Your expected profit would be $14 if you purchase 100 stocks for $1.75 per share with an ROI of 8%
What is the Expected profit on the stock?To calculate your expected profit, you need to take into account the total cost of purchasing the stocks and the expected return on your investment.
Total cost of purchasing 100 stocks at $1.75 per share:
100 stocks x $1.75 per share = $175
Expected return on investment (ROI) of 8%:
$175 x 0.08 = $14
Therefore, your expected profit would be $14 if you purchase 100 stocks for $1.75 per share with an ROI of 8%. However, please keep in mind that this is only an estimate, and actual returns may vary depending on market conditions and other factors.
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problem 11-27 (lo. 3, 4) at the beginning of the tax year, melodie's basis in the mip llc was $60,000, including her $40,000 share of the llc's liabilities. at the end of the year, mip distributed to melodie cash of $10,000 and inventory (basis of $6,000, fair market value of $10,000). in addition, mip repaid all of its liabilities by the end of the year. question content area a. if this is a proportionate current distribution, what is the tax effect of the distribution to melodie and mip? after the distribution, what is melodie's basis in the inventory and in her mip interest? if this is a proportionate current distribution, the cash distribution plus relief of liabilitie
1. Tax effect of the distribution to melodie and mip is that MIP reduces its accumulated earnings and profits by $20,000.
2. Melodie's new basis is:
Inventory: $10,000
MIP LLC interest: $40,000
What method is used to calculate each part of the question?If this is a proportionate current distribution, it means that the distribution is made to all partners in proportion to their ownership interest in the LLC.
Melodie's initial basis in the LLC was $60,000, which includes her share of the LLC's liabilities of $40,000. Thus, her initial basis in the LLC's assets was $20,000 ($60,000 - $40,000).
The cash distribution of $10,000 and the inventory distribution of $10,000 have a total fair market value of $20,000. Since this is a proportionate distribution, Melodie will recognize gain or loss on the distribution based on the difference between the fair market value of the distribution and her basis in the LLC.
Melodie's basis in the LLC was $20,000, and her share of the distribution was also $20,000. Therefore, her gain or loss on the distribution is zero.
After the distribution, Melodie's basis in the inventory is its fair market value of $10,000. Her basis in the LLC is reduced by the amount of the distribution, so her new basis is $40,000 ($60,000 - $20,000).
To summarize:
Tax effect of the distribution:
Melodie recognizes no gain or loss on the distribution.
MIP reduces its accumulated earnings and profits by $20,000.
Melodie's new basis:
Inventory: $10,000
MIP LLC interest: $40,000
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Michael pays RM28,300 on 16 October 2020 for a loan of RM26,000 made on a certain date. The simple interest rate is 4.8% per annum. Using the Banker’s Rule, determine the term of the loan (in days) and the date of the loan.
You invested RM8,700 into an investment plan with the interest rate of 5% compounded annually. Calculate the maturity value and interest earned after three years.
The maturity value of the investment plan after three years is RM10,428.08, and the interest earned is RM1,728.08
How to calculate the maturity value and interest earned?Using the Banker's Rule, we can calculate the term of the loan as follows:
Interest = Principal x Rate x Time
28200 - 26000 = 2200
2200 = 26000 x 0.048 x (T/365)
Solving for T, we get T = 56 days (rounded to the nearest day).
To find the date of the loan, we add 56 days to the date 16 October 2020, giving us the date 11 December 2020.
Now maturity value of the investment plan after three years can be calculated as follows:
Maturity value = Principal x (1 + Rate)^Time
Maturity value = 8700 x (1 + 0.05)^3
Maturity value = RM 10,012.50
The interest earned after three years is the difference between the maturity value and the principal:
Interest earned = Maturity value - Principal
Interest earned = RM 10,012.50 - RM 8700
Interest earned = RM 1,312.50
So, the maturity value after three years is RM 10,012.50 and the interest earned is RM 1,312.50
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A bank purchases a six-month $1 million Eurodollar deposit at an interest rate of 8.0 percent per year. It invests the funds in a six- month Swedish krona bond paying 9.1 percent per year. The current spot rate of U.S. dollars for Swedish krona is $0.1780/SKr. a. The six-month forward rate on the Swedish krona is being quoted at $0.1810/SKr. What is the net spread earned for six months on this Investment if the bank covers its foreign exchange exposure using the forward market? b. At what forward rate will the spread be only 1 percent per year? (For all requirements, do not round Intermediate calculations. Round your answers to 4 decimal places. (e.g., 32.1616)) a. Net spread % b Forward rate per Skr
If the forward rate is $0.1835/SKr, the spread will be only 1 percent per year. The bank purchased a six-month $1 million Eurodollar deposit at an interest rate of 8.0 percent per year and invested the funds in a six-month Swedish Krona bond paying 9.1 percent per year.
The current spot rate of U.S. dollars for the Swedish Krona is $0.1780/SKr. Using the six-month forward rate of $0.1810/SKr, the net spread earned for six months on this investment is 0.0197 or 1.97%.
This means that the bank earned a higher interest rate on its investment than what it paid on the Eurodollar deposit, resulting in a net profit.
