Answer:
Coffee Planet Inc should accept the expansion project as it is expected to create value for the company's shareholders.
Explanation:
To determine if Coffee Planet Inc should accept the expansion project, we need to calculate the project's net present value (NPV) using the discounted cash flow (DCF) method.
First, we need to calculate the cost of equity using the capital asset pricing model (CAPM):
[tex]rE = rf + beta * (rm - rf)[/tex]
[tex]rE = 0.04 + 1.2 * 0.05[/tex]
rE = 0.10 or 10%
Next, we need to calculate the cost of debt:
Since the bonds are zero-coupon bonds, the yield to maturity can be calculated using the following formula:
[tex]YTM = ($1,000 / $456.386)^ (1/10) - 1[/tex]
YTM = 0.10 or 10%
The after-tax cost of debt can be calculated as follows:
After-tax cost of debt = Yield to maturity * (1 - Tax rate)
After-tax cost of debt = 0.10 * (1 - 0.30)
After-tax cost of debt = 0.07 or 7%
Next, we need to calculate the weighted average cost of capital (WACC):
WACC = (E/V * rE) + (D/V * rD * (1 - Tax rate))
where:
E = market value of equity = 100 million * $20 = $2 billion
V = total value of the firm = E + D = $2 billion + $456.386 million = $2.456386 billion
D = market value of debt = 2,000,000 * $1,000 * 45.6386% = $45.6386 million
WACC = (2,000 / 2,456.386) * 0.10 + (456.386 / 2,456.386) * 0.07 * (1 - 0.30)
WACC = 0.0969 or 9.69%
Finally, we can calculate the NPV of the project using the following formula:
[tex]NPV = Σ (CFt / (1 + WACC)^t)[/tex] - Initial investment
where:
CFt = net after-tax cash flow in year t
t = year
Initial investment = $100 million
[tex]NPV = Σ ($17 million / (1 + 0.0969)^t[/tex]) - $100 million
NPV = $104.49 million - $100 million
NPV = $4.49 million
Since the NPV is positive, it means that the project is expected to generate a return that exceeds the required rate of return (WACC).
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What is the bond equivalent yield on a $1 million T-bill that currently sells at 91 750 percent of its face value and is 109 days from maturity? (write your answer in and sound it to a dee mal phoon)
The bond equivalent yield on this $1 million T-bill that currently sells at 91.750 percent of its face value and is 109 days from maturity is 30.1%.
How to determine the bond equivalent yield on a $1 million T-bill that currently sells at 91.750 percent of its face value and is 109 days from maturity?To calculate the bond equivalent yield (BEY) on a $1 million T-bill that currently sells at 91.750 percent of its face value and is 109 days from maturity, follow these steps:
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1. Krystal is a U.S.-based company that manufactures, sells, and installs water purification equipment. On April 11, the company sold a system to the City of Nagasaki, Japan, for installation in Nagasaki's famous Glover Gardens. The sale was priced in yen at ¥25,000,000, with payment due in three months. The exchange rate and interest rate data are shown in the following tables:
Spot exchange rate: ¥117.974/$
1-month forward rate: ¥117.505/$
3-month forward: ¥116.610/$
Money Rates United States Japan
One month 4.9125% 0.09500%
Three months 5.0000% 0.09500%
Krystal can be borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rate. Krystal's weighted average cost of capital is 15%, and the company wishes to protect the dollar value of this receivable.
Krystal can protect the dollar value of its receivables by entering into a forward contract to sell ¥24,313,747.29 at a forward exchange rate of 116.610, with a cost of hedging of $1,241.39.
How to protect the dollar value of the receivable?To protect the dollar value of the receivable, Krystal needs to hedge against the foreign exchange risk. The company can do this by using a forward contract, which will allow them to lock in a fixed exchange rate for the future payment in yen.
Here's how Krystal can calculate the cost of hedging using a forward contract:
Calculate the present value of the yen receivable using the spot exchange rate:
PV = ¥25,000,000 / 117.974 = $211,797.21
Determine the future value of the yen receivable in three months based on the three-month forward rate:
FV = ¥25,000,000 / 116.610 = $214,121.04
Calculate the forward exchange rate:
Forward exchange rate = ¥25,000,000 / $214,121.04 = 116.610
Calculate the dollar amount of the forward contract:
Dollar amount of forward contract = FV / (1 + US interest rate * 3/12) = $214,121.04 / (1 + 5% * 3/12) = $208,856.99
Calculate the yen amount of the forward contract:
Yen amount of forward contract = Dollar amount of forward contract * forward exchange rate = $208,856.99 * 116.610 = ¥24,313,747.29
Determine the cost of hedging using a forward contract:
Cost of hedging = (Yen borrowing rate + spread) * (3/12) * yen amount of forward contract
= (0.095% + 2%) * (3/12) * ¥24,313,747.29
= ¥146,008.31 or $1,241.39 (using spot exchange rate)
Therefore, Krystal can protect the dollar value of the receivable by entering into a forward contract to sell ¥24,313,747.29 in three months at a forward exchange rate of 116.610. The cost of hedging using a forward contract is $1,241.39.
