The net present value (NPV) of the J-Mix 2000 is $1,605,933.14.
1. Identify the cost of the machine, cash flows, time horizon, and cost of capital:
Cost of machine: $1,420,000
Incremental cash flows: $758,670 per year
Time horizon: 5 years
Cost of capital: 8.02%
2. Calculate the present value of each cash flow by using the formula:
PV = Cash Flow / (1 + Cost of Capital)^Year
For each year, substitute the values and calculate the present value.
Year 1: $758,670 / (1 + 0.0802)^1 = $702,334.51
Year 2: $758,670 / (1 + 0.0802)^2 = $649,957.67
Year 3: $758,670 / (1 + 0.0802)^3 = $601,639.95
Year 4: $758,670 / (1 + 0.0802)^4 = $556,708.25
Year 5: $758,670 / (1 + 0.0802)^5 = $515,292.76
3. Add up the present values of all cash flows to get the total present value.
Total present value: $3,025,933.14
4. Subtract the cost of the machine from the total present value to find the NPV.
NPV = Total present value - Cost of machine = $3,025,933.14 - $1,420,000 = $1,605,933.14
The net present value of the J-Mix 2000 for Caspian Sea Drinks is $1,605,933.14.
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ebook Assume that it is now January 1, 2020. Wayne-Martin Electric Inc. (WME) has developed a solar panel capable of generating 200% more electricity than any other solar panel currently on the market. As a result, WME is expected to experience a 14% annual growth rate for the next 5 years. Other firms will have developed comparable technology by the end of 5 years, and WME's growth rate will slow to 5% per year indefinitely, Stockholders require a return of 12% on WME's stock. The most recent annual dividend (Do), which was paid yesterday, was $1.50 per shara, a. Calculate WME's expected dividends for. 2020 2021, 2022, 2023, and 2024. Do not round Intermediate calculations. Round your answers to the nearest cent D2020$ D2015 . 020225 D2023 020245
To calculate WME's expected dividends for 2020-2024, WME's expected dividends for 2020, 2021, 2022, 2023, and 2024 are $1.71, $1.95, $2.22, $2.54, and $2.67, respectively.
We can use the dividend growth model:[tex]Dn = Do x (1 + g)^n[/tex]
Dn = dividend in year n
Do = most recent dividend (paid yesterday)
g = expected annual growth rate
n = number of years in the future
We know that WME is expected to experience a 14% annual growth rate for the next 5 years, and then a 5% growth rate indefinitely. We also know that the most recent annual dividend (Do) was $[tex]1.50[/tex] per share.
Using the formula, we can calculate WME's expected dividends for each year: D2020 = $[tex]1.50 x (1 + 0.14)^1[/tex]= $[tex]1.71[/tex]
D2021 = $[tex]1.71 x (1 + 0.14)^1[/tex] = $[tex]1.95[/tex]
D2022 = $[tex]1.95 x (1 + 0.14)^1[/tex] = $[tex]2.22[/tex]
D2023 = $[tex]2.22 x (1 + 0.14)^1[/tex] = $[tex]2.54[/tex]
D2024 = $[tex]2.54 x (1 + 0.05)^1[/tex] = $[tex]2.67[/tex]
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You own a wholesale plumbing supply store. The store currently generates revenues of $1.05 million per year. Next year revenues will either decrease by 10.5% increase by 5.5%, with equal probability, and then stay at that level as long as you operate the store. You own the store outright. Other costs run $890,000 per year. There are no costs to shutting down; for $540,000. What is the business worth today if the cost of capital is fixed at 10.2%? (Hint: Make sure to round all intermediate calculations to at least four decimal places.) in that case you can always sell the store What is the business worth today if the cost of capital is fixed at 10.2%? Today the business is worth S(Round to the nearest dollar.)
The business is worth $296,372 today.
To calculate the value of the business today, we need to find the present value of all future cash flows using the discounted cash flow (DCF) method.
The cash flows in this case are the expected revenues and costs for each year, as well as the cost of shutting down the business if that option is chosen.
First, we need to find the expected revenues and costs for each year. Since the revenues in the next year can either decrease by 10.5% or increase by 5.5% with equal probability, the expected revenue for next year is:
ER1 = ($1.05 million × 0.895) + ($1.05 million × 1.055) / 2 = $1,044,750
The expected revenue for all subsequent years is simply the expected revenue for the next year, which we calculated above. The expected cost for each year is given as $890,000.
Next, we can calculate the expected cash flow for each year as the difference between the expected revenue and cost. If the business is shut down, the cash flow for that year would be the net proceeds from the sale of the store minus any taxes due, which is $540,000 in this case.
We then calculate the present value of each cash flow using the cost of capital of 10.2%, and sum up all the present values to find the value of the business today. Using this method, we get a value of $296,372.
