a. The expected NPV of the project is $2,000.
b. The decision tree analysis shows that the expected NPV of the project with the option to renew is $6,364. The decision tree takes into account the probabilities of good and bad demand, the cash flows for each scenario, and the cost of the franchise renewal.
By calculating the expected value at each decision point and discounting the future cash flows, we arrive at the expected NPV. The option to renew adds value to the project, as it allows for the potential for additional cash flows in Years 3 and 4 if demand is good.
Decision tree analysis is a useful tool to evaluate the potential outcomes of a decision under uncertainty. In this case, we use the decision tree to model the possible cash flows and probabilities associated with the franchise investment and renewal.
By considering the expected values at each decision point and discounting future cash flows, we can arrive at the expected NPV of the project. The option to renew adds value to the project, as it allows for the potential for additional cash flows in the future if demand is good.
This analysis highlights the importance of considering both the expected outcomes and the potential for future options when evaluating investment decisions.
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Q10. (8 points) The organization My Accounting Course ("accounting education for the rest of us") analyzed two mutually exclusive projects. Project A has a total life of 3 years with a cost of capital of 12%. Project B has a total life of 3 years with a cost of capital of 15% .
The expected cash flows of the projects are:
Year Project A Project B
0 -$1,000 -$800
1 -$2,000 -$700
2 $4,000 $3,000
3 $5,000 $1,500
They concluded that "Given that these are mutually exclusive projects project B should be undertaken because it has a higher IRR than project A".
Do you agree with this decision? If so, why; if not, why not?
Hint: Please read this question carefully.
Based on these calculations, we can see that Project B has a higher IRR than Project A. However, choosing a project based solely on its IRR can be misleading because it does not take into account the size of the investment or the actual dollar amounts of the cash flows.
To determine whether we agree with the decision to choose Project B over Project A based on their respective IRRs, we need to calculate the IRRs for both projects and compare them.
To calculate the IRR for Project A, we need to find the discount rate that makes the present value of the expected cash flows equal to zero. Using Excel or a financial calculator, we find that the IRR for Project A is approximately 22.31%.
To calculate the IRR for Project B, we need to find the discount rate that makes the present value of the expected cash flows equal to zero. Using Excel or a financial calculator, we find that the IRR for Project B is approximately 25.44%.
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Consider historical data showing that the average annual rate of return on the S&P 500 portfolio over the past 85 years has averaged roughly 8% more than the Treasury bill return and that the S&P 500 standard deviation has been about 28% per year. Assume these values are representative of investors' expectations for future performance and that the current T-bill rate is 6%.
Calculate the expected return and variance of portfolios invested in T-bills and the S&P 500 index with weights as follows:
WBills Windex Expected Return Variance 0.6 0.4 0.092 0.0125 Example
0.8 0.2 0.4 0.6 1 0 0 1 0.2 0.8
Using the given historical data and weights, the expected return and variance of the T-bills and S&P 500 index portfolios are:
Expected return: 9.2% for the 0.6 T-bill/0.4 S&P 500 portfolio and 8.4% for the 0.8 T-bill/0.2 S&P 500 portfolio.
Variance: 1.25% for the 0.6 T-bill/0.4 S&P 500 portfolio and 0.36% for the 0.8 T-bill/0.2 S&P 500 portfolio.
To calculate the expected return of each portfolio, we multiply the weight of each asset (T-bills and S&P 500) by its expected return and sum the results. For example, the expected return of the 0.6 T-bill/0.4 S&P 500 portfolio is:
(0.6 x 6%) + (0.4 x (6% + 8%)) = 9.2%
To calculate the variance of each portfolio, we use the formula:
Variance = (w1^2 x σ1^2) + (w2^2 x σ2^2) + 2(w1 x w2 x σ1 x σ2 x ρ)
where w1 and w2 are the weights of the two assets, σ1 and σ2 are their standard deviations, and ρ is the correlation between them (which we assume to be 0 since they are uncorrelated). For example, the variance of the 0.6 T-bill/0.4 S&P 500 portfolio is:
(0.6^2 x 0) + (0.4^2 x 0.28^2) = 0.0125 or 1.25%
The variance of the 0.8 T-bill/0.2 S&P 500 portfolio is:
(0.8^2 x 0) + (0.2^2 x 0.28^2) = 0.0036 or 0.36%
These calculations can help investors make informed decisions about how to allocate their assets between T-bills and the S&P 500 index.