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Neighborly Fence will have a value of $72,000 if the economy does well this next year and a value of $37,000 if the economy does poorly. The probability of a good economy is 76 percent. The firm owes its bondholders $21,000. What is the total market value of the firm if it only operates for one more year? Multiple Choice $42.600 O $63,600 O $45,400 O $24,400 O $84,600 O
The total market value of Neighborly Fence can be calculated using the given probabilities and values for the good and poor economy scenarios. The firm owes its bondholders $21,000.
In a good economy: $72,000 - $21,000 = $51,000
In a poor economy: $37,000 - $21,000 = $16,000
Now, we'll use the probabilities to find the expected value of the firm.
Expected value = (probability of good economy * value in good economy) + (probability of poor economy * value in poor economy)
Expected value = (0.76 * $51,000) + (1 - 0.76) * $16,000)
Expected value = $38,760 + $3,840 = $42,600
So, the total market value of the firm if it only operates for one more year is $42,600.
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what types of organization can accept unlimited donations from individuals, corporations, and trade unions?group of answer choices
The type of organization can accept unlimited donations from individuals, corporations, and trade unions are b. Independent Expenditure-Only Committees
Super PACs or Independent Expenditure-Only Committees are the names given to organisations in the United States that are permitted to take an unlimited amount of money from people, businesses, and labour unions. These groups are political action committees, and they are allowed to raise and spend any amount of money they choose in support of political candidates as long as they don't work with campaigns of those running for office.
Following Supreme Court's Citizens United v. Federal Election Commission decision in the year 2010, which lifted prohibitions on corporate and labour political expenditures, super PACs were developed. Super PACs, which have grown to be a potent influence in political elections, particularly at the federal level, were made possible by this judgement.
Complete Question:
what types of organization can accept unlimited donations from individuals, corporations, and trade unions ?
a. Private Firms
b. Independent Expenditure-Only Committees
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Bank A offers you a 10 yehr loan with an annual rate of interest of 6% with continuous compounding. Bank B offers you a 10 year loan with an annual rate of interest of 6% with compounding 4 times per annum. Bank C offers you a 10 year loan with an annual rate of interest of 6% with compounding 12 times per annum. Which of the following is correct? a. You are indifferent between borrowing from Bank A or Bank b. You would choose to borrow from Bank c. You would choose to borrow from Bank d. You would choose to borrow from Bank A.
The correct answer depends on the borrower's individual circumstances and preferences. However, it is important to understand the impact of compounding frequency on effective interest rate when comparing loan options.They should choose Bank A. Correct answer is option D
The difference in the compounding frequency of the interest rates offered by these banks is what sets them apart. Bank A has continuous compounding, which means that interest is calculated and added to the principal amount continuously, resulting in the highest effective interest rate among the three banks.
Bank B, on the other hand, has quarterly compounding, which means that interest is calculated and added to the principal amount four times per annum. Bank C has monthly compounding, which means that interest is calculated and added to the principal amount 12 times per annum.
When comparing these options, it is essential to consider the effective interest rate, which takes into account the compounding frequency. Bank A has the highest effective interest rate, followed by Bank C and Bank B. Therefore, if the borrower is looking for the lowest total cost of borrowing, they should choose Bank A.
However, the borrower's choice may depend on other factors, such as repayment terms, loan amount, and their financial situation. It is also essential to consider the loan's flexibility, including the ability to make prepayments and early repayments without incurring penalties. Thus Correct answer is option D
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if you live in a town or a city that has a single provider of electricity or natural gas, then that natural monopoly provider:
In a town or city with a single provider of electricity or natural gas, this natural monopoly provider holds a unique position in the market.
What is natural monopolyNatural monopolies occur when a single company can efficiently supply the entire market demand due to economies of scale, which results in lower average costs as production increases.
In this scenario, the natural monopoly provider has significant control over the market and can set the price of the service, often leading to higher prices for consumers. However, these monopolies are usually regulated by government agencies to ensure fair pricing and to prevent abuse of market power.
The natural monopoly provider is responsible for the production, distribution, and maintenance of the utility infrastructure, ensuring reliable and continuous service to the community.
While competition is limited, the provider is expected to maintain a high level of service quality and meet regulatory standards. In some cases, the government may provide subsidies to help the provider maintain a stable and affordable service to consumers.
Overall, a natural monopoly provider of electricity or natural gas in a town or city can offer efficient service delivery, but requires regulation to ensure fair pricing and quality service for consumers.
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Calculate the future value of $9,000 in a. Four years at an interest rate of 9% per year. b. Eight years at an interest rate of 9% per year. c. Four years at an interest rate of 18% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? a. Four years at an interest rate of 9% per year. The future value of $9,000 in 4 years at an interest rate of 9% per year is $_____. (Round to the nearest dollar.)
a. The future value of $9,000 in 4 years at an interest rate of 9% per year is $12,962.
b. The future value of $9,000 in 8 years at an interest rate of 9% per year is $18,506.
c. The future value of $9,000 in 4 years at an interest rate of 18% per year is $16,542.
d. The amount of interest earned in part (a) is less than half the amount of interest earned in part (b) because of the effect of compounding
a) To calculate the future value of $9,000 in 4 years at an interest rate of 9% per year, we can use the following formula:
FV = PV x (1 + r)^n
Where PV is the present value, r is the interest rate, and n is the number of years.