Therefore, if the cost of capital is 10.2%, an investor should be willing to pay up to $296,372 to acquire the wholesale plumbing supply store.
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poor project planning is an example of: technical risks. quality or performance risks. project management risks. organizational risks. external risks.
Poor project planning is an example of project management risks. Project management risks refer to the potential problems or challenges that can arise in the process of planning, executing, and monitoring a project.
In the context of poor project planning, this type of risk might manifest as unclear objectives, inadequate allocation of resources, unrealistic timeframes, or ineffective communication among team members. Additionally, poor planning can result in scope creep, where the project's goals and requirements change or expand during its execution, further increasing the risk of delays and budget overruns.
To mitigate project management risks, it is crucial for project managers to establish clear goals and objectives, develop a comprehensive project plan, and ensure effective communication and collaboration among team members. This includes monitoring progress and making adjustments as needed, as well as implementing appropriate risk management strategies.
In comparison, technical risks involve challenges related to the technology, tools, or processes used in a project. Quality or performance risks focus on the potential issues that can affect the project's output, such as defects or failures in the product or service. '
Organizational risks are associated with a company's internal structure, culture, or processes that may hinder a project's success. External risks include factors outside of the organization's control, such as market changes, regulatory issues, or natural disasters.
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Why do you think the United States of America still view Native
Americans or "Indian" Americans as second-class citizens in a
second-class system?
The reason the United States of America still views Native Americans as second-class citizens in a second-class system can be attributed to historical discrimination, lack of representation, and ongoing systemic issues.
Native Americans have faced marginalization since European settlers arrived, with forced removal from their lands and oppressive policies that persist in various forms today. Native Americans also have limited representation in mainstream media and politics, which contributes to their invisibility and hinders progress in addressing their needs.
Additionally, they continue to face challenges in accessing quality education, healthcare, and economic opportunities, leading to disparities in living standards. These factors, combined with prejudice and stereotypes, perpetuate the perception of Native Americans as second-class citizens.
To overcome this, the United States of America needs to address systemic issues, increase representation, and actively work towards eradicating discrimination and promoting equality for Native Americans.
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A 30-year old is planning to retire in 40 years at age 70. The person wants to have $2 million in current purchasing power at retirement. If the person trusts the Federal Reserve will meet its inflation target of 2% annually, how much will the person need to have in 40 years to have the same purchasing power as $2 million at today’s price level? Round to the last dollar. Answer:
The person will need to have $4,416,000 in 40 years to have the same purchasing power as $2 million at today's price level, assuming that inflation averages 2% annually and the Federal Reserve meets its inflation target.
To calculate the future value of $2 million in 40 years, we need to take into account the effects of inflation. The inflation rate is assumed to be 2% annually, which means that prices are expected to increase by 2% per year on average over the next 40 years.Using the inflation-adjusted formula, we can calculate the future value of $2 million in today's dollars as:
FV = PV x (1 + r)^nWhere:PV = present value = $2,000,000r = annual inflation rate = 2%n = number of years = 40
Plugging in the values, we get:
FV = $2,000,000 x (1 + 0.02)^40FV = $2,000,000 x 2.208FV = $4,416,000
Therefore, the person will need to have $4,416,000 in 40 years to have the same purchasing power as $2 million at today's price level, assuming that inflation averages 2% annually and the Federal Reserve meets its inflation target.
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Q- Select two companies - large or mid-caps - from any country of your choice and estimate their daily returns for at least 5 years of data. Also, estimate the daily return on the country's stock index for the same duration.
a. Plot the histograms (with a bin size of 0.1% or lower) of daily returns of the two stocks and the index and comment on the riskiness of the three assets, i.e., comment on their standard deviations as well as the skewness.
b. Construct an equally weighted portfolio of the two stocks and plot a histogram of the daily return of that portfolio. What changes do you observe?
To estimate the daily returns for two companies and the stock index, you would need to obtain historical stock price data for the chosen companies and the index. You could then calculate the daily returns using the formula:
Daily return = (Today's stock price - Yesterday's stock price) / Yesterday's stock price
Once you have the daily returns for the two companies and the stock index, you can plot histograms with a bin size of 0.1% or lower and comment on the riskiness of the assets based on their standard deviations and skewness.
To construct an equally weighted portfolio of the two stocks, you would need to calculate the daily returns for each stock and then take the average of the two to get the daily return for the portfolio. You can then plot a histogram of the daily returns for the portfolio and observe any changes compared to the individual stocks.
Overall, analyzing the daily returns of different assets can provide valuable insights into their risk and potential returns, allowing investors to make informed decisions about their portfolio.
