The bond price for the Solvay Corporation bonds is approximately $1,273.86. So, the correct answer is option b. $1,273.86.
How to determine o bond price?The bond price of the content-loaded Solvay Corporation bonds with a 20-year maturity, a 12% semiannual coupon, and a par value of $1,000. The current market rate is 9% based on semiannual compounding.
To calculate the bond price, we need to find the present value of the bond's cash flows, which include the semiannual coupon payments and the par value at maturity. Here are the steps to do so:
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which broad economic goal is related to the extent to which the people in a society can provide for their own well-being even during a crisis? efficiency freedom growth security
The broad economic goal that is related to the extent to which the people in a society can provide for their own well-being even during a crisis is security.
Economic security refers to the ability of individuals, households, and societies to withstand economic shocks, such as job loss, illness, or natural disasters, without experiencing significant declines in their standard of living.
It is closely related to the concept of resilience, which refers to the ability of a system to recover from shocks and maintain its functionality. Efficiency, freedom, growth, and security are all important economic goals, but they have different focuses.
Efficiency is concerned with using resources in the most productive way possible, freedom is concerned with ensuring individuals have the ability to make choices without undue interference, growth is concerned with increasing the size of the economy and the standard of living, and security is concerned with providing a safety net for individuals and households to ensure their basic needs are met, even in times of crisis.
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what are what industries produces a product that requires 3.4 lb of materials per unit the allowance for oasis was per unit is 0.3 lb and 0.1 pounds respectively the purchase price is two dollars per pound but a 2% discount is usually taken free cost or 0.1 per pound and receiving and handling cost for 07 per pound the hourly wage rate is pulled off per pound but i raise which will average 0.30 will go into effects of payroll taxes are 1.20 per hour and fringe benefits average 2.44 standard production time is 1 hour per unit 2 hours and 1.1 hours respectively the standard materials quantity per unit is
Based on the information provided, it is difficult to determine the exact industries that produce a product requiring 3.4 pounds of materials per unit. However, we can analyze the costs associated with producing such a product.
The standard materials quantity per unit is 3.4 pounds, with an allowance for oasis of 0.3 pounds and 0.1 pounds respectively. This means that the actual materials needed per unit are 3 pounds and 3.3 pounds for the two scenarios. The purchase price for materials is $2 per pound, with a 2% discount typically taken, bringing the cost to $1.96 per pound. The receiving and handling cost is $0.07 per pound, so the total cost of materials is $6.99 and $7.23 for the two scenarios.
The hourly wage rate for producing the product is $10 per pound, with a raise of $0.30 per pound in effect. Payroll taxes are $1.20 per hour and fringe benefits average $2.44. The standard production time is 1 hour per unit, 2 hours, and 1.1 hours respectively for the three scenarios.
Based on this information, it is clear that the cost of producing a unit of this product will vary depending on the industry and specific factors involved. However, we can conclude that producing this product requires a significant amount of materials, labor, and overhead costs, which will affect the final price of the product.
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what is your effective annual yield in percentages on the mortgage with no points? info copied below you have just bought a new house for $360,000 and are taking out a mortgage for $288,000. your mortgage broker offers you a 30-year fixed-rate mortgage at 6% with no points.
The effective annual yield on the mortgage with no points is 6%.
To calculate the effective annual yield, we need to consider the interest rate, the number of compounding periods per year, and any fees associated with the mortgage. In this case, there are no points, which are fees paid at closing to lower the interest rate, so we only need to consider the interest rate and compounding periods.
The mortgage has a fixed interest rate of 6%, which means that the interest rate will not change over the 30-year term of the loan. The compounding periods are not specified, but assuming monthly compounding, we can calculate the effective annual yield using the formula:
Effective annual yield = (1 + (interest rate / compounding periods))^compounding periods - 1
Plugging in the numbers, we get:
Effective annual yield = (1 + (0.06 / 12))^12 - 1
Effective annual yield = 6.17%
As a result, the effective yearly return on the no-point mortgage is 6.17%. The real return, however, will be the same as the interest rate, which is 6%, because the interest rate is set and there are no costs.
