer to two decimal places.
What is their nominal yield to call? Round your answer to two decimal places. %
What return should investors expect to earn on these bonds?
The nominal yield to maturity is 8.28%, and the nominal yield to call is 7.11%. Investors should expect to earn a return of approximately 8.28% until maturity or 7.11% until the bond is called.
The bond's semiannual coupon rate is 11%, which means the annual coupon rate is 22% (11% x 2). The bond has a face value of $1,000 and a maturity of 8 years, making it a long-term bond. The bond is currently selling for $1,283.09.
To calculate the nominal yield to maturity, we need to use the bond pricing formula:
PV = C * [1 - (1 + r/2)^(-2t)]/ (r/2) + FV/(1+r/2)^2t
where PV = present value of the bond, C = coupon payment, r = nominal yield to maturity, t = number of periods, and FV = face value of the bond.
Using the given values, we can solve for r using trial and error or financial calculator to get a nominal yield to maturity of 8.28%.
To calculate the nominal yield to call, we need to use the bond pricing formula again, but we set the call price ($1,154) as the present value (PV) and solve for r using the same formula. The nominal yield to call is found to be 7.11%.
Investors should expect to earn a return of approximately 8.28% until maturity or 7.11% until the bond is called, depending on which occurs first.
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44.19 and 4.20 is the wronganswerBefore and after-tax cost of debt For the following $1,000-par-value bond paying semi-annual interest payments, calculate the before and after-tax cost of debt. Use the 21% corporate tax rate. Issuer Name Walt Disney Co. Coupon Rate 5.30% Years to Maturity 30 Price $989.67 .. The before-tax cost of debt for Walt Disney Co. is 5.37 %. (Round to two decimal places.) The after-tax cost of debt for Walt Disney Co. is 4.19 %. (Round to two decimal places.)
The before-tax cost of debt for Walt Disney Co. is 5.37%, and the after-tax cost of debt is 4.19%.
Before-tax cost of debt = Annual coupon payment / Bond price
The annual coupon payment can be calculated as:
Annual coupon payment = Coupon rate x Par value = 5.30% x $1,000 = $53
The bond price given is $989.67.
Plugging in these values, we get:
Before-tax cost of debt = $53 / $989.67 = 0.0537 or 5.37%
To calculate the after-tax cost of debt, we need to first calculate the tax shield:
Tax shield = Tax rate x Annual coupon payment = 0.21 x $53 = $11.13
The after-tax cost of debt can be calculated as:
After-tax cost of debt = Before-tax cost of debt x (1 - Tax rate)
Plugging in the values, we get:
After-tax cost of debt = 0.0537 x (1 - 0.21) = 0.0419 or 4.19%
Therefore, the before-tax cost of debt for Walt Disney Co. is 5.37%, and the after-tax cost of debt is 4.19%.
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