To calculate the forward rate at which the spread will be only 1 percent per year, we can use the formula: Forward rate = spot rate x (1 + foreign interest rate) / (1 + domestic interest rate). Substituting the given values, we get Forward rate = $0.1780/SKr x (1 + 0.091) / (1 + 0.08) = $0.1835/SKr.
Overall, this investment strategy shows how a bank can use foreign exchange and interest rate differentials to earn a profit. By covering its foreign exchange exposure using the forward market, the bank can ensure a fixed exchange rate and protect against exchange rate fluctuations.
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xyz is evaluating the reno project. the project would require an initial investment of $124,000 that would be depreciated to $15,300 over 6 years using straight-line depreciation. the project is expected to have operating cash flows of $46,500 per year forever. xyz expects the project to have an after-tax terminal value of $325,000 in 3 years. the tax rate is 30%. what is (x y)/z if x is the project's relevant expected cash flow in year 3, y is the project's relevant expected cash flow in year 4, and z is the project's relevant expected cash flow in year 2?
The relevant expected cash flows in years 3, 4, and 2 are all the same: $46,500.
What is cash flows?Cash flows refer to the movement of money into and out of a business over a specified period of time. Positive cash flows are generated when a business receives more money than it pays out, while negative cash flows occur when the opposite is true. Cash flows can be broken down into three categories: operating, investing, and financing. Operating cash flows are generated through the day-to-day activities of running a business, such as sales, salaries, and expenses. Investing cash flows involve the purchase or sale of long-term investments, such as property, equipment, and securities.
This is because the project is expected to have operating cash flows of $46,500 per year forever. Therefore, (x y)/z is equal to 1, since all cash flows are the same.
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lockboxes are pointed out in the text as a good method of internal control over cash. a major advantage to a lockbox account is
The major advantage of a lockbox account as a method of internal control over cash is that it reduces the time it takes for a company to process incoming cash receipts.
A lockbox account is a bank-managed account that allows a company to receive payments directly from customers to a designated post office box, with the bank collecting and depositing the funds on behalf of the company.
This method of internal control provides several advantages, including reducing the time it takes for a company to process incoming cash receipts, as the funds are collected and deposited by the bank faster than if they were collected and deposited by the company itself.
This can help improve the company's cash flow and provide better control over its cash receipts, as the funds are deposited more quickly and accurately, reducing the risk of errors or misappropriation of funds.
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Francisca has $2,500 to invest. You have been offered an investment that yields $4,000 at the end of year 3. Determine the rate of return you would earn if you accepted the offer.
The rate of return for the investment is 13.7%.
How to calculate the rate of return for an investment?To determine the rate of return for the investment, we can use the formula for compound interest:
A = [tex]P(1 + r)^n[/tex]
Where A is the ending amount, P is the principal or starting amount, r is the interest rate, and n is the number of compounding periods.
In this case, we know that Francisca has $2,500 to invest and will receive $4,000 at the end of year 3. We can assume that the interest is compounded annually, so n = 3. We want to solve for r, the interest rate.
Substituting the given values into the formula, we have:
$4,000 = $2,500[tex](1 + r)^3[/tex]
Dividing both sides by $2,500, we get:
1.6 = [tex](1 + r)^3[/tex]
Taking the cube root of both sides, we get:
1 + r = 1.137
Subtracting 1 from both sides, we get:
r = 0.137 or 13.7%
Therefore, the rate of return for the investment is 13.7%.
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according to alfie kohn, competition promotes individual and group achievement better than cooperation. (true or false)
The given statement "according to alfie kohn, competition promotes individual and group achievement better than cooperation" is false because alfie Kohn, a prominent educational researcher and writer, argues that competition does not promote individual and group achievement better than cooperation.
In fact, he believes that competition often results in negative outcomes, including decreased creativity, cooperation, and intrinsic motivation. Kohn suggests that when individuals are pitted against each other, they focus solely on winning and often resort to unethical or harmful behaviors to achieve their goals. This can create a toxic environment that can be detrimental to individuals and groups alike.
On the other hand, when individuals work together cooperatively, they are able to share ideas and resources, which can lead to greater innovation and creativity. Cooperation also encourages individuals to work towards common goals, fostering a sense of unity and shared responsibility.
In conclusion, while competition may have some benefits in certain contexts, Kohn argues that cooperation is ultimately a more effective approach to promoting individual and group achievement.
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the variable speed company manufactures a line of high-quality tools. the company sold 1,060,000 hammers at a price of $4.60 per unit last year. the company estimates that this volume represents a 25% share of the current hammers market. the market is expected to increase by 5%. marketing specialists have determined that, as a result of a new advertising campaign and packaging, the company will increase its share of this larger market to 30%. due to changes in prices, the new price for the hammer will be $4.90 per unit. this new price is expected to be in line with the competition and have no effect on the volume estimates. what are the estimated sales revenues in the coming year?
The estimated sales revenues in the coming year are $6,544,440.
How to estimate the sales revenuesTo estimate the sales revenues in the coming year for the Variable Speed Company, we need to consider the market share, market growth, and new price per unit.
