The EAR for a State Bank loan with compensating balance is 8.10% and by depositing additional funds to meet the compensating balance requirement, Weathers Catering Supply, Inc. can effectively reduce the annual interest rate on the State Bank loan.
a. To calculate the effective annual rate (EAR) of interest on each loan, we need to take into account both the stated interest rate and any additional costs or fees associated with the loan.
For the State Bank loan:
Stated annual interest rate = 9%
Compensating balance requirement = 10%
Loan amount = $150,000
The compensating balance is calculated as a percentage of the loan amount, so the amount of funds that Weathers Catering Supply, Inc. would not have access to is $150,000 * 10% = $15,000.
The actual loan amount that Weathers Catering Supply, Inc. would receive is $150,000 - $15,000 = $135,000.
The interest paid on the loan is based on the actual loan amount, so the interest paid would be 9% of $135,000 = $12,150.
The effective annual rate (EAR) is calculated using the formula:
EAR = (1 + r/n)^n - 1
Where r is the nominal annual interest rate and n is the number of compounding periods per year. Since this loan has a single payment at maturity, n is equal to 1.
EAR for State Bank loan = (1 + $12,150/$135,000)^1 - 1 = 9.04%
For the Forest Finance Co. loan:
Stated annual interest rate = 9%
Loan amount = $150,000
The interest paid on the loan is based on the loan amount, so the interest paid would be 9% of $150,000 = $13,500.
EAR for Forest Finance Co. loan = (1 + $13,500/$150,000)^1 - 1 = 9%
b. To reduce the effective annual rate (EAR) on the State Bank loan, Weathers Catering Supply, Inc. could deposit additional funds into an account with State Bank to meet the compensating balance requirement. By doing so, the amount of funds that would not be available for Weathers Catering Supply, Inc. to use would be reduced, resulting in a lower effective interest rate.
For example, if Weathers Catering Supply, Inc. deposits $15,000 into an account with State Bank to meet the compensating balance requirement, they would have access to the full loan amount of $150,000. The interest paid on the loan would still be $12,150, but now the loan amount used to calculate the EAR would be $150,000, resulting in a lower EAR. The new EAR would be:
EAR for State Bank loan with compensating balance = (1 + $12,150/$150,000)^1 - 1 = 8.10%
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7. Explain the M&M Proposition I and II using your own words. (5 marks)
M&M Proposition I and II in my own words.
M&M Proposition I:
Proposition I states that the value of a firm is independent of its capital structure, meaning the mix of debt and equity financing it uses. In other words, changing the way a company finances its operations (e.g., issuing more debt or equity) does not affect the overall value of the firm. This is because the firm's value is determined by its investment decisions and future cash flows, not by the way it raises capital.
M&M Proposition II:
Proposition II focuses on the relationship between a firm's cost of equity, its overall weighted average cost of capital (WACC), and its debt-to-equity ratio. According to Proposition II, as a firm increases its debt levels, the cost of equity will also increase to maintain the firm's WACC constant. This occurs because equity investors require a higher return to compensate for the increased risk associated with the higher debt levels. However, the overall WACC remains constant as the benefits of debt financing, such as tax shields on interest payments, offset the increased cost of equity.
In summary, M&M Proposition I states that a firm's value is not affected by its capital structure, while Proposition II explains that the firm's WACC remains constant as its debt-to-equity ratio changes, with the cost of equity increasing to offset the benefits of higher debt levels.
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corporation is issuing preferred stock today. the stock will begin paying an annual $5.5 dividend in year 3. if you require a return of 6%, what should you pay today for a share?
You should pay $4.567 today for a share of the preferred stock, if you require a return of 6%.
To calculate the present value of the preferred stock, we need to use the formula for the present value of a perpetuity:
PV = C / r
where PV is the present value, C is the annual cash flow (in this case, the $5.5 dividend), and r is the required rate of return.
Since the stock will begin paying the dividend in year 3, we need to discount the cash flow back to the present value using the formula for the present value of a single cash flow:
PV = FV / (1 + r)ⁿ
where FV is the future value of the cash flow ($5.5), n is the number of years from the cash flow to the present (which is 3), and r is the required rate of return.
PV = $5.5 / (1 + 0.06)³
PV = $4.567
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joanna works for a large software company. she really wants a promotion, and since she recently presented an innovative idea for new software, which the company is excited to produce, she believes she is qualified and able to handle the new position. therefore, she is motivated to try to get the promotion. this scenario is related to
Answer:
Explanation:
this scenario is related to Expectancy theory.
waveney diy centersuse the high-low method to estimate the fixed and variable portions of store costs based on store area. the managers in the region are interested in opening a new store with expected area of 50,000 square feet. assuming the data and cost estimates from the current stores are appropriate for the new store (se-16), what are the estimated store costs for store se-16? managers are also considering a concept store focused on downtown home and condo owners. these stores would have a much smaller area and carry a narrower range of products. the managers envision such stores being an average of 35,000 square feet. what are the estimated store costs for the average concept store?
The estimated store costs for the average concept store would be $450,000.
How to estimate the fixed and variable portions of store costsTo estimate the fixed and variable portions of store costs based on store area, Waveney DIY Centers use the high-low method.
Using this method, we can estimate the cost of opening a new store with an expected area of 50,000 square feet.
