how does the extent of income inequality in the us compare to that of other nations around the world?

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Answer 1

While the US is one of the wealthiest nations in the world, it also has one of the highest levels of income inequality among developed nations. Factors such as globalization, technological change, declining unionization, and government policies all contribute to income inequality in the US.

According to data from the World Bank, the United States has one of the highest levels of income inequality among developed nations. The Gini coefficient, a commonly used measure of income inequality, ranges from 0 (perfect equality) to 1 (perfect inequality). In 2020, the US had a Gini coefficient of 0.39, which is higher than that of most other developed nations.

For instance, countries like Sweden, Norway, Denmark, and Finland, have Gini coefficients below 0.28, making them the most equal nations in terms of income distribution. In contrast, nations like Brazil, South Africa, Colombia, and Mexico, have Gini coefficients over 0.5, making them some of the most unequal nations in terms of income distribution.

Another measure of income inequality is the ratio of the top 10% of earners to the bottom 10% of earners. According to data from the Organisation for Economic Co-operation and Development (OECD), the US has one of the highest ratios among OECD countries. In 2019, the ratio in the US was 18.3, while the OECD average was 9.6.

The reasons for income inequality in the US are complex and multifaceted. Some argue that factors such as globalization, technological change, and declining unionization have contributed to the widening income gap in the US. Others argue that government policies, such as tax policies and the lack of a comprehensive social safety net, have played a significant role.

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which of the following versions of ppp is thought to be the most relevant to possibly explaining what drives exchange rate values? the law of one price absolute purchasing power parity relative purchasing power parity the international fisher effect

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Among the given options, the most relevant version of PPP (Purchasing Power Parity) to explain what drives exchange rate values is the Relative Purchasing Power Parity.

Absolute Purchasing Power Parity (APP) states that the exchange rate between two countries should equal the ratio of the price levels of a fixed basket of goods and services in each country. However, APP does not always hold due to various factors, such as differences in non-tradable goods, transportation costs, and trade barriers.

Relative Purchasing Power Parity (RPPP) takes into account the inflation differential between two countries to explain changes in exchange rates. According to RPPP, the exchange rate between two countries should adjust to offset the difference in the inflation rates of the two countries. Therefore, RPPP is considered to be more relevant than APP in explaining exchange rate values.

The International Fisher Effect (IFE) is a theory that links the nominal interest rates, inflation rates, and exchange rates between two countries. It suggests that the difference in nominal interest rates between the two countries reflects the expected change in the exchange rate between those countries. However, the IFE assumes that capital markets are perfect and frictionless, which is not always the case in reality.

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Airbus sold an A400 Aircraft to Delta Airlines, a U.S Company,and billed $30 million payable in six months. Airbus is concernedabout the euro proceeds from international sales and would like tocont rol exchange risk. The current spot exchange rate is 1.05 $/euro and the six-month forward rate exchange rate is 1.10 $/euro. Airbus can buy a six-month put option on U.S. dollars with a strike price of 0.95 euro/$ for a premium of .02 euro per U.S. dollar. Currently, the six-month interest rate is 2.5% in the eurozone and 3% in the United States.Compute the guaranteed euro contract proceeds from the American sale if Airbus decides to hedge using a forward contract.

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We have that, Airbus sold an A400 plane to Delta Airlines, an American company, and invoiced 30 million dollars payable in six months, then the contract income in guaranteed euros would be the same as using a forward contract: 27.27 million euro.

If Airbus decides to hedge using a forward contract, it would peg the exchange rate to the current six-month exchange rate of $1.10/euro. Therefore, the guaranteed euro contract proceeds from the US sale would be €27.27 million ($30 million divided by $1.10/euro). However, this would not provide any protection against possible fluctuations in the exchange rate.

If Airbus decides to hedge with a put option, it would have the right, but not the obligation, to sell US dollars at the strike price of EUR/$0.95. To calculate the cost of the premium, we first convert the $30 million payable into US dollars using the current spot exchange rate of $1.05/euro. This gives us $31.43 million. The put option premium would be €0.02 per US dollar, so the total cost of the premium would be €628,600 (€0.02 x US$31.43 million).

If the spot exchange rate at the time of payment is below the strike price of EUR/$0.95, Airbus would exercise the put option and sell US dollars at the higher exchange rate. If the spot rate is above the strike price, Airbus would simply allow the option to lapse and use the spot rate to convert US dollars into Euros. Either way, the guaranteed revenue from the contract in euros would be the same as using a forward contract: 27.27 million euros.

However, by using a put option, Airbus can limit its downside risk to the cost of the premium and at the same time benefit from any favorable exchange rate movements. This may be preferable to using a forward contract, which offers no protection against adverse exchange rate movements.

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what is an accurate statement concerning our time studying boeing corp and the airline industry? i. boeing customers (delta) suffered greater losses during covid by the severe decline in business travel rather domestic travel

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An accurate statement concerning our time studying Boeing Corporation and the airline industry would be: During our study, we discovered that Boeing Corporation plays a significant role in the global aviation market as a leading aircraft manufacturer.

As one of the largest companies in the airline industry, Boeing's innovations, such as the 787 Dreamliner, have revolutionized the way airlines operate and how passengers travel.

Through our research, we found that factors such as fuel efficiency, safety regulations, and global demand for air travel heavily influence the industry's growth and development. Moreover, the competitive landscape, with companies like Airbus, continuously pushes Boeing to innovate and adapt to market dynamics.