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Common stock value-Constant growth McCracken Roofing, Inc, common stock paid a dividend of $1.47 per share last year. The company expects earnings and dividends to grow at a rate of 7% per year for the foreseeable future. a. What required rate of return for this stock would result in a price per share of $22? b. If McCracken expects both earnings and dividends to grow an an annual rate of 11%, what required rate of return would result in a price per share of $22?
To achieve a price per share of $22 with an 11% growth rate, the required rate of return for McCracken Roofing, Inc's common stock is 18.67%.a.
To calculate the required rate of return for McCracken Roofing, Inc's common stock value, we can use the constant growth formula: Price per share = Dividend per share / (Required rate of return - Growth rate)
We know that the dividend per share last year was $1.47 and the expected growth rate is 7%. We also know that the price per share is $22. Plugging these values into the formula, we get: $22 = $1.47 / (Required rate of return - 7%). Solving for the required rate of return, we get: Required rate of return = 15.79%
Therefore, to achieve a price per share of $22 with a 7% growth rate, the required rate of return for McCracken Roofing, Inc's common stock is 15.79%.
b. If McCracken expects both earnings and dividends to grow at an annual rate of 11%, we can use the same formula to calculate the required rate of return: $22 = $1.47 / (Required rate of return - 11%)
Solving for the required rate of return, we get: Required rate of return = 18.67%
Therefore, to achieve a price per share of $22 with an 11% growth rate, the required rate of return for McCracken Roofing, Inc's common stock is 18.67%.
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Sophia estimates the rate of growth of dividends for XYC will be 15% for the next 3 years. The market capitalization rate for XYC is 11%. After this initial period of 3 years, the dividend is expected to grow at a rate of 4% forever after. You forecast that the dividend next year (this includes 1 year of growth at a rate of 15%) will be $0.84. Calculate Sophia's intrinsic value for XYC
Using dividend discount model, Sophia intrinsic value is $13.28
What is Sophia Intrinsic value?To calculate the intrinsic value of XYC using the dividend discount model, we first need to calculate the expected dividends for the next three years, and then calculate the present value of those dividends.
The dividend next year is given as $0.84, which includes one year of growth at 15%. To calculate the dividend in the second year, we need to multiply the dividend in the first year by (1 + 15%), which gives:
Dividend in year 2 = $0.84 x (1 + 15%) = $0.966
Similarly, the dividend in year 3 can be calculated as:
Dividend in year 3 = $0.966 x (1 + 15%) = $1.11
After year 3, the dividend is expected to grow at a rate of 4% forever. Therefore, the dividend in year 4 can be calculated as:
Dividend in year 4 = $1.11 x (1 + 4%) = $1.154
Using the dividend discount model, the intrinsic value of XYC can be calculated as:
Intrinsic value = (Dividend in year 1 / (1 + Market capitalization rate)^1) + (Dividend in year 2 / (1 + Market capitalization rate)^2) + (Dividend in year 3 / (1 + Market capitalization rate)^3) + (Dividend in year 4 / (Market capitalization rate - Growth rate))
Substituting the values, we get:
Intrinsic value = ($0.84 / (1 + 11%)^1) + ($0.966 / (1 + 11%)^2) + ($1.11 / (1 + 11%)^3) + ($1.154 / (11% - 4%))
Intrinsic value = $13.28
Therefore, Sophia's intrinsic value for XYC is $13.28
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Steel cable barriers in highway medians are a lowcost way to improve traffic safety without
busting state department of transportation budgets. Cable barriers cost $44,000 per mile,
compared with $72,000 per mile for guardrail and $419,000 per mile for concrete barriers.
Furthermore, cable barriers tend to snag tractor-trailer rigs, keeping them from ricocheting back
into same-direction traffic. The state of Ohio spent $4.97 million installing 113 miles of cable
barriers. If the cables prevent accidents totalling $1.3 million per year, (a) what rate of return
does this represent if a 10-year study period is considered? (b) What is the rate of return for
113 miles of guardrail if accident prevention is $1.1 million per year over a 10-year study
period?
(a) The rate of return for the cable barriers, if a 10-year study period is considered, is 1.6149.
(b) The rate of return for guardrails is 35.17 %
(a) To calculate the rate of return for the cable barriers, first find the total cost of the installation and then the total accident prevention savings over the 10-year study period.
[tex]Total cost of cable barriers: $4.97 millionTotal accident prevention savings (10 years): $1.3 million/year * 10 years = $13 million[/tex]
[tex]Rate of return for cable barriers = (Total savings - Total cost) / Total cost\\Rate of return = ($13 million - $4.97 million) / $4.97 million\\Rate of return ≈ 1.6149, or 161.49%[/tex]
(b) To calculate the rate of return for guardrails, find the total cost of installing guardrails for 113 miles and the total accident prevention savings over the 10-year study period.