1. Calculate the current market size:
1,060,000 hammers / 0.25 (25% market share) = 4,240,000 hammers
2. Estimate the increased market size:
4,240,000 hammers * 1.05 (5% growth) = 4,452,000 hammers
3. Calculate the company's expected sales volume
4,452,000 hammers * 0.30 (30% market share) = 1,335,600 hammers
4. Estimate the sales revenues:
1,335,600 hammers * $4.90 per hammer = $6,544,440
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Because of the discouraged worker effect, the stated ________ rate may __________ the true magnitude of the problem being studied.Unemployment, Understate or Underestimate how bad the problem isInflation, Exaggerate or make it appear worse than it isInflation, Understate or Underestimate how bad the problem isUnemployment, Exaggerate or make it appear worse than it is
The Discouraged Worker Effect is an economic phenomenon that occurs when a person who is unemployed and actively seeking work is no longer counted as part of the labor force, either because they become discouraged from their job search or because they have been out of work for so long that they are no longer considered employable.
This effect can have a significant impact on the accuracy of economic indicators, such as the unemployment rate. As the number of discouraged workers increases, the stated unemployment rate will underestimate the true magnitude of the problem, as these individuals are no longer counted as unemployed. Conversely, when the number of discouraged workers decreases, the stated unemployment rate will overestimate the true magnitude of the problem, as these individuals are now included in the unemployment rate.
Therefore, the Discouraged Worker Effect can have a significant impact on the accuracy of economic indicators such as the unemployment rate, making it important to take into account when interpreting economic data.
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each of four properties has an assessed valuation of $249,000. based on property classification and assessment ratio, which one would have the highest property tax bill?
To determine which property would have the highest property tax bill, we need to know the tax rate for each property classification and the assessment ratio for each property.
However, assuming that all properties are in the same property classification and have the same assessment ratio, then the property with the highest assessed valuation of $249,000 would have the highest property tax bill.
In other words, if all other factors are equal, the property with the highest assessed valuation would have the highest property tax bill.
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(18)
Fremont Enterprises has an expected return of 15% and Laurelhurst News has an expected return of 20%. If you put 70% of your portfolio in Laurelhurst and 30% in Fremont, what is the expected return of your portfolio?
To calculate the expected return of the portfolio, we need to use the weighted average of the expected returns of Fremont and Laurelhurst.
Expected return of portfolio = (Weight of Fremont x Expected return of Fremont) + (Weight of Laurelhurst x Expected return of Laurelhurst)
= (0.3 x 15%) + (0.7 x 20%)
= 4.5% + 14%
= 18.5%
Therefore, the expected return of the portfolio is 18.5%.content loaded. When you invest in multiple assets, the expected return of your portfolio is a weighted average of the expected returns of the individual assets. In this case, you are investing in two assets: Fremont Enterprises and Laurelhurst News. The expected return of Fremont Enterprises is 15%, and you are putting 30% of your portfolio in this asset. The expected return of Laurelhurst News is 20%, and you are putting 70% of your portfolio in this asset.
To calculate the expected return of your portfolio, you need to take the weighted average of the expected returns of Fremont To calculate the expected return of your portfolio, you need to take the weighted average of the expected returns of Fremont Enterprises and Laurelhurst News. The weights used in the calculation are the percentages of your portfolio that are invested in each asset.
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You just purchased $13,956 of goods from your suppliers with terms of 3/14, net 30. If you take the discount, what will you pay? Answer to the nearest cent and do not include the $ sign. Your Answer:
If you take the discount, you will pay: $13,537.32 for the goods.
To find out how much you will pay if you take the discount, we need to consider the following terms:
1. 3/14: This represents a 3% discount if you pay within 14 days.
2. Net 30: This means you have 30 days to pay the full amount without any discount.
Here's a step-by-step explanation of how to calculate the discounted amount you will pay:
Step 1: Determine the discount percentage.
The discount offered is 3%.
Step 2: Calculate the discount amount.
Multiply the total purchase amount by the discount percentage.
Discount amount = $13,956 * 0.03 = $418.68
Step 3: Subtract the discount amount from the total purchase amount.
Discounted amount = $13,956 - $418.68 = $13,537.32
So, if you take the discount, you will pay $13,537.32 for the goods. Remember to make the payment within 14 days to avail the discount.
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rule-based controls are least useful in organizations with which one of the following characteristics? group of answer choices environments are stable and predictable. employees are highly skilled and independent. there is consistency in product and service. the risk of malfeasance is extremely high.
Rule-based controls are least useful in organizations where employees are highly skilled and independent.
Highly competent and autonomous workers frequently need more freedom and adaptability in their work environments and may be less receptive to strict, rule-based regulations. Instead of extrinsic motivational elements like external incentives or penalties, these types of employees are frequently driven by inner reasons including a sense of purpose, personal growth, and autonomy.
Rules-based controls, on the other hand, are frequently more efficient in situations that are predictable and stable, where there is consistency in the product and service, and where the risk of fraud is very high. Rules and procedures in these settings can help ensure that workers adhere to defined standards and regulations and can help stop errors or fraud.
