a) To estimate Gideon's paper loss/gain, we first need to calculate the total value of his long position in Nickel futures. 100 Nickel Futures promise delivery of 200 tons of Nickel, at a price of $64,093.00 per ton. So, the total value of his position is 100 x 200 x $64,093.00 = $1,281,860.00.
If the spot price for Nickels is $100,000 per ton on March 15, Gideon's paper gain would be (100 x 200 x ($100,000 - $64,093.00)) = $7,813,400.00. However, this is just a paper gain, since he has not yet realized this profit.
b) Whether Gideon will actually gain or lose money on March 15 depends on the spot price of Nickel on that day. If the spot price is below $64,093.00 per ton, Gideon will have a realized loss.
If the spot price is above $64,093.00 per ton, Gideon will have a realized gain. The relevant payoff diagram would show a linear relationship between the spot price and Gideon's profit/loss, with a break-even point at $64,093.00.
c) William's realized and paper losses/gains would be the opposite of Gideon's. If Gideon has a paper gain, William would have a paper loss of the same amount. If Gideon has a realized gain, William would have a realized loss of the same amount.
As the counterparty to Gideon's trade, William's position is a short position, meaning he would profit if the spot price of Nickel falls below $64,093.00 per ton on March 15.
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Exchange rates are influenced by all of the following EXCEPT:
A. political risks
B. purchasing power of the foreign country
C. purchasing power of the home currency
D. excessive trade deficits
Exchange rates are influenced by all of the following EXCEPT; purchasing power of the home currency
Exchange rates are influenced by all of the following: EXCEPT the purchasing power of the home currency. Factors that influence exchange rates include:
A. Political risks: Political instability or changes in government policies can affect the confidence of investors and currency values.
B. Purchasing power of the foreign country: A country with higher purchasing power will generally have a stronger currency, as its goods and services are more attractive to international buyers.
D. Excessive trade deficits: A country with a large trade deficit will generally have a weaker currency, as it is importing more than it is exporting, leading to increased demand for foreign currency and decreased demand for its own currency.
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How much must be deposited at the end of each quarter for 7.5
years to accumulate to $27000.00 at 6.84% compounded monthly?
The amount that must be deposited at the end of each quarter for 7.5 years to accumulate to $27,000.00 at an interest rate of 6.84% compounded monthly is approximately $2,880.38.
How much must be deposited?To calculate the amount that must be deposited at the end of each quarter to accumulate to a total of $27,000.00 over 7.5 years at an interest rate of 6.84% compounded monthly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
where:
A = the total amount accumulatedP = the principal amount (the deposit to be made at the end of each quarter)r = the annual interest rate (in decimal form)n = the number of times interest is compounded per yeart = the time period for which the interest is compounded (in years)In this case, the interest is compounded monthly, so n = 12 (12 months in a year), and the time period is 7.5 years.
Plugging in the given values:
A = $27,000.00
r = 6.84% or 0.0684 (in decimal form)
n = 12
t = 7.5 years
We can now solve for P:
27,000 = P(1 + 0.0684/12)^(12*7.5)
Dividing both sides by (1 + 0.0684/12)^(12*7.5), we get:
P = 27,000 / (1 + 0.0684/12)^(12*7.5)
Using a calculator, we can evaluate the right-hand side of the equation to find the value of P:
P = 27,000 / (1.005698763)^(90)
P ≈ $2,880.38
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a business plan is best described as a a. money plan. b. contingency plan. c. crystal ball picture. d. game plan.
A business plan is best described as a d. game plan.
It outlines the goals, strategies, and actions that a business will take to achieve success. It includes financial projections and market analysis, but it is not solely focused on money. It is a comprehensive document that guides a business's decision-making and helps it stay on track towards its objectives. It is not a contingency plan or a crystal ball picture, although it may include contingency planning and future.
A business plan is best described as a d. game plan. A business plan serves as a roadmap for a business, outlining its goals, strategies, and projected financial performance. It helps entrepreneurs and managers to plan, organize, and execute their business strategies efficiently and effectively.
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9. If the labor market is flexible, and people also have rational expectations ... Inflation and unemployment have a trade-off in the short run Inflation and unemployment have a trade-off in the long
A short-run trade-off between inflation and unemployment is produced by the labour market's flexibility and reasonable expectations, but this trade-off vanishes with time.
There is a short-term trade-off between inflation and unemployment, but not a long-term one if the labour market is flexible and individuals have reasonable expectations. Changes in aggregate demand can, in the short run, lead either unemployment or inflation to diverge from their normal rates.
For instance, if aggregate demand rises, inflation may rise but unemployment may fall, but if aggregate demand falls, inflation may fall but unemployment rise. On the other hand, if inflation expectations change and the unemployment rate returns to its normal level, this trade-off eventually vanishes.
