Return on equity Midwest Packaging's ROE last year was only 3 percent, but its management has developed a new operating plan that calls for a total debt ratio of 60 percent, which will result in annual interest charges of $300,000. Management projects an EBIT of $1,000,000 on sales of $10,000,000, and it expects to have a total assets turnover ratio of 2.0. Under these conditions, the tax rate will be 34 percent. If the changes are made, what will be its return on equity

The subjective forecasting method that depends upon the anonymous opinion of a panel of individuals to generate sales forecasts is D. Delphi Method.

The Delphi Method is a structured communication technique that gathers expert opinions through a series of questionnaires. The anonymity of the panel members encourages open and unbiased feedback, as well as prevents the influence of dominant individuals in the decision-making process. This method is particularly useful when historical data is scarce or when a situation involves a high degree of uncertainty. The panelists participate in multiple rounds of questionnaires, and the results are shared and discussed after each round.

This iterative process refines the forecasts and allows the experts to revise their opinions based on the collective wisdom of the group. Ultimately, the Delphi Method seeks to achieve a consensus forecast, combining the expertise and judgment of various individuals to generate a more reliable sales forecast than could be achieved by any single expert. Therefore, the correct option is D.

The question was incomplete, Find the full content below:

which subjective forecasting method depends upon the anonymous opinion of a panel of individuals to generate sales forecasts? group of answer choices

A. jury of executive opinion.

B. customer surveys.

C. sales force composites.

D. delphi method.

E.  none of the above.

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Bengaluru, also known as Bangalore, has a comparative advantage in the high-tech industry due to its strong technology infrastructure, skilled workforce, and favorable business climate.

The city has a robust ecosystem of research and development institutions, such as the Indian Institute of Science and the Indian Space Research Organization, which attract top talent and support innovation.

Additionally, Bengaluru has a large pool of engineering graduates and IT professionals, making it an attractive location for tech companies to set up operations. The city also offers tax incentives and streamlined regulatory procedures to encourage business growth.

These factors combined make Bengaluru a hub for domestic and foreign high-tech companies seeking to tap into India's growing tech market.

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Value chain relationships are built on a foundation of trust and cooperation. Members of the value chain work together to share information, coordinate activities, and solve problems.

In the 21st century, value chain relationships are characterized by collaborative and cooperative behaviors rather than highly predatory behaviors in marketing channel relationships. Value chain relationships focus on mutual benefit for all parties involved. Value chain relationships are typically long-term, strategic partnerships that focus on creating and sustaining value over time.  

Value chain relationships are built on a foundation of trust and cooperation. Members of the value chain work together to share information, coordinate activities, and solve problems.  Value chain relationships rely on open communication between all parties involved. This means that information is shared freely and transparently to help ensure that everyone is working toward the same goals.

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Parsons did not assume the risk of being struck by the beam because he was attempting to warn the workers of the danger. His actions were reasonable under the circumstances, and he should not be barred from recovering damages.

Parsons will likely recover against the construction company because they owed a duty of care not only to the workers but also to pedestrians who may be in the vicinity of the construction site. The construction company has a responsibility to ensure that the site is safe for both workers and the public.

Parsons should not have sued the worker operating the crane because it is the responsibility of the construction company to hire and train qualified employees and ensure that they operate the equipment safely.

Strict liability does not apply in this case because the falling beam was not an inherent risk of the construction project.

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Parsons did not assume the risk of being struck by the beam because he was attempting to warn the company workers of the danger. His actions were reasonable under the circumstances.

he should not be barred from recovering damages. Parsons will likely recover against the construction company because they owed a duty of care not only to the workers but also to pedestrians who may be in the vicinity of the construction site. The construction company has a responsibility to ensure that the site is safe for both workers and the public. Parsons should not have sued the worker operating the crane becauseis the responsibility of the construction company to hire and train qualified employees and ensure that they operate the equipment safely.

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Either the agent or the principal may terminate an agency relationship.

An agency relationship is a legal relationship where one party, the agent, is authorized to act on behalf of another party, the principal, in business transactions. This relationship can be terminated by either party, subject to the terms of the agency agreement.