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mc qu. 89 when juan's taco hut decided to open... when juan's taco hut decided to open several new locations, it spent millions of dollars on property and equipment. which category of cash flow does this best describe?
The category of cash flow that best describes Juan's Taco Hut's expenditure on property and equipment is Investing activities.
Investing activities involve the acquisition or disposal of long-term assets such as property, equipment, or investments. Hence, the reasoning behind this classification is that investing cash flows involve transactions related to long-term assets, such as property, plant, and equipment.
In this case, Juan's Taco Hut spent millions of dollars on property and equipment to open new locations, which falls under the category of investing activities. These types of cash flows are important to track because they represent the long-term growth and profitability of a business. Hence, based on the provided information, Juan's Taco Hut's expenditure is categorized as investing activities.
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Some people think that financial market transactions should be taxed. What are the arguments for and against?
Would that really somehow make the world a better place? Or would it just make it even harder for you to save for your retirement?
Arguments for taxing financial market transactions include generating revenue for governments to fund public services and reducing excessive speculation.
This could potentially make the world a better place by addressing income inequality and stabilizing markets. Additionally, a small transaction tax might not significantly impact long-term investors saving for retirement, as they typically hold assets for extended periods.
On the other hand, opponents argue that such taxes could reduce market liquidity, increase trading costs, and hinder capital formation. This could lead to negative consequences for the economy and make it harder for individuals to save for retirement due to decreased investment returns. Also, companies and traders might relocate to countries without transaction taxes, limiting the potential benefits.
In summary, taxing financial market transactions has both pros and cons. While it might generate revenue and reduce speculation, it could also negatively impact market liquidity, investment returns, and ultimately, retirement savings.
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Knights Development is considering buying a vacant lot that is
selling for $1.5 million. It will take them two years to permit and
construct a large retail center and will cost an additional $1
millio
Knights Development is considering a project that involves buying a vacant lot for $1.5 million, taking two years to permit and construct a large retail center, and spending an additional $1 million on construction.
What Knights Development looking for investment?Based on the information provided, Knights Development is looking to invest a total of $2.5 million ($1.5 million for the vacant lot and an additional $1 million for construction and permitting) in a large retail center. It is important for them to carefully analyze the potential return on this investment before proceeding with the purchase.
Factors that Knights Development should consider include the current demand for retail space in the area, potential competition from existing businesses, and the projected profitability of the retail center once it is up and running. They should also factor in any additional costs associated with running the center, such as maintenance, utilities, and marketing.
If Knights Development determines that the potential return on their investment is favorable and that they can generate a significant profit from the retail center, then it may be a good decision to move forward with the purchase of the vacant lot. However, it is important for them to carefully weigh the risks and rewards of this investment and to conduct thorough due diligence before making a final decision.
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a 40 year bond with a par value of 5000 is redeemable at par and pays semi-annual coupons at a rate of 7% convertible semi-annually. the bond is purchased to yield annual effective rate of 6%. calculate the amortization of the premium in the 61st coupon.
The amortization of premium is -$10.82. Since the amortization of premium is negative, this means that the bondholder will receive a slightly lower coupon payment than usual
How to Calculate Amortization?To calculate the amortization of the premium in the 61st coupon, we first need to calculate the price of the bond. We can use the following formula to calculate the price of a bond:
Bond Price = (Coupon Payment / Semi-annual Interest Rate) * [1 - 1 / (1 + Semi-annual Interest Rate)^(Number of Semi-annual Payments)] + Par Value / (1 + Semi-annual Interest Rate)^(Number of Semi-annual Payments)
Where:
Coupon Payment = Par Value * Coupon Rate / 2
Semi-annual Interest Rate = Annual Interest Rate / 2
Number of Semi-annual Payments = Number of Years to Maturity * 2
Plugging in the given values, we get:
Coupon Payment = 5000 * 7% / 2 = $175
Semi-annual Interest Rate = 6% / 2 = 3%
Number of Semi-annual Payments = 40 years * 2 = 80
Bond Price = (175 / 3%) * [1 - 1 / (1 + 3%)^80] + 5000 / (1 + 3%)^80
Bond Price = $6,408.55
Next, we need to calculate the coupon payment for the 61st coupon. Since the bond pays semi-annual coupons, the 61st coupon is the 121st semi-annual coupon. The coupon rate is still 7%, but the semi-annual interest rate may have changed due to market conditions.
We can calculate the semi-annual interest rate that corresponds to a yield of 6% using the following formula:
(1 + Semi-annual Interest Rate)^2 = 1 + Annual Effective Rate
(1 + Semi-annual Interest Rate)^2 = 1 + 6%
(1 + Semi-annual Interest Rate)^2 = 1.06
1 + Semi-annual Interest Rate = sqrt(1.06)
Semi-annual Interest Rate = (sqrt(1.06) - 1) = 2.902%
Using the semi-annual interest rate of 2.902%, we can calculate the coupon payment for the 61st coupon:
Coupon Payment = 5000 * 7% / 2 = $175
Finally, we can calculate the amortization of the premium for the 61st coupon:
Amortization of Premium = Coupon Payment - Interest Expense
Interest Expense = Bond Price * Semi-annual Interest Rate
Interest Expense = $6,408.55 * 2.902% = $185.82
Amortization of Premium = $175 - $185.82 = -$10.82
Since the amortization of premium is negative, this means that the bondholder will receive a slightly lower coupon payment than usual, as the premium paid for the bond has already been partially amortized.