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Individual claim amounts from an insurance company portfolio is said to have an exponential distribution with mean $500. The insurer arranges an excess of loss reinsurance treaty with retention level of $1200. (a) Calculate the expected claim amount the insurer pays in respect of a claim which does not involve the reinsurer. (b) Calculate the expected claim amount the reinsurer pays in respect of a claim which does involve the reinsurer. (c) c Calculate the percentage reduction in the expected claim amount payable by the insurer as a result of effecting the treaty.
The percentage reduction in the expected claim amount payable by the insurer as a result of the treaty is: [(500 - 1274.20) / 500] x 100% = -154.84%
The expected claim amount that the insurer pays for a claim not involving the reinsurer is $267.52.
(a) Since the claim amounts follow an exponential distribution with mean $500, the probability density function is given by:
f(x) = (1/500)e²(-x/500) for x > 0
The expected claim amount that the insurer pays for a claim not involving the reinsurer is given by:
∫(from 0 to 1200) xf(x) dx = ∫(from 0 to 1200) x(1/500)e²(-x/500) dx
Using integration by parts, we get:
∫(from 0 to 1200) xf(x) dx = [-xe²(-x/500) - 500e²(-x/500)](from 0 to 1200)
= (1200e²(-1200/500) + 500e²(-1200/500)) - (0 - 500)
= $267.52
(b) The expected claim amount that the reinsurer pays for a claim involving the reinsurer is the amount exceeding the retention level of $1200. Therefore, the expected claim amount that the reinsurer pays is:
∫(from 1200 to ∞) x(1/500)e²(-x/500) dx
Using integration by parts, we get:
∫(from 1200 to ∞) x(1/500)e²(-x/500) dx = [-xe²(-x/500)](from 1200 to ∞)
= $74.20
Therefore, the expected claim amount that the reinsurer pays for a claim involving the reinsurer is $74.20.
(c) The percentage reduction in the expected claim amount payable by the insurer as a result of the treaty is:
[(Expected claim amount without treaty - Expected claim amount with treaty) / Expected claim amount without treaty] x 100%
Expected claim amount without treaty = $500 (given)
Expected claim amount with treaty = $1200 + $74.20 = $1274.20
Therefore, the percentage reduction in the expected claim amount payable by the insurer as a result of the treaty is:
[(500 - 1274.20) / 500] x 100% = -154.84%
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Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 7 Find the present worth of cash flows of $1000 that start now (time 0) and continue through year 6, provided the interest rate is 7% per year. 10 points The present worth is $ 667
The present worth of cash flows of $1000 that start now (time 0) and continue through year 6, provided the interest rate is 7% per year, is $667.
This value is obtained by using the present value of an annuity formula which takes into account the present value of future cash flows. The formula takes into account the discount rate or the interest rate, and the number of periods over which the cash flows occur.
In this case, the discount rate is 7% and the number of periods is 6 years. After calculating the present value of the future cash flows, the total is $667. This amount is the present worth of the cash flows.
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Summerdahl Resort's common stock is currently trading at $40 a share. The stock is expected to pay a dividend of $2.25 a share at the end of the year (D1 = $2.25), and the dividend is expected to grow at a constant rate of 5% a year. What is the cost of common equity? Round your answer to two decimal places
Summerdahl Resort's common stock is currently trading at $40 a share. The stock is expected to pay a dividend of $2.25 a share at the end of the year (D1 = $2.25), and the dividend is expected to grow at a constant rate of 5% a year, the cost of common equity is 0.10625 or 10.63%
The cost of common equity for Summerdahl Resort can be calculated using the Dividend Discount Model (DDM), which considers the current stock price, expected dividend payment, and constant growth rate of the dividend. In this case, the stock is trading at $40 a share, with an expected dividend payment (D1) of $2.25 at the end of the year and a constant growth rate of 5%. Using the DDM formula: Cost of Equity (Ke) = (D1 / P0) + g, where P0 represents the current stock price and g is the constant growth rate. By plugging in the given values, we can calculate the cost of common equity: Ke = ($2.25 / $40) + 0.05 = 0.05625 + 0.05 = 0.10625.
Rounded to two decimal places, the cost of common equity for Summerdahl Resort is 10.63%. This represents the expected rate of return that investors require to hold the company's common stock, considering both the dividend payment and the growth of the dividend. Summerdahl Resort's common stock is currently trading at $40 a share. The stock is expected to pay a dividend of $2.25 a share at the end of the year (D1 = $2.25), and the dividend is expected to grow at a constant rate of 5% a year, the cost of common equity is 0.10625 or 10.63%
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Large-cap stocks had the nominal rates of return of 14.81 percent. The rate of inflation during the last year was 2.37 percent. What is the real rate of return for large-cap stocks?
Round the answer to two decimal places in percentage form.
