The amount of operating income in the flexible budget (FB) for September was $75000. It is closest to $80,000. Option D is correct.
To solve this problem, we need to calculate the actual variable cost and contribution margin first.
Actual Variable Cost = Total Cost - Fixed Cost
Actual Variable Cost = $255,000 - $28,000
Actual Variable Cost = $227,000
Contribution Margin = Sales - Variable Cost
Contribution Margin = $273,000 - $227,000
Contribution Margin = $46,000
Next, we can use the flexible-budget variance formula to find the flexible-budget amount for total variable costs:
Flexible-Budget Variance = Actual Results - Flexible Budget
$69,000U = ($273,000 - $227,000) - (330,000 - 227,000)
$69,000U = $46,000 - $103,000
$69,000U = -$57,000
Flexible Budget = Actual Results - Flexible-Budget Variance
Flexible Budget = $273,000 - (-$57,000)
Flexible Budget = $330,000
Now we can use the sales volume variance formula to find the actual sales:
Sales Volume Variance = (Actual Sales - Flexible Budget Sales) × Budgeted Contribution Margin
$30,000U = (Actual Sales - $330,000) × ($46,000/$273,000)
$30,000U = (Actual Sales - $330,000) × 0.1685
Actual Sales - $330,000 = $30,000U/0.1685
Actual Sales - $330,000 = $178,041.49
Actual Sales = $508,041.49
Finally, we can calculate the operating income in the flexible budget using the following formula:
Operating Income = (Sales in FB - Variable Costs in FB) - Fixed Costs
Operating Income = ($330,000 - $227,000) - $28,000
Operating Income = $75,000
Therefore, the answer is $75,000, which is closest to option D) $80,000.
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Help with following please
Help with following please. will upvote
The Valuation Principle states that the value of a stock is equal to the present value (PV) of both the dividends and future sale price of that stock which the investor will receive. ОО True O False
The statement about the Valuation Principle is correct.
The Valuation Principle states that the value of a stock is equal to the present value (PV) of both the dividends and future sale price of that stock which the investor will receive.
So the answer is:
True
The key ideas of the Valuation Principle are:
1. The value of a stock depends on the future cash flows it is expected to generate. This includes dividends and the proceeds from selling the stock.
2. These future cash flows need to be discounted back to the present using an appropriate discount rate. This gives the present value of the future cash flows.
3. The sum of the present values of dividends and selling price equals the price of the stock.
Sodividends, potential capital gains, and the timing of these cash flows all determine a stock's value according to the Valuation Principle.
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when considering perfect competition the absence of entry barriers implies that part 2 a. no firm can enter the industry. b. firms can enter but cannot get out of the industry easily. c. all firms will earn economic profit. d. firms can enter and leave the industry without serious impediments.
In the context of perfect competition and considering the absence of entry barriers, the correct answer is option D: firms can enter and leave the industry without serious impediments.
Perfect competition is an economic model where numerous small firms produce homogeneous products, and no single firm has the power to influence the market price. Entry and exit barriers are factors that restrict the ability of firms to enter or exit an industry. When there are no entry barriers, new firms can easily join the market, and existing firms can leave the industry without facing major challenges. The absence of entry barriers promotes competition, as it encourages new firms to enter the market and compete with existing firms. This ultimately results in an efficient allocation of resources and a balance between supply and demand.
As a consequence, firms in perfect competition will not earn long-term economic profit, as any profits would attract new competitors, driving down prices and reducing profit margins. In summary, perfect competition without entry barriers allows firms to enter and exit the industry freely, fostering a competitive environment that benefits both consumers and businesses in terms of efficiency and resource allocation.
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for a cafe and deli small business answer these questions:
-Goals and objectives, including a brief discussion of why you believe the business will be successful
-Market environment considerations, including current needs for the product and discussion of current or potential competition
-Brief description of owners and principal managers, including what they offer to help the business succeed (you may include a resume for each in an appendix if desired)
-Marketing plan and strategy
-2 keys to success
Goals and objectives for a small café and deli business include providing high-quality food and beverages, excellent customer service, and creating a welcoming atmosphere. The business is expected to be successful due to its unique menu offerings, convenient location, and competitive pricing.
Market environment considerations include the current demand for healthy and locally sourced food, and potential competition from other cafes and delis in the area. The owners and managers bring extensive experience in the foodservice industry and are committed to providing exceptional products and service.
The marketing plan includes social media promotions, local advertising, and word-of-mouth recommendations. Two keys to success include maintaining high standards for food and service, and fostering strong relationships with customers.
Goals and objectives for a small café and deli business: The goals and objectives for a small café and deli business include providing high-quality food and beverages, excellent customer service, and creating a welcoming atmosphere.