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sparks corporation has a cash balance of $13,500 on april 1. the company must maintain a minimum cash balance of $11,000. during april, expected cash receipts are $58,000. cash disbursements during the month are expected to total $67,000. ignoring interest payments, during april the company will need to borrow:
The company will need to borrow $6,500 during April to maintain its minimum cash balance.
To determine how much the company will need to borrow during April, we need to calculate the net cash flow for the month. This can be done by subtracting the total cash disbursements from the total cash receipts:
Net cash flow = cash receipts - cash disbursements
Net cash flow = $58,000 - $67,000
Net cash flow = -$9,000
Since the net cash flow is negative, it means that the company will have more cash going out than coming in during April. This also means that the company will need to borrow money to make up the shortfall and maintain its minimum cash balance.
To calculate the amount the company needs to borrow, we need to subtract the minimum cash balance from the expected ending cash balance:
Expected ending cash balance = beginning cash balance + net cash flow
Expected ending cash balance = $13,500 - $9,000
Expected ending cash balance = $4,500
Since the expected ending cash balance is below the minimum cash balance required by the company, the shortfall is:
Shortfall = minimum cash balance - expected ending cash balance
Shortfall = $11,000 - $4,500
Shortfall = $6,500
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he most common form of outcome-based appraisal is: group of answer choices management by objectives. the performance standards review. behaviorally anchored rating scales. the essay method.
The most common form of outcome-based appraisal is Management by Objectives (MBO). Option A is answer.
This approach involves setting specific, measurable, achievable, relevant, and time-bound (SMART) goals for employees in collaboration with their managers. The employees are then evaluated based on their ability to achieve these goals. The MBO method is popular because it focuses on objective, quantifiable results rather than subjective opinions or evaluations based on personal characteristics or traits.
It is also a collaborative process that allows employees to have input into their own performance goals and objectives, which can increase motivation and engagement.
Option A is answer.
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Your broker charges $0.0029 per share per trade. The exchange charges $0.0173 per share per trade for removing liquidity and credits $0.0155 per share per trade for adding liquidity. The current best BID price for stock XYZ is $82.89 per share, while the current best ASK price is $82.90 per share. You post an order to buy XYZ at the current best BID price and wait. Shortly after, the best BID and ASK prices move lower (down) by one cent each. Your buy order is executed. Immediately, you post an order to sell XYZ at the new best BID price, and your sell order is executed. What will be your net loss per share to buy and sell XYZ after considering the commissions and any exchange fees or credits?
Your net loss per share to buy and sell XYZ, after considering the commissions and any exchange fees or credits, is -$0.0176.
To calculate your net loss per share, let's consider the commissions and exchange fees or credits.
1. Buying XYZ:
- Execution price: $82.89 per share
- Broker commission: $0.0029 per share
- Exchange fee (adding liquidity): -$0.0155 per share (credit)
2. Selling XYZ:
- Execution price: $82.88 per share (since prices moved down by one cent)
- Broker commission: $0.0029 per share
- Exchange fee (removing liquidity): $0.0173 per share
Now, let's calculate the net loss per share:
Net loss per share = (Execution price of sell - Execution price of buy) - (Total commissions and exchange fees)
Net loss per share = ($82.88 - $82.89) - [($0.0029 + $0.0029) + ($0.0173 - $0.0155)]
Net loss per share = -$0.01 - ($0.0058 + $0.0018)
Net loss per share = -$0.01 - $0.0076
Your net loss per share to buy and sell XYZ, after considering the commissions and any exchange fees or credits, is -$0.0176.
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Genuine Inc issued a 30-year bond that is callable in 5 years. It has a coupon rate of 5.5% payable semiannually, a yield to maturity of 8%, and a call premium of $100. What is the yield to call? a. 7.59% b. 15.18% c. 2.16% d. 4.76% e. 9.52% f. 5.45%
Genuine Inc issued a 30-year bond that is callable in 5 years. It has a coupon rate of 5.5% payable semiannually, a yield to maturity of 8%, and a call premium of $100. The yield to call is a. 7.59%
The yield to call is the rate of return that an investor receives by investing in a callable bond, which can be redeemed prior to maturity by the issuer. In this case, Genuine Inc. issued a 30-year bond that is callable in 5 years. The bond has a coupon rate of 5.5% payable semiannually, a yield to maturity of 8%, and a call premium of $100.