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Mr. and Mrs. Norton purchased a ski-chalet for $34,500. (This must have been in 1930!) They paid $3,860 down and agreed to make equal payments at the end of every three months for 15 years. Interest is 7.43% compounded quarterly. Do not include the dollar sign, $, in your answers. Do not include the comma usually used to denote thousands. All dollar figures must be exactly 2 decimals. Although the Cash Flow Concept puts a negative sign, "-", in front of many numbers, do not include the negative sign when you put these numbers into Moodle. (a.) What is the size of the payment? Hint: Make sure your calculator is set to 2 decimal places before using AMORT. (b.) What is the balance after the first payment? (C.) How much of the principal is paid in the first payment? (d.) How much interest is paid in the first payment? (e.) What is the balance after the second payment? (f.) How much of the principal is paid in the second payment? (9.) How much interest is paid in the second payment? (h.) How much will they have paid in total after the 15 years? Total paid in payment = Plus the downpayment = (1.) How much interest will they pay in total? Total paid in payments - Original Mortgage =
(a) Using the PMT function in Excel, with a loan amount of $30,640 ($34,500 - $3,860) and a 15-year term with quarterly payments at 7.43% quarterly interest rate, the size of the payment is $552.23.
(b) After the first payment, the balance is the present value of the remaining payments, which can be calculated using the PV function in Excel. With a rate of 7.43%/4, 14*4 = 56 periods remaining, and a payment of $552.23, the balance is $29,428.05.
(c) The amount of principal paid in the first payment can be calculated by subtracting the interest paid from the total payment. The interest paid can be calculated as the balance multiplied by the quarterly interest rate of 7.43%/4. Therefore, the principal paid is $552.23 - ($29,428.05 x 7.43%/4) = $159.16.
(d) The interest paid in the first payment is $552.23 - $159.16 = $393.07.
(e) After the second payment, the remaining balance is the present value of the remaining payments, which can be calculated using the PV function in Excel. With a rate of 7.43%/4, 13*4 = 52 periods remaining, and a payment of $552.23, the balance is $28,198.54.
(f) The amount of principal paid in the second payment can be calculated by subtracting the interest paid from the total payment. The interest paid can be calculated as the balance multiplied by the quarterly interest rate of 7.43%/4. Therefore, the principal paid is $552.23 - ($28,198.54 x 7.43%/4) = $163.79.
(g) The interest paid in the second payment is $552.23 - $163.79 = $388.44.
(h) The total amount paid after 15 years can be calculated as the total number of payments (154) multiplied by the payment amount, plus the down payment of $3,860. Therefore, the total paid is (154)*$552.23 + $3,860 = $105,791.40.
(i) The total interest paid can be calculated as the total amount paid minus the original mortgage amount of $30,640. Therefore, the total interest paid is $105,791.40 - $30,640 = $75,151.40.
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1. a)
Rozanski Co. currently has EBIT of $36,000 and is all equity financed. EBIT are expected to grow at a rate of 3% per year. The firm pays corporate taxes equal to 26% of taxable income. The cost of equity for this firm is 10%.
What is the market value of the firm? Enter your answer rounded to two decimal places.
b)
Rozanski Co. currently has EBIT of $31,000 and is all equity financed. EBIT are expected to grow at a rate of 1% per year. The firm pays corporate taxes equal to 22% of taxable income. The cost of equity for this firm is 16%.
What is the market value of the firm? Enter your answer rounded to two decimal places.
The market values for the two scenarios are:
a) $266,400.00
b) $151,125.00
a) To calculate the market value of the firm, we can use the formula:
Market Value = EBIT x (1 - Tax Rate) / Cost of Equity
For Rozanski Co. in scenario a), we have:
EBIT = $36,000
Tax Rate = 26%
Cost of Equity = 10%
Market Value = $36,000 x (1 - 0.26) / 0.10
Market Value = $36,000 x 0.74 / 0.10
Market Value = $26,640 / 0.10
Market Value = $266,400.00
b) For Rozanski Co. in scenario b), we have:
EBIT = $31,000
Tax Rate = 22%
Cost of Equity = 16%
Market Value = $31,000 x (1 - 0.22) / 0.16
Market Value = $31,000 x 0.78 / 0.16
Market Value = $24,180 / 0.16
Market Value = $151,125.00
So, the market values for the two scenarios are:
a) $266,400.00
b) $151,125.00
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Systematically thinking about the benefits associated with the consumption of goods and services can:
Multiple choice question.
ensure market equilibrium.
reduce the need for regulation.
eliminate shortages and surpluses.
help consumers make better decisions.
Systematically thinking about the benefits associated with the consumption of goods and services can "help consumers make better decisions."
Systematically thinking about the benefits associated with the consumption of goods and services can help consumers make better decisions. By understanding the benefits that a product or service provides, consumers can make informed choices about whether or not to purchase it.