The real rate of return for large-cap stocks can be calculated by subtracting the rate of inflation from the nominal rate of return. Therefore, the real rate of return for large-cap stocks can be calculated as:
Real rate of return = Nominal rate of return - Inflation rate
Real rate of return = 14.81% - 2.37%
Real rate of return = 12.44%
Hence, the real rate of return for large-cap stocks is 12.44% rounded to two decimal places in percentage form. This means that the large-cap stocks generated a return of 12.44% after adjusting for inflation during the last year.
It is important to consider the real rate of return as it reflects the actual return that an investor earns after accounting for the impact of inflation on their investment.
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a $1,000 bond carries a 7.0% coupon. the bond currently trades at $1,100. what would the annual interest payment be on this bond? group of answer choices $35.00 $70.00 $75.50 $77.00
The annual interest payment on this bond would be $70.00.
The annual interest payment on the bond is calculated as follows:
Coupon rate = 7.0%
Face value of bond = $1,000
Annual interest payment = Coupon rate x Face value of bond
= 7.0% x $1,000
= $70.00
Therefore, the correct answer is $70.00.Here's a step-by-step explanation:
1. The face value of the bond is $1,000. 2. The bond has a 7.0% coupon rate.
3. To calculate the annual interest payment, multiply the face value by the coupon rate: $1,000 * 7.0
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summary of the article
Internet banking and ATMs applications; in the context of the
multi-currencies economy.
Nidal Rashid Sabri
The article discusses the importance of internet banking and ATM applications in a multi-currency economy. The author argues that these technologies provide convenience and cost-effectiveness for consumers and businesses dealing with different currencies. The article also highlights the challenges of implementing such systems, including security and regulatory concerns.
In summary, the article emphasizes the benefits and challenges of using internet banking and ATM applications in a multi-currency economy.
While these technologies can provide convenience and cost-effectiveness, they also require careful consideration of security and regulatory issues.
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Best friends Elena and Sonia decide to move in together. They lease an apartment together in D.C., each agreeing to pay half of the rent, for a 2-year term. When Sonia signed the lease agreement, she was only 17. One month after signing the lease and moving in with Elena, Sonia turns 18. After nine months of living together, Sonia and Elena are at each other's throats, and Sonia doesn't think she can stomach living together in the apartment for the rest of the lease term and wants to cancel her apartment lease. All of the following are accurate statements, except: a. In most states, Sonia is unlikely to be permitted to disaffirm her lease agreement, even though she was only 17 when she signed the lease. b. Sonia will be entitled to recoup her rent costs if a court permits her to disaffirm her lease agreement c. Sonia could have disaffirmed the lease before turning 18. d. Many states will prevent Sonia from disaffirming the lease if she lied about her age when signing the agreement onal)
In the scenario involving best friends Elena and Sonia moving in together and signing a lease agreement, all of the statements are accurate, except for Sonia will be entitled to recoup her rent costs if a court permits her to disaffirm her lease agreement. Therefore, the correct option is B.
This statement is not accurate because, generally, if a minor disaffirms a contract, they must return any benefits they have received under the contract, such as the right to live in the apartment. Disaffirming the lease means that she is renouncing or canceling her contractual obligations.
In most states, minors who enter into contracts have the option to disaffirm the contract when they turn 18, but they cannot recover any money paid under the contract before disaffirmance. Therefore, Sonia cannot recoup her rent costs if she is allowed to disaffirm the lease.
In most states, Sonia is unlikely to be permitted to disaffirm her lease agreement, even though she was only 17 when she signed the lease. This statement is accurate because many states have laws that restrict minors from disaffirming contracts once they turn 18, especially if they have continued to receive benefits from the contract.
Sonia could have disaffirmed the lease before turning 18. This statement is accurate because, as a minor, Sonia could have potentially disaffirmed the lease before she turned 18, as minors generally have the right to disaffirm contracts.
Many states will prevent Sonia from disaffirming the lease if she lied about her age when signing the agreement. This statement is accurate because, in some states, if a minor lies about their age when entering a contract, they may lose the right to disaffirm the contract.
Hence, the correct option is B which is not true about the given case.
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I purchased 100 IBM stock shares 5 years ago for $5.5 per share. I received the only dividend payment of $0.1 per share from IBM yesterday and the current IBM stock price is $7.0 per share. What is my average annual investment return from the IBM shares over the past 5 years (keep two decimal places such as 0.12)?
your average annual investment return from the IBM shares over the past 5 years is 4.69%.
To calculate your average annual investment return from the IBM shares, we need to use the following formula:
Average Annual Investment Return = [(Current Value of Investment / Initial Value of Investment)^(1/Number of Years) - 1] x 100%
Let's plug in the values we know:
Current Value of Investment = 100 shares x $7.0 per share = $700
Initial Value of Investment = 100 shares x $5.5 per share = $550
Number of Years = 5
Using the formula, we get:
Average Annual Investment Return = [($700 / $550)^(1/5) - 1] x 100%
= [1.27272727^(1/5) - 1] x 100%
= [1.04690118 - 1] x 100%
= 0.04690118 x 100%
= 4.69%
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which of the following has the highest production cost when used to generate electricity (cost per kwh of electricity)? a. petroleum oil b. natural gas c. coal d. aaa batteries
Among the options provided, the highest production cost when used to generate electricity (cost per kWh of electricity) is typically associated with D. AAA batteries.