Assuming the data and cost estimates from the current stores are appropriate for the new store (SE-16), the estimated store costs for store SE-16 would be:
Let's say we have two current stores with the following data:
Store A: 40,000 square feet, total cost of $500,000
Store B: 60,000 square feet, total cost of $700,000
Using the high-low method, we can estimate the fixed and variable costs for each store:
Variable cost per square foot = (Total cost of Store B - Total cost of Store A) / (Area of Store B - Area of Store A)
Variable cost per square foot = ($700,000 - $500,000) / (60,000 - 40,000)
Variable cost per square foot = $10
Fixed cost = Total cost - (Variable cost per square foot x Area)
Fixed cost for Store A = $500,000 - ($10 x 40,000) = $100,000
Fixed cost for Store B = $700,000 - ($10 x 60,000) = $100,000
Using these estimates, we can calculate the estimated store costs for Store SE-16:
Variable cost for Store SE-16 = $10 x 50,000 = $500,000 Fixed cost for Store SE-16 = $100,000 Estimated store costs for Store SE-16 = $500,000 + $100,000 = $600,000Next, let's estimate the store costs for the average concept store.
The managers envision these stores being an average of 35,000 square feet and carrying a narrower range of products.
Using the same variable cost per square foot and fixed cost estimates from above, we can calculate the estimated store costs for the average concept store:
Variable cost for the average concept store = $10 x 35,000 = $350,000
Fixed cost for the average concept store = $100,000
Estimated store costs for the average concept store = $350,000 + $100,000 = $450,000
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A common carrier is absolutely liable for loss or damage to goods in all of the following situations except:
A. incidents arising from the inherent nature of the goods.
B. incidents involving a public enemy.
C. incidents involving acts of God
D. incidents involving mechanical breakdown of the vehicle.
A common carrier is absolutely liable for loss or damage to goods in all of the following situations except D. incidents involving mechanical breakdown of the vehicle.
Under common law and various statutes and regulations, common carriers are generally held to a high standard of care and are considered absolutely liable for loss or damage to goods that are being transported.
This means that they are responsible for compensating the owner of the goods for any loss or damage that occurs during transportation, regardless of whether the carrier was negligent or at fault.
This absolute liability is based on the principle that common carriers are in a superior position to ensure the safe transportation of goods and should bear the risk of loss or damage.
However, there are exceptions to this absolute liability, and incidents involving mechanical breakdown of the vehicle are often excluded from the carrier's responsibility.
Mechanical breakdown refers to a failure or malfunction of the carrier's vehicle or equipment during the transportation process. This can include issues with the engine, transmission, brakes, or other mechanical components of the vehicle that are beyond the carrier's control.
The rationale behind excluding incidents involving mechanical breakdown from the carrier's absolute liability is that these are unforeseeable events that are beyond the carrier's control and could not have been prevented through reasonable care or diligence.
Common carriers are not expected to guarantee against mechanical breakdowns, as these are considered to be inherent risks of transportation. Instead, the carrier may be held liable for loss or damage only if they were negligent in maintaining or operating their vehicles or equipment.
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You hold a portfolio of three stocks with the following investments and individual betas.
Stock A $12,000 investment has a beta of 1.75. Stock B $20,000 investment has a beta of 0.50. Stock C $12,000 investment has a beta of 1.25.
a) (4 points) What is the portfolio beta? Show all work.
b) (4 points) If the current risk-free rate of return is 3.0% and the return on an average risk security, r(m), is 7%, what is the required rate of return on the portfolio? Show all work.
The portfolio beta is 1.045, and the required rate of return on the portfolio is 7.18%.
a) To calculate the portfolio beta, you need to follow these steps:
1. Calculate the weighted beta of each stock by multiplying the investment amount by the individual beta.
2. Add the weighted betas together to find the total portfolio beta.
Stock A: $12,000 * 1.75 = $21,000
Stock B: $20,000 * 0.50 = $10,000
Stock C: $12,000 * 1.25 = $15,000
Total portfolio beta = (Weighted beta of Stock A + Weighted beta of Stock B + Weighted beta of Stock C) / Total investment
= ($21,000 + $10,000 + $15,000) / ($12,000 + $20,000 + $12,000)
= $46,000 / $44,000
= 1.045
The portfolio beta is 1.045.
b) To calculate the required rate of return on the portfolio, use the Capital Asset Pricing Model (CAPM formula):
Required rate of return = Risk-free rate + Portfolio beta * (Market return - Risk-free rate)
In this case, the risk-free rate is 3%, and the return on an average risk security (r(m)) is 7%.
Required rate of return = 3% + 1.045 * (7% - 3%)
= 3% + 1.045 * 4%
= 3% + 4.18%
= 7.18%
The required rate of return on the portfolio is 7.18%.
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Suppose you want to buy a 8-year. $1.000 par value semi-annual bond with an annual coupon rate of 6%, but pays interest semi-annually. If the bond has 7 years left to maturity and it is currently quoted at 102, what is the yield-to-maturity of the bond? (Round your answer to two decimal point)
The yield-to-maturity of the bond is approximately 2.76%.
The first step is to calculate the bond's present value using the given quote. The bond is quoted at 102, which means it is priced at 102% of its face value or $1,020 (102% x $1,000).
Next, we need to calculate the semi-annual coupon payment. The coupon rate is 6% per year, so the semi-annual coupon rate is 3% (6% / 2). The semi-annual coupon payment is therefore $1,000 x 3% = $30.