The principal may terminate the agency relationship for a variety of reasons, such as a breach of contract by the agent or the completion of the transaction for which the agent was hired. Similarly, the agent may terminate the agency relationship if the principal breaches the agency agreement or if the agent no longer wishes to represent the principal.

In some cases, the agency agreement may specify the conditions and procedures for terminating the relationship, including notice requirements and any penalties for early termination. However, in the absence of such provisions, either the agent or the principal may terminate the agency relationship at any time.

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The ability to use market multiples in the business valuation is what makes the market approach the best way to value a business.

Market multiples allow for a comparison of the business being valued with similar companies that have already been sold or are publicly traded. This method provides a realistic estimate of the business's value based on its market position, financial performance, and other relevant factors.

The accounting rules that apply to valuing businesses with the market approach, the ease of using the market approach for nonpublic companies, and the fact that market information is available for all businesses are also important factors to consider when using the market approach.

However, the ability to use market multiples is what truly sets this approach apart as the most effective way to value a business.

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a. To calculate the size of the monthly payments, we need to find the mortgage amount first.

Nicole made a downpayment of 25% of the value of the house, which is:

Downpayment = 25% x $475,000 = $118,750

Therefore, the mortgage amount is:

Mortgage amount = $475,000 - $118,750 = $356,250

The interest rate is 5.50% compounded semi-annually for 20 years. To find the monthly payments, we need to first calculate the number of semi-annual periods (n) and the semi-annual interest rate (i).

n = 20 years x 2 semi-annual periods per year = 40 semi-annual periods

i = 5.50% / 2 = 0.0275 (semi-annual interest rate)

Using the formula for calculating the monthly payments on a mortgage, we get: Monthly payment = (i * P) / (1 - (1 + i)^(-n * 12)), where P is the mortgage amount.

Plugging in the values, we get: Monthly payment = (0.0275 * $356,250) / (1 - (1 + 0.0275)^(-40 * 12))

= $2,085.62

Therefore, the size of the monthly payments is $2,085.62 (rounded to the nearest cent).

b. At the end of the 5-year term, the principal balance can be calculated using the formula for compound interest: P = A / (1 + r/n)^(n*t)

where P is the principal balance, A is the initial amount (mortgage amount), r is the annual interest rate, n is the number of compounding periods per year, and t is the time period in years.

For the first 5-year term, the annual interest rate is 5.50% and the compounding period is semi-annual (n=2). Therefore, r = 5.50% = 0.055 and n = 2

The time period is 5 years, so t=5.

Plugging in the values, we get: P = $356,250 / (1 + 0.055/2)^(2*5)

= $261,219.50

Therefore, the principal balance at the end of the 5-year term is $261,219.50 (rounded to the nearest cent).

c. If the mortgage is renewed for another 5-year term at 5.25% compounded semi-annually, we need to recalculate the monthly payments using the new interest rate.

The new semi-annual interest rate (i) is: i = 5.25% / 2 = 0.02625

The number of semi-annual periods (n) is: n = (20 years - 5 years) x 2 = 30 semi-annual periods

Using the same formula as before, we get:

Monthly payment = (0.02625 * $261,219.50) / (1 - (1 + 0.02625)^(-30 * 12))

= $1,564.92

Therefore, the size of the monthly payments after the first 5-year term is $1,564.92 (rounded to the nearest cent).

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The annual operating cash flow is $24,912.50.

To calculate the annual operating cash flow, we need to consider the annual revenues, variable costs, fixed costs, depreciation, and tax rate.

1. First, find the annual profit by subtracting variable and fixed costs from annual revenues:

$133,700 - $80,800 - $21,300 = $31,600.

2. Next, add the annual depreciation to the annual profit: $31,600 + $4,850 = $36,450.

3. Calculate the taxable income:

$31,600 - $4,850 = $26,750.

4. Determine the tax amount by multiplying taxable income by the tax rate:

$26,750 × 25% = $6,687.50.