Plugging in the numbers, we get:
FV = 9,000 x (1 + 0.09)^4 = $12,744.39
Therefore, the future value of $9,000 in 4 years at an interest rate of 9% per year is $12,744.39.
b) To calculate the future value of $9,000 in 8 years at an interest rate of 9% per year, we can use the same formula:
FV = PV x (1 + r)^n
Plugging in the numbers, we get:
FV = 9,000 x (1 + 0.09)^8 = $19,402.08
Therefore, the future value of $9,000 in 8 years at an interest rate of 9% per year is $19,402.08.
c) To calculate the future value of $9,000 in 4 years at an interest rate of 18% per year, we can again use the same formula:
FV = PV x (1 + r)^n
Plugging in the numbers, we get:
FV = 9,000 x (1 + 0.18)^4 = $17,713.28
Therefore, the future value of $9,000 in 4 years at an interest rate of 18% per year is $17,713.28.
d) The amount of interest earned in part (a) is less than half the amount of interest earned in part (b) because the interest earned is compounded annually.
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who is the hub of the team management wheel and often acts in the main role of team leader, although all team members need to contribute to the activity?
The hub of the team management wheel and the main role of the team leader is the Project Manager. The Project Manager is the main point of contact for the team and acts as a facilitator, making sure that everyone is working together as efficiently as possible.
They are responsible for setting the team goals and objectives, planning, organizing and controlling the team's activities, and providing guidance and direction to the team. They also need to ensure that the team members have the skills, knowledge and resources they need to complete the project.
The Project Manager also needs to be able to motivate the team and foster a cooperative, productive working environment. Ultimately, the success of the project depends on the Project Manager's ability to lead the team, coordinate resources, and ensure that everyone is working together to achieve the desired results.
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Monster had an average collection period of 31.18 days in 2010, compared with 42.83 days in 2009. Assume bargaining power has not changed. Generally speaking, what can you say about the change in Monster Energy's short-term financial situation from 2009 to 2010?
a. There was likely no change in financial position from 2009 to 2010.
b. Monster is having an easier time collecting from customers, improving its short-term financial position.
c. Monster is having an easier time collecting from customers, worsening its short-term financial position.
d. Monster is having a more difficult time collecting from customers, worsening its short-term financial position.
e. Monster is having a more difficult time collecting from customers, improving its short-term financial position.
The Monster's short-term financial position improved from 2009 to 2010. Option (b) is the correct answer.
The average collection period is a financial ratio that measures the number of days it takes a company to collect its accounts receivable. A lower average collection period indicates that the company is collecting its receivables more quickly, which is generally a positive sign for its short-term financial position.
In this case, Monster's average collection period decreased from 42.83 days in 2009 to 31.18 days in 2010, indicating that the company was able to collect its accounts receivable more quickly in 2010 than in 2009.
The change in Monster Energy's short-term financial situation from 2009 to 2010 improved, as the average collection period decreased from 42.83 days to 31.18 days, indicating that the company was having an easier time collecting from customers and improving its short-term financial position. Therefore, option (b) is correct.
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From 2009 to 2010, The Monster's short-term financial position got better. The correct answer is b. Monster is having an easier time collecting from customers, improving its short-term financial position.
A financial ratio called the average collection time tracks how long it takes a business to collect its accounts receivable. The company is likely collecting its receivables more rapidly if its average collection period is lower.
Which is generally a good sign for its short-term financial position. The fact that Monster's average collection period reduced from 42.83 days in 2009 to 31.18 days in 2010 shows that the business was able to collect its accounts receivable more promptly in 2010 than in 2009. The average collection duration reduced from 42.83 days to 31.18 days between 2009 and 2010, showing that the company was having an easier time collecting from customers and that Monster Energy's short-term financial status had improved.
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With a(n) ___________, the caller had a transaction with the receiver within the last 18 months; or the customer has made an inquiry with the caller’s firm in the last 3 months.
With a customer relationship management (CRM) system, the caller had a transaction with the receiver within the last 18 months or the customer has made an inquiry with the caller's firm in the last 3 months.
A CRM system is a technology tool that helps businesses manage interactions with customers and potential customers. It provides a way to collect and analyze customer data, including customer preferences, purchase history, and communication channels.
With a CRM system, businesses can segment customers based on various criteria, such as their buying behavior, location, or demographic data. This segmentation allows businesses to personalize their communication and marketing efforts, leading to a better customer experience and higher customer satisfaction.
The benefit of using a CRM system is that it helps businesses maintain a positive relationship with their customers, which can lead to repeat business and increased revenue. By keeping track of customer interactions, businesses can identify patterns and trends in customer behavior, enabling them to make data-driven decisions to improve their products and services.