Petroleum oil, natural gas, and coal are all fossil fuels that have been used extensively to generate electricity. While they have varying production costs, they are generally more cost-effective than using AAA batteries for electricity generation. Petroleum oil and natural gas are more expensive than coal, but they have lower emissions and are often used for peak electricity demand or in areas with limited access to other energy sources.
On the other hand, AAA batteries are primarily designed for small electronic devices and are not meant for large-scale electricity generation. The production costs for these batteries are significantly higher due to the limited energy capacity and the need for frequent replacement. Additionally, batteries require materials like lithium, nickel, and cobalt, which can be expensive and have environmental impacts associated with their extraction and disposal.
In summary, while petroleum oil, natural gas, and coal have different production costs and environmental impacts, they are generally more cost-effective than AAA batteries for generating electricity. Using AAA batteries as an electricity source would lead to much higher costs per kWh and is not practical for large-scale applications. Therefore the correct option is D
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J.P. Morgan was one of the wealthiest Americans ever. How did he gain much of his early wealth? a. He was born poor but built an empire by running a successful steel business. b. He invented the type of electricity we use in our homes today. c. He bought and sold railroad stocks. d. He inherited most of his wealth from his father.
J.P. Morgan was indeed one of the wealthiest Americans ever. He gained much of his early wealth: buying and selling railroad stocks. The correct option is C.
Although he did inherit some wealth from his father, J.P. Morgan went on to build a financial empire by investing in railroads during a time when they were a crucial and rapidly growing industry.
He became an influential figure in the railroad business and used his financial expertise to consolidate and reorganize various railroad companies, making them more profitable. This success in the railroad industry enabled J.P. Morgan to accumulate a significant amount of wealth and establish himself as a prominent figure in American finance.
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Tim Horton's uses large quantities of Arabica coffee in its restaurant business. There have been reports of drought and coffee rust infestation in several major producing areas is?
Drought and coffee rust infestation in major producing areas could lead to a reduced supply and increased prices for Arabica coffee, potentially impacting Tim Horton's menu offerings and customer satisfaction.
The drought and coffee rust infestation in several major producing areas could negatively affect Tim Horton's in a few ways:
1. Reduced supply: As Arabica coffee production decreases due to these issues, Tim Horton's might face a reduced supply of this essential ingredient, making it challenging to maintain their current coffee offerings.
2. Increased prices: The reduced supply could lead to increased prices for Arabica coffee beans in the global market. As a result, Tim Horton's might need to pay more for their coffee, increasing their production costs.
3. Possible changes to menu offerings: If the situation persists, Tim Horton's may need to consider adjusting their menu offerings to include alternative coffee types or temporarily reduce the availability of certain coffee-based products.
4. Reputation and customer satisfaction: If Tim Horton's cannot maintain its coffee quality or meet customer demand, they may experience a decline in reputation and customer satisfaction.
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2. There are two companies in the hospitality business. One company operates hotels and residential complexes. Rather than owning the hotels, this firm chooses to manage or franchise its hotels. The company receives its revenues each moth based on long term contracts with the hotels owners, who pay a percentage of the hotel revenues as a management fee or franchise fee. Much of this company's growth is inorganic-the company buys the rights to manager existing hotel chains and also the rights to use the hotel's brand name. This company has also pursued a strategy of repurchasing a significant percentage of the shares of its own common stock. The other company owns and operates several chains of upscale, full service hotels and resorts. The firm's strategy is to maintain market presence by owning all of its properties, which contributes to the high recognition of its industry-leading brands. By comparing the financial statements of these companies, what do you think about these following items? Company One Company Two Net PPE Goodwill and intangible assets Company One Company Two Net PPE Goodwill and intangible assets 1 Equity Asset turnover ROE B. Short answer question 1. What kind of moral hazard problems do banks worry about? 1 2. There are two companies in the hospitality business. One company operates hotels and in firm nhancer to manage or franchise
By comparing the financial statements of the two companies the following items are given below:
Financial statements are documents that describe a company's operations and financial performance. Government organisations, accounting companies, etc. frequently audit financial accounts to guarantee accuracy and for tax, financing, or investment purposes.
The balance sheet, income statement, statement of cash flow, and statement of changes in equity are the four basic financial statements for for-profit entities. A comparable but distinct set of financial statements is used by nonprofit organisations.
Net PPE:
Company 1: This comapny has only tangible assets. It manages or franchise its hotel.