5. Subtract the tax amount from the income before taxes:

$26,750 - $6,687.50 = $20,062.50.

6. Finally, calculate the annual operating cash flow by adding the after-tax income and depreciation:

$20,062.50 + $4,850 = $24,912.50.

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Early adopters are the second group of consumers to adopt an innovation on the diffusion of innovation curve. They are leaders in a social setting, deliberate in their decision-making process, and can be a key target for businesses and innovators seeking to successfully introduce new innovations to the market.

The second group of consumers to adopt an innovation on the diffusion of innovation curve are the early adopters. They tend to be leaders in a social setting and are eager to try out new ideas and products. They are a crucial group for the success of an innovation because they are the ones who bridge the gap between the innovators and the early majority.

Early adopters are different from the first movers or innovators, who are the first to try out a new idea or product. Early adopters are more deliberate in their decision-making process and tend to be more strategic in their adoption of new innovations. They carefully evaluate the potential benefits and risks before deciding to adopt.

For businesses and innovators, targeting early adopters can be a key strategy for successful adoption of new innovations. Early adopters can provide valuable feedback, create positive word-of-mouth buzz, and help to establish credibility for the innovation among the broader market.

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Dylan's decision to hand over the deed to her property rather than face foreclosure proceedings is an example of a deed in lieu of foreclosure.

This is a process in which the borrower voluntarily transfers ownership of the property to the lender to satisfy the mortgage debt and avoid foreclosure. By doing so, the borrower avoids the negative consequences of foreclosure, such as damage to their credit score, and the lender can avoid the costs and delays associated with foreclosure proceedings.

Dylan is in default on her mortgage, which means she has failed to meet the required payment obligations. In this situation, she decides to hand over the deed to her property rather than face foreclosure proceedings. This is an example of a "deed in lieu of foreclosure." This is a voluntary agreement between the borrower and the lender, where the borrower transfers ownership of the property to the lender to satisfy the remaining debt and avoid foreclosure.

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Having an independent party assess each year the adequacy of a company's internal control procedures is an example of a detective control known as audits.

Audits are an important tool used by organizations to evaluate the effectiveness of their internal controls and ensure that they are operating in accordance with established policies and procedures During an audit, an independent auditor will review the company's financial statements and internal control procedures to determine whether they are accurate and effective. The auditor will also look for any weaknesses or deficiencies in the company's internal controls and make recommendations for improvements.Audits are an important part of a company's overall internal control system and can help to identify potential risks and vulnerabilities. They also provide assurance to stakeholders, such as shareholders, lenders, and customers, that the company's financial statements are reliable and accurate.Other detective controls include separation of duties, performance reviews, and reconciliations. Separation of duties involves dividing responsibilities among different employees to prevent fraud or errors from occurring. Performance reviews involve evaluating employee performance to ensure that they are following established policies and procedures. Reconciliations involve comparing different sets of records to ensure that they are accurate and consistent.

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The net present value is a measure of the expected profitability of an investment by comparing the present value of its expected cash inflows to the cost of the investment. In this scenario, Build's management can use the calculated net present value to make a more informed decision on whether to invest in the new machine.

To calculate the NPV, we need to first determine the cash inflows and outflows for each year. In this case, the cash inflow for each year is the sales revenue of $200,000, and the cash outflow is the total expenses of $80,000, excluding depreciation. To calculate the depreciation, we need to divide the cost of the machine ($300,000) by its useful life (5 years), which gives us an annual depreciation expense of $60,000. We subtract this depreciation expense from the cost of the machine to get the tax basis, which is $240,000.

To calculate the tax savings due to depreciation, we need to multiply the depreciation expense by the combined income tax rate of 40%, which gives us $24,000. We subtract this tax savings from the annual cash outflow of $80,000 to get a net cash outflow of $56,000 per year.

Using the PV annuity factor for 5 years at a rate of 10%, which is 3.791, we can calculate the present value of the net cash flows for each year. We multiply the annual net cash flow of $56,000 by the PV annuity factor of 3.791 to get a present value of $212,296. Adding up the present values for all 5 years gives us a total present value of $1,061,480.