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As a manager, Jason spends much of his time coaching his employees and making sure that any required information from upper management reaches them in an understandable format. Jason would best be described as an) Multiple Choice tactical manager frontline manager top-level manager operational manager Institutional controller
Jason would best be described as a frontline manager. Option b is answer.
Frontline managers are responsible for managing and coaching employees directly involved in producing goods or delivering services. They are often the first level of management in an organization and spend much of their time overseeing daily operations and providing guidance and support to employees.
In the scenario described, Jason's role as a manager involves coaching his employees and ensuring that important information is effectively communicated to them. This suggests that he is working closely with frontline employees and is involved in day-to-day operations. Therefore, Jason is most likely a frontline manager.
Option b is answer.
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X Your answer is incorrect. A project has an NPV of $51,500. Calculate the cost of capital of this project if it generates the following cash flows for six years after an initial investment of $205,000: (Round answer to 4 decimal places, eg. 25.2513%.) Year 1: $51,500 Year 2: $51,500 Year 3: $32,500 Year 4: $79,500 Year 5: $63,500 Year 6: $74,500 Cost of capital ___ %
$74,500 Cost of capital 13.9272 %.
The cost of capital for this project can be calculated using the Net Present Value (NPV) equation. The NPV equation is used to determine the present value of a series of future cash flows. In this case, the initial investment of $205,000 and the cash flows for the following six years are considered. From the equation, we can calculate the cost of capital as 13.9272%.
The cost of capital is the rate of return required to make the project worthwhile. It is the minimum rate of return that investors expect to receive in order to invest in a project. In this case, the cost of capital is 13.9272%, meaning that if the project generates a return greater than or equal to 13.9272%, then it is a sensible investment.
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true of false a drop in value of the dollar hurts u.s. importers and helps u.s. exporters, ceteris paribus.
True, a drop in the value of the dollar, ceteris paribus, generally hurts U.S. importers and helps U.S. exporters.
This is because a weaker dollar makes imported goods more expensive for U.S. consumers, while making exported goods cheaper and more attractive to foreign buyers.
Impact on U.S. Importers: When the value of the U.S. dollar drops, it means that the dollar becomes less valuable relative to other currencies.
As a result, it takes more dollars to purchase the same amount of foreign goods, making imported goods more expensive for U.S. consumers and businesses. This can result in several challenges for U.S. importers:
a. Increased Costs: U.S. importers will need to pay more in their local currency to purchase the same quantity of imported goods. This can lead to higher costs of production for businesses that rely on imported raw materials, components, or finished goods.
It may also result in higher prices for consumers who purchase imported products, leading to reduced demand or lower profit margins for businesses.
b. Reduced Competitiveness: As imported goods become more expensive, U.S. importers may face increased competition from domestic producers or alternative sourcing options. This can impact the competitiveness of U.S. businesses that rely heavily on imported goods or services, potentially leading to decreased market share or reduced profitability.
Impact on U.S. Exporters: On the other hand, a weaker U.S. dollar can benefit U.S. exporters, as it makes their goods and services more affordable and attractive to foreign buyers. This can lead to several advantages for U.S. exporters:
Increased Demand: A weaker dollar can result in lower prices for U.S. goods and services in foreign markets, making them more competitive and attractive to foreign buyers.
This can potentially lead to increased demand for U.S. exports, as foreign consumers and businesses can purchase more U.S. goods for the same amount of their local currency.
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5. You have one asset in CCA Asset Class 12. You purchased this asset five years prior for $10.25 min plus $1.75 min for installation. Asset Class 12 has a CCA Rate of 15.00% and your firm's marginal tax rate is 22.50%. a. If you sell this asset today for $7.50 min, what are the tax implications? [3 points) b. if you sell the asset today for $3.50 mln, what are the tax implications? [3 points] c. if you sell the asset today for $15.00 min, what are the tax implications? [4 points)
a. If you sell the asset today for $7.50 min, the tax implications would be a capital loss. The capital loss would be equal to the difference between the original cost of the asset and the sale price of the asset.
This amount would be multiplied by the marginal tax rate of 22.50%. The amount of the capital loss would be equal to ($10.25 min + $1.75 min) - $7.50 min = $3.00 min, which multiplied by the marginal tax rate of 22.50% would equal $0.675 min in capital losses.
b. If you sell the asset today for $3.50 min, the tax implications would be a capital loss plus a recapture of the CCA previously claimed. The capital loss would be equal to the difference between the original cost of the asset and the sale price of the asset.
This amount would be multiplied by the marginal tax rate of 22.50%. The amount of the capital loss would be equal to ($10.25 min + $1.75 min) - $3.50 min = $6.00 min, which multiplied by the marginal tax rate of 22.50% would equal $1.35 min in capital losses.