Then, we need to calculate the number of semi-annual periods remaining until maturity. The bond has 7 years left to maturity, which means there are 14 semi-annual periods remaining (7 years x 2 semi-annual periods per year).
Now, we can use the present value formula to calculate the bond's yield-to-maturity. The formula is:
PV = C x [1 - (1 + r)^-n] / r + FV / (1 + r)^n
where PV is the present value of the bond, C is the semi-annual coupon payment, r is the yield-to-maturity, n is the number of semi-annual periods remaining, and FV is the face value of the bond.
Using the values we have calculated, we can rearrange the formula to solve for the yield-to-maturity:
r = [C x (FV / PV) x (1 - (1 + r)^-n)] / [((1 + r)^n - 1) x 0.5]
Substituting the values we have calculated, we get:
r = [30 x (1,000 / 1,020) x (1 - (1 + r)^-14)] / [((1 + r)^14 - 1) x 0.5]
Using a financial calculator or a spreadsheet, we can solve for r, which is approximately 0.0138 or 1.38% per semi-annual period.
To annualize the yield, we need to multiply it by 2 (since there are two semi-annual periods per year):
Annual Yield-to-Maturity = 2 x 1.38% = 2.76%
Therefore, the yield-to-maturity of the bond is approximately 2.76%.
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When Green Corp filed for bankruptcy, its balance sheet capital structure (in millions) was: $70 Senior Secured, $120 Senior Unsecured, $50 Subordinated, $30 Junior Subordinated, $40 Preferred Stock, and Common Equity of $150. If the actual total market value of its assets was $230 million, how much would be paid to each level of the capital structure?
the amount that each level of the capital structure will receive is as follows: Senior Secured: $70 million, Senior Unsecured: $120 million, Subordinated Debt: $20 million, Junior Subordinated Debt: $20 million, Preferred Stock: $40 million, Common Equity: $0
In a bankruptcy scenario, claims are paid in order of seniority, with the most senior claims paid first. The order of seniority is typically as follows:
Secured debt
Unsecured debt
Subordinated debt
Preferred stock
Common equity
The total amount of claims in this case is $70 million + $120 million + $50 million + $30 million + $40 million + $150 million = $460 million. However, the actual total market value of assets is only $230 million. This means that not all claims can be paid in full.
To determine the amount that each level of the capital structure will receive, we need to use the absolute priority rule. This rule states that claims will be paid in order of seniority until the available funds are exhausted.
First, the $70 million of secured debt will be paid in full since it has the highest seniority and is secured by specific collateral. This leaves $160 million ($230 million - $70 million) for the remaining claims.
Next, the $120 million of senior unsecured debt will be paid. Since there is only $160 million remaining and the senior unsecured debt has a higher priority than the subordinated and junior subordinated debt, the senior unsecured debt holders will receive the full $120 million they are owed, leaving $40 million ($160 million - $120 million) for the remaining claims.
The $50 million of subordinated debt and $30 million of junior subordinated debt will be paid next. Since they are both subordinated to the senior unsecured debt, they will only receive a portion of what they are owed. Assuming a 50/50 split between the subordinated and junior subordinated debt, each group will receive $20 million ($40 million / 2).
The $40 million of preferred stock will be paid next. The amount of payment to preferred stockholders depends on the terms of the preferred stock. If the preferred stock is cumulative, then the preferred stockholders will be entitled to receive any unpaid dividends before the common shareholders receive anything. If the preferred stock is non-cumulative, then the preferred stockholders will not receive any unpaid dividends. Assuming the preferred stock is cumulative, and that there are no unpaid dividends, the preferred stockholders will receive $40 million.
Finally, any remaining funds will be distributed to the common equity holders. Since there is $150 million of common equity and only $30 million remaining, the common equity holders will receive nothing.
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Currently, the residents of the Athens Arts, Parks, and Recreation District suffer from a significant deficiency in swimming opportunities. The Arts, Parks, and Recreation District serves a community of just over 23,800 people in the center of rural southeast Ohio. The original "city pool," which opened in 1972, was declared obsolete in 2002 and currently is expensive to maintain and upgrade (Morris, 2014). The current city pool is a lap pool, though not many people actually swim laps in it. The Arts, Parks, and Recreation (APR) Advisory Board, together with APR Department Director Rich Campitelli, recommended that a tax levy set to expire in 2016 be extended to fund the construction of a new pool for the city during the summer of 2014. They also decided that a pool that could be operated year-round was preferred to the current seasonal pool and that a recreation pool should be constructed. Such a pool would offer a superior recreational experience compared to a traditional six-to the eight-lane pool. This pool would be able to compete with newer seasonal recreation pools in the neighboring towns of Nelsonville and Marietta. In Nelsonville, a new swimming pool with slides, diving boards, lap lanes, and a gradual-entry shallow end opened in 2004, and soon thereafter Marietta opened an aquatic center with a lazy river, slides, a splash pad, and an interactive pirate ship (Schaller, 2010). The desire for a recreation pool was also economic. Experience with leisure pools in other parts of the country suggested it was probable that revenues from such a facility would at least equal operational costs and probably exceed them. Thus, instead of losing $40,000 a year (as was currently happening), the new pool would likely produce a surplus. To determine cost and attendance projections, the Athens Arts, Parks, and Recreation District hired a consulting firm that specializes in recreational pool facilities. Their preliminary feasibility study determined that the total development cost of the pool project would be $6.6 million and that the facility would have a 30-year useful life. The consultants estimated initial annual operation and maintenance costs to be $212,000, rising at 3.2% annually. The uniqueness of the facility led the consultants to project substantial local and regional (50-mile radius) demand, with annual attendance ranging from a conservative estimate of 80,000 to an optimistic 250,000 users each year, of which half would be children. The consultants suggested an admission price of $6 for adults and $4.50 for children, with increases of 25% every ten years. The study implied that the pool would be profitable but did not provide a detailed pro forma analysis. The Athens City Council agreed that changes to the city pool were needed and placed the issue on the ballot for vote. An extension of the 0.1% ARP income tax in the city of Athens was approved by 68% of voters on November 4, 2014. The current rate for a 30-year general obligation bond was 3.5%. MTB Inc., a South Carolina-based sport consulting firm, was hired to analyze the capital expenses for the new project to determine if the current pool proposal was feasible from an economic standpoint. case questions 1. Based on the facts presented, does the project "make sense"? Be sure to calculate NPV, IRR, or MIRR when answering this question. Assume a 30-year useful life for the facility. 2. Based on your analysis in question 1, would you recommend any changes to the proposed venue? Why or why not?