To calculate the NPV, we subtract the initial cost of the machine ($300,000) from the total present value of the cash flows ($1,061,480), which gives us a net present value of $761,480. Rounded to the nearest whole dollar, the net present value of the investment is $761,480.

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True. This is because:

In a free-market economic system, decisions on production and distribution are made by buyers and sellers, with minimal intervention from the government or other external factors. The demand and supply of goods and services determine what is produced and at what quantity, and prices are set based on the perceived value by buyers and sellers in the market.  The government typically plays a limited role in regulating the market, allowing market forces to determine prices and allocate resources. In a free-market system, businesses compete with each other to provide goods and services that meet the needs and wants of consumers, and consumers are free to choose what they want to buy at prices they are willing to pay.

Free-market economic system is one in which the market of buyers and sellers decides what is produced, how much is produced, and how it is distributed, without interference from the government or other outside forces. The pricing of goods and services is also determined by the forces of supply and demand in a free-market system. In this system, businesses compete with each other to offer the best products or services at the most competitive prices, and consumers are free to choose what they want to buy based on their preferences and budgets.

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The money multiplier in this scenario can be calculated using the formula: Money Multiplier = 1 / Reserve Requirement Ratio. Therefore, in this case, the money multiplier would be 1 / 0.15, which equals 6.67. This means that for every dollar held in reserves, the banks can potentially create up to $6.67 in new money through lending.

The money multiplier is the amount by which the money supply is increased by each dollar increase in reserves. It is calculated as:

Money Multiplier = 1 / Reserve Requirement

In this case, the reserve requirement is 15%, so the money multiplier is:

Money Multiplier = 1 / 0.15

Money Multiplier = 6.67

Therefore, each dollar increase in reserves will result in a $6.67 increase in the money supply

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After financing its capital budget and keeping its optimal capital structure intact, Driver Corporation's dividend payout will be $23.4 million.

To calculate the dividend payout for Driver Corporation after financing its capital budget, we need to consider its optimal capital structure, EBIT, interest on debt, tax rate, and residual dividend policy.

1. Calculate the firm's earnings after interest and taxes (EAT):

EBIT = $98 million

Interest on debt = 10% of $200 million * 40% (debt portion) = $8 million

Earnings before taxes (EBT) = EBIT - Interest = $98 million - $8 million = $90 million

Taxes = EBT * Marginal Tax Rate = $90 million * 34% = $30.6 million

Earnings after taxes (EAT) = EBT - Taxes = $90 million - $30.6 million = $59.4 million

2. Determine the amount of equity and debt needed to finance the capital budget:

Capital Budget = $60 million

Equity portion = 60% * $60 million = $36 million

Debt portion = 40% * $60 million = $24 million

3. Calculate the remaining earnings after financing the capital budget:

Remaining EAT = EAT - Equity portion = $59.4 million - $36 million = $23.4 million

4. Determine the dividend payout:

Since Driver Corporation maintains a residual dividend policy, the remaining earnings after financing the capital budget will be distributed as dividends. Therefore, the dividend payout will be $23.4 million.

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The correct answer is (b). A + B + C + D + E + F.

This is because:

Total surplus is the total welfare generated by a market, which is the sum of consumer surplus and producer surplus. Consumer surplus is the difference between the amount that consumers are willing to pay for a product and the actual price they pay. Producer surplus is the difference between the actual price producers receive for a product and the minimum price they are willing to accept.

- Consumer surplus represents the difference between what consumers are willing to pay and the price they actually pay. It is represented by areas A and B.
- Producer surplus represents the difference between the price producers receive and their cost of production.

If there is no tax placed on the product in this market, then the total surplus is the sum of the following areas:

A: Consumer surplus

B: Producer surplus

C: Government revenue (which is zero in this case)

D: Deadweight loss (which is also zero in this case, since there is no tax)

E: Economic rent (which is the additional surplus generated by a market when a resource is scarce)

F: Any external benefits or costs (which are assumed to be zero in this case)

Therefore, the total surplus in this market is the sum of A + B + C + D + E + F, which is answer choice b.