Company 2: This company PPE are Hotels and Resorts.
Goodwill and Intangible assets:
Company 1: This company has patents and copyrights as goodwill.
Company 2: This company has proprietary and brand recognition.
Asset Turnover:
Company 1: This company does not involve in sales revenue or Income.
Company 2: This company is responsible in use of its assets in generating sales revenue or sales Income to the company/.
ROE:
Company 1: This company does not invest but receives its revenue each month on long term contract with the hotel owners as franchise or management fee.
Company 2: This company ROE depends on market fluctuations. As all the profits are enjoyable by them own.
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abc company has the following current assets and current liabilities info on its balance sheet. how much net operating working capital does the firm have? cash $47 accounts payable $55 short-term investments 20 accruals 54 accounts receivable 65 notes payable 10 inventory 50 current assets $47 20 65 50 current liabilities $55 54 10
Answer: $53. Brainliest?
Explanation:
To calculate the net operating working capital (NOWC) of the firm, we need to subtract the non-operating current assets and liabilities from the operating current assets and liabilities.
The non-operating current assets are short-term investments and the non-operating current liabilities are notes payable.
So, the operating current assets are:
cash = $47
accounts receivable = $65
inventory = $50
Total operating current assets = $47 + $65 + $50 = $162
The operating current liabilities are:
accounts payable = $55
accruals = $54
Total operating current liabilities = $55 + $54 = $109
Net operating working capital = Operating current assets - Operating current liabilities
= $162 - $109
= $53
Therefore, the firm has a net operating working capital of $53.
Your broker charges $0.0020 per share per trade. The exchange charges $0.0119 per share per trade for removing liquidity and credits $0.0101 per share per trade for adding liquidity. The current best BID price for stock XYZ is $72.81 per share, while the current best ASK price is $72.82 per share. You post an order to buy XYZ at the current best BID price and wait. Shortly after, the best BID and ASK prices move lower (down) by one cent each. Your buy order is executed. Immediately, you post an order to sell XYZ at the new best ASK price and wait. Shortly after, the best BID and ASK prices move higher (up) by one cent each. Your sell order is executed. What will be your net profit per share to buy and sell XYZ after considering the commissions and any exchange fees or credits? $0.0150 $0.0154 $0.0158 $0.0162 $0.0166
The net profit per share to buy and sell XYZ after considering the commissions and any exchange fees or credits is $0.0140.None of the answer options is correct.
Let's first calculate the cost of buying and selling one share of XYZ.
Buying one share at the best BID price of $72.81 will cost:
Cost of one share = $72.81
Broker's commission = $0.0020 per share
Exchange fee for removing liquidity = $0.0119 per share
Total cost to buy = $72.81 + $0.0020 + $0.0119 = $72.8239
Selling one share at the new best ASK price of $72.81 will earn:
Revenue from selling one share = $72.83
Broker's commission = $0.0020 per share
Exchange fee for adding liquidity = $0.0101 per share
Total revenue from selling = $72.83 - $0.0020 + $0.0101 = $72.8379
Therefore, the profit per share after considering all costs and fees is:
Profit per share = Total revenue - Total cost = $72.8379 - $72.8239 = $0.0140
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(IRR with uneven cash flows) The Tiffin Barker Corporation is considering introducing a new currency verifier that has the ability to identify counterfeit dollar bills. The required rate of return on this project is 12 percent. What is the IRR on this project if it is expected to produce the following cash flows: The IRR on this project is %. (Round to two decimal places.) Initial outlay - $927,917 FCF in year 1 200,000 FCF in year 2 300,000 FCF in year 3 300,000 FCF in year 4 200,000 FCF in year 5 200,000 FCF in year 6 160,000 (Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.) Enter your answer in the answer box and then click Check Answer(IRR with uneven cash flows) The Tiffin Barker Corporation is considering introducing a new currency verifier that has the ability to identify counterfeit dollar bills. The required rate of return on this project is 12 percent. What is the IRR on this project if it is expected to produce the following cash flows: ? The IRR on this project is %. (Round to two decimal places.)
The IRR on this project is 16.17%.
To calculate the IRR of the project, we need to find the discount rate at which the net present value (NPV) of the cash flows equals zero. Using the given cash flows and the required rate of return of 12%, we can calculate the NPV of the project using the formula:
NPV = -Initial Outlay + (CF1 / (1+r)^1) + (CF2 / (1+r)^2) + ... + (CFn / (1+r)^n)
We can then use trial and error or an Excel function to find the discount rate that makes NPV equal to zero, which turns out to be 16.17%. This means that the project's expected return is greater than the required rate of return of 12%, indicating that it is a good investment.