This can be achieved by offering unique menu items that differentiate the business from competitors, maintaining competitive pricing, and hiring knowledgeable and friendly staff. The business's overall success will depend on its ability to attract and retain customers through exceptional products and service.
Market environment considerations: The market environment for a café and deli business is highly competitive, with many other similar businesses offering similar products and services. Therefore, it is essential to consider the current demand for healthy and locally sourced food to ensure that the business meets the needs of its target market.
Additionally, potential competition from other cafes and delis in the area should be taken into account when developing marketing strategies and determining pricing strategies.
Owners and principal managers:The owners and principal managers of the café and deli business bring extensive experience in the foodservice industry and are committed to providing exceptional products and service.
They have experience in menu development, food preparation, customer service, and financial management. Their expertise will be essential in ensuring that the business operates efficiently and effectively.
Marketing plan and strategy:The marketing plan for the café and deli business should include a mix of online and offline marketing strategies, including social media promotions, local advertising, and word-of-mouth recommendations.
The business should also consider offering discounts and promotions to attract new customers and retain existing ones. Additionally, the café and deli business should focus on building relationships with its customers, offering personalized recommendations and customer service.
Two keys to success:Two keys to success for a café and deli business include maintaining high standards for food and service and fostering strong relationships with customers.
This can be achieved by ensuring that all menu items are of the highest quality, using fresh and locally sourced ingredients whenever possible, and hiring knowledgeable and friendly staff. Building strong relationships with customers will help to ensure repeat business and positive word-of-mouth recommendations.
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Total food orders delivered (Q) # of cooks (C) # of packagers (P) 20 1 1
28 1 2
40 2 3
44 3 3
From the above table, what is the production function? A. Q = 8 + 8C +4P B. Q = 4C +4P C. Q = 8 + 4C + 8P D. Q = 4C + 8P E. Q = 4C
After running the regression, we find that the production function that best fits the data is Q = 4C + 8P.
The production function is a mathematical equation that describes the relationship between inputs and outputs in a production process. In this case, the inputs are the number of cooks and packagers, and the output is the total number of food orders delivered. To determine the production function from the given table, we can use the method of least squares to estimate the coefficients of the equation that best fits the data.
This means that each additional cook contributes 4 units to the output, while each additional packager contributes 8 units to the output. The intercept term is not significant, which means that there is no fixed component to the production function.
Overall, the production function helps to provide insights into the productivity of the production process and can be used to make decisions on how to allocate resources to maximize output.
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Jill wants to buy a car but needs to calculate how much she can afford to borrow. The maximum she can repay is $1900 at the end of each quarter and the bank has indicated it will charge a fixed 6.3% p.a compounding quarterly. If she takes a loan for 5 years how much can she afford to borrow? (Do not use the $ sign or commas; include cents e.g 24500.09)
Jill can afford to borrow up to $505,286 if she wants to make quarterly payments of $1900 at a fixed interest rate of 6.3% compounded quarterly over a loan term of 5 years.
To calculate how much Jill can afford to borrow, we need to determine the quarterly payment amount based on the loan amount, interest rate, and loan term, and then use that payment amount to calculate the maximum loan amount that Jill can afford.
We can use the following steps:
1. Calculate the quarterly interest rate by dividing the annual interest rate by 4. In this case, the quarterly interest rate is 6.3% / 4 = 1.575%.
2. Determine the loan term in quarters by multiplying the number of years by 4. In this case, the loan term is 5 years x 4 quarters/year = 20 quarters.
3. Calculate the quarterly payment amount using the loan amount, interest rate, and loan term using the following formula:
[tex]Quarterly payment = Loan amount (r(1+r)^n) / ((1+r)^n - 1)[/tex]
where,
r is the quarterly interest rate and
n is the loan term in quarters.
Let's assume that Jill wants to borrow an amount of X. Using the formula, we get:
[tex]$1900 = X * (0.01575 * (1+0.01575)^20) / ((1+0.01575)^20 - 1)[/tex]
Solving for X, we get:
X = $1900 x ((1+0.01575)^20 - 1) / (0.01575 x (1+0.01575)^20)
X = $1900 x (4.1807) / (0.01575 x 4.1807)
X = $1900 x 265.94
X = $505,286
Therefore, Jill can afford to borrow up to $505,286 if she wants to make quarterly payments of $1900 at a fixed interest rate of 6.3% compounded quarterly over a loan term of 5 years.
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The maximum amount Jill can borrow for a 5-year car loan, with a quarterly repayment of $1900 and a fixed interest rate of 6.3% p.a compounding quarterly, is $71,308.85.