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Yes, this call option should be exercised at time 3 months after time 0. Therefore, the correct option is B.

To determine whether an American Call option with a strike of $100 and a term of 6 months should be exercised at 3 months after time 0, given a spot price of $105, a dividend of $1, and a risk-free rate of 5%, we will compare the payoff of early exercise to the payoff of holding the option to maturity.

1: Calculate the payoff from early exercise.

If the option is exercised at 3 months, the payoff will be the difference between the spot price and the strike price: $105 - $100 = $5.

Step 2: Calculate the present value of the dividend.

The present value of the $1 dividend can be calculated as: $1 / (1 + 0.05)^0.25 = $0.9877, where 0.25 is the remaining 3 months in terms of years.

Step 3: Adjust the spot price for the dividend.

Since the dividend will be paid, we adjust the spot price: $105 - $0.9877 = $104.0123.

Step 4: Calculate the intrinsic value of the option.

The intrinsic value of the option is the difference between the adjusted spot price and the strike price: $104.0123 - $100 = $4.0123.

Since the payoff from early exercise ($5) is greater than the intrinsic value of holding the option to maturity ($4.0123), the option should be exercised at 3 months after time 0. The answer is (b) Yes.

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When one fixed and one variable input arc are used to produce good X and the marginal physical product of the variable input increases, the marginal cost decreases.

In a production process where one fixed input and one variable input are used to produce good X, the relationship between marginal physical product (MPP) of the variable input and marginal cost (MC) is crucial for understanding the efficiency of production. When the MPP of the variable input increases, the MC of producing good X decreases.

The MPP is the additional output generated by using an extra unit of the variable input, holding other factors constant. When the MPP of the variable input increases, it means that the productivity of the input is improving, and a higher output is generated with each additional unit. This implies that fewer resources are needed to produce each unit of good X, which reduces the cost of production.

On the other hand, MC is the additional cost incurred when producing one more unit of good X. It is inversely related to the MPP because as the MPP increases, the variable input is being used more efficiently, thus reducing the cost per unit produced. Consequently, the MC decreases as the MPP increases.

In summary, when the marginal physical product of the variable input increases, the marginal cost of producing good X decreases. This relationship reflects the improved efficiency and productivity of the variable input in the production process.

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The net single premium per $1,000 for a one-year term insurance policy sold to a man at age 40 assuming a 5.5 percent interest rate is $1.56.

An insurance policy is a legal contract between an insurance company and an individual or business that outlines the terms of the insurance coverage. It documents the coverage amount, type of coverage, and the duration of the policy. It also outlines any exclusions and other restrictions. The policyholder is required to pay a specified premium in exchange for the coverage. In case of a claim, the insurance company will pay the policyholder a sum of money as specified in the policy.

The net single premium per $1,000 for a one-year term insurance policy sold to a man of age 40 is calculated by multiplying the yearly probability of dying by the present value of $1 one year from now (assuming a 5.5% interest rate): Net Single Premium = .00165 x .9479 = $1.56.

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It is true that "residual income indicates that the segment’s return on investment is greater than the company’s target rate of return" . It is a financial performance measure that indicates the excess of actual income earned by a business unit over its expected income.

If the residual income is positive, it means that the segment has generated more income than the company's target rate of return, which is the minimum return expected by investors. A positive residual income shows that the segment is profitable and creates value for the company.

On the other hand, a negative residual income indicates that the segment is not meeting the target rate of return and is not contributing to the company's profitability. Residual income is a useful tool for evaluating the financial performance of business units and for making investment decisions.

By calculating residual income, managers can identify the most profitable segments and allocate resources accordingly to maximize the company's overall return on investment. The answer is true.

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The identified profile can then be used for various purposes, such as personalizing the user's experience on the website, sending targeted marketing emails, or offering tailored product recommendations. The correct answer is C.

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The value of the European call option is $15.56 and the value of the European put option is $6.52.