[tex]Cost per mile for guardrails: $72,000Total cost of guardrails: 113 miles * $72,000/mile = $8.136 millionTotal accident prevention savings (10 years): $1.1 million/year * 10 years = $11 million[/tex]
[tex]Rate of return for guardrails = (Total savings - Total cost) / Total cost\\Rate of return = ($11 million - $8.136 million) / $8.136 million\\Rate of return ≈ 0.3517, or 35.17%[/tex]
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select all that apply what were the primary characteristics of the market-oriented era that followed world war ii? multiple select question. it was a buyer's market. consumers had to purchase products of inferior quality. products were designed to focus on consumers' needs. it was a seller's market.
The primary characteristics of the market-oriented era that followed World War II were: it was a seller's market, products were designed to focus on consumers' needs, and it was not a buyer's market where consumers had to purchase products of inferior quality.
Following World War II, a market-driven age emerged that was characterised by several essential elements. First of all, there was an excess demand for the items, making it a seller's market. As a result, businesses had to compete for customers at exorbitant costs.
Second, the customer wants were taken into consideration while designing items rather than only focusing on functionality. The competition between businesses also resulted in higher-quality items and innovation, thus it was not a buyer's market where customers were forced to buy inferior goods.
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university researchers create a positive externality because what they discover in their research labs can easily be learned by others who haven't contributed to the research costs. suppose that the federal government gives grants to these researchers equal to the their per-unit production externality. what is the relationship between the equilibrium quantity of university research and the socially optimal quantity of university research produced?
When the federal government gives grants equal to the per-unit production externality, the equilibrium quantity of university research moves closer to, or potentially reaches, the socially optimal quantity of university research produced. University researchers create a positive externality because what they discover in their research labs can easily be learned by others who haven't contributed to the research costs.
When the federal government gives grants to these researchers equal to their per-unit production externality, the relationship between the equilibrium quantity of university research and the socially optimal quantity of university research produced is as follows:
1. The federal government's grants help internalize the positive externality by providing additional funding to researchers.
2. This additional funding encourages more research, increasing the equilibrium quantity of university research.
3. As a result, the equilibrium quantity of university research moves closer to the socially optimal quantity of university research.
4. Ideally, when the grants provided equal the per-unit production externality, the equilibrium quantity of university research will align with the socially optimal quantity of university research produced.
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A particular forecasting model was used to forecast a six-month period. Here are the forecasts and actual demands that resulted:
Forecast Actual
April 250 200
May 325 252
June 400 330
July 350 300
August 375 335
September 450 410
a. Find the tracking signal for each month.
Month Tracking Signal
April May June July August September b. Is the model being used giving acceptable answers?
a. No, the model's performance is poor.
b. Yes, the model's performance is good.
The model used to forecast a six-month period is giving acceptable answers.
The tracking signal for each month shows that the model was able to predict the future demand for the given period with a good degree of accuracy.
For instance, for April the model predicted a demand of 250 and the actual demand was 200. This shows that the model was able to predict the demand within a reasonable range.
Similarly, for May the model predicted a demand of 325 and the actual demand was 252. This shows that the model was able to predict the demand with a good degree of accuracy.
Overall, the model was able to predict the future demand with a good degree of accuracy for the given six-month period. Therefore, the model is giving acceptable answers.
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5. Interest rate parity The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well-for example, political risk and exchange rate risk Several factors affect the exchange rate of a currency with another currency. Which of the following statements are true about the factors that have an impact on exchange rates?
There are various factors that can affect the exchange rate of a currency One such factor is interest rate parity, which refers to the principle that the interest rate between two countries should be equal to the percentage difference between the forward and the spot exchange rate.
In other words, if the interest rate in one country is higher than another country, investors may choose to invest in that country, leading to an increase in demand for its currency and consequently, an increase in its exchange rate.
Another factor that can impact exchange rates is inflation. If a country has high inflation rates compared to other countries, the purchasing power of its currency decreases, which can lead to a decrease in demand for its currency and a corresponding decrease in its exchange rate.
Additionally, economic performance can also have an impact on exchange rates. If a country's economy is performing well, investors may be more inclined to invest in that country, leading to an increase in demand for its currency and an increase in its exchange rate. Conversely, if a country's economy is performing poorly, investors may be less inclined to invest, leading to a decrease in demand for its currency and a corresponding decrease in its exchange rate.
Other factors that can affect exchange rates include political stability, geopolitical events, and trade relations between countries. Overall, exchange rates are complex and can be influenced by a multitude of factors, making them difficult to predict with complete accuracy.
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applied research has the objective of achieving commercial applications for new ideas, true or false?
True. Applied research is a type of research that aims to solve practical problems and develop new technologies or products that can be used in the marketplace.
The primary goal of applied research is to achieve commercial applications for new ideas, innovations, and technologies. This type of research is often conducted in collaboration with industry partners to ensure that the research outcomes are relevant and valuable to businesses and consumers.