To calculate the maximum amount Jill can borrow, we need to use the formula for the present value of an annuity due, which is:
PV = Pmt x ((1 - (1 + r/n)(-n*t))/(r/n)) x (1 + r/n)
where:
PV = present value of the loan
Pmt = quarterly repayment amount
r = interest rate in decimal form
n = number of compounding periods per year
t = total number of years
Substituting the values given in the question, we get:
PV = 1900 x ((1 - (1 + 0.063/4)(-4*5))/(0.063/4)) x (1 + 0.063/4) = $71,308.85
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in california, an exclusive right to sell listing agreement cannot be for longer than one year. true or false
Evolutionary psychologists most clearly emphasize that environmentally adaptive behaviors are those that have promoted. natural selection.
Evolutionary psychologists focus on the idea that certain behaviors and traits are advantageous for survival and reproduction, and therefore have been naturally selected for over time.
This means that behaviors that are adaptive in a particular environment are more likely to be passed on to future generations.
So, evolutionary psychologists emphasize that environmentally adaptive behaviors are those that have promoted natural selection, meaning they have helped individuals survive and reproduce in their particular environment.
Examples of adaptive behaviors might include traits like intelligence, social skills, and physical strength, as well as behaviors like cooperation, altruism, and aggression.
By studying these adaptive behaviors, evolutionary psychologists hope to gain a better understanding of how humans and other animals have evolved over time.
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Question 8 What is the monthly earnings credit? Assume the following: Ledger Balance = $500,000 Deposit Float = $ 87972 Eamings Credit Rate = 0.50% Days in Month= 30 days Reserve Requirement Ratio = 10%
The monthly earnings credit is the amount of money a bank credits to a customer's account as compensation for the customer's deposits. It is calculated based on the average daily balance in the account and the earnings credit rate (ECR) set by the bank is $24.53.
To calculate the monthly earnings credit for this scenario, we need to take into account several factors:
1. Ledger balance: The ledger balance is the actual balance in the account, including all deposits and withdrawals. In this case, it is $500,000.
2. Deposit float: The deposit float is the amount of funds in the account that have been deposited but are not yet available for use. In this case, it is $87,972.
3. Average daily balance: To calculate the average daily balance, we need to take the ledger balance and add any deposits that have not yet cleared (i.e., the deposit float), and then divide by the number of days in the month.
In this case, the average daily balance is:
[tex]($500,000 + $87,972) / 30[/tex]
= $19,266.40
4. Earnings credit rate: The earnings credit rate is the rate set by the bank for calculating the monthly earnings credit. In this case, it is 0.50%.
5. Reserve requirement ratio: The reserve requirement ratio is the percentage of deposits that a bank is required to hold in reserve. In this case, it is 10%.
Now, we can calculate the monthly earnings credit using the following formula:
Monthly earnings credit = (average daily balance x ECR x days in month) - (average daily balance x reserve requirement ratio x days in month / 365)
Substituting the values we have, we get:
[tex]Monthly earnings credit = ($19,266.40 * 0.005 * 30) - ($19,266.40 * 0.10 *30 / 365)[/tex]
= $24.53
Therefore, the monthly earnings credit in this scenario is $24.53.
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I need help asap pls
Based on the Income Statement, December 31, 2012: The foloowing data on income statement was gotten
What was the company's net sales?Net Sales = Sales - Sales returns and allowances = $9,450.00 - $673.41 = $8,776.59
Therefore, the company's net sales were $8,776.59.
What was the company's gross margin?Gross Margin = Net Sales - Cost of Goods sold = $8,776.59 - $4,395.00 = $4,381.59
Therefore, the company's gross margin was $4,381.59.
What was the company's net income after taxes?Net Income after taxes = Net Income before taxes - Federal Income Tax = $1,760.59 - $528.18 = $1,232.41
Therefore, the company's net income after taxes was $1,232.41.
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Eric Inc.'s noncallable, 10-year, 10% semiannual coupon bonds currently sell for $1,135.90. They have a par value of $1,000. What is their yield to maturity? (Multiple Choice) a. 4.00% b. 3.38% c. 8.56% d. 8.00% e. 7.97% Assume that interest rates on 20-year Treasury and corporate bonds are as follows: T-bond = 2.89%, Corporate Bond = 4.73%. The difference in these rates was probably caused primarily by: (Multiple Choice) = a. Default and liquidity risk differences. b. Inflation differences. Tax effects. c. Maturity risk differences. d. Real risk-free rate differences.
The yield to maturity of Eric Inc.'s noncallable, 10-year, 10% semiannual coupon bonds is 8.00%. (D)
The difference in interest rates between the 20-year Treasury and corporate bonds is primarily caused by default and liquidity risk differences (Option a).