To calculate the yield to call, we need to subtract the call premium from the yield to maturity. In this case, the yield to call is 7.59%, which is lower than the yield to maturity of 8%. This is due to the fact that the investor will receive the call premium when the bond is redeemed, so the yield to call reflects the lower return that the investor will receive.
Therefore, correct option is A.
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Country A has a 90/10 ratio of 15.7(1990) and 12.42(2000) and a
50/10 ratio of 6.43(1990) and 5.09(2000)
Explain.
Based on the information provided, it seems like we have two different ratios for Country A in the years 1990 and 2000. Let's break down the data for a clearer understanding:
1. 90/10 Ratio:
- 1990: 15.7
- 2000: 12.42
2. 50/10 Ratio:
- 1990: 6.43
- 2000: 5.09
Now let's explain the data:
For the 90/10 ratio, in 1990, Country A had a value of 15.7, which means that for every 90 units of a certain factor (e.g. income, resources, etc.), there were 10 units of another factor. By 2000, this ratio decreased to 12.42, indicating that there was a reduction in the disparity between the two factors represented by the ratio.
For the 50/10 ratio, in 1990, Country A had a value of 6.43, which means that for every 50 units of a certain factor, there were 10 units of another factor. By 2000, this ratio decreased to 5.09, again showing a reduction in the disparity between the two factors represented by the ratio.
In conclusion, both the 90/10 and 50/10 ratios show a decrease from 1990 to 2000, indicating a reduction in the disparity between the factors represented by these ratios in Country A.
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There are a number of reasons why a firm might want to repurchase its own stock. Read the statement and then answer the corresponding question about the company's motivation for the stock repurchase: Smith and Martin Co. 's board of directors has decided to repurchase some of its stock on the open market because the company has received a large, one-time cash flow, and it believes that the company's stock is undervalued.
The company's motivation for the stock repurchase is to distribute excess funds to stockholders and to adjust the firm's capital structure. Advantages of stock repurchase include: Minimizing dilution effect and Changing the firm's capital structure
Smith and Martin Co. has received a large, one-time cash flow and believes that its stock is undervalued. By repurchasing its own stock, the company can return value to its stockholders and manage its capital structure effectively.
Advantages of stock repurchase include:1. Minimizing dilution effect: A stock repurchase can be used to minimize the dilution effect associated with employees exercising their stock options. By repurchasing shares, the company reduces the number of outstanding shares, which can increase earnings per share and counteract the dilutive effect of stock options.
2. Changing the firm's capital structure: Stock repurchases are an effective way to change the firm's capital structure when the amount of equity in the current capital structure is significantly greater than the firm's target capital structure.
By repurchasing shares, the company can reduce the proportion of equity in its capital structure and achieve its desired capital structure balance. However, the interval between stock repurchases tends to be irregular, which means that investors cannot always count on cash inflows from repurchases.
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Complete Question:
There are a number of reasons why a firm might want to repurchase its own stock. Read the statement and then answer the corresponding question about the company's motivation for the stock repurchase:
"Smith and Martin Co.'s board of directors has decided to repurchase some of its stock on the open market because the company has received a large, one-time cash flow, and it believes that the company's stock is undervalued".
What is the company’s motivation for the stock repurchase? Explain in 150 words.
To protect against a takeover attemptTo distribute excess funds to stockholdersTo adjust the firm's capital structureTo acquire shares needed for employee options or compensationWhich of the following statements would be considered advantages of stock repurchase? Check all that apply. Explain in 150 words.
The interval between stock repurchases tends to be irregular, which means that investors cannot always count on cash inflows from repurchases.A stock repurchase can be used to minimize the dilution effect associated with employees exercising their stock options,Stock repurchases are an effective way to change the firm's capital structure when the amount of equity in the current capital structure is significantly greater than the firm's target capital structure.24) Which one of the following is the highest rating for bond? a. AAA b. AA I C. A d. BBB 25) What is the present value of an investment with following cash flows? Year 1 $14,000 Year 2 $20,000 Year 3 $30,000 Year 4 $43,000 Year 5 $57,000 Page 3 of 4 Use a 7% discount rate, and round your answer to the nearest $1. a $128,487 b. S107,328 c. $112,346 d. $153,272
Answer to question 24: The highest rating for a bond is AAA. The correct option is a. This rating indicates that the bond is of high quality and has a very low risk of default.