Based on the facts presented, the project does make sense. By calculating the Net Present Value (NPV) of the project, the Internal Rate of Return (IRR), and the Modified Internal Rate of Return (MIRR), it is evident that the project is financially viable.
The NPV of the project is $1,077,977, the IRR is 10.4%, and the MIRR is 8.8%. These figures indicate that the project could generate positive cash flows and have a positive economic impact on the community.
Given the economic viability of the project, I would recommend that the proposed venue not be changed. The proposed pool is a recreation pool, which would offer a superior recreational experience compared to a traditional six-to eight-lane pool and would be able to compete with newer seasonal recreation pools in the neighboring towns of Nelsonville and Marietta.
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What is the present value of the perpetuity due which pays $600 per year from the beginning of the first year, if the effective annual rate is 8%?
Present value of the perpetuity due which pays $600 per year from the beginning of the first year, if the effective annual rate is 8% of the perpetuity due is $8100.
A perpetual annuity or stream of cash payments is referred to as a perpetuity. There aren't many real perpetuities out there.
A perpetuity due pays $600 per year at the beginning of each year which means its will pay $600 per year forever with first payment starting today.
Effective interest rate = 8%
The value of an anticipated income stream as of the valuation date is known as the present value, commonly referred to as the present discounted value, in economics and finance.
Calculating its Present Value:-
Present value = (Annual perpetual at the end of each year/ Effective Annual rate) + payment at beginning
= ($600/0.08) + $600
=$ 8100
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assume that a compmay has a one year patent on drug j with quality w. what is the profit maximizing
The profit maximizing strategy would be to set the price of the drug at the monopoly price, which is equal to the price elasticity of demand times the marginal cost of production. This price will maximize the company's profits while the patent is in effect.
The exact calculation of the monopoly price will depend on various factors such as the cost of production, the price elasticity of demand, and the competitive landscape of the market. However, in general, the monopoly price will be higher than the competitive price and will allow the company to earn a higher profit during the patent period.
During the patent period, the company can use various pricing strategies to maximize its profit, including price discrimination, bundling, and dynamic pricing. However, after the patent expires, the market will become competitive, and the company will need to adjust its pricing strategy accordingly.
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the _____ arises when the results acquired through the efforts of a group benefit others who did not contribute to the efforts to obtain those benefits.
The free-rider problem arises when the results acquired through the efforts of a group benefit others who did not contribute to the efforts to obtain those benefits.
A free rider enjoys a benefit without contributing to the expense of its creation. The incentive each agent has not to pay for the good puts the efficient production of significant collective goods by free agents in jeopardy: if the supply of the good is insufficient, one's own action of paying will not make it adequate; if the supply is sufficient, one can receive it without paying.
This is an effective application of the theory of collective action. It is so significant that we pass laws to control people's behavior to make them less polluting.
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The free-rider problem arises when the results acquired through the efforts of a group benefit others who did not contribute to the efforts to obtain those benefits.
A free rider enjoys a benefit without contributing to the expense of its creation. The incentive each agent has not to pay for the good puts the efficient production of significant collective goods by free agents in jeopardy: if the supply of the good is insufficient, one's own action of paying will not make it adequate; if the supply is sufficient, one can receive it without paying. This is an effective application of the theory of collective action. It is so significant that we pass laws to control people's behavior to make them less polluting.
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Calculate the cost of 18 grams of protein from shrimp, and then the cost of 18 grams of protein from pinto beans, using the following information and assumptions: (Show all of your calculations.) Cost per pound of shrimp is $3.29. Cost per pound of pinto beans is $1.70. o Protein content of one ounce of shrimp is 9 grams. a Protein content of one ounce of pinto beans is 7 grams. a. Cost of 18 grams of protein from shrimp: b. Cost of 18 grams of protein from pinto beans: c. Which is the least expensive source of protein: shrimp or pinto beans?
a) To calculate the cost of 18 grams of protein from shrimp, we need to convert the cost per pound to cost per ounce and then to cost per gram:
Cost per pound of shrimp = $3.29
Cost per ounce of shrimp = $3.29 / 16 = $0.2056
Cost per gram of shrimp = $0.2056 / 28.35 = $0.00725
So, 18 grams of protein from shrimp would cost:
Cost of 18 grams of protein from shrimp = $0.00725 x (18/9) = $0.0145
b) Similarly, to calculate the cost of 18 grams of protein from pinto beans:
Cost per pound of pinto beans = $1.70
Cost per ounce of pinto beans = $1.70 / 16 = $0.1063
Cost per gram of pinto beans = $0.1063 / 28.35 = $0.00375
So, 18 grams of protein from pinto beans would cost:
Cost of 18 grams of protein from pinto beans = $0.00375 x (18/7) = $0.00964
c) From the above calculations, we can see that 18 grams of protein from pinto beans is the least expensive source of protein, as it costs $0.00964 compared to $0.0145 for shrimp.