To calculate the yield to maturity (YTM), you need to use the bond pricing formula:
Bond Price = C * [(1 - (1 + YTM/2)⁻²ⁿ) / (YTM/2)] + Par Value * (1 + YTM/2)⁻²ⁿ
Where C is the semiannual coupon payment, n is the number of years until maturity, and YTM is the yield to maturity. In this case, C = $1,000 * 10% / 2 = $50.
By plugging the given values into the formula and solving for YTM, you'll find that YTM = 8.00%.
The difference in interest rates between the 20-year Treasury and corporate bonds is due to the varying levels of default and liquidity risk. T
reasury bonds are considered risk-free, while corporate bonds carry default risk, meaning there is a chance the issuing company could fail to make interest payments or repay the principal.
Additionally, corporate bonds often have less liquidity compared to Treasury bonds, making them less attractive to investors, and therefore requiring a higher yield to compensate for these risks.(D)
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the maximum legal limit for a loan in walter's state is 5.8%. keeli charges walter 23% because she does not trust he can pay back the loan. what is the term for giving a loan at an interest rate that exceeds the legal maximum?
The term for giving a loan at an interest rate that exceeds the legal maximum is called usury.
Usury is the practice of charging an excessive or illegal rate of interest on a loan. The maximum legal limit for a loan is set by the state to protect borrowers from predatory lenders who take advantage of their financial need.
Charging interest rates that exceed the legal limit is illegal and can result in penalties for the lender. In the case of Walter and Keeli, Keeli's decision to charge Walter 23% interest is not only unethical but als
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a company's product sells at $12.22 per unit and has a $5.33 per unit variable cost. the company's total fixed costs are $96,900. the break-even point in units is:
The break-even point is the point at which a company's total revenue equals its total costs, resulting in neither a profit nor a loss.
To calculate the break-even point in units, we can use the following formula:
Break-even point (in units) = Total Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)
Given the information provided:
Selling Price per Unit = $12.22
Variable Cost per Unit = $5.33
Total Fixed Costs = $96,900
Plugging these values into the formula:
Break-even point (in units) = $96,900 / ($12.22 - $5.33)
Break-even point (in units) = $96,900 / $6.89
Break-even point (in units) ≈ 14,063.86
So, the break-even point in units for the company is approximately 14,063.86 units. This means that the company needs to sell at least 14,063.86 units in order to cover its total fixed costs and avoid incurring a loss.
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(Related to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 24 years with an annual coupon rate of 8 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 11 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 12 percent. What will be the price of these bonds if they receive either an A or a AA rating? a. The price of the Pybus bonds if they receive a AA rating will be s (Round to the nearest cent.) Enter your answer in the answer box and then click Check Answer. part remaining Clear All Check Answer
If the bonds receive a AA rating, their price will be $634.76, and if they receive an A rating, their price will be $595.43.
To calculate the price of the bonds, we need to use the bond pricing formula:
P = (C / r) x [1 - 1 / (1 + r)^n] + M / (1 + r)^n
where:
P = price of the bond
C = semiannual coupon payment
r = semiannual yield to maturity
n = number of semiannual periods until maturity
M = par value of the bond
For the AA rating, the semiannual yield to maturity is 11%/2 = 5.5%, and the number of semiannual periods until maturity is 24 x 2 = 48. Therefore, we can calculate the price of the bond as:
P = ($40 / 0.055) x [1 - 1 / (1 + 0.055)^48] + $1,000 / (1 + 0.055)^48
P = $634.76
For the A rating, the semiannual yield to maturity is 12%/2 = 6%, and we can use the same number of semiannual periods until maturity. Therefore, the price of the bond with an A rating is:
P = ($40 / 0.06) x [1 - 1 / (1 + 0.06)^48] + $1,000 / (1 + 0.06)^48
P = $595.43
Thus, if the bonds receive a AA rating, their price will be $634.76, and if they receive an A rating, their price will be $595.43.
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Consider a project with a life of 7 years with the following information: initial fixed asset investment = $440,000: straight-line depreciation to zero over the 7-year life: zero salvage value; price = $37, variable costs = $18: fixed costs = $154,000. quantity sold = 101.640 units, tax rate - 25 percent. How sensitive is OCF to changes in quantity sold? Multiple Choice $0.07 $18.38 S1012 $14.25 $16.24
The sensitivity of the OCF to changes in quantity sold is $14.25.
The sensitivity of the OCF to changes in quantity sold can be determined by calculating the projected change in the OCF if the quantity sold is changed. To calculate the sensitivity, the projected OCF if the quantity sold is changed by one unit can be compared to the OCF if the quantity sold is unchanged.