To solve this problem, we can use the Black-Scholes formula to calculate the option price. The formula for a European call option is:

Call [tex]= SN(d1) - Xe^(-r*T)*N(d2)[/tex]

Where:

S = stock price,X = strike price, r = risk-free rate, T = time to maturity, N = standard normal cumulative distribution function, d1 = (ln(S/X) + (r + 0.5*sigma^2)T) / (sigmasqrt(T))

d2 = d1 - sigma * sqrt(T)

Similarly, the formula for a European put option is:

Put =[tex]Xe^(-rT)N(-d2) - SN(-d1)[/tex]

Where the values of S, X, r, T, and sigma (volatility) are the same as in the call option formula, and d1 and d2 are calculated in the same way.

(a) Using the given values, we can calculate the call option price as:

S = $60

X = $55

r = 4%

T = 2 years

sigma = 20%

[tex]d1 = (ln(60/55) + (0.04 + 0.50.2^2)2) / (0.2sqrt(2)) = 0.8104[/tex]

d2 = 0.8104 - 0.2sqrt(2) = 0.1418

N(d1) = 0.7910

N(d2) = 0.5562

Call =[tex]600.7910 - 55e^{(-0.04*2)*0.5562} = $15.56[/tex]

Similarly, we can calculate the put option price as:

N(-d1) = 0.2090

N(-d2) = 0.4438

Put[tex]= 55e^(-0.042)0.4438 - 600.2090 = $6.52[/tex]

Therefore, the value of the European call option is $15.56 and the value of the European put option is $6.52.

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A good leader is key to making an employee believe that pay is linked to individual performance False.

Employee feedback is provided during the assessment process, which also helps managers decide whether to provide bonuses or salary raises and identifies areas for development. Continuously subpar performance may result in reprimands or termination.

The process of communicating an employee's success and advising them on potential career roadblocks is known as performance management. On the other hand, a performance appraisal provides feedback and an objective assessment of an employee's performance.

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The disadvantage of individual incentives that this situation illustrates is that "Individual incentives may not fit organizational culture."

When an individual incentive program is introduced, it can create a competitive environment where employees are motivated to prioritize their own interests over those of the team. This can result in a breakdown of teamwork and a negative impact on organizational culture.

In this scenario, Aleksander and his team members feel like they are competing with each other, rather than working together as a team. This suggests that the individual incentive program is not aligned with the team-oriented culture of the organization, and may be causing more harm than good.

Therefore, it is important for organizations to carefully consider their culture and values when designing and implementing incentive programs. Incentive programs should be aligned with the organization's goals and values, and should encourage behaviors that support teamwork and collaboration, rather than competition and individualism.

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The disadvantage the given question illustrates is: B) Individual incentives may motivate undesirable employee behaviors. Thus, option B is correct.

In this case, the individual incentive program is causing team members to compete against each other rather than collaborating and working together, which is an undesirable behavior in a team-oriented environment. Teamwork has a number of advantages in a work environment that include the following:

1. Effective communication

2. Working hard towards a common goal

3. Improves problem solving skills

4. Contributes to the culture of the company

5. Increases employee engagement

Thus, it is more beneficial to provide group incentives rather than individual incentives as the former promote work culture while the latter leads to undesirable employee behavior. Option B is the correct option.

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The answers are as follows:

[a] Average return- 9.20%

[b] Variance- 0.052820

[c] Standard deviation - 22.98%

A risk premium is the projected return on an asset that is higher than the risk-free rate of return. The risk premium on an asset is a sort of remuneration for investors. In exchange for accepting more risk in a particular investment than in a risk-free asset, it serves as compensation to investors.

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Loans provided by government agencies differ from loans provided by private lenders in source of fund, loan purpose, interest rate, loan eligibility and requirements, risk assessment, and loan repayment.

1. Source of Funds: Government agencies use public funds (taxpayer money) to provide loans, while private lenders use private capital from individuals or organizations.

2. Loan Purpose: Government agencies often provide loans to support social and economic development, such as infrastructure projects, education, or healthcare. Private lenders, on the other hand, focus on providing loans for profit-making purposes, such as business expansion, investments, or personal consumption.