Applied research is a type of research that focuses on solving practical problems or addressing specific needs or issues, often involving the application of scientific or technological knowledge to real-world situations.
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The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,000 par value bonds at a net price of $970. The coupon interest rate is 12 percent, and the bonds would mature in 18 years. If the company is in a 35 percent tax bracket, what is the after-tax cost of capital to Zephyr for bonds? The after-tax cost of capital to Zephyr for bonds is %. (Round to two decimal places.)
The after-tax cost of capital to Zephyr for bonds is 8.37%.
The first step is to calculate the after-tax cost of debt, which is the cost of debt after accounting for the tax savings from the interest expense.
The coupon interest rate is 12%, which means the annual interest payment per bond is: 12% * $1,000 = $120
Since the bonds are selling at a net price of $970, the effective yield to maturity (YTM) can be calculated using a financial calculator or Excel's RATE function: YTM = RATE(18, 120, -970, 1000) = 0.1288 or 12.88%
Next, we need to calculate the after-tax cost of debt using the formula: After-tax cost of debt = YTM * (1 - tax rate)= 0.1288 * (1 - 0.35) = 0.0837 or 8.37%
Therefore, the after-tax cost of capital to Zephyr for bonds is 8.37%.
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Suppose your perfectly competitive firm's cost function is c(Q) = 30 + 10Q + Q?, where Qis output, and your competitors charge a price of $45 per output. Clearly show your steps and () derive your firm's short-run profit function and (ii) with the derived profit function, calculate your firm's profit maximizing output and price in the short-run.
To find the profit-maximizing output and price in the short-run, we need to maximize the profit function. We can do this by finding the critical point where the derivative of the profit function with respect to Q is equal to zero.
Taking the derivative of the profit function with respect to Q:
dπ/dQ = -2Q + 35
-2Q + 35 = 0
Q = 17.5
So, the profit-maximizing output in the short-run is Q = 17.5.
To find the corresponding price, we substitute this value of Q into the price equation:
P = $45
In the short-run, your firm's profit-maximizing output is 17.5 units, and the price charged is $45.
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a stock has an expected return of 12.4 percent, the risk-free rate is 4.5 percent, and the market risk premium is 10 percent. what must the beta of this stock be? (do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The beta of a stock which has an expected return of 12.4 percent, the risk-free rate is 4.5 percent, and the market risk premium is 10 percent, must be 0.79.
The capital asset pricing model (CAPM) can be used to calculate the beta of a stock given its expected return, the risk-free rate, and the market risk premium. The CAPM formula is:
Expected return = Risk-free rate + Beta * Market risk premium
Rearranging this formula to solve for beta, we get:
Beta = (Expected return - Risk-free rate) / Market risk premium
Substituting the given values, we have:
Beta = (0.124 - 0.045) / 0.10
Beta = 0.79
Therefore, the beta of this stock must be 0.79.
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7Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 1.1. The risk-free rate is 5%, and the expected market return is 9%. a. Determine the risk premium on Netflix common stock. b. D etermine the required return that Netflix common stock should provide.c. Determine Netflix's cost of common stock equity using the CAPM.
a) The risk premium on Netflix common stock is 4%.
b) The required return that Netflix common stock should provide is 9.4%.
c) Netflix's cost of common stock equity using the CAPM is 9.4%.
a. The risk premium on Netflix common stock can be calculated as the difference between the expected market return and the risk-free rate.
Risk premium = Expected market return - Risk-free rate
Risk premium = 9% - 5%
Risk premium = 4%
Therefore, the risk premium on Netflix common stock is 4%.
b. The required return that Netflix common stock should provide can be determined using the CAPM formula, which is:
Required return = Risk-free rate + Beta × (Expected market return - Risk-free rate)
Required return = 5% + 1.1 × (9% - 5%)
Required return = 9.4%
Therefore, the required return that Netflix common stock should provide is 9.4%.
c. Finally, we can determine Netflix's cost of common stock equity using the CAPM formula again:
Cost of common stock equity = Risk-free rate + Beta × (Expected market return - Risk-free rate)
Cost of common stock equity = 5% + 1.1 × (9% - 5%)
Cost of common stock equity = 9.4%
Therefore, Netflix's cost of common stock equity using the CAPM is 9.4%.
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former general electric ceo jack welch was well known for regularly meeting one-on-one with all senior managers and business unit heads. welch was practicing which type of control technique?
The former General Electric CEO, Jack Welch, was practicing a type of control technique known as "personal control" or "direct supervision."
What is "personal control" or "direct supervision."?Personal control is a form of management control in which top-level executives directly supervise and monitor the activities of lower-level managers and employees.
It involves direct communication, monitoring, and feedback between the supervisor and the subordinate.