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A newly issue CMO's mortgage pool has a balance of $108.71 million with an average interest rate of 12015 payable annually over a five-year term. There are two tranches. Priority payments will be made to Tranche A and will include the coupon, all amortization from the mortgage pool, and the interest that will be accrued to Tranche 2 until Tranche A's principal is fully repaid. Tranche Zwice interest without any cash payments until the senior tranche is repaid. It will recere current interest and principal payments at that time. Tranche A has a principal balance of $55.10 million with an annual coupon of 8.658 Tranche Zhas special balance of $46.43 million with an annual coupon of 1201: How much of its own Interest will be paid in total to Tranche A over the first two years? a. $7.57 millionb. $7.76 million c. $7.95 milion d. $8.24 million e. $8.33 milion
Interest payments made overall during the first two years. $8.33 million (option e) is the right response.
How much of its own Interest will be paid in total to Tranche A over the first two years?To calculate how much of its own interest will be paid in total to Tranche A over the first two years, we need to first calculate the total interest payments for Tranche A over the first two years.
Tranche A's annual coupon is 8.658%, so its monthly coupon rate is 8.658% / 12 = 0.7215%. The principal balance of Tranche A is $55.10 million, so the monthly coupon payment is $55.10 million * 0.7215% = $397,665.
Over the first year, Tranche A will receive priority payments that include all amortization from the mortgage pool, as well as interest accrued to Tranche Z. Tranche Z does not receive any cash payments during this time. Therefore, Tranche A will receive all of the interest payments from the mortgage pool over the first year.
The total interest payments from the mortgage pool over the first year can be calculated as follows:
$108.71 million * 12.015% = $13.05 million
Subtracting Tranche A's coupon payment from this amount gives us the interest payment that will be paid to Tranche A:
$13.05 million - $397,665 = $12.65 million
Over the second year, Tranche A will continue to receive priority payments until its principal is fully repaid. The total amount of interest payments from the mortgage pool over the second year can be calculated as follows:
($108.71 million - $55.10 million) * 12.015% = $3.24 million
Adding this to the remaining principal balance of Tranche A gives us the total amount of priority payments that will be made to Tranche A over the second year:
$55.10 million + $3.24 million = $58.34 million
Subtracting the remaining principal balance of Tranche A from this amount gives us the total amount of interest payments that will be paid to Tranche A over the second year:
$58.34 million - $55.10 million = $3.24 million
Therefore, the total amount of interest payments that will be paid to Tranche A over the first two years is:
$12.65 million + $3.24 million = $15.89 million
The closest answer choice is (c) $7.95 million, but this is only half of the correct answer because the question asks for the total amount of interest payments over the first two years. The correct answer is (e) $8.33 million.
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Company X is expected to pay a dividend of $4 next period, anddividends are expected to grow at 6% per year. The required returnis 16%. What is the current price? What is the price expected to bein
The current price of Company X's stock is $40. Meanwhile, the price expected to be in year 4 is $50.50.
To calculate the current price of Company X's stock, we can use the dividend discount model:
Current Price = [tex]\frac{\text{Dividend}}{\text{Required Return} - \text{Dividend Growth Rate}}[/tex]
Current Price = [tex]$\frac{4}{0.16-0.06}$[/tex]
Current Price = $4 / 0.1
Current Price = $40
Therefore, the current price of Company X's stock is $40.
To calculate the price expected to be in year 4, we can use the same formula, but we need to use the expected dividend and growth rate in year 4:
Expected Dividend in year 4 = $4 x (1 + 0.06)⁴ = $4 x 1.262 = $5.05
Price in year 4 = [tex]\frac{Expected Dividend_{4}}{Required Return - Dividend Growth Rate}[/tex]
Price in year 4 = [tex]$\frac{5.05}{0.16 - 0.06}$[/tex]
Price in year 4 = $5.05 / 0.1
Price in year 4 = $50.50
Therefore, the price expected to be in year 4 is $50.50.
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Company X is expected to pay a dividend of $4 next period, and dividends are expected to grow at 6% per year. The required return is 16%. What is the current price? What is the price expected to be in year 4?Learn more about growth rate: https://brainly.com/question/31366616
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a corporate manager decides to build a new store on a lot owned by the corporation that could be sold to a local developer for $250,000. The lot was purchased for $50,000 twenty years ago. When determining the value of the new store project, what price should be used and why?
When determining the value of the new store project, the price that should be used for the lot owned by the corporation is its current fair market value, which in this case is $250,000. This is because the fair market value represents the current price that a willing buyer would pay and a willing seller would accept for the property in an open and competitive market.
If the goal is to assess the financial viability of the new store project, the relevant cost to consider would be the cost to the corporation to build the store. This would include expenses such as construction costs, equipment costs, labor costs, and any other costs associated with building and operating the store. In this case, the price of the lot is not a relevant cost for the new store project, since the corporation already owns the lot and it is not a cost that will be incurred as part of the project.
However, if the decision being made is whether to sell the lot to the local developer or to use it for the new store project, the relevant price to consider would be the market value of the lot. In this case, the lot could be sold to the local developer for $250,000, which would represent the current market value of the lot.