This can lead to more efficient markets as consumers are more likely to only purchase goods and services that provide them with the most value. However, this alone cannot ensure market equilibrium, reduce the need for regulation, or eliminate shortages and surpluses.
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Systematically thinking about the benefits associated with the consumption of goods and services can "help consumers make better decisions." Systematically thinking about the benefits associated .
the consumption of goods and services can help consumers make better decisions. By understanding the benefits that a product or service provides, consumers can make informed choices about whether or not to purchase it. This can lead to more efficient markets as consumers are more likely to only purchase goods and services that provide them with the most value. However, this alone cannot ensure market equilibrium, reduce the need for regulation, or eliminate shortages and surpluses.
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carol fisher wants to sell the stock of hathaway international at the next available price after the prices reaches $50 per share. what type of transaction is carol making?
Carol Fisher is making a sell limit order transaction for the stock of Hathaway International once the price reaches $50 per share.
A sell limit order is a type of order to sell a security at a specified or better price, meaning that the order will only be executed if the stock reaches a particular price or higher.
Sell limit orders are a common way for investors to set a target price for selling their stocks. This type of order allows investors to control the price at which they sell their shares, ensuring that they receive a minimum price for their investment.
Once the stock price reaches the specified price or higher, the broker will execute the order and sell the stock at the next available price.Carol Fisher is making a "stop order" or "stop-loss order" transaction.
In this case, she wants to sell her Hathaway International stock when the price reaches $50 per share. A stop order is an instruction to sell the stock at the next available price after it reaches the specified price threshold, which helps protect profits or limit losses.
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Q4 - A family has established a trust fund for its children, attending college, and has paid $101.514 to a bank. In return, the bak is going to pay the family $20,000 every year for the next 6 years. The first payment will be made 1 year from the day the family paid the bank. What is the interest rate that thic trust fund will be earning?
The trust fund is earning an interest rate of 5%.
Calculate the the interest rate earned by the trust fund?To solve for the interest rate earned by the trust fund, we can use the present value formula:
PV = PMT x (1 - 1/(1+r)^n) / r
Where PV is the present value of the payments, PMT is the payment amount, r is the interest rate, and n is the number of payment periods.
In this case, we know that the family paid $101,514 upfront and will receive $20,000 per year for 6 years, with the first payment made 1 year after the initial payment. Therefore, PMT = $20,000, n = 6, and the time period is 5 years.
We can rearrange the formula to solve for r:
r = (PMT / ((PV x r) + PMT)) x (1 - 1/(1+r)^n)
We can start by assuming an interest rate and then use the formula to calculate the present value of the payments. We can then compare this value to the initial payment of $101,514 to see if the assumed interest rate is too high or too low.
Let's assume an interest rate of 4%. Plugging in the values, we get:
PV = $20,000 x (1 - 1/(1+0.04)^6) / 0.04 = $98,619.56
Since $98,619.56 is less than the initial payment of $101,514, we know that the interest rate must be higher than 4%. Let's try an interest rate of 5%:
PV = $20,000 x (1 - 1/(1+0.05)^6) / 0.05 = $101,150.70
Since $101,150.70 is very close to the initial payment of $101,514, we know that the interest rate is approximately 5%. Therefore, the trust fund is earning an interest rate of 5%.
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You purchased a stock for $175 and sold it for $250 one yearlater. Additionally, you received a dividend payment of $30. Whatwas your total return (yield) on this investment?
The total return (yield) on an investment which involve purchasing a stock for $175 and selling it for $250 as well as a dividend payment of $30 is 60%.
To calculate the total return (yield) on your investment, we will consider the initial stock purchase price, the selling price, and the dividend payment.
In order to calculate the total return, follow these steps:
1. Calculate the capital gain:
Selling price - Purchase price = $250 - $175 = $75.
2. Add the dividend payment:
Capital gain + Dividend = $75 + $30 = $105.
3. Calculate the total return (yield):
(Total gain / Purchase price) x 100 = ($105 / $175) x 100 = 60%.
So, your total return (yield) on this investment was 60%.
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plunder inc. accepted a six-month noninterest-bearing note for $2,800 on january 1, 2021. the note was accepted as payment of a delinquent receivable of $2,500. the cash collection on july 1, 2021, would be recorded as:
The cash collection on July 1, 2021, would be recorded as follows: Debit Cash for $2,800 and credit Notes Receivable for $2,500 and Interest Revenue for $300
Interest is the extra payment made by a borrower or deposit-taking financial institution to a lender or depositor above and beyond the principal amount (the amount borrowed) at a predetermined rate. It is distinct from any fees the borrower may be required to pay the lender or another party.