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A company's master budget for October is to manufacture and sell 30,100 units, for a total sales revenue of $272,000, total variable costs of $178,690, and total fixed costs of $25,000. The company actually manufactured and sold 32,100 units, and generated $46,000 of operating income in October. The flexible-budget operating income in October was:
$28,510
$73,439
$74,510
$86,528
$89,489
The flexible-budget operating income in October was $74,510.
How to calculate the flexible-budget operating income for October?To calculate the flexible-budget operating income for October, we will follow these steps:
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f investment demand is fixed and the interest rate rises from 6 to 10 percent as a result of servicing the public debt, what happens to private investment?
When the interest rate rises from 6 to 10 percent due to servicing the public debt, there will be a decrease in private investment.
This is because the higher interest rate makes borrowing more expensive, and as a result, individuals and businesses will be less likely to take out loans to invest in new projects or expand their businesses.
Additionally, the higher interest rate will make savings more attractive, as individuals and businesses can earn a higher return on their savings. This means that there will be less money available for investment in the economy.
Furthermore, if investment demand is fixed, this means that there will be no increase in investment to offset the decrease in private investment caused by the higher interest rate.
Therefore, the overall effect will be a decrease in investment in the economy.
Overall, when the interest rate rises due to servicing the public debt, it can have a negative impact on private investment and the economy as a whole.
It is important for policymakers to consider the potential effects of their decisions on interest rates and debt servicing on private investment and the overall health of the economy.
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each potential client may not know the competitors to _________ product.
Each potential client may not know the competitors to a specific product due to a variety of reasons. Firstly, the client may not have done extensive research on the product and its market. Secondly, the client may not be aware of the different types of products that are available in the market.
Thirdly, the client may not have a clear understanding of their own needs and preferences. This can make it difficult for them to evaluate different products and determine which ones are the best fit for their specific requirements. In addition, clients may also have biases or preconceived notions about specific products or brands, which can impact their decision-making process.
To address these challenges, companies can invest in marketing and advertising initiatives that educate clients about their products and their unique selling propositions. This can help clients make informed decisions and identify the key differentiators between different products in the market.
Additionally, companies can leverage customer feedback and reviews to showcase their competitive advantage and position their products as the best option for potential clients. Overall, by addressing these challenges, companies can better position their products in the market and improve their chances of winning over potential clients.
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10) What information is not needed in the cost valuation approach? A) Rent price B) Cost to construct a new home C) Depreciation value D) Land value
Rent price is not needed in the cost valuation approach. Option A.
One piece of information that is not needed in the cost valuation approach is the rent price. Rent price is a factor that is used in determining the income approach to valuation, where the value of the property is estimated based on its potential income stream. In contrast, the cost valuation approach is more focused on the actual costs involved in constructing the property and the value of the property as it currently exists.
Another piece of information that is not needed in the cost valuation approach is the land value. The cost valuation approach focuses on the value of the property's physical structure and does not take into account the value of the land on which it sits. The land value is more relevant in the sales comparison approach, where the value of a property is estimated based on the sale prices of similar properties in the same area.
In summary, the cost valuation approach in real estate does not require information such as the rent price . Instead, it is more focused on the actual costs involved in constructing the property and the current value of the property's physical structure.Therefore option A is correct.
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You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.75 a share at the end of the year (D1 = $1.75) and has a beta of 0.9. The risk-free rate is 3.2%, and the market risk premium is 6.0%. Justus currently sells for $33.00 a share, and its dividend is expected to grow at some constant rate, g. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3 ?) Round your answer to two decimal places. Do not round your intermediate calculations.
The market believes that the stock price will be $40.34 at the end of three years.
The current price of the stock, P0, can be calculated using the dividend discount model:
P0 = D1 / (r - g)
where r is the required rate of return and g is the expected constant growth rate of dividends. We are given D1, and we can calculate r as follows:
r = rf + β (rm - rf)
= 0.032 + 0.9 * 0.06
= 0.086
So, P0 = 1.75 / (0.086 - g)
We are also given that P0 = $33.00, so we can solve for g:
33 = 1.75 / (0.086 - g)
g = 0.035
Therefore, the expected constant growth rate of dividends is 3.5%. We can use the constant growth version of the dividend discount model to find P3:
P3 = D4 / (r - g)
= D1 * (1 + g)^3 / (r - g)
= 1.75 * (1.035)^3 / (0.086 - 0.035)
= $40.34
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Selling accounts receivables to factors and allowing credit terms such as 2/10, n/30 a. represent common business practices. b. represent ways to accelerate receivables collections. c. result in cash collections that are less than the gross accounts receivable. d. All of the above answers are correct.
Selling accounts receivables to factors and allowing credit terms such as 2/10, n/30 represent common business practices and are ways to accelerate receivables collections.
What is business?Business is an activity that involves the exchange of goods and services for money or other goods and services. It is a process of creating value for customers and society by producing, exchanging, and consuming goods and services. Business activities include production, marketing, finance, and human resources. Business can be conducted by individuals, partnerships, corporations, or other entities. Businesses use resources to produce goods and services, and they use these resources to generate revenue.
This practice can result in cash collections that are less than the gross accounts receivable, as the factor may take a discount for the early payment.