Our study has provided valuable insights into the challenges and opportunities that Boeing Corporation and the airline industry face in a rapidly changing world.

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conscientiousness is a trait that is associated with better job performance, higher job satisfaction, better leadership performance, and higher retention. conscientiousness is a trait that is associated with better job performance, higher job satisfaction, better leadership performance, and higher retention. true false

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The  given statement" conscientiousness is a trait that is associated with better job performance, higher job satisfaction, better leadership performance, and higher retention. conscientiousness is a trait that is associated with better job performance, higher job satisfaction, better leadership performance, and higher retention." is True.conscientiousness is a valuable trait in the workplace and is often sought after by employers when hiring and promoting employees.

They are also more likely to exhibit effective leadership behaviors, such as being organized, planning ahead, and setting goals for their team. Conscientiousness has also been linked to a range of other positive outcomes, including better physical health, higher academic achievement, and greater life satisfaction.

Overall, conscientiousness is a valuable trait in the workplace and is often sought after by employers when hiring and promoting employees.

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Sanchez Company sold merchandise in the amount of $23.200 to Emanuel Company on September 1, with credit terms of 2/10,n/30. The cost of the merchandise is $9,600. On September 4, Emanuel retums some of the merchandise, which was put back into Sanchez's inventory. The selling price and the cost of the returned merchandise are $3,200 and $2,000, respectively. Emanuel Company's journal entry on September 8, when they pay the amount due, will include: (assume both companies use the perpetual inventory method) A) Credit Purchase Discounts $400 B) Credit Cash $20.776 C) Debit Accounts Payable $20,000 D) Credit Sales Discounts $400

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The journal entry made by Emanuel Company on September 8 when paying the amount due to Sanchez Company will include Credit Cash $20,776 and Debit Accounts Payable $20,000. The correct option is B and C

This is because Emanuel Company initially purchased merchandise from Sanchez Company for $23,200 with credit terms of 2/10,n/30. The 2/10,n/30 terms indicate that if the buyer pays within 10 days of the purchase, they will receive a 2% discount on the total purchase price.

Emanuel Company returned some of the merchandise on September 4, which was put back into Sanchez's inventory. The selling price and cost of the returned merchandise were $3,200 and $2,000, respectively. Therefore, the amount due by Emanuel Company decreased by $3,200.

As a result, the total amount due to Sanchez Company was $20,000 ($23,200 - $3,200). Since Emanuel Company did not pay within the 10-day discount period, they were not eligible for the 2% discount. Hence, they will not credit the purchase discounts account.

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A regional sales manager position has opened up in your company, and the National Sales Director calls you to encourage you to apply for the position. The position would require significant international travel. Since you've recently adopted a child, the idea of international travel isn't appealing. According to _____ theory, you will not be motivated by the National Sales Director's suggestion.
a. the two-factor
b. Maslow's
c. equity
d. Hawthorne's
e. expectancy

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According to the expectancy theory, you will not be motivated by the National Sales Director's suggestion to apply for the regional sales manager position that requires significant international travel. The expectancy theory, developed by Victor Vroom, states that an individual's motivation depends on three factors: expectancy, instrumentality, and valence.

Expectancy is the belief that increased effort will lead to increased performance. Instrumentality is the belief that better performance will lead to desired outcomes or rewards. Valence is the value an individual place on the rewards or outcomes.

In this scenario, you have recently adopted a child, and the idea of international travel is not appealing to you. This affects the valence factor of the expectancy theory. Since the required international travel is not perceived as a desirable outcome or reward, the overall motivation to apply for the position is reduced.

Thus, according to the expectancy theory, you will not be motivated by the National Sales Director's suggestion to apply for the regional sales manager position.

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Current Attempt in Progress Wildhorse, Inc., has net income of $11,760,000 on net sales of $367,500,000. The company has total assets of $105,000,000 and stockholders' equity of $50,000,000. Use the extended DuPont identity to find the return on assets and return on equity for the firm. (Round answers to 2 decimal places, e.g. 12.25 or 12.25%.) Profit margin % Total assets turnover times ROA % ROE %

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Using the extended DuPont identity, the return on assets (ROA) for Wildhorse, Inc. is 11.20% and the return on equity (ROE) is 23.52%.

To find the return on assets (ROA) and return on equity (ROE) for Wildhorse, Inc., using the extended DuPont identity, we need to calculate the profit margin, and total assets turnover, and then apply these values to find ROA and ROE.

1. Profit margin: Profit margin = (Net income / Net sales) x 100
Profit margin = ($11,760,000 / $367,500,000) x 100
Profit margin = 3.20%

2. Total assets turnover: Total assets turnover = Net sales / Total assets
Total assets turnover = $367,500,000 / $105,000,000
Total assets turnover = 3.5 times

3. ROA: ROA = Profit margin x Total assets turnover
ROA = 3.20% x 3.5
ROA = 11.20%

4. ROE: ROE = ROA x (Total assets / Stockholders' equity)
ROE = 11.20% x ($105,000,000 / $50,000,000)
ROE = 11.20% x 2.1
ROE = 23.52%.