It also contrasts from a dividend, which is cash distributed to shareholders (owners) by a business from its profit or reserve, but not at a predefined rate or percentage but rather on a pro rata basis as a share of the benefits gained by risk-takers who incur risks in order to generate revenue.
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The spread of the 5-year bond credit issued by MyBank on risk-free bonds equivalent is equal to 325 bps (calculated as the difference between the zero spot rates).MyBank recovery rate is estimated at40%. Determine the cumulative default probability of MyBank at 5 years.
The probability that MyBank will default within the 5-year period is CDP = 325/40 = 8.125%. The cumulative default probability of MyBank at 5 years can be calculated using a combination of its spread and recovery rate.
The spread of the 5-year bond credit issued by MyBank on risk-free bonds equivalent is equal to 325 bps, which is the difference between the zero spot rates. The recovery rate of MyBank is estimated at 40%.
By combining the spread and recovery rate, the cumulative default probability (CDP) of MyBank at 5 years can be calculated. CDP is equal to the spread over the recovery rate. Therefore, CDP = 325/40 = 8.125%. This is the probability that MyBank will default within the 5-year period.
It is important to note that the higher the spread and the lower the recovery rate, the higher the probability of default. Therefore, MyBank should strive to reduce the spread and increase the recovery rate in order to reduce the probability of default in the 5-year period.
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a/an __________ are motivated by a desire to acquire something, for example food riots. (35)
An acquisitive mob is motivated by a desire to acquire something that is perceived as scarce or in short supply.
These mobs can form when individuals or groups feel that their access to basic necessities such as food, water, or shelter is being threatened or limited. Food riots, for example, are a common type of acquisitive mob that typically occurs in response to food shortages or rising prices. During such riots, people may take to the streets and engage in looting or other forms of violence to secure food or other essential items.
Acquisitive mobs can also form in response to perceived social or economic inequalities. In these cases, individuals may feel that they are being unfairly denied access to resources or opportunities, and may resort to violent or disruptive behavior to express their grievances. Acquisitive mobs can be difficult to control and can pose a significant threat to public safety and social stability.
Effective responses to such mobs require a combination of short-term measures, such as police intervention, and longer-term efforts to address underlying social and economic factors that contribute to mob formation.
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A/an incentive is motivated by a desire to acquire something, for example, food riots.
A motivator or catalyst is something that urges someone to act. Due to a lack of resources, people are driven to buy food in the case of food riots, which gives them the incentive to take action through protests or riots. Positive or negative incentives are possible, as well as financial or non-financial ones. They may also be explicit or implicit, direct or indirect, etc. In economics, incentives are essential in determining how people, businesses, and governments behave. Designing efficient institutions and policies that advance social welfare and economic prosperity requires a thorough understanding of incentives and how they operate.
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abc bank offers to lend you $50,000 for one year at a quoted annual rate of 8.31% with each payment at the end of each month. def bank also offers to lend you the same amount at a quoted annual rate of 8.63%, with each payment at the end of each quarter. what is the difference in the effective annual rates charged by the two banks? group of answer choices 0.22% 0.24% 0.26% 0.30% 0.28%
The difference in the effective annual rates charged by the two banks is 0.30%.
How to determine the effective annual rate (EAR)To calculate the effective annual rate (EAR) for each bank, we need to consider the compounding frequency.
For ABC Bank, the compounding period is monthly, so we use the formula (1 + r/n)^n - 1, where r is the quoted annual rate and n is the number of compounding periods.
Plugging in the numbers, we get an EAR of 8.573%.
For DEF Bank, the compounding period is quarterly, so we use the same formula with n = 4.
Plugging in the numbers, we get an EAR of 8.870%.
To find the difference in the effective annual rates, we subtract the EAR of ABC Bank from the EAR of DEF Bank:
8.870% - 8.573% = 0.297% or 0.30% (rounded to the nearest hundredth)
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You are given information for a delta-hedged portfolio for European options that you have written. For each scenario, compute the number of shares to buy or sell (indicate which action to take) on day 1 to maintain the delta-hedge for a portfolio of one option.
Stock Price Call premium Call delta (A)
Day 0 55 6.50 0.4
Day 1 60 9.50 0.6
Stock Price Put premium Put Elasticity()
Day 0 50 1.00 -5
Day 1 49 0.91 -7
To maintain the delta-hedge for a portfolio of one European call option, you should buy 0.6 shares on Day 1.