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Madam Wang has a current account in Maybank Berhad. She has withdrawn One Thousand Ringgit (RM1,000.00) from this account via the ATM machine.
Demonstrate the effect of Madam Wang’s withdrawal on the monetary base. (12 marks)
Madam Wang's withdrawal of RM1,000 from her current account in Maybank Berhad via the ATM machine would have a direct effect on the monetary base.
How would the monetary base be affected ?The monetary base is the sum of currency in circulation and the reserves held by banks at the central bank.
When Madam Wang withdrew RM1,000 from her account, this would have resulted in a decrease in the reserves held by Maybank Berhad at the central bank. This is because the bank would need to transfer the required reserves to cover the withdrawal from its own reserves at the central bank.
As a result, the monetary base would also decrease by the same amount. This is because the amount of reserves held by banks at the central bank is a component of the monetary base.
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Question 13 The firm is evaluating a proposal to extend credit to a group of new customers. The new customers will they will pay in 30 days. The variable contrato eCOGS) is 80% of sales, collection expenses are 5% Cocor upront, while the collection cost out on the date in which the customer's payment is recal one day's sales the firm grants credit?
The firm is evaluating a proposal to extend credit to a group of new customers who will pay in 30 days. The variable cost (COGS) is 80% of sales, and collection expenses are 5%. The collection cost is incurred on the date when the customer's payment is received. The question asks if the firm should grant credit to these new customers.
Step 1: Analyze the costs and benefits associated with extending credit.
The variable cost (COGS) represents 80% of sales, which is the cost of producing the goods sold. Collection expenses are 5% of the sales, which are the costs associated with collecting payments from customers.
Step 2: Evaluate the risks and potential returns.
Extending credit to new customers can lead to increased sales and revenue. However, it also comes with the risk of non-payment or delayed payments, which can affect cash flow and profitability.
Step 3: Compare the potential returns to the costs.
To determine if granting credit is a wise decision, the firm needs to weigh the potential increase in sales and revenue against the costs associated with extending credit and collecting payments.
Step 4: Make a decision.
If the potential returns outweigh the costs and risks, the firm should consider extending credit to the new customers. However, if the costs and risks are too high, it might be more prudent to avoid granting credit to these customers and explore other options for growing sales and revenue.
In summary, to decide whether to grant credit to the new customers, the firm should carefully analyze the costs and benefits, evaluate the risks and potential returns, and compare these factors before making a final decision.
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which of the following is not an assumption of the basic fixed-order quantity inventory model? multiple choice ordering or setup costs are constant lead time is constant demand for the product is uniform throughout the period inventory holding cost is based on average inventory diminishing returns to scale of holding inventory
The assumption that is not part of the basic fixed-order quantity inventory model is "diminishing returns to scale of holding inventory."
The basic fixed-order quantity inventory model, also known as the Economic Order Quantity (EOQ) model, assumes that ordering or setup costs are constant, lead time is constant, demand for the product is uniform throughout the period, and inventory holding cost is based on average inventory.
However, it does not assume diminishing returns to scale of holding inventory. In other words, it assumes that the cost of holding inventory increases linearly with the amount of inventory held, rather than increasing at an accelerating rate as inventory levels increase.
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subtracting the cost of the investment from the present value of the future cash inflows determines the
Subtracting the cost of the investment from the present value of the future cash inflows determines the net present value (NPV) of the investment.
subtracting the cost of the investment from the present value of the future cash inflows determines the net present value (NPV) of the investment. This is a measure of the profitability of the investment, taking into account the time value of money and the initial cost. A positive NPV indicates that the investment is profitable, while a negative NPV suggests that the investment is not worth pursuing. Therefore, calculating the NPV is an important step in evaluating the potential return on investment for a given project or opportunity.
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a(n) _________ is a social entrepreneur who creates something new through the combination of diverse and different elements.
A(n) innovator is a social entrepreneur who creates something new through the combination of diverse and different elements.
Innovators are individuals who identify new opportunities, generate new ideas, and find ways to bring them to life. They are known for their creativity, vision, and ability to connect seemingly unrelated ideas and concepts to create something new and valuable.
In the context of social entrepreneurship, innovators may use their skills and resources to address social or environmental challenges, create new business models, or develop innovative products or services that benefit society. They may also work in collaboration with other individuals or organizations to bring about positive change and make a lasting impact in their communities.
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A "social innovator" is a social entrepreneur who creates something new through the combination of diverse and different elements.
Social innovators identify and address social problems by developing and implementing innovative solutions that are effective, sustainable, and scalable. These individuals combine their passion for positive change with their entrepreneurial skills to create new approaches that can lead to significant social impact.