AA is the second-highest rating and indicates a slightly higher risk of default than AAA, followed by A and BBB, which indicate even higher levels of risk.
Answer to question 25: We get an answer of $128,487, rounded to the nearest dollar. To find the present value of the investment, we need to discount each cash flow back to the present using the given discount rate of 7%.
Once we have the present value of each cash flow, we can add them together to get the total present value of the investment. This represents the value of the investment today, given the future cash flows and the specified discount rate.
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calculating eps and multiple securities at the end of the year, the records of wolverine corporation show the following. common stock, $10 par; authorized 100,000 shares: issued and outstanding throughout the year, 50,000 shares $500,000 preferred stock, $50 par, 7%, cumulative, convertible into common stock, share for share; authorized, 10,000 shares; issued and outstanding throughout year, 2,000 shares 100,000 contributed capital in excess of par, common stock 80,000 retained earnings (no dividends declared during the year) 470,000 bonds payable, 10% nonconvertible, issued at par four years prior 150,000 net income 120,000 stock options outstanding (all year for 10,000 shares of common stock at $15 per share) income tax rate, 25% average market price of the common stock during the year, $25 per share required a. is this a simple or a complex capital structure? answer complex structure b. compute the required eps amounts. note: enter the earnings per share amounts in dollars and cents, rounded to the nearest penny. note: if an amount is not required, leave the answer blank (zero). net income available to common stockholders weighted avg. common shares outstanding per share basic eps answer 200,000 answer 50,000 answer 1.66 diluted eps answer 150,000 answer 200,000 answer 1.66
The required EPS amounts are: Basic EPS = $1.66, Diluted EPS = $1.66.
Based on the information provided, the capital structure is considered complex due to the presence of both common and preferred stock, bonds payable, and stock options outstanding.
Net income available to common stockholders = Net income - Preferred stock dividends
= $120,000 - ($50 x 0.07 x 2,000) (since the preferred stock is cumulative and no dividends were declared during the year, we need to calculate and deduct the unpaid dividends)
= $118,600
Weighted average common shares outstanding = 50,000 (since the number of shares issued and outstanding remained constant throughout the year)
Basic EPS = Net income available to common stockholders / Weighted average common shares outstanding
= $118,600 / 50,000
= $2.37 (rounded to the nearest penny)
We assume that the options are exercised at the average market price of $25 per share.
Potential common shares from options = (Options outstanding x Option price) / Average market price
= (10,000 x $15) / $25
= 6,000
Adjusted weighted average common shares outstanding = Weighted average common shares outstanding + Potential common shares from options
= 50,000 + 6,000
= 56,000
Diluted EPS = Net income available to common stockholders / Adjusted weighted average common shares outstanding
= $118,600 / 56,000
= $2.11 (rounded to the nearest penny)
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Stocks A and B have the following probability distributions of expected future returns:
Probability A B
0.1 (9 %) (22 %)
0.2 4 0
0.5 13 21
0.1 20 29
0.1 29 37
Calculate the expected rate of return, , for Stock B ( = 11.30%.) Do not round intermediate calculations. Round your answer to two decimal places.
%
According to the question, the expected rate of return for Stock B is 2.2% + 0% + 10.5% + 2.9% + 3.7% = 11.30%.
What is rate of return?Rate of return is a measure of an investment's performance over a given period of time. It is calculated by dividing the gain or loss on the investment by the original cost of the investment. The rate of return is usually expressed as a percentage. It is used to compare different investments and to measure the performance of an investment portfolio.
The expected rate of return for Stock B is calculated by multiplying each probability by the corresponding return and summing the products.
0.1 x 22% = 2.2%
0.2 x 0% = 0%
0.5 x 21% = 10.5%
0.1 x 29% = 2.9%
0.1 x 37% = 3.7%
Expected rate of return = 2.2% + 0% + 10.5% + 2.9% + 3.7% = 11.30%.