The call delta on Day 0 is 0.4, and on Day 1 it's 0.6. The change in delta (∆delta) is 0.6 - 0.4 = 0.2. Since you have written one option, you need to buy 1 × 0.2 = 0.2 shares to maintain the delta-hedge.
However, since the question asks for maintaining the hedge for a portfolio of one option, it means you need to consider the initial 0.4 delta as well. Thus, you should buy 0.4 + 0.2 = 0.6 shares on Day 1.
To maintain the delta-hedge for a portfolio of one European put option, you should sell 7 shares on Day 1.
The put elasticity on Day 0 is -5, and on Day 1 it's -7. The change in elasticity (∆elasticity) is -7 - (-5) = -2. Since you have written one option, you need to sell 1 × 2 = 2 shares to maintain the delta-hedge.
However, since the question asks for maintaining the hedge for a portfolio of one option, it means you need to consider the initial -5 elasticity as well. Thus, you should sell -5 + (-2) = -7 shares on Day 1.
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the loanable funds market in an economy is in equilibrium. draw a correctly labeled graph of the loanable funds market, labeling the equilibrium real interest rate and the equilibrium quantity. show the impact of a decrease in the money supply for this economy in your graph from part (a). will the result be a shortage or surplus in the loanable funds market at the original equilibrium? will lenders of existing fixed-rate loans be better or worse off as a result of the change in the real interest rate? how will investment spending on facilities and equipment in this economy be impacted? explain.
The loanable funds market is where savers provide funds for borrowers to use for investment purposes.
What's loanable fundsIn equilibrium, the quantity of loanable funds supplied equals the quantity demanded. This is represented by a graph with the real interest rate on the y-axis and the quantity of loanable funds on the x-axis. The supply and demand curves intersect at the equilibrium real interest rate and equilibrium quantity.
A decrease in the money supply shifts the supply curve for loanable funds to the left, as there are fewer funds available for lending. This leads to a higher real interest rate and a lower quantity of loanable funds at the new equilibrium point.
At the original equilibrium, there is now a shortage of loanable funds, as the quantity demanded exceeds the quantity supplied. Lenders of existing fixed-rate loans are worse off, as the real interest rate increases, reducing the value of their existing loans.
Investment spending on facilities and equipment is negatively impacted, as the higher real interest rate discourages borrowing and investment due to increased borrowing costs. This may lead to reduced economic growth in the long run.
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suppose that an insurance agent offers you a policy that will provide you with a yearly income of $40,000 in 30 years. what is the comparable annual salary today, assuming an annual inflation rate of 5% (compounded annually)? (round your answer to the nearest cent.)
The comparable annual salary today, adjusted for inflation, is $3,691.81 rounded to the nearest cent
To calculate the comparable annual earnings today, we want to adjust the future income of $40,000 for inflation using the present value method.
The present value formula for a future payment can be expressed as:
[tex]PV = FV / (1 + r)^n[/tex]
Where:
PV is the present price
FV is the future price
r is the interest fee or discount charge
n is the range of periods
In this example, the future profits is $forty,000 in 30 years, and the annual inflation rate is five% compounded yearly. consequently, we are able to use the present value system with the following values:
FV = $40,000
r = 5%
n = 30
[tex]PV = $40,000 / (1 + 0.05)^{30[/tex]
PV = $40,000 / 10.835
PV = $3,691.81
Therefore, the comparable annual salary today, adjusted for inflation, is $3,691.81.
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The technique used to determine which forces could act for a proposed change and which forces could act against it is referred to as ______.
Choose matching definition
diagnosis
survey feedback
force-field analysis
innovation system
The technique used to determine which forces could act for a proposed change and which forces could act against it is referred to as force-field analysis.
Force-field analysis is a powerful decision-making tool that helps individuals and organizations to identify and evaluate the factors that can facilitate or hinder the success of a proposed change.
In force-field analysis, the proposed change is considered as the driving force, and the forces that could support or oppose the change are identified as the restraining forces. The driving forces are those factors that push the organization towards the change, while the restraining forces are those factors that resist the change. By identifying both the driving and restraining forces, an organization can determine the feasibility of the proposed change and develop a plan to overcome the resistance to change.
Force-field analysis is used in many areas of business, including project management, change management, and innovation. It is a valuable tool that helps organizations to make informed decisions by identifying the potential risks and benefits associated with a proposed change. By using force-field analysis, organizations can create a roadmap for change that includes strategies for minimizing the resistance to change and maximizing the driving forces.
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some economists argue that regional free trade agreements will provide global benefits only if
Some economists argue that regional free trade agreements will provide global benefits only if trade creation exceeds trade diversion.