3. Interest Rates: Government agencies usually offer loans at lower interest rates compared to private lenders. This is because government loans aim to promote social welfare, while private lenders are profit-driven.

4. Loan Eligibility and Requirements: Government loans typically have more stringent eligibility requirements, targeting specific groups or sectors. Private lenders, however, may have more flexible lending criteria, which can result in a broader range of borrowers.

5. Risk Assessment: Government agencies may be more willing to provide loans to high-risk borrowers, while private lenders focus on the creditworthiness of borrowers to minimize risks.

6. Loan Repayment: Government loans might have more flexible repayment terms, such as longer repayment periods or income-based repayment plans. Private loans usually have stricter repayment terms, which can result in higher monthly payments.

In summary, loans provided by government agencies and private lenders differ in terms of their funding sources, purposes, interest rates, eligibility, risk assessment, and repayment terms. Government loans often focus on promoting social welfare and development, while private loans aim to generate profits for the lender.

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The activity known as shirking is least likely to occur when the earnings of a worker are closely tied to the worker's output. Thus, the correct answer is option c.

When workers are incentivized to produce more and are compensated accordingly, they are less likely to engage in shirking or avoiding work. Monitoring, equal wage rates, and separating firm ownership from managerial control may not necessarily discourage shirking behavior. Shirking makes a firm's productivity decline. Thus, the firm needs to offer its workers higher wages to eliminate shirking. Then all firms try to eliminate activity of shirking, which pushes up average wages and decreases employment.

Therefore, the correct answer to the given question is option c: the earnings of a worker are closely tied to the worker's output.

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The answer to the question is the price of the bond will change by approximately 2.47%. To calculate the price of the bond, we need to find the present value of all the cash flows from the bond. The coupon payments are semi-annual, so we need to use the semi-annual yield of 6% (12% per annum/2) for discounting. Using the formula for the present value of a bond, we get:

PV = (5/1.06) + (5/1.06^2) + (5/1.06^3) + (105/1.06^3) = $87.35

Therefore, the price of the bond is $87.35.

To calculate the duration of the bond, we need to find the weighted average of the time to receive each cash flow, weighted by the present value of that cash flow. Using the formula for the bond duration, we get:

Duration = [(0.5 x 1/1.06) + (1 x 2/1.06^2) + (1.5 x 3/1.06^3) + (1.5 x 3/1.06^3)] / ($87.35 x 0.06)

Therefore, the duration of the bond is 2.47 years.

Duration is a measure of the sensitivity of the bond price to changes in interest rates. A higher duration means the bond price will be more sensitive to changes in interest rates. In this case, the duration of the bond is 2.47 years, which means that for every 1% change in interest rates, the price of the bond will change by approximately 2.47%.

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The expected return on the stock is 55.76%.

The expected return on a stock can be calculated using the Capital Asset Pricing Model (CAPM) which takes into account the risk-free rate, market return, and the stock's beta. The formula for CAPM is:

Expected Return = Risk-free Rate + Beta x (Market Return - Risk-free Rate)

Substituting the values given in the problem, we get:

Expected Return = 0.03 + 3.2 x (0.1855 - 0.03)

Expected Return = 0.03 + 0.4874

Expected Return = 0.5174 or 51.74%

Therefore, the expected return on the stock is 55.76% (rounding off to the nearest 0.01%).

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The present value of cash flows for project A is $123.56, and for project B it is $191.39. Since project B has a higher present value of cash flows, the financial manager should accept project B.

The internal rate of return (IRR) for project B is 16.6%, which is higher than the discount rate of 3%. Therefore, project B is also financially attractive since it generates a rate of return greater than the required rate of return.

To calculate the present value of cash flows for each project, the cash flows for each year are discounted at a rate of 3% using the present value formula. The sum of the discounted cash flows is the present value of cash flows.

The project with the higher present value of cash flows should be selected. The IRR of a project is the discount rate that makes the net present value of the project's cash flows equal to zero. If the IRR is greater than the required rate of return, the project is financially attractive.

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