In addition, the CCA previously claimed on the asset would need to be recaptured, as the sale price of the asset is below the original cost. The recapture amount is calculated by taking the original cost of the asset, multiplying it by the CCA rate of 15.00%, and subtracting the CCA amount previously claimed. This amount would be multiplied by the marginal tax rate of 22.50%, resulting in a recapture amount of $1.0875 min.
c. If you sell the asset today for $15.00 min, the tax implications would be a capital gain. The capital gain would be equal to the difference between the sale price of the asset and the original cost of the asset.
This amount would be multiplied by the marginal tax rate of 22.50%. The amount of the capital gain would be equal to $15.00 min - ($10.25 min + $1.75 min) = $2.50 min, which multiplied by the marginal tax rate of 22.50% would equal $0.5625 min in capital gains.
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a. If the asset is sold for $7.50 million, there is a terminal loss of $0.95 million, which can be used to reduce the taxable income of the company for the current tax year, resulting in tax savings of $213,750.
This amount would be multiplied by the marginal tax rate of 22.50%. The amount of the capital loss would be equal to ($10.25 min + $1.75 min) - $7.50 min = $3.00 min, which multiplied by the marginal tax rate of 22.50% would equal $0.675 min in capital losses.
b. If the asset is sold for $3.50 million, there is a larger terminal loss of $4.95 million, which can be used to reduce the taxable income of the company for the current tax year, resulting in greater tax savings of $1,113,750.
c. If the asset is sold for $15.00 million, the company would have a capital gain of $6.55 million ($15.00 million - $8.45 million UCC), which would be included in the company's taxable income. The tax payable on this capital gain would be $6.55 million x 22.50% = $1,473,750. It is important to note that the amount of tax payable on a capital gain can be reduced by applying any capital losses carried forward from previous years.
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in 2 years, zeke wants to buy a bicycle that costs $600.00. if he opens a savings account that earns 5% interest compounded quarterly, how much will he have to deposit as principal to have enough money in 2 years to buy the bike?
Zeke will need to deposit $498.35 as principal to have enough money in 2 years to buy the $600.00 bicycle.
How much Zeke will need to deposit as principalTo calculate how much Zeke will need to deposit as principal to have enough money to buy the $600.00 bicycle in 2 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
where A is the amount accumulated, P is the principal (the initial deposit), r is the annual interest rate (in decimal form), n is the number of times the interest is compounded per year, and t is the number of years. In this case, r = 0.05 (5% interest rate), n = 4 (compounded quarterly), t = 2 (2 years).
We want to solve for P.
First, we need to calculate the total amount Zeke will need in 2 years:
$600.00.
Next, we can plug in the values we know and solve for
P: $600.00 = P(1 + 0.05/4)^(4*2)
Simplifying the equation, we get:
$600.00 = P(1.0125)^8
Dividing both sides by (1.0125)^8, we get:
P = $498.35 (rounded to the nearest cent)
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you can construct a sources and uses statement for 2017 if you have a company’s year-end balance sheets for 2017 and 2018. True or false?
The given statement "you can construct a sources and uses statement for 2017 if you have a company’s year-end balance sheets for 2017 and 2018" is False because balance sheet does not show the changes in cash flows over the year.
The Balance sheets provide the information related to the financial position of a company at a specific point in time and it does not show the changes in cash flows over the year.
In order to make a sources and uses statement. Then, information on the company's cash inflows and outflows for the year is required and it is obtained from the statement of cash flows and other factors are also required.
Therefore, the given statement is false.
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Ridley Corporation is in the process of adjusting and correcting its books at the end of 2020. In reviewing its records, the following information was discovered. Prepare the journal entries necessary at December 31, 2020, to record the corrections and changes. The books are still open for 2020. The income tax rate is 40%. The company has not yet recorded its 2020 income tax expense and payable amounts so current-year tax effects may be ignored. Prior-year tax effects must be considered in item 4. 5. A collection of $5,600 on account from a customer received on December 31, 2020, was not recorded until January 2, 2021.
Here are the journal entries to record the corrections and changes at December 31, 2020:
1. Incorrect recording of equipment purchase - the $12,000 equipment actually purchased on 12/31/20.
Debit Equipment $12,000
Credit Accounts Payable $12,000
2. Unrecorded sale of land - the company sold land with a book value of $25,000 for $42,000 cash.
Debit Cash $42,000
Debit Gain on Sale of Land $17,000
Credit Land $25,000
Credit Accumulated Depreciation $8,000
3. Unrecorded expense - prepaid insurance expense of $3,000 expired on 12/31/20.
Debit Insurance Expense $3,000
Credit Prepaid Insurance $3,000
4. Understatement of depreciation in prior years - additional depreciation of $10,000 should have been recorded in prior years. The tax effect is $4,000.
Debit Accumulated Depreciation $10,000
Debit Deferred Tax Asset $4,000
Credit Provision for Income Taxes $4,000
5. Collection received on 12/31/20 but not recorded until 1/2/21 -
Debit Accounts Receivable $5,600
Credit Cash $5,600
The net income effect of the above corrections is to increase net income by $11,000.