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The goal of a(n) ______ strategy is to generate profit and establish a new product or service in the market as quickly as possible.
- reference point
- price skimming
- improvement-value

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The goal of a value strategy is to generate profit and establish a new product or service in the market as quickly as possible. This strategy focuses on offering a product or service at a lower price than competitors, while still maintaining quality. By doing so, the company aims to attract price-sensitive customers who are looking for a good deal.

In order to implement a successful value strategy, a company must first identify its target market and understand their needs and preferences. The company should then develop a product or service that meets those needs and is priced competitively.


Once the product or service has been developed and priced appropriately, the company should focus on marketing and promotion to reach its target market. This may involve advertising through social media, email campaigns, or other channels that are popular with the target audience.

Overall, a value strategy can be an effective way for companies to generate profit and establish a new product or service in the market quickly. However, it is important to carefully consider the costs involved and ensure that the company can maintain quality while keeping prices low.

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Suppose you bought a $1,000 face value bond with a coupon rate of 3.4 percent one year ago. The purchase price was $983.5. You sold the bond today for $987.5. If the inflation rate last year was 2.4 percent, what was your exact real rate of return on this investment? ______%
Instruction: Enter your response as a percentage with two decimal places.
For example, if your answer is 0.1213=12.13%, please only enter "12.13", please do not enter "0.1213" or "12.13%", the system may not recognize the % sign. You may put negative signs if necessary,

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The answer is 1.02%.

To calculate the exact real rate of return on this investment, we need to adjust the nominal return for inflation. The nominal return is the percentage difference between the purchase price and the selling price, plus any coupon payments received during the holding period. In this case, the nominal return is:

Nominal return = (Selling price + Coupon payment - Purchase price) / Purchase price

Nominal return = ($987.5 + $34 - $983.5) / $983.5

Nominal return = 5.9%

To adjust for inflation, we need to use the following formula:

Real return = (1 + nominal return) / (1 + inflation rate) - 1

Substituting the values, we get:

Real return = (1 + 0.059) / (1 + 0.024) - 1

Real return = 0.012 or 1.2%

Therefore, the exact real rate of return on this investment is 1.02%.

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As "Gambling" is becoming a major social problem amongst society. How do the rules and practices within social institutions create, maintain, and help alleviate the effects of the social problem?

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Answer:

The rules and practices within social institutions play a crucial role in creating, maintaining, and alleviating the effects of the social problem of gambling.

Firstly, social institutions such as the government and regulatory bodies create rules and regulations to control and monitor the gambling industry. These rules and regulations aim to limit the negative effects of gambling on individuals and society as a whole. For example, some countries have banned or restricted certain types of gambling activities, such as online gambling or sports betting, to reduce the potential harm caused by these activities.

Secondly, social institutions such as schools and community organizations can educate individuals about the risks and negative effects of gambling. By raising awareness and providing information, individuals can make informed decisions about their gambling habits and avoid falling into problem gambling.

Thirdly, social institutions such as healthcare organizations and support groups can provide assistance and support to individuals who are struggling with problem gambling. These institutions can offer counseling, therapy, and other forms of treatment to help individuals overcome their addiction and regain control of their lives.

Overall, the rules and practices within social institutions can create a safe and responsible gambling environment, educate individuals about the risks of gambling, and provide support to those who are struggling with problem gambling. By working together, social institutions can help alleviate the negative effects of gambling and promote responsible gambling behavior.

the method that permits businesses to recover all the costs, including both fixed and variable costs and direct and indirect costs is called: question 4 options: target costing marginal cost pricing zero cost pricing full cost pricing

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The method that permits businesses to recover all the costs, including both fixed and variable costs and direct and indirect costs, is called full cost pricing.

This pricing strategy involves adding up all the expenses incurred during the production process, including materials, labor, overhead costs, and any other expenses, and then adding a profit margin to arrive at a final price for the product or service. Full cost pricing is commonly used in industries where products have long lifecycles and stable demand. It helps businesses ensure that they cover all their costs and generate sufficient profits to remain competitive. However, it may not be suitable for businesses operating in highly competitive markets where price sensitivity is high.

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which of the following approaches to behavioral strategic control would be the least useful for an organization in which there is a great need for innovation and a high degree of employee autonomy? group of answer choices culture rewards rules incentives

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Of the given options, the approach to behavioral strategic control that would be the least useful for an organization in which there is a great need for innovation and a high degree of employee autonomy is rules.                       Option C.  

Rules typically involve strict guidelines and procedures that employees must follow in order to achieve desired outcomes. While rules can be useful in some contexts, they may not be as effective in promoting innovation and employee autonomy because they limit creativity and independent thinking. In a highly innovative and autonomous environment, employees may need more flexibility to experiment, take risks, and explore new ideas without being constrained by rigid rules and procedures.

On the other hand, approaches such as culture, rewards, and incentives can be more effective in promoting innovation and autonomy because they encourage creativity, collaboration, and individual initiative. A strong organizational culture that values innovation and autonomy can create a supportive environment that empowers employees to take ownership of their work and pursue new ideas. Rewards and incentives that recognize and encourage innovation can also motivate employees to think creatively and take risks. Option C.  

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which of the following is true regarding price? multiple choice question. it should be based on the value that the customer perceives. it should be as high as legally allowed. it should always be based on competitors' prices. it may result in higher-than-necessary margins and profits if it is too low

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The statement which is true regarding price is a. it should be based on the value that the customer perceives.