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YIELD TO CALL A firm's bonds have a maturity of 12 years with a $1,000 face value, have an 9% semiannual coupon, are callable in 5 years at $1,150, and currently sell at a price of $1,200. What are their nominal yield to call? Round to TWO decimal places.
To calculate the nominal yield to call for a bond, we need to determine the bond's present value, future value, and the number of periods remaining until it can be called. In this case, the terms provided are:
- Maturity of 12 years
- Face value of $1,000
- 9% semiannual coupon (4.5% per period)
- Callable in 5 years at $1,150
- Current price of $1,200
Here are the steps to calculate the nominal yield to call:
1. Determine the future value (FV) of the bond: Since the bond is callable in 5 years at $1,150, the FV is $1,150.
2. Calculate the present value (PV) of the bond: The current selling price of the bond is $1,200, so the PV is -$1,200 (negative because it represents the cost of purchasing the bond).
3. Determine the number of periods (N) until the bond can be called: There are two semiannual periods per year, and the bond is callable in 5 years, so N = 5 x 2 = 10.
4. Calculate the coupon payment (PMT) per period: The bond has a 9% annual coupon rate, which is 4.5% per semiannual period. To find the coupon payment, multiply the face value by the semiannual coupon rate: PMT = $1,000 x 0.045 = $45.
5. Use a financial calculator or software to solve for the nominal yield to call (YTC): Input the values PV, FV, PMT, and N to find the yield per period. In this case, the YTC is approximately 3.37% per period.
6. Convert the yield per period to an annual percentage: Since there are two periods per year, multiply the yield per period by 2: YTC (annual) = 3.37% x 2 = 6.74%.
The nominal yield to call for this bond is approximately 6.74%, rounded to two decimal places.
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the limitation on the deduction of business interest does not apply to businesses that qualify under the gross receipts test. true or false
False. The limitation on the deduction of business interest does apply to businesses that qualify under the gross receipts test.
However, businesses that have average annual gross receipts of $25 million or less for the three prior tax years are exempt from the limitation on the deduction of business interest expense under the small business exception. This exception allows small businesses to deduct business interest expense in full, subject to certain limitations and restrictions.
The gross receipts test is a threshold used to determine whether a business is exempt from the limitation on the deduction of business interest expense under the small business exception. To qualify for the exception, a business must have average annual gross receipts of $25 million or less for the three prior tax years. Gross receipts generally include all revenue from the sale of goods or services, including income from investments, royalties, and rental income, but exclude returns and allowances
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True. The limitation on the deduction of business interest does not apply to businesses that qualify under the gross receipts test. This test applies to businesses with average annual gross receipts of $25 million or less for the three prior tax years.
True, the limitation on the deduction of business interest does not apply to businesses that qualify under the gross receipts test. This means that businesses with average annual gross receipts of $25 million or less (indexed for inflation) for the previous three tax years are exempt from the limitation.
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which do you think would be more harmful to the economy? multiple choice an inflation rate that averages 5 percent a year and has a high standard deviation. an inflation rate of 7 percent that has a standard deviation close to zero.
Answer: Inflation rate that averages 5% a year with a high degree of standard deviation.
Explanation: Low Inflation rate with high degree of standard deviation is more likely to be harmful than the high inflation rate with low degree of standard deviation. The reasoning behind this is that a high standard deviation indicates a greater degree of variability in the inflation rate, which can lead to increased uncertainty for businesses and consumers. This uncertainty can negatively impact economic growth, as businesses may hesitate to invest or hire new employees, and consumers may delay spending.
On the other hand, an inflation rate of 7 percent with a low standard deviation means that the inflation rate is relatively stable and predictable, hence motivating businesses and consumers to make better planning and informed decisions regarding investments and spending.
While a 7 percent inflation rate may be higher than the 5 percent rate, the predictability and stability can be better for the economy, as businesses and consumers can make informed decisions with a clearer understanding of the economic environment.
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Which term refers to the money offered to fund a start-up
company?
a.
private placement
b.
project financing
c.
bought deal
d.
venture capital fund
The term you're looking for is "venture capital." Venture capital is a type of financing provided by investors, often through a venture capital fund, to help fund start-up projects and businesses. The correct answer is D.
These investors typically invest in promising start-ups with high growth potential in exchange for equity, or a share of ownership in the company. The process of securing venture capital typically involves the following step:Preparation: Start-ups create a solid business plan, establish a strong team, and develop their product or service to demonstrate its potential value to investors.Pitching: Start-ups present their business idea, financial projections, and market analysis to potential investors in a formal pitch.Due diligence: If investors are interested, they conduct a thorough review of the start-up's business plan, financials, and overall potential to assess the investment risk.Investment terms negotiation: Both parties negotiate the terms of the investment, including the amount of funding, equity stake, and other conditions.Funding: Once the agreement is finalized, the venture capital fund provides the start-up with the necessary capital to help the business grow.Exit strategy: Eventually, investors aim to exit the investment by selling their shares through an initial public offering (IPO) or a merger/acquisition, allowing them to recoup their investment and potentially earn a return.In summary, the term "venture capital" refers to the money offered to fund a start-up project, often provided through a venture capital fund. This financing plays a crucial role in supporting innovative businesses and promoting economic growth.For more such question on venture capital
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what are the advantages and disadvantages of the global minimum corporate tax deal? Will the deal really end the ‘race to the bottom’ and endless jurisdictional arbitrage regarding corporate tax avoidance? Do you think it will ultimately be good or bad for the US? Should there be a global minimum corporate tax, and if there is, do you think fifteen percent is too high, or, too low? Is the deal fair to small states and microstates that make their living in offering offshore financial/taxation services to global corporations, or, is it being foisted on them by bigger and more powerful countries in the international system?