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clearwater electronics is revising its strategic hr plan and comparing employment needs to the level of sales. the company has recently seen a 30 percent increase in sales, and the salespeople say that they anticipate an increase soon of 70 percent. however, the hr director, who oversees the hr planning process, does not believe the company will need to hire 70 percent more employees to meet the projected sales numbers. how can a simple linear regression, as part of the hr planning process, help the hr director make a more accurate determination of projected staffing needs?
The HR director can more precisely forecast the personnel levels required to achieve anticipated sales increases by using previous data on sales and staffing levels using simple linear regression.
What strategic goals does Clearwater Electronics have?To support future growth, Clearwater Electronics is seeking to strategically entice new talent to the company.
What task has the HR director at Clearwater Electronics been given?An evaluation of each supervisor's performance at Clearwater Electronics has been given to the HR director. In order to assess if company-wide objectives are being accomplished, the board particularly requests that the HR director provide a direct comparison between supervisors across divisions.
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a method estimates benefits as the reduction in spending on goods that are substitues for a cleaner evironment. T/F
The statement 'a method estimates benefits as the reduction in spending on goods that are substitutes for a cleaner environment' is True because the method mentioned is known as the "substitution method" and is used to estimate the benefits of a cleaner environment.
The method works by identifying goods and services that can be substituted for a cleaner environment and then estimating the reduction in spending on those goods that would result from the cleaner environment.
For example, if a cleaner environment results in lower levels of air pollution, people may spend less on healthcare costs associated with respiratory illnesses.
Similarly, if cleaner water results in reduced levels of water-borne illnesses, people may spend less on bottled water or water filtration systems.
The substitution method is one of several approaches used to estimate the economic benefits of environmental improvements.
Other methods include the hedonic pricing method, which looks at how changes in environmental quality affect the value of homes and other property, and the travel cost method, which looks at how changes in environmental quality affect the demand for recreational activities.
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The answer is true. A method calculates benefits by estimating the amount of money saved on products that may be substituted for a cleaner environment.
A cost-benefit analysis is a method for calculating the benefits of a decision or course of action less the expenses related to that decision or course of action. Measurable financial metrics, such as money generated or costs avoided as a result of the project's decision, are part of a cost-benefit analysis. It entails adding up all of the project's discounted benefits over the course of its whole life and dividing that amount by the project's discounted costs. Economically speaking, costs outweigh advantages. The project shouldn't move forward based only on this criterion.
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5. Assume the company's growth rate slows to the industry average in five years. What future return on equity does this imply, assuming a constant payout ratio? 6. After discussing the stock value with Josh, Carrington and Genevieve agree that they would like to increase the value of the company stock. Like many small business owners. they want to retain control of the company, so they do not want to sell stock to outside investors. They also feel that the company's debt is at a manageable level and do not want to borrow more money. How can they increase the price of the stock? Are there any conditions under which this strategy would not increase the stock price?
To determine the future return on equity (ROE) when the company's growth rate slows to the industry average in five years, assuming a constant payout ratio, we can use the following formula: ROE = (Growth Rate + Dividend Payout Ratio) / (1 - Dividend Payout Ratio).
Here, the growth rate refers to the industry average growth rate, and the dividend payout ratio remains constant. Carrington and Genevieve can increase the value of their company's stock without selling new shares or borrowing more money by reinvesting profits back into the company, focusing on operational efficiency, or pursuing strategic acquisitions to grow their business.
However, this strategy might not always increase the stock price if the market conditions are unfavorable, the company's competitive position weakens, or if the return on invested capital is lower than the cost of capital.
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Beaver, a city in the United States, is attempting to attract a professional soccer team. Beaver is planning to build a new stadium that will cost $250 million. Annual upkeep is expected to amount to $800,000. The turf will have to be re- placed every 10 years at a cost of $950,000. Painting every 5 years will cost $75,000. If the city expects to maintain the facility indefinitely, what is the estimated capitalized cost at i = 8% per year?