Free trade agreements (FTAs) are agreements reached between two or more countries on a range of topics, such as investor protections, intellectual property rights, and responsibilities influencing trade in goods and services. It could require keeping more records to be able to receive FTA benefits for your product, but it could provide it a competitive edge against products from other countries.
Each FTA has unique features, but they all generally have the same goal of lowering trade barriers and promoting more secure and open business and investment environments. Free trade agreements (FTAs) make it possible for American exporters and manufacturers to gain greater access to other markets. Tariffs are decreased or eliminated, trade barriers are removed through bilateral and global agreements, and economic growth is promoted.
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T/F: A Unique Identifier has a NULL value for each instance of the entity for the lifetime of the instance.
The statement "A Unique Identifier has a NULL value for each instance of the entity for the lifetime of the instance" is false because each entity instance can be precisely identified using its Unique Identifier
A Unique Identifier is a value assigned to an instance of an entity that distinguishes it from all other instances in the system. This is important for maintaining consistency and preventing ambiguity, as each entity instance can be precisely identified using its Unique Identifier.
Having a NULL value for each instance of the entity would contradict the purpose of a Unique Identifier. A NULL value indicates the absence of a value or an unknown value, which means it cannot uniquely identify an instance.
In fact, the Unique Identifier should always have a non-NULL value to serve its purpose of uniquely identifying an instance for its entire lifetime.
Furthermore, Unique Identifiers are often enforced through primary keys in databases, which automatically ensure that there are no NULL values or duplicate values for the field serving as the primary key.
In summary, the statement is false because Unique Identifiers must have non-NULL values to effectively and consistently distinguish between different instances of an entity throughout their lifetimes.
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the opportunity cost of a purchase is: a. always equal to the selling price of what you purchased. b. the lowest possible price. c. the alternative good or service that one sacrifices because a different good was purchased. d. zero if the item is what you want most. e. always greater for people who are out of work than for people who are working.
The opportunity cost of a purchase is: c. the alternative good or service that one sacrifices because a different good was purchased. This term represents the value of the best alternative option that was not chosen when making a decision.
The opportunity cost of a purchase is the alternative good or service that one sacrifices because a different good was purchased. It is the value of the best alternative foregone. It is important to consider opportunity cost when making a decision as it helps to weigh the benefits and drawbacks of different options. It is not always equal to the selling price of what you purchased, the lowest possible price, zero if the item is what you want most, or always greater for people who are out of work than for people who are working.
Option c is correct.
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The
annuties formula is used by mortgage bankers to compute the
amortization schedule of a loan (i.e. the schedule of payment of
principal and interest).
true or false
True. The annuity formula is commonly used by mortgage bankers and lenders to calculate the amortization schedule of a loan.
An amortization schedule is a table that breaks down each loan payment into its principal and interest components over the life of the loan. This schedule allows borrowers to understand how much of each payment goes towards paying down the principal balance and how much goes toward paying interest.
The annuity formula is based on the concept of level payments, which means that the borrower makes the same fixed payment amount every period (e.g. every month or every year) until the loan is fully paid off. The formula takes into account the loan amount, interest rate, and loan term to determine the fixed payment amount required to fully repay the loan over its term.
Therefore, it is true that the annuity formula is used by mortgage bankers to compute the amortization schedule of a loan.
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the materials price variance is calculated using the blank . multiple select question. standard quantity allowed of the input for the actual output actual quantity of the input purchased standard price of the input actual price of the input
The materials price variance is calculated using the actual price of the input and the standard price of the input
The materials price variance is a measure of the difference between the actual cost of materials used in production and the standard cost of those materials. The standard price of the input is the expected cost per unit of the material based on budgeted costs, supplier contracts, or historical prices. The actual price of the input is the actual cost per unit of the material purchased.
The materials price variance is calculated as the difference between the actual cost and the standard cost of the materials used. If the actual price is higher than the standard price, the variance is unfavorable, indicating that the company paid more than expected. Conversely, if the actual price is lower than the standard price, the variance is favorable, indicating cost savings. Companies can use this information to monitor costs, negotiate with suppliers, and adjust budgeted costs.
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distinguish between common-law liability and statutory liability for auditors. what is the basis for the difference in liability?
A Liability is defined as a unborn loss of profitable benefits that an reality is needed to give to another reality as a result of once deals or other once events.
Common law liability arises from the legal opinions of judges in deciding a case, a precedent that serves as a companion for other judges to decide future analogous cases and is used in civil action.
On the other hand, legal liability reflects laws legislated at the state or civil position and prescribes certain procedures.