This type of control is often used in situations where tasks are complex, and there is a need for close monitoring and coordination of activities to ensure that organizational goals are achieved.
In Welch's case, his one-on-one meetings with senior managers and business unit heads allowed him to personally monitor their performance, discuss business strategies and challenges, and provide direct feedback and guidance.
This type of personal control allowed Welch to maintain a high level of involvement in the operations of the company and ensure that his vision and goals were being implemented at all levels.
Overall, personal control can be an effective control technique in situations where tasks are complex and require close supervision and coordination.
However, it can also be time-consuming and resource-intensive, and may not be practical in all organizational settings.
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Suppose you want to buy a 10-year $1,000 par value semi-annual bond with an annual coupon rate of 10%, but pays interest semi-annually. If the bond has 8 years left to maturity and it is currently quoted at 97, what is the yield-to-maturity of the bond?
The yield-to-maturity of the given bond is 10.47%
To calculate the yield-to-maturity of the bond, we can use the following formula:
YTM = (C + (F - P) / n) / ((F + P) / 2)
Where:
C = the annual coupon payment
F = the face value of the bond
P = the current market price of the bond
n = the number of periods (in this case, semi-annual periods) until maturity
Hence, using the information given in the question, we can plug in the values:
C = $100 (10% of the face value of $1,000)
F = $1,000
P = $970 (since the bond is currently quoted at 97% of its par value)
n = 16 (since there are 8 years left until maturity, and interest is paid semi-annually, there are 16 semi-annual periods remaining)
Therefore,
YTM = (100 + (1000 - 970) / 16) / ((1000 + 970) / 2) = 0.1047 or 10.47%
Therefore, for a 10-year $1,000 par value semi-annual bond with an annual coupon rate of 10%, 8 years left to maturity and currently quoted at 97, the yield-to-maturity of the bond is 10.47%.
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kando company currently pays $15 per unit to buy a part for a product it manufactures. instead, kando could make the part for per unit costs of $6 for direct materials, $4 for direct labor, and $2 for incremental overhead. kando normally applies overhead costs using a predetermined rate of 200% of direct labor cost.(a) prepare a make or buy analysis of costs for this part.(b) should kando make or buy the part?
The make or buy analysis of costs for the part is as follows:
Current cost of buying the part = $15 per unit
Cost of making the part = $6 for direct materials + $4 for direct labor + $2 for incremental overhead = $12 per unit
Total cost of making the part including overhead = $12 + (200% x $4) = $20 per unit.
Based on the analysis, it would be cheaper for Kando to buy the part at $15 per unit rather than making it at $20 per unit.
Therefore, Kando should continue to buy the part instead of manufacturing it.To make the decision, we need to compare the buy cost per unit with the make cost per unit.
The total overhead cost per unit is calculated as:
Overhead cost per unit = 200% x Direct labor cost per unit
= 200% x $4
= $8
The total make cost per unit is:
Total make cost per unit = Direct materials cost per unit + Direct labor cost per unit + Overhead cost per unit
= $6 + $4 + $8
= $18
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In fund financial statements, where are the revenues and expenditures (expenses) of governmental, proprietary, and fiduciary funds reported
Governmental, proprietary, and fiduciary funds should be reported in separate sets of financial statements.
major fund should be reported in a separate column, and nonmajor funds should be combined and reported in a separate column.
A significant transaction within the control of management that is either unusual in nature or infrequent in occurrence.
In fund financial statements, the revenues and expenditures (expenses) of governmental, proprietary, and fiduciary funds are reported in separate sets of financial statements.
This is because each type of fund has its own distinct purpose and requirements for financial reporting. Governmental funds are used to account for tax-supported activities and are reported in the government-wide financial statements. Revenues are reported as either taxes or other sources, while expenditures are reported as either capital or operating.
Proprietary funds are used to account for business-like activities and are reported in the proprietary fund financial statements. Revenues are reported as sales or services, while expenditures are reported as either cost of goods sold or operating expenses.
Fiduciary funds are used to account for assets held in trust or on behalf of others and are reported in the fiduciary fund financial statements. Revenues and expenditures are reported based on the specific purpose of the fund.
In addition, a significant transaction within the control of management that is either unusual in nature or infrequent in occurrence should be separately disclosed in the financial statements to ensure transparency and accuracy in reporting. Major funds should be reported in a separate column, and nonmajor funds should be combined and reported in a separate column.
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define the generic business-level strategies companies pursue. provide an example of a company that represents each type of strategy.
Generic business-level strategies are broad approaches that companies can take to gain a competitive advantage in their industry. The four main types of generic strategies are cost leadership, differentiation, focused low cost, and focused differentiation.
Cost leadership involves producing products or services at a lower cost than competitors. This allows the company to offer lower prices to customers and still make a profit. An example of a company that pursues this strategy is Walmart.