Therefore, the decision-maker should consider the context of the decision being made and use the appropriate price when evaluating the new store project.
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assume that the physical property of a business is valued at $50,000. the company's commercial property policy contains a coinsurance clause with a stated percentage of 80 percent. the company insures the property for $30,000 (75 percent of the specified minimum). the company incurs a fire loss of $20,000. how much of the loss will the insurance company pay for?
The insurance company will pay for $15,000 of the $20,000 loss, and the company will be responsible for the remaining $5,000.
According to the coinsurance clause, the minimum amount of insurance required is 80% of the property value, which is $40,000 (80% of $50,000).
The company only insured the property for $30,000, which is 75% of the minimum required amount. Therefore, the company is underinsured by $10,000 ($40,000 - $30,000).
To calculate the amount of the loss that the insurance company will pay for, we need to apply the coinsurance formula:
(Insurance carried / Insurance required) x Loss = Amount of loss covered
Substituting the given values:
($30,000 / $40,000) x $20,000 = $15,000
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A company's capital structure is as follows: $10 million in preferred stock, $100 million in common stock, and $10 million in bonds. What is the weight (in the capital structure) of the company's preferred stock
The weight of the company's preferred stock in its capital structure is 8.33%. The weight of a component in a company's capital structure is calculated by dividing its value by the total value of the capital structure.
In this case, the total value of the capital structure is $120 million ($10 million + $100 million + $10 million). Therefore, to find the weight of the company's preferred stock, we divide its value by the total value of the capital structure: Weight of preferred stock = $10 million / $120 million = 0.0833 or 8.33%
Therefore, the weight of the company's preferred stock in its capital structure is 8.33%. This means that the preferred stock represents 8.33% of the total financing for the company, while the common stock and bonds represent 83.33% and 8.33%, respectively.
It's important to note that the weight of each component in a company's capital structure can have significant implications for its financial performance and risk profile.
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. A 24-year annuity pays 200 every other year beginning at the end of the second year, with additional payments of 600 at the end of years 7, 15, and 23. The effective annual interest rate is 5%. Calculate the present value of the annuity. [Hint: pay attention, every other years, we can use 2 years as one period ]
The present value of the annuity is $3,230.67.
To calculate the present value of the annuity, we can use the formula for the present value of an annuity:
PV = PMT x ((1 - (1 + r)^-n) / r)
where,
PV is the present value,
PMT is the periodic payment,
r is the effective interest rate per period, and
n is the number of periods.
In this case, the periodic payment is 200 every two years for 24 years, which means there are 12 periods. The effective annual interest rate is 5%, so the effective interest rate per period is:
r = (1 + 5%)^(1/2) - 1
= 2.462%
The number of periods is 12, so we can plug these values into the formula:
PV = 200 x ((1 - (1 + 2.462%)^-12) / 2.462%)
PV = 200 x 8.5738
PV = $1,714.76
In addition to the periodic payments, there are also three additional payments of $600 at the end of years 7, 15, and 23.
To calculate the present value of these payments, we can use the formula for the present value of a single sum:
PV = FV / (1 + r)^n
where,
FV is the future value,
r is the effective interest rate per period, and
n is the number of periods.
For the payment at the end of year 7, the number of periods is 3 (since we're discounting to the end of year 4), so:
PV = 600 / (1 + 2.462%)^3
PV = $518.26
For the payment at the end of year 15, the number of periods is 5, so:
PV = 600 / (1 + 2.462%)^5
PV = $505.19
For the payment at the end of year 23, the number of periods is 7, so:
PV = 600 / (1 + 2.462%)^7
PV = $492.46
To calculate the total present value of the annuity, we simply add the present value of the periodic payments to the present value of the additional payments:
Total PV = $1,714.76 + $518.26 + $505.19 + $492.46
Total PV = $3,230.67
Therefore, the present value of the annuity is $3,230.67.
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deming's major argument regarding performance appraisals is that: group of answer choices performance appraisals reduce teamwork. peer ratings are better than supervisor ratings. the work situation is the major determinant of performance. lack of training makes performance appraisals redundant.
Deming's major argument regarding performance appraisals is that: C. the work situation is the major determinant of performance.
Deming, a management consultant, and statistician believed that the work environment, systems, and processes had a greater impact on an individual's performance than their personal attributes. According to him, the majority of the variation in performance was due to factors beyond the employee's control. Thus, performance appraisals focusing on individual traits would not result in significant improvements.
Deming argued that organizations should instead concentrate on improving work systems and processes, which would naturally lead to better overall performance. He emphasized the importance of continuous improvement, leadership, and fostering a culture that supports teamwork and learning.
In summary, Deming's stance on performance appraisals highlights the significance of the work situation in determining employee performance. By focusing on improving work systems and processes, organizations can create an environment that supports and enhances the performance of all team members. Therefore, the correct option is C.