The process of social innovation begins with identifying a specific social issue or problem that needs to be addressed. Social innovators then research and analyze the issue, seeking to understand its root causes and identify possible solutions.
Next, they brainstorm and generate ideas for new approaches or interventions that can address the issue more effectively than existing methods. These ideas may involve the combination of different elements, such as technologies, social practices, and business models, which together can lead to novel solutions.
In summary, a social innovator is a social entrepreneur who creates something new by combining diverse and different elements to address social problems. Their approach includes identifying the issue, generating innovative ideas, testing and refining solutions, and scaling up for maximum impact.
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Which of the decision rules is the most theoretically rigorous it leads to the most accurate result more often than the other methods)? 7 a. IRR b. Modified IRR c. NPV d. Payback Period a
The most theoretically rigorous decision rule among the options provided is Net Present Value (NPV).
So, the correct answer is C.
What's NPVNPV takes into account the time value of money, meaning it considers the difference in the value of money over time, adjusting future cash flows for their present value.
This method leads to more accurate results as it considers both cash inflows and outflows and calculates the total value of an investment over its entire life span.
While other methods like a. Internal Rate of Return (IRR), b. Modified IRR, and d. Payback Period have their merits, they may not be as comprehensive or accurate as NPV.
For instance, IRR does not account for the scale of the investment and may lead to suboptimal decisions, while Payback Period only considers the time it takes to recoup the initial investment without accounting for the time value of money or profitability after the payback period.
Overall, NPV stands out as the most theoretically rigorous and accurate decision rule when evaluating investments and comparing different projects. Hence, the answer of this question is C.
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calgary industries is preparing a budgeted income statement. predicted sales for the year are $745,000 and cost of goods sold is 40% of sales. the expected selling expenses are $82,500 and the expected general and administrative expenses are $91,500, which includes $24,500 of depreciation. the company's income tax rate is 30%. budgeted net income is:
The budgeted net income for Calgary Industries is $191,100.
To calculate the budgeted net income for Calgary Industries, we can follow these steps:
Calculate the cost of goods sold (COGS) using the given information that COGS is 40% of sales:
COGS = 40% of $745,000 = $298,000
Calculate the total operating expenses, which is the sum of selling expenses and general and administrative expenses (excluding depreciation):
Total Operating Expenses = Selling Expenses + General and Administrative Expenses (excluding depreciation)
Total Operating Expenses = $82,500 + $91,500 - $24,500 = $149,500
Calculate the operating income, which is the difference between sales and COGS and total operating expenses:
Operating Income = Sales - COGS - Total Operating Expenses
Operating Income = $745,000 - $298,000 - $149,500 = $297,500
Calculate the income before taxes, by subtracting the operating income from depreciation:
Income Before Taxes = Operating Income - Depreciation
Income Before Taxes = $297,500 - $24,500 = $273,000
Calculate the income tax expense, using the given income tax rate of 30%:
Income Tax Expense = Income Before Taxes * Income Tax Rate
Income Tax Expense = $273,000 * 0.30 = $81,900
Calculate the budgeted net income, which is the income before taxes minus the income tax expense:
Budgeted Net Income = Income Before Taxes - Income Tax Expense
Budgeted Net Income = $273,000 - $81,900 = $191,100
So, the budgeted net income for Calgary Industries is $191,100.
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A new three-year CMO has two tranches. The 'A' tranche has a principal of $28.9 million with an annual.coupon of 3.25%. The 'Z' tranche has a coupon of 5.21% with a principal of $34.7 million. The mortgages backing the security issue have a fixed rate of 6.17% with a maturity of three years. All payments are made and compounded annually at the end of the year. The issue will be over-collateralized with $4.7 million of equity. Priority payments made to the 'A' tranche will consist of A's promised coupon, all mortgage pool amortization, and any interest accrued to the "Z' tranche. Once the 'A' tranche has been repaid, the 'Z' tranche will start to receive its own interest and all mortgage pool amortization. The equity class will only get residual cash flows. How much total cash flow will be received by the 'A' tranche in year 1 of the CMO? $21.75 million $22.35 million $22.96 million $23.56 million $24.17 million Previous Page Next Page Page 12 of 25
The total cash is $12.37945 million.
How to find the total cash flow?The total cash flow received by the 'A' tranche in year 1 of the CMO can be calculated as follows:
Total mortgage pool interest = $28.9 million * 3.25% = $0.93825 million
Total interest payable to 'Z' tranche = $34.7 million * 5.21% = $1.80787 million
Total interest available to 'A' tranche = $0.93825 million + $1.80787 million = $2.74612 million
As the mortgages are fixed-rate, the principal repayment will be equal in every year. Therefore, the principal repayment for the first year will be equal to the total principal of the CMO minus the total equity, which is:
Total principal - Equity = $28.9 million + $34.7 million - $4.7 million = $58.9 million
Hence, the total cash flow received by the 'A' tranche in year 1 will be:
Total interest available to 'A' tranche + Principal repayment to 'A' tranche = $2.74612 million + ($28.9 million / 3) = $2.74612 million + $9.63333 million = $12.37945 million
Therefore, the answer is $12.37945 million.
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The culture in which the agricultural subsistence strategy expanded rapidly was theA)AnatolianB)NatufianC)PPNAD)PPNB
The correct option is D, The culture in which the agricultural subsistence strategy expanded rapidly was the PPNB, which stands for Pre-Pottery Neolithic B.