By comparing these two values, the change in OCF per unit can be determined. In this case, the sensitivity of the OCF to changes in quantity sold is $14.25.
This means that if the quantity sold changes by one unit, then the OCF will change by $14.25. This sensitivity analysis can be helpful in determining the potential impact of changes in quantity sold on the overall profitability of the project. It can also be helpful in determining the optimal pricing and quantity of the project.
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when a fortune 500 business lays off workers, some displaced employees may decide to start their own businesses. they are best described as
When a fortune 500 business lays off workers, it can be a difficult and challenging time for the affected employees. However, some of these displaced workers may choose to turn this situation into an opportunity and start their own businesses. These individuals are best described as resilient, entrepreneurial, and driven.
Starting a business can be a daunting task, especially for those who have never done it before. However, the experience and skills gained from working for a large corporation can be invaluable in this new endeavor.
Many of these workers have gained valuable knowledge in areas such as marketing, finance, and management, which can be applied to their own businesses.
Moreover, these displaced workers often have a strong work ethic and a desire to succeed, which can give them an edge in the competitive world of entrepreneurship. They are motivated by the desire to take control of their own destiny and create a better future for themselves and their families.
In many cases, these new businesses can contribute to the local economy, creating jobs and driving innovation. While the decision to start a new business may have been forced upon them by circumstances outside their control, these workers are taking charge of their own futures and embracing the challenges and opportunities of entrepreneurship.
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7. Discuss two important economic behaviors of a monopoly, which are different from economic behaviors of firms in a competitive market 8. What is the consequence when a firm exercises its monopoly po
The consequences of monopoly power can negatively impact both consumers and overall economic welfare.
1. Price-setting ability: Unlike firms in a competitive market, a monopoly has the power to set its own price for goods or services. In a competitive market, firms must accept the market-determined price, whereas a monopolist can adjust the price to maximize its profits. This is due to the lack of competition, as a monopolist is the sole provider of a particular product or service.
2. Output restriction: A monopolist may intentionally restrict the output of goods or services to maintain a higher price. In a competitive market, firms cannot restrict output without losing market share, as consumers can easily switch to competitors' products. However, a monopoly can restrict output without the risk of losing customers, allowing it to maintain a higher price and earn greater profits.
Consequence of monopoly power: When a firm exercises its monopoly power, it often leads to allocative inefficiency, which is a misallocation of resources. Monopolies tend to produce less output and charge higher prices compared to competitive markets. As a result, consumer surplus decreases, and deadweight loss occurs. Additionally, monopolies may also invest less in innovation and improvements, since they face less competitive pressure to do so.
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which of the following defines a foreign-based entity that uses a functional currency different from the local currency? i. a u.s. subsidiary in britain maintains its accounting records in pounds sterling, with the majority of its transactions denominated in pounds sterling. ii. a u.s. subsidiary in peru conducts virtually all of its business in latin america, and uses the u.s. dollar as its major currency. group of answer choices i only. ii only. both i and ii. neither i nor ii.
The first statement i.e. a U.S. subsidiary in Britain maintaining its accounting records in pounds sterling with the majority of its transactions denominated in pounds sterling defines a foreign-based entity that uses a functional currency different from the local currency.
The functional currency is the primary currency that a company uses for accounting purposes to report financial results.
In this case, the U.S. subsidiary in Britain is using the British pound sterling as its functional currency instead of the U.S. dollar.
This is because the majority of its transactions are denominated in pounds sterling, making it more practical to use the local currency for accounting purposes.
On the other hand, the second statement i.e. a U.S. subsidiary in Peru conducting virtually all of its business in Latin America and using the U.S. dollar as its major currency does not define a foreign-based entity that uses a functional currency different from the local currency.
In this case, the U.S. subsidiary is using the U.S. dollar as its functional currency, which is also the major currency it conducts its business in.
It's important to note that a company's choice of functional currency can have significant impacts on its financial statements and performance.
For example, fluctuations in exchange rates between the functional currency and other currencies can impact the company's reported revenues, expenses, and profits.
Therefore, companies must carefully consider their choice of functional currency based on the nature of their operations, local regulations, and accounting standards.
The correct answer is: i only.
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The shift from Corporate Planning to Strategy-Making implies: a. From the sources of profit outside the firm to the sources of profit within the firm b. To the Resource-based view of the firm c. Both a and b d. From the structure-based approach to the value-added perspective
The shift from Corporate Planning to Strategy-Making implies a move away from the traditional structure-based approach to a more value-added perspective.
This involves looking at the sources of profit within the firm, rather than outside of it. This shift is also associated with the Resource-based view of the firm, which considers the resources and capabilities of a firm as the primary drivers of competitive advantage and value creation.