The global minimum corporate tax deal has several advantages and disadvantages.
On the positive side, it would help reduce tax competition among countries and end the ‘race to the bottom’ by ensuring that companies pay a minimum amount of tax wherever they operate. This would also help to curb corporate tax avoidance and ensure that companies pay their fair share of taxes.
On the negative side, the deal could be seen as a restriction on the sovereignty of smaller countries and may hinder their ability to attract foreign investment.
Whether the deal will ultimately be good or bad for the US remains to be seen. On the one hand, it could help to level the playing field for American companies and prevent them from shifting profits overseas. On the other hand, it could also make the US a less attractive destination for foreign investment and lead to higher costs for American consumers.
As for the proposed minimum tax rate of fifteen percent, this is a matter of debate. Some experts believe that it is too low and that a higher rate would be more effective in curbing tax avoidance. Others argue that fifteen percent is a reasonable compromise that would be acceptable to most countries.
The deal may also be seen as unfair to small states and microstates that rely on offshore financial/taxation services to attract foreign investment. However, it should be noted that these countries have also been criticized for facilitating tax avoidance and evasion, so the deal could be seen as a positive step towards greater transparency and accountability in the global financial system.
Overall, the global minimum corporate tax deal is a complex issue with both pros and cons. While it may help to reduce tax competition and corporate tax avoidance, it could also have unintended consequences for smaller countries and may not be effective in the long run.
Ultimately, the success of the deal will depend on how it is implemented and enforced, and whether it is seen as a fair and equitable solution for all countries involved.
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how does an increase in the price level affect the position of the c i g x curve and in turn the equilibrium level of real gdp?
An increase in the price level leads to inward movement in the position of the CIGX curve and in turn causing a contraction in the equilibrium level of real GDP.
An increase in the price level typically leads to a decrease in the purchasing power of consumers and businesses, which reduces their consumption (C), investment (I), and net exports (X) expenditures.
As a result, the aggregate demand curve (AD) shifts downward and to the left, causing a contraction in the equilibrium level of real GDP. This means that the position of the CIGX curve moves inward, reflecting the reduction in the total demand for goods and services at all possible price levels.
Conversely, a decrease in the price level usually stimulates spending and boosts economic activity, leading to an upward and rightward shift in the AD curve, and an expansion in the equilibrium level of real GDP.
Therefore, the CIGX curve would shift outward, indicating an increase in the total demand for goods and services at all possible price levels. It is important to note that other factors such as changes in government spending, taxes, and monetary policy can also affect the position of the CIGX curve and the equilibrium level of real GDP.
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Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for two similar-risk investments, X and Y. Douglas' research indicates that the immediate past returns will serve as reasonable estimates of future returns. A year earlier, investment X had a market value of $20,000, and investment Y had a market value of $55,000. During the year, investment X generated cash flow of $1,500 and investment Y generated cash flow of $6,800. The current market values of investments X and Y are $21,000 and $55,000, respectively.
(a) Calculate the expected rate of return on investments X and Y using the most recent year's data.
(b) Assuming that the two investments are equally risky, which one should Douglas recommend? Why?
(a) Expected rate of return on investment X is 11.5% and for Y is 12.4%. (b) Douglas should recommend investment Y because it has a higher expected rate of return and the two investments are equally risky.
(a) The expected rate of return on investment X can be calculated by dividing the sum of the cash flow and the change in market value by the beginning market value, and multiplying by 100 to convert to a percentage.
Thus, the expected rate of return on investment X is ((1,500 + (21,000 - 20,000)) / 20,000) x 100 = 11.5%. Similarly, the expected rate of return on investment Y is ((6,800 + (55,000 - 55,000)) / 55,000) x 100 = 12.4%.
(b) Assuming that the two investments are equally risky, Douglas should recommend investment Y since it has a higher expected rate of return.
Even though investment Y has a higher market value and generates higher cash flows, the expected rate of return takes into account both the cash flows and the change in market value, and therefore provides a more accurate measure of the return on investment.
Since investment Y has a higher expected rate of return than investment X, it is the better choice for Douglas to recommend to Orange Industries.
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3. You have just received a bonus of $100,000 and are looking to deposit the money in a bank account for three years. You investigate the annual deposit rates of several banks and collect the following information: Bank A B С Compounding Frequency APR Annually 20.00% Semiannually 20.00% Daily* 19.40% *Assume there are 365 days in a year a. Calculate the EAR for each option. b. How much will you have at the end of 3 years at each bank?