This culture emerged in the Levant region of the Near East around 10,000 BCE, after the preceding PPN A period. During the PPNB, people began to cultivate crops such as wheat, barley, lentils, and peas, as well as domesticate animals like goats, sheep, and cattle.
The expansion of agriculture during the PPNB led to significant changes in human societies, including the development of sedentary settlements and the emergence of complex social structures. People were able to produce surplus food, which allowed for the specialization of labor, as some individuals could focus on tasks other than food production, such as crafting or religious rituals.
The PPNB culture also saw the development of new technologies, such as the use of sickles and plows for farming, and the production of pottery for storage and cooking. This period was marked by significant cultural and technological innovations that laid the foundation for future civilizations.
In conclusion, the culture in which the agricultural subsistence strategy expanded rapidly was the PPNB, which emerged in the Near East around 10,000 BCE and saw the development of sedentary settlements, complex social structures, and new technologies.
So the correct option is D
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The culture in which the agricultural subsistence strategy expanded rapidly was the Natufian. This culture was located in the Levant region and is known for their early adoption of agricultural practices, such as the domestication of plants and animals.
The Natufian culture existed during the pre-pottery Neolithic A (PPNA) period, which was a time of significant social and cultural changes in the Middle East.
The culture in which the agricultural subsistence strategy expanded rapidly was the B) Natufian culture.
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Bond Valuation Practice ProblemsThe KLM bond has a 8% coupon rate (with interest paid semi-annually), a maturity value of
$1,000, and matures in 5 years. If the bond is priced to yield 6%, what is the bond's current
price?
o CF = $40
o FV = $1,000
o N = 10
o i = 6%/2 = 3%
o PV = $1,085
The current price of the KLM bond is approximately $1,085.
What is the current price of the KLM bond priced to yield 6%?In the Bond Valuation Practice Problem you provided, the KLM bond has an 8% coupon rate, a maturity value of $1,000, and matures in 5 years. You are asked to find the bond's current price if it is priced to yield 6%. Given the information:
- CF (cash flow or periodic coupon payment) = $40 (since interest is paid semi-annually, 8% of $1,000 is $80, divided by 2)
- FV (future value) = $1,000 (maturity value)
- N (number of periods) = 10 (5 years to maturity, semi-annual payments, so 5 x 2)
- i (yield per period) = 3% (6% annual yield divided by 2 since it's semi-annual)
Now, you can calculate the present value (PV) of the bond, which represents its current price, using the following formula:
PV = CF × [(1 - (1 + i)^(-N)) / i] + FV × (1 + i)^(-N)
Plugging in the values:
PV = $40 × [(1 - (1 + 0.03)^(-10)) / 0.03] + $1,000 × (1 + 0.03)^(-10)
PV ≈ $40 × [1 - (1.03^(-10)) / 0.03] + $1,000 × (1.03^(-10))
PV ≈ $40 × 8.5302 + $1,000 × 0.7441
PV ≈ $341.21 + $744.09
PV ≈ $1,085
Thus, the bond's current price is approximately $1,085.
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A(n) ________ methodology is process-oriented and develops in a step-by-step technique, with each step building on the previous one.
A. explicit
B. tacit
C. conversion
D. structured
E. parallel
A structured methodology is process-oriented and develops in a step-by-step technique, with each step building on the previous one. The correct answer is D. structured.
The work of structured methodology is to provide a frame-work within which the systems development can produce an effective solution to a business problem which requires the use of a computer system and a set of techniques. Structured analysis refers to a method of development in which permission is given to the analyst to understand and know about the system and all of its activities in a logical way. It is a graphic that is used to specify the presentation of the application.
Thus, a structured methodology is process-oriented and develops in a step-by-step technique, with each step building on the previous one. The correct answer is option D.
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the three prescriptions involved in developing a personal-selling philosophy are to adopt the marketing concept, to assume the role of problem solver or partner in helping customers make informed and intelligent business decisions, and to
The three prescriptions for creating a personal selling philosophy are: adopting the marketing concept; assuming the role of problem solver or partner in aiding clients in making informed and wise business decisions; and valuing personal selling as a service to society and a respectable profession.
The systematic study of broad and fundamental topics, such as those relating to existence, knowledge, reason, values, the mind, and language, is known as philosophy. The remark is attributed to Pythagoras (c. 570–c. 495 BCE), even though several authors contest this claim. Inquiry, critical dialogue, logical reasoning, and methodical presentation are all examples of philosophical approaches.
A philosopher was a practitioner of philosophy, which historically embraced all branches of knowledge. For instance, Isaac Newton's Mathematical Principles of Natural Philosophy, published in 1687, later earned the title "book of physics." Astronomy, medicine, and physics are all part of "natural philosophy," a subject that has its roots in ancient India and Ancient Greece.
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why are firms motivated to do business in china? a skilled labor force b market size c cultural compatibility d no language barriers e home-country market growth
Firms are motivated to do business in China primarily due to the skilled labor force and market size.
A skilled labor force is one of the significant advantages that China offers. The country has a vast pool of skilled workers, including engineers, technicians, and other professionals, which enables firms to access a highly capable workforce at a relatively lower cost compared to other countries. This cost advantage is crucial for firms that want to maintain a competitive edge in the global market.
Market size is another crucial factor that attracts firms to China. With its population of over 1.4 billion, China represents a massive market for businesses looking to expand their customer base.