This shift away from the structure-based approach to a value-added perspective is important because it allows firms to identify new sources of value and differentiate their offerings from those of their competitors. Additionally, it provides a framework for developing and implementing strategies that are tailored to the firm's particular strengths and weaknesses.
Finally, it enables firms to identify and capitalize on opportunities for growth and expansion.
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(Nonconstant Growth) Question 17 of 20 Check My Work (3 remaining) B eBook Problem Walk-Through Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 29% per year - during Years 4 and 5, but after Year 5, growth should be a constant 5% per year. If the required return on Computech is 14%, what is the value of the stock today? Do not round intermediate calculations. Round your answer to the nearest cent.
The value of the stock today is $38.17.
To calculate the value of the stock today, we need to find the present value of all the future dividends and the future stock price.
First, let's find the dividend in year 3.
D3 = $1.75
Next, let's find the dividends in years 4 and 5, which are growing at a rate of 29% per year.
D4 = D3 * (1 + 29%) = $2.26
D5 = D4 * (1 + 29%) = $2.92
After Year 5, the dividends are expected to grow at a constant rate of 5% per year. Let's find the expected dividend in Year 6.
D6 = D5 * (1 + 5%) = $3.06
To find the present value of these future dividends, we need to discount them back to the present using the required return of 14%.
[tex]PV(D3) = $1.75 / (1 + 14%)^3 = $1.1655[/tex]
[tex]PV(D4) = $2.26 / (1 + 14%)^4 = $1.3642[/tex]
[tex]PV(D5) = $2.92 / (1 + 14%)^5 = $1.4466[/tex]
[tex]PV(D6) = $3.06 / (14% - 5%) / (1 + 14%)^5 = $16.1597[/tex]
Now, let's find the present value of the future stock price, which is the present value of the stock price at the end of Year 5.
To find the future stock price, we need to find the dividend in Year 6 and the constant growth rate beyond that year.
D6 = $3.06
g = 5%
The stock price in Year 6 can be calculated using the constant growth model:
P6 = D6 * (1 + g) / (r - g) = $3.06 * (1 + 5%) / (14% - 5%) = $36.72
Now, we can discount this stock price back to the present using the required return of 14% and the number of years to Year 5.
[tex]PV(P5) = $36.72 / (1 + 14%)^5 = $18.0321[/tex]
Finally, we can calculate the value of the stock today by adding up the present value of all the future dividends and the future stock price.
Value of stock today = PV(D3) + PV(D4) + PV(D5) + PV(D6) + PV(P5)
Value of stock today = $1.1655 + $1.3642 + $1.4466 + $16.1597 + $18.0321 = $38.1681
Therefore, the value of the stock today is $38.17.
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equipment that was purchased for $700,000 has a current book value of $350,000. assume a capital gains tax rate of 28%. compute the net tax payment or savings if you sell the equipment for $584,367.
The net tax payment or savings if the equipment is sold for $584,367 would be a tax savings of $56,840.
To calculate the net tax payment or savings, we first need to determine the gain or loss on the sale of the equipment. The gain is calculated as the selling price minus the book value, which in this case is $584,367 - $350,000 = $234,367.
Next, we need to calculate the capital gains tax on the gain. The tax rate is given as 28%, so the tax would be 0.28 x $234,367 = $65,790. Finally, we can calculate the net tax payment or savings by subtracting the tax from the gain: $234,367 - $65,790 = $168,577.
We need to take into account the tax that would have been paid if the equipment had not been sold. Since the book value is $350,000 and the selling price is $584,367, the company would have paid tax on the difference between the selling price and the book value, or $234,367.
The tax on this amount would be 0.28 x $234,367 = $65,790. Therefore, the net tax payment or savings is $65,790 - $8,950 = $56,840, where $8,950 is the tax savings from the original book value.
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the reasons behind the accelerating pace of globalization include:select one:a.lower barriers to international tradeb.countries with previously planned economies are embracing market or mixed economiesc.transportation and information technology shrinks the importance of geographic distancesd.all of these
A. "Lower barriers to international trade", B. "countries with previously planned economies are embracing market or mixed economies", and C. "transportation and information technology shrinks the importance of geographic distances" are reasons behind the accelerating pace of globalization.
Lower barriers to international trade, the adoption of market or mixed economies by previously planned economies, and the development of transportation and information technology have all contributed to the increasing interconnectedness of economies and cultures around the world. These factors have made it easier for businesses to operate globally, for goods and services to be traded across borders, and for people to communicate and share ideas regardless of their physical location. As a result, the pace of globalization has accelerated in recent decades.
The correct answers are options B and C.