Setting the appropriate pricing may help firms attract clients, produce revenue, and make a profit. Pricing is a crucial component of marketing strategy. Pricing should be determined by the perceived value that consumers place on the provided goods. This implies that when determining pricing, firms should consider both advantages of their commodities as well as the requirements and preferences of their target clients.

A detailed grasp of the market, the competitors, and customer behaviour should serve as the foundation for pricing strategies. Pricing decisions can have a detrimental effect on sales and earnings. It may not be the ideal strategy to set pricing based merely on those of rivals or on regulatory restrictions since it may neglect to consider the special value proposition of the item or service being given.

Complete Question:

Which of the following is true regarding price?

a. it should be based on the value that the customer perceives.

b. it should be as high as legally allowed.

c. it should always be based on competitors' prices.

d. it may result in higher-than-necessary margins and profits if it is too low

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Currently, in 2022, the US Treasury Note yield stands at about 2.03% whereas the core PC stands at 5.2%. Based on this information, how high is the real yield of the
US Treasury Note? Can you see any implications for stocks (and other riskier assets) demand? Please discuss.

Answers

The real yield of the US Treasury Note can be calculated by subtracting the core PC (5.2%) from the US Treasury Note yield (2.03%). Therefore, the real yield of the US Treasury Note is currently -3.17%.

This negative real yield implies that investors are essentially losing money by investing in US Treasury Notes after accounting for inflation.

As for implications for stocks and other riskier assets, a negative real yield on US Treasury Notes could potentially lead to increased demand for higher-yielding assets such as stocks, corporate bonds, and other riskier assets. This is because investors may seek higher returns to offset the negative impact of inflation on their investments.

However, it is important to note that investors also take into account other factors such as market volatility, geopolitical risks, and company-specific risks when making investment decisions.

Therefore, the demand for stocks and other riskier assets is not solely determined by the real yield on US Treasury Notes, but rather by a combination of various factors.

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XYZ Company currently has the following capital structure Amount (in millions) $18.5 $3.2 $10.8 Source Common Stock Preferred Stock Debt In addition, you have the following information. The last common stock dividend paid by the company was $2.40 and this dividend is expected to grow at a constant 6 percent rate. The price of a share of common is currently $30. The annual preferred stock dividend is $6 and the price of a share of preferred stock is $60. The company's debt is all from a single issue of bonds, with each bond currently selling for $901.82. The bonds have a 20-year maturity and a coupon rate of 7 percent. (Assume semi-annual payments for the bonds). Tax-rate is 40%. 1. 2. Calculate the weights in this capital structure for common stock, preferred stock, and debt. Calculate the required rate of return (yield-to-maturity) on the bonds (before tax cost of debt) Calculate the required rate of return on preferred stock Calculate the required rate of return on common stock Calculate the WACC 3. 4. 5.

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Answer:

Common Stock:  56.7%, Preferred Stock: 9.8%, Debt: 33.5%.  Rate of return (yield-to-maturity) on the bonds (before tax cost of debt): 3.58%. Rate of return on preferred stock is 10%. Rate of return on common stock: 9.1%. WACC: 9.44%

Explanation:

The weights in the capital structure can be calculated as follows:

Common Stock: $18.5 million / ($18.5 million + $3.2 million + $10.8 million) = 0.567 or 56.7%

Preferred Stock: $3.2 million / ($18.5 million + $3.2 million + $10.8 million) = 0.098 or 9.8%

Debt: $10.8 million / ($18.5 million + $3.2 million + $10.8 million) = 0.335 or 33.5%

To calculate the yield-to-maturity on the bonds (before tax cost of debt), we need to use the following formula:

[tex]PV = (C / 2) / (1 + r / 2) + (C / 2) / (1 + r / 2)^2 + ... + (C / 2 + F) / (1 + r / 2)^n[/tex]

Where PV is the present value of the bond, C is the coupon payment, r is the yield-to-maturity, F is the face value, and n is the number of periods.

In this case, we have:

PV = $901.82

C = 0.07 x $1,000 / 2 = $35

F = $1,000

n = 20 x 2 = 40

Solving for r using a financial calculator or spreadsheet software, we get:

r = 3.58%

Therefore, the yield-to-maturity on the bonds (before tax cost of debt) is 3.58%.

The required rate of return on preferred stock can be calculated using the following formula:

Rp = Dp / Pp

Where Rp is the required rate of return on preferred stock, Dp is the annual preferred stock dividend, and Pp is the price of a share of preferred stock.

In this case, we have:

Rp = $6 / $60 = 0.1 or 10%

The required rate of return on common stock can be calculated using the capital asset pricing model (CAPM) as follows:

Rc = Rf + βc x (Rm - Rf)

Where Rc is the required rate of return on common stock, Rf is the risk-free rate, βc is the beta of the common stock, and Rm is the market return.

In this case, we have:

Rf = 2.5% (Assumed risk-free rate)

βc = 1.2 (Assumed beta based on industry average)

Rm = 8% (Assumed market return)

Rc = 2.5% + 1.2 x (8% - 2.5%) = 9.1%

Therefore, the required rate of return on common stock is 9.1%.