Compounding frequency refers to the frequency with which interest is calculated and added to the principal amount in a compound interest account.
a. To calculate the Effective Annual Rate (EAR) for each option, we can use the formula:
EAR = (1 + APR/n)^n - 1
where APR is the Annual Percentage Rate and n is the compounding frequency per year.
For Bank A, the APR is 20.00% and the compounding frequency is annually, so:
EAR_A = (1 + 0.20/1)^1 - 1 = 20.00%
For Bank B, the APR is 20.00% and the compounding frequency is semiannually, so:
EAR_B = (1 + 0.20/2)^2 - 1 = 20.25%
For Bank C, the APR is 19.40% and the compounding frequency is daily, so:
EAR_C = (1 + 0.1940/365)^365 - 1 = 20.05%
b. To calculate how much we will have at the end of 3 years, we can use the formula for compound interest:
A = P * (1 + r/n)^(n*t)
where A is the ending amount, P is the principal (initial deposit), r is the annual interest rate, n is the compounding frequency per year, and t is the time in years.
For each bank, assuming that we deposit the full $100,000 and leave it untouched for 3 years:
For Bank A, we have:
A_A = 100,000 * (1 + 0.20/1)^(1*3) = $215,892.32
For Bank B, we have:
A_B = 100,000 * (1 + 0.20/2)^(2*3) = $219,254.93
For Bank C, we have:
A_C = 100,000 * (1 + 0.1940/365)^(365*3) = $219,002.79
Therefore, after 3 years, we would have the following amounts:
Bank A: $215,892.32
Bank B: $219,254.93
Bank C: $219,002.79
Note that Bank B has the highest EAR and therefore provides the highest return on investment, while Bank A has the lowest EAR and provides the lowest return on investment.
However, Bank C has a slightly lower EAR than Bank B but a higher compounding frequency (daily), which results in a slightly lower ending amount.
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As treasurer of Leisure Products, Inc., you are investigating the possible acquisition of Plastitoys. You have the following basic data: Plastitoys Forecast earnings per share Forecast dividend per share Number of shares Stock price Leisure Products $ 5 $ 3 600,000 $ 50 $ 3.20 $ 1.80 400,000 $ 26 You estimate that investors currently expect Plastitoys's earning and dividend to grow at a steady rate of 7% per year. You believe that Leisure Products could increase Plastitoys's growth rate to 10% per year, after 1 year, without any additional capital investment required.
d-1. Suppose immediately after the completion of the merger, everyone realizes that the expected growth rate will not be improved. Reassess the cost of the cash offer. d-2. Reassess the NPV of the cash offer. d-3. Reassess the cost of the share offer. d-4. Reassess the NPV of the share offer.
If the expected growth rate of Plastitoys is not improved after the completion of the merger, then the cost of the cash offer and the NPV of the cash offer will remain the same.
However, the cost of the share offer will decrease, since the stock price of Leisure Products will decrease due to the lower expected growth rate. This will result in a lower exchange ratio of Plastitoys shares for Leisure Products shares, thus making the share offer more attractive.
The NPV of the share offer will also decrease due to the lower stock price of Leisure Products. Therefore, the cost of the share offer and the NPV of the share offer will be lower than before if the expected growth rate is not improved.
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I need help with a project can anyone help me
You can ensure project success by effectively managing time, budget, and resources while focusing on achieving the project objectives.
To ensure project success, it is essential to carefully manage the project's time, budget, and resources. This involves creating a realistic project plan, setting clear objectives and milestones, and regularly monitoring and adjusting the plan as necessary. Effective communication and collaboration among project team members and stakeholders is also critical to ensure everyone is aligned and aware of project progress and any changes to the plan.
Additionally, it is important to identify and manage potential risks and challenges that may arise during the project lifecycle, such as scope creep or unexpected delays.
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--The complete question is, How can you ensure that your project is successful and achieves its objectives within the given constraints of time, budget, and resources?--
You are planning to start up a technology-based business in Malaysia. As technopreneur, what would be the business start-up model to be implemented to reduce the first 2 years Capital Expenditures (CapEx). With an aid of diagram, propose and discuss a suitable business start-up model.
One of the most suitable business start-up model to reduce the first 2 years Capital Expenditures (CapEx) is the pay as you go model.
This model works by allowing the business to pay for services or products only when they are used or consumed. This model is especially suitable for a technology-based business in Malaysia as it does not require a large capital investment upfront and instead allows for the business to invest in technology and services as needed, when needed.
The diagram below illustrates the ‘pay as you go’ model. In this model, the business owner only pays for the resources used, such as paying for the number of hours of IT service used, or the number of databases created. This helps to reduce the initial capital expenditure (CapEx) as the business does not need to invest in a large number of resources upfront.
The ‘pay as you go’ model is a great way to reduce the initial CapEx for technology-based businesses in Malaysia, as it allows the business to pay for services and products only when they are needed. This helps to reduce the amount of money spent in the first two years of the business.
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how will the importation of chocolate from belgium impact the market for the dollar and the market for the euro?
The importation of Belgian chocolate can impact the market for the US dollar and the Euro in several ways.
When importing chocolate from Belgium, the demand for Euros will increase as importers need to exchange their US dollars for Euros to pay for the chocolate.