May involve civil or felonious liability. Liability is an obligation or liability to another that's extinguished by the unborn transfer or use of goods, the provision of services or any other profitable sale at a specific or determinable time, upon the circumstance of a specific event or on demand.
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Problem 21-1 (LG 21-2) Jane Doe earns $30,000 per year and has applied for an $80,000, 30-year mortgage at 8 percent interest, paid monthly. Property taxes on the house are expected to be $1,200 per y ear. if her bank requires a gross debt service ratio of no more than 30%, will Jane be able to obtain the mortgage?
Jane's GDS ratio is below the bank's requirement of 30%, she should be able to obtain the $80,000 mortgage at 8% interest, paid monthly.
To determine if Jane Doe can obtain the mortgage, we first need to calculate her monthly gross income and monthly housing expenses.
Jane's monthly gross income can be calculated as follows:
$30,000 / 12 months = $2,500 per month
Next, we need to calculate her monthly housing expenses. This includes the monthly mortgage payment and property taxes. The monthly mortgage payment can be calculated using the following formula:
[tex]M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1][/tex]
where M is the monthly mortgage payment, P is the principal amount of the mortgage, i is the monthly interest rate, and n is the number of months in the mortgage term.
For Jane's mortgage, we have:
P = $80,000
i = 8% / 12 = 0.0067
n = 30 years * 12 months per year = 360 months
Plugging in these values, we get:
[tex]M = $80,000 [ 0.0067(1 + 0.0067)^{360 }] / [ (1 + 0.0067)^{360 - 1 ][/tex]= $587.82 per month
Adding the property taxes, we have:
$587.82 + ($1,200 / 12) = $687.82 per month
Finally, we can calculate Jane's gross debt service ratio (GDS) by dividing her monthly housing expenses by her monthly gross income and multiplying by 100%:
GDS = ($687.82 / $2,500) x 100% = 27.51%
Since Jane's GDS ratio is below the bank's requirement of 30%, she should be able to obtain the $80,000 mortgage at 8% interest, paid monthly.
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Please calculate WACC given corporate tax rate of 25%. Market risk premium is 8% and risk-free rate is 2%. Debt 20.000 debt contracts were issued, at 10% coupon rate, 25 years to maturity, selling for 120% of par. (Assuming bond is semi-annually compounding) Common stock 500,000 shares outstanding, selling for $88 per share, beta is 1.5. Preferred stock 150,000 shares outstanding, $10 is dividend and 10% of flotation cost. It is selling for $98 per share.
The WACC is calculated to be 11.7%.
The weighted average cost of capital (WACC) can be calculated by taking the cost of the debt and the cost of the equity and weighting them according to the proportion of debt and equity in the capital structure.
The cost of debt is 10%, calculated by taking the coupon rate of 10% and adjusting for the present value of the bond at 120% of par (semiannual compounding).
The cost of equity is 13.3%, calculated by taking the market risk premium of 8%, adding the risk-free rate of 2%, and multiplying by the beta of 1.5. When the cost of debt and the cost of equity are weighted by their respective proportions in the capital structure, the WACC is calculated to be 11.7%.
This is calculated by taking 20,000 debt contracts (weighted by 17.6%) multiplied by the cost of debt of 10%, added to 500,000 shares of common stock weighted by 71.9% multiplied by the cost of equity of 13.3%, and added to the 150,000 shares of preferred stock weighted by 10.5% multiplied by the cost of equity of 13.3%.
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yee-wei calls paula on the telephone and offers to buy three of paula's textbooks from the previous semester for $90. paula agrees. yee-wei and paula have made:
Yee-Wei and Paula have made a bilateral contract.A bilateral contract is a type of contract where both parties make promises to each other.
In this scenario, Yee-Wei promises to pay Paula $90 for three of her textbooks from the previous semester, and Paula promises to provide Yee-Wei with the textbooks in exchange for the payment.
The contract is considered binding once both parties have agreed to the terms, in this case, when Paula agrees to Yee-Wei's offer. This means that both parties have legal obligations to fulfill under the terms of the contract. Yee-Wei is obligated to pay $90 to Paula, and Paula is obligated to provide Yee-Wei with the textbooks.
If either party fails to fulfill their obligations under the contract, the other party may have legal recourse to seek damages or other remedies.
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HYee-wei calls Paula on the telephone and offers to buy three of Paula's textbooks from the previous semester for $90. Paula agrees. Yee-wei and Paula have made a contract. A contract is formed when one party makes an offer, and the other party agrees to the offer.
In this situation, Yee-wei initiates the transaction by calling Paula on the telephone and making her an offer to purchase three textbooks for $90. Paula, in turn, agrees to the offer made by Yee-wei. This agreement between the two parties is the foundation of a contract. In this case, Yee-wei is the offeror, and Paula is the offeree.