The weighted average cost of capital (WACC) can be calculated using the following formula:

[tex]WACC = (wE * Cost of Equity) + (wP * Cost of Preferred Stock) + (wD * Cost of Debt) * (1 - Tax Rate)[/tex]

where,

wE = proportion of common equity = $18.5 / ($18.5 + $3.2 + $10.8) = 0.5772

wP = proportion of preferred stock = $3.2 / ($18.5 + $3.2 + $10.8) = 0.1013

wD = proportion of debt = $10.8 / ($18.5 + $3.2 + $10.8) = 0.3215

Tax Rate = 0.40

[tex]WACC = (0.5772 * 0.1416) + (0.1013 * 0.10) + (0.3215 * 0.03874) * (1 - 0.40)[/tex]

= 0.0944 or 9.44%

Therefore, the WACC of XYZ Company is 9.44%.

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Problem 16-14 MM and Taxes Cede & Co. expects its EBIT to be $115,000 every year forever. The company can borrow at 7 percent. The company currently has no debt and its cost of equity is 13 percent. a. If the tax rate is 24 percent, what is the value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the value be if the company borrows $255,000 and uses the proceeds to repurchase shares? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answers

A) The value of the company is $672,308.00.                                                                                        

B) The value of the company after borrowing and repurchasing shares is $693,650.79.

a. To calculate the value of the company, we need to calculate the unlevered free cash flows and discount them at the weighted average cost of capital (WACC).

First, we need to calculate the unlevered free cash flows. Since the company expects to generate a constant EBIT of $115,000 every year forever, we can use the perpetuity formula:

PV = C / r

where PV is the present value, C is the cash flow, and r is the discount rate. In this case, the cash flow is the EBIT, and the discount rate is the cost of capital. Therefore, the unlevered free cash flow is:

FCF = EBIT × (1 - tax rate) = $115,000 × (1 - 0.24) = $87,400

Next, we need to calculate the WACC, which is the weighted average of the cost of debt and the cost of equity. Since the company currently has no debt, the WACC is equal to the cost of equity:

WACC = cost of equity = 0.13

Finally, we can calculate the value of the company using the formula:

Value of company = FCF / WACC

Value of company = $87,400 / 0.13 = $672,308.00

Therefore, the value of the company is $672,308.00.

b. If the company borrows $255,000 and uses the proceeds to repurchase shares, the new capital structure will include debt, and the WACC will change. To calculate the new value of the company, we need to calculate the new unlevered free cash flows and the new WACC.

The new unlevered free cash flow will be the same as before, since the EBIT is not affected by the capital structure:

FCF = $87,400

To calculate the new WACC, we need to calculate the cost of debt and the cost of equity. The cost of debt is given as 7 percent. The cost of equity can be calculated using the capital asset pricing model (CAPM):

cost of equity = risk-free rate + beta × (market risk premium)

Assuming a risk-free rate of 3 percent and a market risk premium of 8 percent, and a beta of 1.5, we get:

cost of equity = 0.03 + 1.5 × 0.08 = 0.15

The new WACC can be calculated as:

WACC = (value of debt / (value of debt + value of equity)) × cost of debt + (value of equity / (value of debt + value of equity)) × cost of equity

where the value of debt is $255,000, and the value of equity is the value of the company before borrowing:

WACC = ($255,000 / ($255,000 + $672,308.00)) × 0.07 + ($672,308.00 / ($255,000 + $672,308.00)) × 0.15 = 0.126

Finally, we can calculate the new value of the company using the formula:

Value of company = FCF / WACC

Value of company = $87,400 / 0.126 = $693,650.79

Therefore, the value of the company after borrowing and repurchasing shares is $693,650.79.

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the rental income an existing, stabilized property is expected to generate, after allowances for vacancies and collection losses, is called

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The rental income an existing, stabilized property is expected to generate, after allowances for vacancies and collection losses, is called Effective Gross Income.

Effective Gross Income (EGI) of a rental property is calculated as Potential Gross Rental Income in addition to other income less vacancy and credit charges. By combining prospective gross rental revenue with other sources of income and deducting vacancy and credit charges from a rental property, effective gross income is computed.

Effective Gross Income is crucial in assessing a rental property's worth and the actual positive cash flow it may provide. EGI is crucial for real estate investors because they need to be sure that the property they are thinking about buying generates enough positive cash flow to pay for monthly operating costs as well as any debts or encumbrance they may have taken on to buy the property.

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A non-dividend paying stock currently sells for 100. One year from now the stock sells for 110. The continuously compounded risk-free interest rate is 6%. A trader purchases the stock in the following manner: i) The trader pays 100 today ii) The trader takes possession of the stock in one year Determine which of the following describes this arrangement Posible Answers Outright purchase Fully leveraged purchase Prepaid forward contract Forward contract This arrangement is not possible due to arbitrage opportunities

Answers

The arrangement described in the question is a prepaid forward contract. In a prepaid forward contract, the buyer pays for the underlying asset upfront, but the delivery of the asset is deferred to a future date.

In this case, the trader pays $100 today for the stock and takes possession of it in one year when it is expected to sell for $110.

To determine whether this arrangement is feasible, we need to calculate the fair value of the prepaid forward contract using the formula:

FV = S0 * e^{(r*t)} - PV(D)

Where:

S0 = the current stock price

r = the continuously compounded risk-free interest rate

t = the time period in years

PV(D) = the present value of the expected future value of the dividend payments

Plugging in the values from the question, we get:

FV = $100 * e^{(0.06*1)} - 0

FV = $106.18

This means that the fair value of the prepaid forward contract is $106.18, which is greater than the price paid by the trader ($100).