Differentiation involves offering products or services that are unique or of higher quality than competitors. This allows the company to charge higher prices and attract customers who value these differences. An example of a company that pursues this strategy is Apple.
Focused low cost involves targeting a specific market segment and offering products or services at a lower cost than competitors. This allows the company to compete in a smaller, niche market. An example of a company that pursues this strategy is Dollar General.
Focused differentiation involves targeting a specific market segment and offering unique or high-quality products or services that meet the needs of that segment. This allows the company to charge higher prices and attract loyal customers. An example of a company that pursues this strategy is Tesla.
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point-of-sale terminals record purchase information and electronically send it in a flow of information that initially travels from blank______ to blank______.
Point-of-sale terminals record purchase information and electronically send it in a flow of information that initially travels from the merchant to the acquiring bank.
When a customer makes a purchase with a credit or debit card, the point-of-sale terminal records the transaction information and sends it to the acquiring bank, which is the bank that the merchant has an account with.
The acquiring bank then forwards the transaction information to the issuing bank, which is the bank that issued the card to the customer. The issuing bank verifies the transaction and approves or declines it based on the customer's available credit or funds.
Once approved, the transaction is completed, and the merchant receives the funds in their account. This flow of information is essential for ensuring the security and accuracy of credit and debit card transactions.
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Holt Enterprises recently paid a dividend, D0, of $3.75. It expects to have nonconstant growth of 12% for 2 years followed by a constant rate of 5% thereafter. The firm's required return is 11%.
a. How far away is the horizon date?
I. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of Year 2.
II. The terminal, or horizon, date is infinity since common stocks do not have a maturity date.
III. The terminal, or horizon, date is Year 0 since the value of a common stock is the present value of all future expected dividends at time zero.
IV. The terminal, or horizon, date is the date when the growth rate becomes nonconstant. This occurs at time zero.
V. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the beginning of Year 2.
b. What is the firm's horizon, or continuing, value? Do not round intermediate calculations. Round your answer to the nearest cent.
c. What is the firm's intrinsic value today, ? Do not round intermediate calculations. Round your answer to the nearest cent.
A. The horizon, or terminal, date is the end of Year 2.
a. The statement I is correct. The horizon, or terminal, date is the date when the growth rate becomes constant, which occurs at the end of Year 2.
b. To calculate the horizon, or continuing, value, we first need to find the dividend in Year 3. Using the dividend growth formula, we have:
D1 = D0 x (1 + g1) = 3.75 x (1 + 0.12) = 4.20
D2 = D1 x (1 + g2) = 4.20 x (1 + 0.12) = 4.70
Then, using the constant growth formula, we can find the horizon value:
H = D3 / (r - g) = D2 x (1 + g) / (r - g) = 4.70 x (1 + 0.05) / (0.11 - 0.05) = $106.53
c. To find the intrinsic value today, we need to find the present value of all future dividends and the horizon value. Using the dividend discount model, we have:
PV = D1 / (1 + r) + D2 / (1 + r)^2 + H / (1 + r)^2 = 4.20 / (1 + 0.11) + 4.70 / (1 + 0.11)^2 + 106.53 / (1 + 0.11)^2 = $91.50
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Consider the following projects: Cash Flows ($) Project C0 C1 D –11,500 23,000 E –21,500 37,625 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 10%. a. Calculate the profitability index for each project. Project Profitability Index D E b-1. Calculate the profitability-index using the incremental cash flows. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Profitability-index b-2. Which project should you choose? Project D Project E
To calculate the profitability index for each project, we need to divide the present value of the cash flows by the initial investment (C0).
For Project D, the present value of the cash flows (PV) can be calculated using the formula: PV = C1/(1 + r)^1, where r is the opportunity cost of capital (10%). Thus, PV = 23,000/(1 + 0.10)^1 = 20,909.09. The profitability index for Project D is then calculated as follows:
Profitability Index (D) = PV/C0 = 20,909.09/11,500 = 1.82
For Project E, the present value of the cash flows (PV) can be calculated using the same formula: PV = 37,625/(1 + 0.10)^1 = 34,204.55. The profitability index for Project E is then calculated as follows:
Profitability Index (E) = PV/C0 = 34,204.55/21,500 = 1.59
To calculate the profitability-index using the incremental cash flows, we need to calculate the difference in cash flows between the two projects (D-E). These incremental cash flows can then be discounted back to the present using the same formula as above, and the profitability index can be calculated as follows:
Incremental Cash Flows:
Year 0: C0 (E-C) = 21,500 - 11,500 = 10,000
Year 1: C1 (E-C) = 37,625 - 23,000 = 14,625
PV of Incremental Cash Flows:
PV (E-C) = 10,000/(1 + 0.10)^0 + 14,625/(1 + 0.10)^1 = 22,840.91
Profitability Index (E-C) = PV (E-C)/C0 (C) = 22,840.91/11,500 = 1.99
Based on the profitability index calculations, both projects are acceptable as they both have a value greater than 1. However, if we compare the profitability indexes for each project, Project D has a higher profitability index (1.82) than Project E (1.59), indicating that it is more profitable. Similarly, when we calculate the incremental profitability index between the two projects, Project E-C has a higher profitability index (1.99) than Project D-C, indicating that it is the better choice. Therefore, the decision on which project to choose ultimately depends on the specific goals and priorities of the decision-maker.