Here is a step-by-step explanation:1. Yee-wei calls Paula on the telephone: This is the method used to communicate the offer.
2. Yee-wei offers to buy three textbooks: The offer is made by Yee-wei, and specifies the items he wants to buy (three textbooks) and the price he is willing to pay ($90).
3. Paula agrees to the offer: Paula's agreement to sell the three textbooks for $90 solidifies the contract between the two parties.
In conclusion, Yee-wei and Paula have made a contract by agreeing to the terms of the offer through a telephone conversation. Yee-wei, as the buyer, offers to purchase three of Paula's textbooks for a total of $90. Paula accepts this offer, and both parties are now bound by the terms of the contract.
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in how many ways can seven different jobs be assigned to four different employees so that each employee is as- signed at least one job and the most difficult job is as- signed to the best employee?
There are 540 ways to assign the seven different jobs to four different employees, ensuring each employee gets at least one job and the most difficult job is assigned to the best employee.
To find the number of ways seven different jobs can be assigned to four different employees, ensuring that each employee gets at least one job and the most difficult job is assigned to the best employee, we can use combinatorics.
First, let's assign the most difficult job to the best employee, which leaves six jobs for the other three employees. Since each employee must be assigned at least one job, we can use the Principle of Inclusion-Exclusion to find the number of ways to distribute the remaining six jobs.
There are [tex]3^{6}[/tex] ways to distribute the six jobs among the three employees without restrictions. However, this includes cases where one or more employees do not receive any jobs. To correct for this, we need to subtract the number of ways in which one or more employees do not get any jobs.
There are 3 ways to exclude one employee and [tex]2^{6}[/tex] ways to distribute the jobs among the remaining two employees. We've counted cases where two employees are excluded twice, so we need to add back the number of ways all six jobs are assigned to one employee (3 ways).
Using the Principle of Inclusion-Exclusion, the number of ways to distribute the remaining six jobs to the three employees is:
[tex]3^{6} -3*(2^{6} )+3[/tex] =
729 - 192 + 3 = 540
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what is the maximum value that can be reached using the hhi? group of answer choices 100 1,000 10,000 100,000
The maximum value that can be reached using the HHI is 10,000. This occurs when there is a pure monopoly, and one firm holds 100% of the market share.
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the concept of inherent risk is most closely tied to the idea of _________. a. currency risk b. underlying business risks c. global risk d. audit risk
The concept of inherent risk is most closely tied to the idea of underlying business risks.
Inherent risk refers to the risk that exists in a company's operations and activities before any controls or measures are put in place to mitigate it. These risks can arise from factors such as market conditions, competition, economic trends, and management decisions, all of which are related to the underlying business risks faced by the company. Therefore, inherent risk is a crucial factor in assessing the overall audit risk of a company.
What types of risks fall under "business risk"?Anything that might have an effect on your company's finances is referred to as a business risk. These financial hazards have the potential to bankrupt your business frequently. While there are numerous elements that can result in business risk, a few are as follows: Fire harm. Flooding.
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most americans will never be able to understand and develop a personal financial plan. true or false
The given statement, "Most Americans will never be able to understand and develop a personal financial plan." is false because Americans have been studying financial plan in their university and through family.
The road map for accomplishing your goals is a financial strategy. Either you or a professional can carry out financial planning. Your current financial condition, your financial goals, and any strategies you have made to achieve those goals are all clearly outlined in a financial plan. A strong financial plan should include information about your cash flow, savings, debt, investments, insurance, and any other financial components of your life.
Making a financial plan is essential because it allows you to make the most of your resources and gives you the peace of mind you need to deal with any setbacks along the way. It might reduce your financial stress, provide for your immediate needs, and help you start a savings account for your long-term goals.
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the small-scale movements on the stage, which an actor performs within the larger pattern of entrances and exits, is called managing. blocking. producing. business.
The small-scale movements on stage that an actor performs within the larger pattern of entrances and exits are called a) blocking.
Blocking is the process of planning and rehearsing the movements and positions of actors on stage. It is an essential component of a theatrical production, as it helps to ensure that the actors are positioned correctly for the audience to see and that their movements are coordinated with the larger production.
Blocking also helps to create a visual pattern for the audience to follow, as actors move in and out of the stage area. Managing, producing, and business are all related to theater production but do not refer specifically to the small-scale movements on stage.
Managing may refer to the overall management of a theater company, producing to the process of producing a show, and business to the financial aspects of theater production.So correct answer is option a.
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