Therefore, the trader has a profit opportunity of $6.18 by entering into this prepaid forward contract.

If the price of the prepaid forward contract were less than $100, it would create an arbitrage opportunity where the trader could buy the contract and the stock at a lower price and then earn a risk-free profit.

Therefore, the arrangement described in the question is feasible and represents a prepaid forward contract.

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marsha incorporated has the following budgeted data for the coming year: cash balance, beginning $ 15,700 collections from customers 145,700 direct materials purchases 25,700 expenses: operating expenses 51,400 payroll 75,700 income taxes 6,000 other: machinery purchases 30,700 operating expenses include $20,700 depreciation for buildings and equipment. all purchases of materials are paid for in the period of purchase. the company requires a minimum cash balance of $25,000. required: compute the amount the company needs to finance or the excess cash available for marsha to invest

Answers

The ending cash balance is negative, it means that the company needs financing of $49,500 to meet its cash requirements for the year. Alternatively, if the company had a positive ending cash balance, it would have excess cash available for investment.

To compute the amount of financing needed or excess cash available for investment, we need to calculate the company's total cash inflows and outflows for the year.

Cash inflows:

Collections from customers = $145,700

Cash outflows:

Direct materials purchases = $25,700

Operating expenses (excluding depreciation) = $51,400

Payroll = $75,700

Income taxes = $6,000

Depreciation = $20,700

Machinery purchases = $30,700

Total cash outflows = $210,900

To determine the company's ending cash balance, we need to add the beginning cash balance to the total cash inflows and subtract the total cash outflows:

Beginning cash balance = $15,700

Total cash inflows = $145,700

Total cash outflows = $210,900

Ending cash balance = Beginning cash balance + Total cash inflows - Total cash outflows

Ending cash balance = $15,700 + $145,700 - $210,900

Ending cash balance = -$49,500

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The third phase in the SDLC is planning and in this phase the analyst thoroughly studies the organization's current procedures and the information systems used to perform organizational tasks.TRUE/FALSE

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TRUE. The third phase in the SDLC (Software Development Life Cycle) is planning, and during this phase, the analyst thoroughly studies the organization's current procedures and the information systems used to perform organizational tasks.

This is a critical step in the development of a new information system as it helps the analyst to understand the current processes, identify any issues or inefficiencies, and determine the requirements for the new system.

During the planning phase, the analyst works closely with the stakeholders and end-users of the current system to gather information and document the processes. This may involve conducting interviews, surveys, or focus groups to get a better understanding of how the current system is used.

The analyst will also examine any existing documentation, such as user manuals or training materials, to gain insight into the system's functionality and limitations.

By thoroughly studying the current procedures and information systems, the analyst can identify areas for improvement and develop a clear vision for the new system.

This information is used to create a comprehensive plan for the project, including timelines, budget, and resource requirements. Without this critical phase of planning, the development of a new system may be inefficient, ineffective, and fail to meet the needs of the organization.

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Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 40%, rd = 8%, rps = 7.1%, and rs = 10%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.

Answers

Shi Import-Export's WACC is 8.10%.

To calculate Shi Import-Export's WACC, we need to first calculate the cost of each component of its capital structure: debt, preferred stock, and common stock.

The cost of debt (rd) is given as 8%, so we can simply use that. The cost of preferred stock (rps) is also given as 7.1%.

To calculate the cost of common stock (rs), we can use the capital asset pricing model (CAPM):

rs = rf + β(rs - rf)

where rf is the risk-free rate (assumed to be 2.5%), β is the company's beta (assumed to be 1.2), and rs - rf is the market risk premium (assumed to be 5%).

Using these values, we can calculate the cost of common stock as:

rs = 2.5% + 1.2(5%) = 8.5%

Next, we need to calculate the weights of each component of the capital structure. Shi's target capital structure is 30% debt, 5% preferred stock, and 65% common stock.

Using these weights and the costs of each component, we can calculate the weighted average cost of capital (WACC) as:

WACC = (0.30 x 0.08) + (0.05 x 0.071) + (0.65 x 0.085) x (1 - 0.40) = 0.081 or 8.10%

Therefore, Shi Import-Export's WACC is 8.10%.

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1.1 Heating degree-day and cooling degree-day futures contracts make payments based on whether the temperature is abnormally hot or cold. Explain why the following businesses might be interested in such a contract: a. Soft-drink manufacturers. b. Ski-resort operators. c. Electric utilities. d. Amusement park operators. 1.2 Suppose the businesses in the previous problem use futures contracts to hedge their temperature-related risk. Who do you think might accept the opposite risk?

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Heating degree-day and cooling degree-day futures contracts help businesses like soft-drink manufacturers, ski-resort operators, electric utilities, and amusement park operators manage temperature-related risks by providing financial protection against abnormally hot or cold weather.


a. Soft-drink manufacturers: High temperatures increase soft-drink consumption, so manufacturers may use cooling degree-day contracts to hedge against abnormally low temperatures that could reduce sales.


b. Ski-resort operators: Low temperatures boost skiing demand, so operators may use heating degree-day contracts to hedge against abnormally high temperatures that could lead to fewer visitors.


c. Electric utilities: High temperatures increase electricity demand for air conditioning, and low temperatures increase heating demand. Utilities may use both types of contracts to hedge against abnormal temperatures affecting their revenue.


d. Amusement park operators: Attendance may decline during extreme temperatures, so operators may use both types of contracts to protect against abnormal weather affecting their business.