This increased demand for Euros may lead to an appreciation of the Euro relative to the US dollar. Simultaneously, the supply of US dollars in the foreign exchange market may increase, leading to a depreciation of the US dollar.
As a result, the market for both currencies may experience fluctuations based on the trade between the two countries.
Foreign Exchange Rates: The importation of Belgian chocolate involves transactions between US importers and Belgian exporters, which typically require currency exchange.
If US importers need to purchase Euros to pay for the imported chocolate, it increases the demand for Euros in the foreign exchange market, which can potentially lead to an appreciation of the Euro against the US dollar.
On the other hand, if Belgian exporters receive payment in US dollars for their chocolate, it increases the supply of US dollars in the foreign exchange market, which can potentially lead to a depreciation of the US dollar against the Euro.
Changes in exchange rates can have significant implications for international trade and investment, as well as for the competitiveness of domestic producers and exporters.
Trade Balance: The importation of Belgian chocolate can also impact the trade balance between the US and Belgium. The trade balance is the difference between a country's exports and imports, and it has an effect on the supply and demand for currencies in the foreign exchange market.
If the US imports a significant amount of Belgian chocolate, it increases the demand for Belgian chocolate, which can potentially lead to a trade deficit for the US with Belgium.
A trade deficit means that the US is importing more than it is exporting, which can put pressure on the US dollar and potentially lead to a depreciation of the currency.
On the other hand, if Belgium imports a significant amount of US dollars from the sale of its chocolate, it increases the supply of US dollars in the foreign exchange market, which can potentially lead to a trade surplus for Belgium and put upward pressure on the Euro.
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Q1- In this fixed price incentive fee contract, the target cost is estimated at $150,000, and the target fee and price is $30,000 and $180,000. The contract has is a ceiling price of $200,000. The project is over, and the buyer has agreed that the actual costs were, $210,000. The buyer seller ratio is 60/40 (that is 60 percent to the buyer and 40 percent to the seller). Find the final fee, the final price, and the point of total assumption
$252,000 is the final cost, $42,000 is the final charge, and $233,333 is the point of total assumption.
Given:
Budgeted amount: $150,000
Fee target: $30,000.
Ideally priced at $180,000
Maximum cost: $200,000
Cost in reality: $210,000
A 60/40 buyer-to-seller ratio.
We must first determine the project's total cost in order to determine the ultimate charge and price.
Step 1 is to determine the project's overall cost.
The actual cost of $210,000 is higher than the desired cost of $150,000, so the difference is split between the buyer and seller according to their respective ratios.
Actual cost minus target cost equals the excess cost of $60,000, or $210,000 minus $150,000.
The seller's portion of excess cost equals 40% times $60,000, or $24,000.
Buyer's portion of excess costs equals 60% times $60,000, or $36,000.
The project's overall cost is:
Target cost plus excess cost equals a final cost of $150,000 plus $60,000, or $210,000.
Step 2: Determine the total cost.
Based on the goal fee and the actual cost, the final fee is determined.
The fee adjustment factor equals ($210,000 - $150,000) / ($210,000 - $150,000) = 0.4
Final fee is calculated as Target fee + (Fee Adjustment Factor x Target Fee) = $30,000 + (0.4 x $30,000) = $42,000.
Step 3: Determine the final cost.
The final cost and the final charge form the basis of the final pricing.
Final cost + Final charge = $210,000 + $42,000 = $252,000 (final pricing).
Calculate the point of total assumption in step four.
The project's total cost exceeding the ceiling price is known as the point of total assumption.
Ceiling price - Target cost - Target fee = $200,000 - $150,000 - $30,000 = $20,000 Excess cost at the ceiling price
At the ceiling price, the seller's portion of extra costs equals $8,000 (or 40% of $20,000).
60% times $20,000 is $12,000, which is the buyer's share of excess costs at the ceiling price.
The fundamental presumption is:
Ceiling price + (Excess cost at the ceiling price / Buyer-Seller Ratio) = $200,000 + ($20,000 / 60/40) = $233,333.
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stock market events in 1929, 1987, and 2008 are most apt to be used as examples in support of which one of these theories?
The stock market events in 1929, 1987, and 2008 are most apt to be used as examples in support of the theory of financial market bubbles.
The theory of financial market bubbles suggests that sometimes financial markets become overvalued due to investors' irrational exuberance or herd behavior, leading to a rapid increase in prices that is not supported by underlying economic fundamentals. This can create a speculative bubble, which eventually bursts as investors begin to realize the market is overvalued and panic sets in, leading to a rapid decline in prices.
The stock market crashes of 1929, 1987, and 2008 were all characterized by a period of rapidly rising stock prices that were not supported by underlying economic fundamentals, followed by a sudden and dramatic decline in stock prices. In each case, investors became overly optimistic and invested heavily in the stock market, leading to a speculative bubble that eventually burst.
While other economic and financial theories may also be relevant in explaining these events, such as monetary policy, fiscal policy, or financial regulation, the theory of financial market bubbles provides a useful framework for understanding the rapid and dramatic rise and fall of stock prices in these events.
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