Please let me know if any additional explanations or details are needed.
Brett creative media is expected to pay dividends at the end of the next three years of $0.5 $1.5 $2 respectively after three years the dividend is expected to grow at a 5% constant annual rate forever if the required rate of return on this stock is 10% what is the current stock price?
The current stock price of Brett Creative Media is $32.06
How to calculate current stock price?To calculate the current stock price, we need to find the present value of all the future dividends and the perpetuity. We can use the following formula:
P = [tex]\frac{D1}{(1+r)^{1} }[/tex]+ [tex]\frac{D2}{(1+r)^{2} }[/tex]+ [tex]\frac{D3}{(1+r)^{3} }[/tex] + [tex]\frac{D4 }{(r-g) * (1+r)^{3} }[/tex]
Where:
P = current stock price
D1, D2, D3 = dividends expected to be paid at the end of year 1, 2, and 3, respectively
D4 = the perpetual dividend expected after year 3
r = required rate of return
g = expected constant annual growth rate
Substituting the given values:
P = [tex]\frac{0.5 }{(1+0.1)^{1} }[/tex] + [tex]\frac{1.5 }{(1+0.1)^{2} }[/tex]+ [tex]\frac{2 }{(1+0.1)^{3} }[/tex]+ [tex]\frac{2 * 1.05}{(0.1-0.05) * (1+0.1)^{3} }[/tex]
P = 0.4545 + 1.2397 + 1.653 + 28.714
P = 32.0612
Therefore, the current stock price of Brett Creative Media is $32.06
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A) Rozanski Co. currently has EBIT of $41,000 and is all equity financed. EBIT are expected to grow at a rate of 2% per year. The firm pays corporate taxes equal to 38% of taxable income. The cost of equity for this firm is 14%. Suppose the firm has a value of $211,833.33 when it is all equity financed. Now assume the firm issues $87,000 of debt paying interest of 10% per year and uses the proceeds to retire equity. The debt is expected to be permanent. Suppose that with the $87,000 of debt and no costs to financial distress the firm has a value of $244,893.33. Suppose, in addition:
1) The debt issue raises the possibility of bankruptcy.
2) The firm has a 24% chance of going bankrupt after 2 years.
3) If it goes bankrupt, it will incur bankruptcy costs of 70,000.
4) The discount rate is 14%.
What is the value of the firm? Enter your answer rounded to two decimal places
The value of the firm with debt is $244,893.33, but considering the possibility of bankruptcy and the associated costs, the value decreases to $225,788.12.
This is calculated by discounting the expected cash flows, taking into account the probability of bankruptcy and the costs associated with it. The value of the firm decreases because the debt raises the risk of bankruptcy and the associated costs, reducing the expected cash flows and increasing the discount rate.
In summary, the value of the firm is influenced by various factors, such as the level of debt, the cost of equity, the tax rate, and the probability of bankruptcy, and it is important to consider these factors when making financial decisions.
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the study of behavioral finance has best helped explain which of the following investor behaviors? multiple choice investors are often unable to short sell unfavorable stocks. investors often create undiversified portfolios. investors tend to sell their losing stocks and retain stocks that have capital gains. investors are generally too slow to update their beliefs in the face of new evidence.
The study of behavioral finance has best helped explain that "Investors tend to sell their losing stocks and retain stocks that have capital gains". Option c is answer.
The study of behavioral finance has shown that investors often exhibit behavioral biases, such as loss aversion and the disposition effect, which can lead to this type of behavior. Loss aversion refers to the tendency for people to experience the pain of losses more strongly than the pleasure of gains, while the disposition effect refers to the tendency for people to sell winning investments too early and hold on to losing investments for too long.
Option c is answer.
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Suppose that last year, the nominal exchange rate between the Japanese yen and the British pound was 225.0 Yen per 1.0 Euro, one unit of Japanese output cost 2000 Yen , and one unit of British output cost 8.0 Euro.
a. What was the real exchange rate between the U.K. and Japan last year, expressed as the cost of British output (i.e. - the quantity of Japanese output that exchanges for 1 unity of British output)? In which country are goods more expensive last year?
b. Suppose that between last year and this year the British pound appreciate by 20% against the Japanese yen (a 20% increase in the number of yen required to buy 1 pound). if the price of goods in the U.K. and Japan are unchanged from last year, what is this year's new real exchange rate? In which country are goods more expensive this year?
c. Now suppose, instead, that between last year and this year, the pound appreciated by 20% against the yen and Japan experienced a 30% increase in its price level (a 30% increase in the number of yen required to purchase one unit of Japanese output). All else equal, what is this year's real exchange rate in that case? In which country are goods more expensive this year?
An exchange rate determines the price at which one currency will be exchanged for another & has an impact on international trade & money transfers.
a. To calculate the real exchange rate, we need to divide the nominal exchange rate by the ratio of the price levels of the two countries.