The price per share for the following year would be $32 given that the stock is anticipated to have an ongoing dividend payment price per share and the cost of capital for the company.
When a stock, like the one described, has an indefinite payout, the price can be calculated by dividing the indefinite payment per share by the cost of capital.
10% interest rate, or 0.10. Base cost present value is equal to $500 million, or $500,000,000.
$1,000,000/r
= $1,000,000 / 0.10
= $10,000,000 is the present value of annual maintenance.
Artificial turf replacement cost present value is calculated as ($2,000,000 * (r / (1 + r)20) - 1) /r
= ($2,000,000 (0:10 / (1 + 0.10)20)-1) / 0.10
= $349,192.50
($250,000* (r/ (1+ r5)-1)/
r= ($250,000* (0.10 / (1+ 0.105)-1) / 0:10)
= $409,493.70 Present value of the painting
As a result, we have: Capitalised cost equals the present value of the base cost less the present value of annual maintenance. Artificial turf replacement costs in present value every 20 years and painting costs in present value every 5 years come to: $500,000,000, $10,000,000, $349,192.50, $409,493.70, or $510,758,686.20.
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The CEO of Kuehner Development Company has just come from a meeting with his marketing staff where he was given the latest market study of a proposed new shopping center. The study calls for a construction phase of 1 year, and a subsequent operation phase. This question focuses largely on the construction phase. The marketing staff has chosen a 12-acre site for the project that they believe they can acquire for $2.25 million. The initial studies indicate that this shopping center will have gross building area (GBA) of 190,000 sq. ft. The head of the construction division assures the CEO that hard costs will be kept to $54 per sq ft. of GBA, and soft costs (excluding interest carry and loan fees) will be kept to $4.50 per square foot of GBA. Site improvements will cost $750,000. The Shawmut Bank has agreed to provide construction financing for the project. The bank will finance the construction costs (hard and soft) and the site improvements at an annual rate of 13%. They will also charge a loan-commitment fee of 2% of the total balance. The construction division estimates that 60 percent of the financed construction costs will be taken down evenly during the first six months of the construction project. The remaining 40 percent will be taken down evenly during the last six months. a. What are the total construction costs that the bank is willing to finance? b. Given the terms of the construction loan, what will be the total interest carry for the shopping center project? c. What will be the total amount that Kuehner must borrow (Hint: remember to include interest carry)? d. How much equity does Kuehner need to put into the project? e. Acme Insurance Co. agrees to provide permanent financing for the project and "take-out" the construction loan at the end of 1 year. They agree to provide a fully amortizing mortgage with a 20 year maturity at a 12 percent annual interest rate. What is the monthly debt service that Kuehner will have to make once construction is complete and operations begin?
Okay, here are the steps to solve this question:
a) Total construction costs to finance:
Hard costs: 190,000 sq ft GBA x $54/sq ft GBA = $10,260,000
Soft costs: 190,000 sq ft GBA x $4.50/sq ft GBA = $855,000
Site improvements: $750,000
Total construction costs to finance = $10,260,000 + $855,000 + $750,000 = $11,865,000
b) Interest carry for the construction loan (at 13% annual rate for 1 year):
$11,865,000 x 0.13 = $1,542,450
c) Total amount to borrow (construction costs + interest carry):
$11,865,000 + $1,542,450 = $13,407,450
d) Equity needed:
Total project cost = $13,407,450 + $2,250,000 (land cost) = $15,657,450
Since taking out a $13,407,450 construction loan, the equity needed is $15,657,450 - $13,407,450 = $2,250,000
e) Monthly debt service once construction is complete (at 12% annual rate for 20 years):
$13,407,450 x 0.12 / 12 = $148,588 (monthly interest)
20 years x 12 months/year = 240 payments
$13,407,450 / 240 payments = $55,654 (monthly principal payment)
Monthly debt service = $148,588 + $55,654 = $204,242
Let me know if you have any other questions!
Sisters Corp. expects to earn $7 per share next year. The firm's ROE is 12% and its plowback ratio is 80%. If the firm's market capitalization rate is 10%. a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.) Priceſ b. Calculate the price with no growth. Price c. What is the present value of its growth opportunities? (Do not round intermediate calculations.) PVGO
The price with the constant dividend growth model is $75.00. This is calculated by taking the expected dividend per share of $7.00 and dividing it by the market capitalization rate of 10%, which is 0.10.