For question 1.2, counterparties accepting the opposite risk in futures contracts could be insurance companies, financial institutions, or other businesses with opposite temperature-related exposures, as they may benefit from the opposite temperature deviations.

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which of the following refers to the displacement of market middlemen and the creation of a new direct relationship between producers and consumers?question 1 options:network effectdisintermediationfriction-free commercefirst mover advantage

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The "disintermediation" refers to the displacement of market middlemen and the creation of a new direct relationship between producers and consumers.

Disintermediation is the process of cutting out intermediaries in a supply chain, such as wholesalers or retailers, and establishing a direct relationship between producers and consumers. This can be facilitated by technology, such as the internet or mobile apps, which allows producers to sell directly to consumers without the need for intermediaries.

The reason of the disintermediation can lead to reduced costs, increased efficiency, and greater control over the distribution and marketing of products. However, it can also disrupt existing business models and create new challenges for traditional intermediaries.

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identify a true statement about bona fide seniority systems.

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A true statement about bona fide seniority systems is that almost any "time in the organization" rationale can be constructed as a basis for a seniority system. Bona fide seniority systems are those that are legally recognized and are based on an employee's length of service within an organization.

These systems are often used to determine various aspects of employment, such as promotions, transfers, or layoffs. In a bona fide seniority system, the primary criterion for decision-making is the employee's length of service or "time in the organization."

This rationale allows for the construction of various types of seniority systems, as long as they are based on objective measures of an employee's tenure. Such systems can be established through collective bargaining agreements, company policies, or other methods, and they must be consistently applied across the organization.

The purpose of a bona fide seniority system is to provide a fair and equitable means of recognizing employee loyalty and experience. These systems can help to reduce potential biases in employment decisions and promote a more stable and committed workforce.

However, it is essential that these systems do not unfairly disadvantage any particular group of employees or create barriers to equal employment opportunities.

In summary, a true statement about bona fide seniority systems is that almost any "time in the organization" rationale can be constructed as a basis for a seniority system, provided that it is legally recognized and consistently applied across the organization.

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Complete Question:

Identify a true statement about bona fide seniority systems.

a. the law does not define a "seniority system"

b. almost any "time in the organization" rationale can be constructed as a basis for a seniority system

c. Employer defense of "unreasonable hardship" is usually sufficient to avoid compliance decisions of the A.D.A.

d.  According to EEOC data, women still account for less than 50% of employment in banking, health care, retail and legal services.

all else remaining equal, if the amount of small-denomination time deposits increases, this will increase the size of

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If the amount of small-denomination time deposits increases, all else remaining equal, this will increase the size of the money supply.

Small-denomination time deposits are a type of savings account held at a bank or financial institution that pays interest on the deposited funds. When individuals or businesses deposit funds into these accounts, banks can use a portion of those funds to make loans or purchase securities, which in turn increases the money supply in the economy. .Therefore, an increase in small-denomination time deposits can lead to an increase in the money supply. All else remaining equal, an increase in the money supply can lead to inflationary pressures as there is more money chasing the same amount of goods and services.

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All else remaining equal, if the amount of small-denomination time deposits increases, this will increase the size of the money supply.

This is because small-denomination time deposits are included in the definition of M2 money supply, which includes all cash and deposits that are readily available for spending.

What is money supply?

The money supply is the total amount of money—cash, coins, and balances in bank accounts—in circulation. The money supply is commonly defined to be a group of safe assets that households and businesses can use to make payments or to hold as short-term investments.

As such, an increase in small-denomination time deposits means that there is more money available for spending and this can lead to an increase in economic activity.

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as a manager, tariq has consistently demonstrated an appropriate amount of concern for both people and production. on the leadership grid, tariq's style would be classified as

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Tariq's leadership style would likely be classified as "Team Management" on the Leadership Grid, also known as the Blake-Mouton Grid or Managerial Grid.

The Leadership Grid is a model that assesses leadership styles based on two dimensions: concern for people and concern for production. The concern for people dimension measures the leader's level of consideration, support, and respect for the needs and well-being of team members. The concern for production dimension measures the leader's focus on achieving tasks, goals, and results.

A leadership style that demonstrates an appropriate amount of concern for both people and production would fall into the Team Management style, which is characterized by high concern for both people and production. Leaders with this style strive to balance the needs of their team members with the goals and tasks at hand, aiming to achieve both high productivity and employee satisfaction. They emphasize teamwork, collaboration, and effective communication to achieve results while also valuing the well-being and development of their team members.

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suppose that the government forces each pizzeria to pay a tax on each pizza sold. illustrate the effect of this tax on the pizza market, being sure to label the consumer surplus, producer surplus, government revenue, and deadweight loss. how does each area compare to the pre-tax case?

Answers

The tax on each pizza sold would increase the cost of production for the pizzerias, leading to a decrease in the supply of pizzas.

This would result in an increase in the price of pizzas, reducing the quantity demanded by consumers. As a result, the consumer surplus would decrease, the producer surplus would decrease, and the government revenue would increase. The deadweight loss would also increase due to the inefficiencies introduced in the market.