The price level of Japan is given as 2000 Yen per unit of output, & the price level of the UK is given as 8.0 Euro per unit of output. Since we need the cost of British output in terms of Japanese output, we need to convert the British price level into Yen. Using the given nominal exchange rate, we have:
8.0 Euro/unit * 225.0 Yen/Euro = 1800 Yen/unit of British output
Therefore, the ratio of the price levels is:
2000 Yen/unit of Japanese output / 1800 Yen/unit of British output = 1.111
The real exchange rate is then:
225.0 Yen/Euro / 1.111 = 202.5 Yen/unit of British output
Goods are more expensive in Japan last year, since it takes more Yen to buy one unit of Japanese output than it takes to buy one unit of British output.
b. If the British pound appreciated by 20%, then the new nominal exchange rate is:
225.0 Yen/Euro / (1 + 0.2) = 187.5 Yen/Euro
Using the same price levels as last year, the new real exchange rate is:
187.5 Yen/Euro / 1.111 = 168.75 Yen/unit of British output
Goods are more expensive in Japan this year, since it takes more Yen to buy one unit of Japanese output than it takes to buy one unit of British output.
c. If the pound appreciated by 20% & Japan experienced a 30% increase in its price level, then the new price level in Japan is:
2000 Yen/unit of Japanese output * (1 + 0.3) = 2600 Yen/unit of Japanese output
The new nominal exchange rate is the same as in part (b):
225.0 Yen/Euro / (1 + 0.2) = 187.5 Yen/Euro
The new real exchange rate is then:
187.5 Yen/Euro / (2600 Yen/unit of Japanese output / 1800 Yen/unit of British output) = 129.17 Yen/unit of British output
Goods are more expensive in Japan this year, since it takes more Yen to buy one unit of Japanese output than it takes to buy one unit of British output, & the increase in the price level of Japan makes Japanese goods even more expensive.
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a. Real exchange rate last year: 28.125. Goods more expensive in Japan.
b. New real exchange rate: 33.75. Goods more expensive in Japan.
c. New real exchange rate: 37.5. Goods more expensive in Japan.
a. In the previous year, the real exchange rate between the UK and Japan was 28.125 (225/8). A unit of British output cost 8.0 Euro, which is comparable to 7.14 pounds (8/1.12), but a unit of Japanese output cost 2000 yen, or 8.89 pounds (2000/225), making last year's prices in Japan higher.
b. The new real exchange rate for this year is 33.75 (225/6.67), which means that goods in Japan are now more expensive. One unit of Japanese output continues to cost 2000 yen, which is now equivalent to 29.85 pounds (2000/67), while one unit of British output now costs 150 euros (81.2), which is equivalent to 1000 yen (1506.67).
c. A unit of Japanese output now costs 2600 yen (20001.3), which is equivalent to 1040 pounds (2600/2.5), while a unit of British output continues to cost 150 euros (81.2), which is equivalent to 1000 yen (150*6.67). c. This year's new real exchange rate is 37.5 (225/6), meaning that goods in Japan are now more expensive this year.
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One-, two and three-year maturity, default-free, zero-coupon bonds have yields to maturity of 5%, 6%, and 7%, respectively. What is the implied 1-year forward rate 1 year from today? 11.11% 16.67% 7% 8.01%
The implied 1-year forward rate 1 year from today is 8.01%. This rate is calculated from the yields to maturity of one-, two-, and three-year zero coupon bonds.
A zero coupon bond pays no interest, but instead is issued at a discount to face value and matures at face value. The yield to maturity (YTM) of a zero coupon bond is the rate of return that an investor earns by holding the bond until maturity.
The forward rate (FR) is the expected rate of return on a security in a given time period. The formula to calculate the 1-year forward rate 1 year from today is FR = (1+YTM2) / (1+YTM1) - 1.
In this case, the 1-year forward rate 1 year from today is (1+6%)/(1+5%)-1 = 8.01%. Therefore, the implied 1-year forward rate 1 year from today is 8.01%.
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please answer asap!no plagarism100 pts Initial Post due Day 3 Responses due Day 7 Explain why taxes and tax policy are important considerations in capital budgeting decisions. Give examples. Search entries or author Unread Subscrib
Taxes and tax policy are important considerations in capital budgeting decisions because they directly affect a company's cash flow, profitability, and overall financial performance.
For example, changes in tax rates, tax credits, and deductions can significantly impact a project's net present value (NPV) and internal rate of return (IRR), two key metrics used in capital budgeting decision-making.One example of the impact of taxes on capital budgeting decisions is the effect of depreciation allowances. Companies can claim depreciation on their assets, which reduces their taxable income and ultimately their tax liability. By considering the tax benefits of depreciation, a company can make better-informed capital investment decisions. Another example is the availability of tax credits for specific industries or activities, such as research and development (R&D) or renewable energy projects.
Companies considering investments in these areas need to factor in the tax credits they may receive, as this can significantly improve the project's financial attractiveness.
In summary, taxes and tax policy play a crucial role in capital budgeting decisions by directly affecting cash flows, profitability, and financial performance. By considering tax implications, companies can make more informed investment decisions that align with their overall business objectives.
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