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richard earns $550 a week. although he has received a recent raise, he is unsatisfied because most other people on his job earn $100 a week more. richard's dissatisfaction is based on:
Richard's dissatisfaction with his earnings is based on relative income, income inequality, and social comparison.
What the dissatisfaction based on for this case?Richard's dissatisfaction can be attributed to the concept of relative income. Although he earns $550 a week and has received a recent raise, he still feels unsatisfied because most of his colleagues earn $100 more per week.
This comparison with others leads him to perceive his income as inadequate. In this scenario, Richard is experiencing income inequality, which is a disparity in earnings among individuals or groups.
Richard's dissatisfaction is also linked to the idea of social comparison, where individuals evaluate their own circumstances by comparing themselves to others.
In his case, he compares his income to that of his coworkers, and the perceived discrepancy contributes to his dissatisfaction.
Despite his recent raise, the perceived gap between his earnings and that of his colleagues leads to discontentment.
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Explain interest rates. What are they? Why are there so many interest rates quoted in the financial world? What are the reasons for an investor to understand the direction of interest rates (forward rates)?
Interest rates are an essential factor in the financial world, and understanding their direction, including forward rates, can significantly impact an investor's decision-making process and overall financial success.
Interest rates are the cost of borrowing money or the return earned on an investment. They are expressed as a percentage of the principal amount, usually on an annual basis.
Investors need to understand the direction of interest rates, including forward rates, for several reasons:
1. Investment decisions: Knowing the direction of interest rates can help investors decide whether to invest in fixed-income securities (such as bonds) or equities, as well as whether to invest in short-term or long-term instruments.
2. Borrowing decisions: Understanding interest rate trends can help borrowers make informed decisions about when to take out a loan, as well as whether to choose a fixed or variable interest rate for their loans.
3. Portfolio management: Monitoring interest rates allows investors to manage their investment portfolios effectively, as changes in interest rates can impact the value of existing investments, particularly fixed-income securities.
4. Risk management: Understanding the direction of interest rates helps investors assess the potential risks associated with their investments and make appropriate adjustments to mitigate those risks.
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the fact that a bank's assets tend to be long-term while its liabilities are short-term creates multiple choice interest-rate risk. credit risk. decreased risk for the bank. trading risk.
The fact that a bank's assets tend to be long-term while its liabilities are short-term creates interest-rate risk.
Interest-rate risk is the risk that changes in interest rates will affect the value of a bank's assets and liabilities differently, leading to a decline in the bank's net worth or earnings. In this case, if interest rates rise, the value of the bank's long-term assets will decrease more than the value of its short-term liabilities, resulting in a decline in the bank's net worth. Conversely, if interest rates fall, the value of the bank's long-term assets will increase more than the value of its short-term liabilities, resulting in an increase in the bank's net worth.
Credit risk (option B) is the risk that a borrower will default on their obligations, leading to losses for the bank. Decreased risk for the bank (option C) is not an accurate description of the situation, as interest-rate risk can lead to losses for the bank if interest rates move against them. Trading risk (option D) is a type of risk that arises from a bank's trading activities and is not related to the maturity mismatch between assets and liabilities.
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Insuring While Away at College Kate's son, Hubert, is a college student ving in an off-campus apartment where he resides year round. He owns an expensive computer and wants to make sure the full value is insured. Which of the following statements regarding Hubert's Insurance needs are true? Check all that apply.a. Hubert should purchase an HC-2 broad form insurance polley because he is not covered under his parents' policy b. If he purchases an H0-4 polley, he can choose the value of the property he wishes to insure c. His computer is covered under his parents' policy Insuring a Condominium Kate's parents own a condominium that they fully insured for the replacement value of $120,000. Last year a portion of their roof collapsed due to the weight of snow after a severe storm. rendering the condo uninhabitable for the month that it took to complete repairs. Based on the coverago details of their condominium form ______ Insurance policy, the additional living expenses they incur as a result of the damage (such as the cost of staying in a hotel during the repairs)_____.
a. Hubert should purchase an policy because he is not covered under his parents' policy.
c. His computer may not be covered under his parents' policy, so he should consider purchasing additional coverage through an policy.
the regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month following the month of sale, and the remainder in the second month following the month of sale. there are no bad debts. the budgeted accounts receivable balance on september 30 would be
Balanced Accounts As of September 30, there was a $166,000 balance due. October cash receipts are expected to total $248,000.
The money that clients owe you for goods or services for which you have issued an invoice is known as accounts receivable.
On the balance sheet, the total amount of all accounts receivable is shown as current assets. This includes invoices for goods or services provided to clients on credit that they still owe.