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the new equilibrium will be where a. the new money supply curve intersects a new money demand curve. b. the new money supply curve intersects the original money demand curve. c. the original money supply curve intersects the original money demand curve. d. anywhere along the new money supply curve.
The new equilibrium will be where the new money supply curve intersects the original money demand curve. The correct answer is option (b).
When there is a change in the money supply, it will shift the money supply curve. However, the money demand curve remains the same since it represents the willingness of people to hold money at various interest rates, which is not affected by changes in the money supply.
Therefore, the new equilibrium will occur where the new money supply curve intersects the original money demand curve. This is because the interest rate will adjust until the quantity of money demanded equals the quantity of money supplied at that interest rate.
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11. efficiency states that all private and publicly available information is reflected in the current market prices. a. Weak-form b. Semistrong-form c. Strong-form d. Economic
Semistrong-form efficiency states that all private and publicly available information is reflected in the current market prices. Option b is answer.
Semistrong-form efficiency is one of the three forms of market efficiency, which states that all publicly available and privately known information is reflected in the current market prices. This means that any new information, such as earnings announcements or news events, will be quickly incorporated into the stock price, leaving no room for investors to consistently earn excess returns by trading on this information.
In summary, semistrong-form efficiency implies that the market is highly efficient in processing and reflecting all relevant information in stock prices, leaving no predictable patterns for investors to exploit for profit.
Option b is answer.
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Question 12 2 points Save Answer Almari inc. has a return on assets (ROA) of 5.5% and a return on equity (ROE) of 13.5%. Furthermore, we know that the firm's total assets turnover is 3. What is Fama's
Fama's profit margin is 3.3%, which means that for every $1 of revenue, the company earns 3.3 cents in profit.
To calculate Fama's debt ratio, we need to use the formula: Debt ratio = Total Debt / Total Assets. Unfortunately, we do not have information on the total debt, so we cannot calculate the debt ratio.
However, we can calculate the profit margin by using the formula: Profit Margin = Net Income / Total Revenue. We do not have information on the net income, but we can use the information we have to calculate the total revenue. The total assets turnover is 3, which means that for every $1 of assets, the company generates $3 of revenue. Therefore, we can calculate the total revenue as Total Assets x Total Assets Turnover = Total Revenue.
Let's assume that the total assets of Fama are $100. Using the total assets turnover of 3, we can calculate the total revenue as 100 x 3 = $300.
Now, we can use the profit margin formula to calculate the profit margin as Profit Margin = Net Income / Total Revenue. Let's assume that the net income of Fama is $10. Therefore, the profit margin can be calculated as 10 / 300 = 0.033 or 3.3%.
The complete question is:
Almari inc. has a return on assets (ROA) of 5.5% and a return on equity (ROE) of 13.5%. Furthermore, we know that the firm's total assets turnover is 3. What is Fama's debt ratio? What is Fama's profit margin? Please interpret your answers?
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Explain why the Malaysian Financial Reporting Standards and
Inland Revenue Board of Malaysia require an entity to use
absorption costing for external reporting purpose instead of other
methods of cost
The Malaysian Financial Reporting Standards (MFRS) and the Inland Revenue Board of Malaysia (IRBM) require entities to use absorption costing for external reporting purposes because it provides a more accurate representation of the cost of producing a product.
Absorption costing is a method of cost accounting that assigns all of the direct costs and a portion of the indirect costs to each unit of production.
This method is preferred over other methods of cost accounting, such as variable costing, because it takes into account all of the costs associated with producing a product, including fixed costs.
Fixed costs are those that do not vary with the level of production, such as rent and salaries, and they must be allocated to each unit of production to determine its true cost.
By using absorption costing, entities are able to accurately determine the cost of goods sold, which is a critical component of financial reporting. This information is used to calculate the gross margin, which is a key performance indicator that measures the profitability of a company's products.
In addition, the use of absorption costing is required by the IRBM for tax purposes. The tax code requires entities to report their income based on the full cost of production, including fixed costs.
Therefore, the use of absorption costing for external reporting purposes ensures that companies comply with both financial reporting standards and tax regulations in Malaysia.
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