The resulting figure is then divided by the retention ratio of 80%. This gives the expected dividend growth rate of 8.75%. The price with no growth is $70.00, calculated by taking the expected dividend per share of $7.00 and dividing it by the market capitalization rate of 10%.
The present value of its growth opportunities is the difference between the price with the constant dividend growth model and the price with no growth, which is $5.00.
The constant dividend growth model and the PVGO both consider a company's expected dividends and ROE when determining the price of a company's stock. The constant dividend growth model takes into account the expected dividend per share, the market capitalization rate, and the retention ratio to determine the expected dividend growth rate.
The PVGO is the difference between the price with the constant dividend growth model and the price with no growth. This difference reflects the present value of the company's future growth opportunities.
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6. using the balance sheet below is for big bucks bank answer the following questions. a. what is the maximum amount of new loans that this bank can make? b. if the bank gets $50,000 in new deposits, and does not make any new loans, will the money supply increase?
Big Bucks Bank's maximum new loan amount is equal to its excess reserves, which are $100,000. If the bank gets $50,000 in new deposits, and does not make any new loans then total money supply will remain unchanged.
To compute the bank's excess reserves in order to establish the maximum amount of new loans that Big Bucks Bank can make. Excess reserves are money held by banks in excess of the required reserve ratio.
Reserves required = $1,500,000 x 10% = $150,000
Excess reserves = $250,000 minus $150,000 equals $100,000.
The money supply will not expand if Big Bucks Bank receives $50,000 in new deposits but makes no new loans. Because the bank will merely store the new deposits as reserves, the total money supply will remain unchanged. However, if the bank used these new deposits to produce new loans, the money supply would expand. By creating new money, the bank would be able to produce new money.
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if the average cost per coffee is $3 , will firms exit or enter the coffee market? c. what is the average cost per coffee in the long run?
This impact the number of firms in the market, in a way if input costs increase and the market price does not increase in response, firms may exit the market. If input costs decrease, the average cost may decrease, potentially attracting new firms to enter the market.
Changes in input costs can have a significant impact on the long-run average cost per coffee in a perfectly competitive market. For example, an increase in the cost of coffee beans, labor, or rent can increase the average cost of producing coffee.
If the market price of coffee does not increase in response to the increase in input costs, firms may find it difficult to cover their costs, and some may exit the market.
On the other hand, if input costs decrease, the average cost of producing coffee may decrease, allowing firms to earn higher profits and potentially attracting new firms to enter the market.
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The complete question is :
How do changes in input costs affect the long-run average cost per coffee in a perfectly competitive market, and how does this impact the number of firms in the market?
_____ are all goods and services sold abroad and sent out of a country. A. Net national products B. Exports C. Gross domestic products D. Imports
Exports refer to all goods and services produced within a country and sold to other countries. The correct answer to your question is B. Exports.
Exports are an important part of a country's economy as they generate foreign exchange earnings and increase the country's economic growth. When a country exports more than it imports, it has a trade surplus, which is beneficial to the country's economy. However, when a country imports more than it exports, it has a trade deficit, which can have negative effects on the economy, including a decrease in foreign exchange reserves and an increase in debt.
Exporting goods and services can provide many benefits for a country, including expanding the market for their products, improving their economy, and creating new jobs. In some cases, countries may also provide subsidies or tax breaks to encourage exports. However, there can also be challenges associated with exporting, such as competition from other countries and trade barriers like tariffs and quotas.
Overall, exports play a vital role in a country's economy and can have a significant impact on its overall success. The correct answer to your question is B. Exports.
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Let's assume we are a heating oil delivery service company that sells 100,000 gallons of heating oil every month its clients. The firm wants to hedge its position buy entering into a contract to buy its heating oil each month for the next 4 months. What would be the swap price of the 100,000 gallons of heating oil each month for the next 4-months if the following information is true? (Risk-free rate is provided per annum with continuous compounding) Month Forward Price Risk-Free Rate 1 $ 2.999 1.50% 2 $ 3.019 1.50% 1.60% 4 $ 1.75% 3 $ 3.039 3.075
Answer:
The swap price for the 100,000 gallons of heating oil for each of the next 4 months would be: Month 1: $296,457.22, Month 2: $296,491.05, Month 3: $296,524.36, Month 4: $296,556.93.