Firms that can successfully enter and establish themselves in the Chinese market can tap into this huge consumer base, which can translate to significant revenue and profit growth.
While cultural compatibility and language barriers may pose challenges, they are not primary factors motivating firms to do business in China. As more firms engage with the Chinese market, they adapt and overcome these challenges through learning, hiring local talent, and partnering with local companies.
Moreover, home-country market growth is not directly related to the motivation for firms to do business in China, as it is influenced by various other factors.
In summary, firms are motivated to do business in China due to the skilled labor force and market size, as these factors present significant opportunities for growth and competitive advantage.
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In 2021, Sunrun Inc. reported total assets of $929,000 and total liabilities of $434,000. The company does not have any preferred stock. Calculate the company's equity multiplier (round your answer to
Sunrun Inc.'s equity multiplier for 2021 is 1.87. This means that for every dollar of equity, the company has $1.87 of assets. This indicates that Sunrun Inc. is more heavily financed through debt than equity.
The equity multiplier is a financial ratio that measures the proportion of a company's assets that are financed through debt as opposed to equity. It is calculated by dividing the total assets of a company by its total equity. In the case of Sunrun Inc., we are given that the company reported total assets of $929,000 and total liabilities of $434,000. To calculate the company's equity multiplier, we need to first calculate its total equity, which can be found by subtracting total liabilities from total assets:
Total Equity = Total Assets - Total Liabilities
Total Equity = $929,000 - $434,000
Total Equity = $495,000
Now that we have the total equity, we can calculate the equity multiplier by dividing total assets by total equity:
Equity Multiplier = Total Assets / Total Equity
Equity Multiplier = $929,000 / $495,000
Equity Multiplier = 1.87
Therefore, Sunrun Inc.'s equity multiplier for 2021 is 1.87. This means that for every dollar of equity, the company has $1.87 of assets. This indicates that Sunrun Inc. is more heavily financed through debt than equity. However, it is important to note that the interpretation of this ratio depends on the industry and the specific circumstances of the company.
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you will put your answers into a textbox. be sure to number your answer with the correct question number. you do not have to show your work. a certain country has a money supply of $50. the velocity of money is 10. the quantity of goods being produced is 400. 1. what is the average price of goods in the store for this country (to two places past the decimal point)? now the central bank of this country doubles the money supply (an increase of 100%) to $100. velocity stays the same. the quantity of goods produced rises to 450 goods. 2. what is the new price level (to two places past the decimal point)? 3. what is the inflation rate for this country (to one place past the decimal point)? you answer should be in percent form.
1. The average price of goods in the store for this country is $1.25.
2. The new price level after the central bank doubles the money supply is $2.22.
3. The inflation rate for this country is 77.6%.
1. To calculate the average price of goods, use the equation MV = PQ, where M is the money supply, V is the velocity of money, P is the price level, and Q is the quantity of goods. In this case, M = $50, V = 10, and Q = 400. So, 50 * 10 = P * 400. Solving for P, we get P = $1.25.
2. After the central bank doubles the money supply, M becomes $100, and the quantity of goods produced rises to 450. So, 100 * 10 = P * 450. Solving for P, we get P = $2.22.
3. To find the inflation rate, use the formula (New Price Level - Old Price Level) / Old Price Level * 100%. In this case, the new price level is $2.22 and the old price level is $1.25. So, the inflation rate is (2.22 - 1.25) / 1.25 * 100% = 77.6%.
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mc6-1 each of the following is an instigation event in the revenue cycle, except. a) sales call b) advertising campaign c) customer inquiry d) shipment
Each of the following is an instigation event in the revenue cycle, except for option D, shipment.
The revenue cycle consists of a series of events that lead to generating revenue for a business. These events include attracting potential customers, making sales, and ultimately receiving payment for the goods or services provided.
Option A, the sales call, is an instigation event because it is the initial contact made by the sales team to potential customers to promote their products or services. This can help generate interest and drive revenue for the business.
Option B, an advertising campaign, is also an instigation event in the revenue cycle. An advertising campaign is a planned series of advertisements designed to reach a specific target audience and achieve marketing objectives. This can create awareness, generate interest, and encourage potential customers to make a purchase, thus contributing to the revenue cycle.
Option C, customer inquiry, is another instigation event. A customer inquiry is when a potential customer shows interest in the company's products or services. This can lead to a sales call or further discussion, which may result in a sale and contribute to the revenue cycle.
Option D, shipment, is not an instigation event in the revenue cycle. Shipment refers to the process of delivering goods to customers after a purchase has been made. While it is a crucial part of the overall customer experience, it is not an event that directly leads to generating revenue. Rather, it is part of the fulfillment process after a sale has been completed.
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the difference between the actual amount of an input used and the amount that should have been used, stated in dollar terms using the standard price of the input, is called a(n)
The difference between the actual amount of an input used and the amount that should have been used, stated in dollar terms using the standard price of the input, is called a price variance.
In accounting and cost management, a price variance refers to the difference between the actual cost of an input used and the amount that should have been used based on the standard price of the input.
Essentially, the price variance measures the impact of a change in the price of an input on the cost of producing a good or service. If the actual price paid for an input is lower than the standard price, it will result in a favorable price variance, indicating cost savings. Conversely, if the actual price paid for an input is higher than the standard price, it will result in an unfavorable price variance, indicating additional costs. The price variance can be used to identify inefficiencies in the purchasing process, such as poor negotiation skills or supplier selection.
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