The three categories of receivables are:
trade accounts receivable, notes receivable, other accounts receivable.Payments for credit sales are made several days or weeks after a product has been delivered. Accounts receivable in a company's balance sheet represent short-term credit agreements, which are distinct from payments paid in cash right away.
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Suppose the market risk premium is 5.8% and also that the standard deviation of returns on the market portfolio is 0.26. Further assume that the correlation between the returns on ABX (Barrick Gold) stock and returns on the market portfolio is 0.7, while the standard deviation of returns on ABX stock is 0.35. Finally assume that the risk-free rate is 2.1 %. Under the CAPM, what is the expected return on ABX stock? (write this number as a decimal and not as a percentage, e.g. 0.11 not 11%. Round your answer to three decimal places. For example 1.23450 or 1.23463 will be rounded to 1.235 while 1.23448 will be rounded to 1.234)
The expected return on ABX stock using the CAPM is 0.085.
The CAPM formula is:
E(Ri) = Rf + βi (E (RM) - Rf)
Where:
E(Ri) is the expected return of the stock
Rf is the risk-free rate
βi is the beta of the stock
E(RM) is the expected return of the market
Given the market risk premium of 5.8%, the risk-free rate of 2.1%, the standard deviation of returns on the market portfolio of 0.26, the correlation between the returns on ABX and returns on the market portfolio of 0.7, and the standard deviation of returns on ABX stock of 0.35, the expected return of ABX stock can be calculated as follows:
E(Ri) = 2.1% + 0.7 (5.8% - 2.1%) = 0.085
Therefore, the expected return on ABX stock using the CAPM is 0.085.
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A company finances its operations with 50% debt and 50% equity. Its net income is I=RM30 million and it has a dividend payout ratio of x=20%. Its capital budget is B=RM40 million this year. The interest rate on company's debt is and the company's tax rate is T = 40%. The company's common stock trades at = RM66 per share, and its current dividend of = RM4 per share is expected to grow at a constant rate of g=10% a year. The flotation cost of external equity, if issued, is F=5% of the Malaysian Ringgit (MYR) amount issued. Required: a. Calculate the following: i. Will the company have to issue external equity? What is the company's Weighted Average Cost of Capital? (5) ii. (10) b. Briefly explain TWO (2) problems with cost of capital estimates. (5) (Total: 20)
Based on the given information, the company's Weighted Average Cost of Capital (WACC) can be calculated. Two problems with the cost of capital estimates include the assumption of constant capital structure.
And the reliance on historical data for estimates. The actual capital structure may fluctuate, and historical data may not accurately reflect future market conditions. Since the company finances its operations with 50% debt and 50% equity, the cost of debt and the cost of equity must be weighted accordingly. The cost of debt is not given, so it must be assumed or estimated. Assuming a cost of debt of 6%, the Weighted Average Cost of Capital can be calculated to be 10.5%.
To determine whether the company will have to issue external equity, the retained earnings available for the capital budget must be calculated. With a net income of RM30 million and a dividend payout ratio of 20%, the company retains RM24 million. Since the capital budget is RM40 million, external equity will be needed to cover the shortfall of RM16 million.
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pr efforts on behalf of charities, relief groups, or other organizations serving publics in need are called select one: a. do-good pr. b. cause marketing. c. viral pr. d. lobbying.
The correct answer is b. Cause marketing.
Cause marketing is a public relations effort that focuses on marketing a product, service, or brand in a way that benefits a charitable cause. The public relations effort helps to increase awareness of the charity's mission and help to build relationships between the charity and the company.
It can also increase sales for the company and help to raise the profile of the charity. Cause marketing typically involves a company making a donation to the charity, or offering some other type of promotional benefit such as discounted prices or special offers. A company may also use cause-related marketing as a way to show its commitment to social issues, such as by supporting a cause that is important to its target audience.
Cause marketing can be a powerful tool for companies to use in order to demonstrate their commitment to social responsibility while also building relationships with customers and other stakeholders.
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suppose a stock had an initial price of $35 per share, paid a dividend of $1.00 per share during the year, and had an ending share price of $48. compute the percentage return.
A stock with an initial price of $35 per share, paid a dividend of $1.00 per share during the year the percentage return will be 40%.
To compute the percentage return for the stock, we need to calculate the total return, which includes both the price appreciation and the dividend received. The formula for total return is:
Total Return = (Ending Share Price - Beginning Share Price + Dividends) / Beginning Share Price
In this case, the beginning share price is $35, the ending share price is $48, and the dividend is $1.00 per share. Plugging these values into the formula, we get:
Total Return = ($48 - $35 + $1) / $35 = $14 / $35 = 0.4 or 40%
Therefore, the percentage return for the stock is 40%.
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