Compared to the pre-tax case, the consumer surplus would decrease due to the increase in prices, the producer surplus would decrease due to the increase in costs, and the government revenue would increase due to the tax revenue collected.

The deadweight loss represents the loss of efficiency in the market that results from the tax.

Overall, the tax on pizzas would have a negative impact on the pizza market, leading to a reduction in consumer surplus and producer surplus, and an increase in government revenue and deadweight loss.

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# of days b/t dates/ # of days in reference period * interest earned in reference period
For example: Suppose that the bond principal is $100, coupon payment dates are 3/1 and 9/1, and the coupon rate is 8%. We wish to calculate the interest earned between 3/1 and 7/3.
•(Actual / Actual) = (124 / 184)*$4 = $2.6957
•(30 / 360) = ((4*30+2)/180)*$4 = $2.7111
•(Actual/360)= (124/180)*4= $2.7556
How did we get these numbers?

Answers

Okay, let's walk through this step-by-step to understand how these interest earned amounts are calculated:

1) There are 2 coupon payment dates: March 1 (3/1) and September 1 (9/1). So the reference period is from 3/1 to 9/1.

2) In this reference period, there are 184 total days (9/1 - 3/1 = 184 days).

3) The coupon rate is 8% and the bond principal is $100. So each semi-annual coupon payment is $4 (0.08 * $100 / 2).

To calculate the interest earned from 3/1 to 7/3:

(Actual / Actual) method:

* There are actually 124 days between 3/1 and 7/3.

* So the interest earned = (124 / 184) * $4 = $2.6957

(30 / 360) method:

* We assume each month has 30 days and there are 360 days in a year.

* From 3/1 to 7/3 is 4 months and 2 days. 4 months * 30 days/month = 120 days. 2 days = 2 days. So 120 + 2 = 122 days.

* 122 / 360 = 0.3389. So the interest earned = 0.3389 * $4 = $2.7111

(Actual/360) method:

* Although there are actually 124 days, we calculate as if each month has 30 days.

* So from 3/1 to 7/3 is 4 months. 4 months * 30 days/month = 120 days.

* 120 / 180 days in 6 months = 0.667

* So the interest earned = 0.667 * $4 = $2.7556

Does this help explain the calculations? Let me know if you have any other questions!

stabilization policy refers to policy actions aimed at: reducing the severity of short-run economic fluctuations. equalizing incomes of households in the economy. maintaining constant shares of output going to labor and capital. preventing increases in the poverty rate.

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Stabilization policy refers to policy actions aimed at reducing the severity of short-run economic fluctuations.Option (1)

These policy actions are designed to help stabilize the economy during periods of recession or inflation by influencing aggregate demand through monetary or fiscal policy tools.

The goal of stabilization policy is to achieve full employment and price stability in the economy. While stabilizing the economy, these policies also aim to promote economic growth and development. Therefore, stabilization policies are critical in achieving macroeconomic stability and ensuring the long-term sustainability of the economy.

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Full Question: Stabilization policy refers to policy actions aimed at:

reducing the severity of short-run economic fluctuations. equalizing incomes of households in the economy. maintaining constant shares of output going to labor and capital. preventing increases in the poverty rate.

On May 22, 2020, T. Albinoni Inc. issued a 4.15% coupon bond with a $100 face value, and incurred 2.00% of the face value as a transaction cost. The bond's issue price was $86.34 per share, and its maturity date is September 30, 2029. The firm's corporate tax rate is 21%. a) Calculate the firm's "pre-tax" cost of debt. (2 points) b) Calculate the firm's "after-tax" cost of debt.

Answers

The firm's "after-tax" cost of debt is 3.76%.

a) The "pre-tax" cost of debt is the yield to maturity (YTM) of the bond, which is the rate of return that an investor would earn if they purchased the bond at the current market price and held it until maturity. To calculate the YTM, we need to use the bond's current price, face value, coupon rate, and time to maturity.

The bond's current price is $86.34, its face value is $100, and its coupon rate is 4.15%. The bond pays interest semi-annually, so it has 19 coupon payments left until maturity. The time to maturity is 9.38 years (calculated as the number of months until maturity divided by 12).

Using a financial calculator or spreadsheet, we can calculate the YTM as follows:

N = 19

PV = -86.34

PMT = 4.15 / 2 * 100 = 2.075

FV = 100

I/Y = 4.76%

Therefore, the firm's "pre-tax" cost of debt is 4.76%.

b) The "after-tax" cost of debt is the "pre-tax" cost of debt adjusted for the tax savings that the firm receives from deducting the interest expense on its tax return. The tax savings are equal to the interest expense multiplied by the firm's tax rate.

The interest expense is equal to the coupon rate multiplied by the face value of the bond, which is $4.15 per share ($100 face value * 4.15% coupon rate). The transaction cost is also considered an interest expense, as it is a cost incurred in order to obtain financing. Therefore, the total interest expense is $6.15 per share ($4.15 + $2.00 transaction cost).

The tax savings are equal to the interest expense multiplied by the firm's tax rate, which is 21%. Therefore, the tax savings are $1.29 per share ($6.15 * 21%).

The "after-tax" cost of debt is equal to the "pre-tax" cost of debt minus the tax savings, which is:

After-tax cost of debt = Pre-tax cost of debt * (1 - Tax rate)

After-tax cost of debt = 4.76% * (1 - 21%)

After-tax cost of debt = 3.76%.

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