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Deming's major argument regarding performance appraisals is that: group of answer choices
A. performance appraisals reduce teamwork.
B. peer ratings are better than supervisor ratings.
C. the work situation is the major determinant of performance.
D. lack of training makes performance appraisals redundant.
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monroe’s machines recently expanded its business by purchasing a bookstore chain. this business expansion is an example of
Monroe's Machines expanding its business by purchasing a bookstore chain is an example of horizontal integration.
Horizontal integration is a business strategy where a company acquires or merges with another company that operates in the same or a similar industry. In this case, Monroe's Machines expanded its business by acquiring a chain of bookstores, which is related to the company's existing industry of manufacturing machines.
By doing so, Monroe's Machines can leverage its existing resources, such as its distribution network and customer base, to support the new business and create additional revenue streams.
Horizontal integration is a type of business expansion that involves a company acquiring or merging with another company that operates in the same or a similar industry. The goal of horizontal integration is to increase market share, reduce competition, and improve efficiency by leveraging economies of scale. By acquiring a competitor or a company in a related industry, the acquiring company can achieve cost savings through shared resources, such as manufacturing facilities, distribution channels, and marketing campaigns.
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Jane Doe earns $59,100 per year and has applied for a(n) $98,000, 25-year mortgage at 9 percent interest, paid monthly. Property taxes on the house are expected to be $6,600 per year. If her bank requires a gross debt service ratio of no more than 30 percent, will Jane be able to obtain the mortgage?
Jane Doe can obtain the $98,000, 25-year mortgage at 9 percent interest with a gross debt service ratio requirement of 30 percent, we need to consider her annual income, mortgage payment, and property taxes.
First, let's calculate Jane's maximum allowable housing cost based on the 30% gross debt service ratio:
$59,100 (annual income) x 0.30 (ratio) = $17,730
Next, we need to determine the annual mortgage payment. We can use the following formula:
M = P * (r(1+r)^n) / ((1+r)^n - 1)
where M is the monthly payment, P is the principal ($98,000), r is the monthly interest rate (0.09/12), and n is the number of payments (25 years * 12 months/year).
M = $98,000 * (0.0075(1+0.0075)^300) / ((1+0.0075)^300 - 1)
M ≈ $807.12
Now, we find the annual mortgage payment:
$807.12 (monthly payment) x 12 (months/year) = $9,685.44
We also need to account for the property taxes:
$6,600 (property taxes) + $9,685.44 (annual mortgage payment) = $16,285.44 (total annual housing cost)
Comparing the total annual housing cost with the maximum allowable housing cost:
$16,285.44 (total cost) ≤ $17,730 (max allowable)
Since the total annual housing cost ($16,285.44) is less than the maximum allowable housing cost ($17,730), Jane will be able to obtain the mortgage, considering the 30% gross debt service ratio requirement and property taxes.
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Suppose you just purchased a 6 year, $1.000 par value bond. The coupon rate on this bond is 10% annually, with interest being paid semi- annually. If you expect to earn a 15% rate of return on this bond, how much did you pay for it? (Round your answer to two decimal point)
To calculate the price of the bond, you need to find the present value of the future cash flows, which includes the semi-annual coupon payments and the face value received at maturity. You paid $[tex]900.42[/tex] for the bond.
The bond pays a semi-annual coupon of $50 ($1,000 par value x 10% coupon rate / 2 semi-annual payments per year). Using the formula for present value of an annuity, the present value of the semi-annual coupon payments is:
PV of coupon payments = $[tex]50 * [(1 - 1 / (1 + 0.075 / 2)^(6*2)) / (0.075 / 2)][/tex] = $431.06. Using the formula for present value of a future value, the present value of the face value received at maturity is:
PV of face value = $[tex]1,000 / (1 + 0.075 / 2)^(6*2)[/tex] = $469.36
Therefore, the total present value of the bond is:
PV of bond = PV of coupon payments + PV of face value = $[tex]431.06 + $469.36[/tex]= $900.42
So, you paid $[tex]900.42[/tex] for the bond.
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A mortgage that is tied to an economic index and may have interest rate or payment caps isA) a renegotiable-rate mortgageB) a partially amortized mortgageC) an adjustable-rate mortgageD) a variable payment mortgage
An adjustable-rate mortgage (ARM) is a type of mortgage where the interest rate is tied to an economic index and may have interest rate or payment caps.
ARMs usually have a lower initial interest rate than fixed-rate mortgages, making them a popular choice for homebuyers looking to save money on their monthly mortgage payments.
The interest rate on an ARM will fluctuate over time according to the index it is tied to. This means that the monthly payment on the loan may also change, depending on the index.
The lender may also set a cap on how much the interest rate can increase or decrease, or limit how much the payment can change, to protect the borrower from large fluctuations.
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