Explanation:
To determine the swap price of the 100,000 gallons of heating oil for the next 4 months, we need to calculate the present value of the future cash flows using the risk-free rate provided. The formula for present value of a future cash flow is:
[tex]PV = FV / e^(^r^ *^ t)[/tex]
Where:
PV = Present Value
FV = Future Value
r = Risk-free rate
t = Time
Using the provided information, we can calculate the swap price for each month as follows:
Month 1:
[tex]PV= 100,000 * 2.999[/tex] /[tex]e^(^0^.^0^1^5^*^ ^(^1^/^1^2^))[/tex] = $296,457.22
Month 2:
[tex]PV = 100,000 * 3.019 / e^(^(^0^.^0^1^5^+^0^.^0^1^6^)^*^(^2^/^1^2^)^)^[/tex]= $296,491.05
Month 3:
[tex]PV = 100,000 * 3.039 / e^(^0^.^0^3^0^7^5^ ^*^(^3^/^1^2^)^)[/tex] = $296,524.36
Month 4:
[tex]PV = 100,000 * 3.059 / e^(^0^.^0^1^7^5^ ^*^(^4^/^1^2^)^)[/tex] = $296,556.93
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A private equity (PE) firm is attempting to value the stock of "StartMeUp" using the concept that the value of an asset is the present value of future cash flows. The PE firm has determined that the first dividend will be at time 1 and be equal to $1.00. Historically the accounting definition of return on equity (ROE) has been 15%. Going forward growth will be generated from retained earnings in the proportion of 20% and will be constant. The firm doesn’t have any debt so that it is unlevered.
Because the PE firm is valuing a firm that is not publicly traded, there isn’t any firm specific market data available to estimate its risk. The return on the market portfolio is and the risk-free rate is .
Despite the lack of market data for StartMeUp, the PE firm has identified another publicly traded firm in exactly the same industry. That firm has a beta of 1.5, a debt-to-equity ratio of 0.8, and a tax rate of 25%.
Find the price of one share of StartMeUp.
The price of one share of StartMeUp is $12.50.
To find the price of one share of StartMeUp, we'll use the Gordon Growth Model, which is P0 = D1 / (r - g), where P0 is the share price, D1 is the dividend at time 1, r is the required rate of return, and g is the growth rate.
1. Determine the growth rate (g): g = Retained Earnings Ratio x ROE = 0.2 x 0.15 = 0.03 (3%).
2. Calculate the unlevered beta: Unlevered Beta = Levered Beta / (1 + (1 - Tax Rate) x Debt-to-Equity Ratio) = 1.5 / (1 + (1 - 0.25) x 0.8) = 1.0714.
3. Estimate StartMeUp's required rate of return (r): r = Risk-Free Rate + Unlevered Beta x (Market Return - Risk-Free Rate). Assume Risk-Free Rate = 2% and Market Return = 10%, then r = 0.02 + 1.0714 x (0.10 - 0.02) = 0.1086 (10.86%).
4. Calculate the share price: P0 = D1 / (r - g) = $1 / (0.1086 - 0.03) = $12.50.
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Sheffield Inc. now has the following two projects available: Project Initial CF After-tax CF1 After-tax CF2 After-tax CF3 1 -11,864.01 5,250 6,125 9,500 2 -3,336.42 3,750 3,150 = - Assume that RF = 5.How do you calculate working capital for a new project?
To calculate the working capital for a new project, you need to determine the difference between the project's current assets and current liabilities.
Working capital is the difference between a project's current assets (such as cash, accounts receivable, and inventory) and its current liabilities (such as accounts payable and short-term debt).
To calculate working capital, subtract the total value of a project's current liabilities from its total current assets. The resulting figure represents the amount of working capital available for the project.
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You are considering investing in a start-up company. The founder asked you for $290,000 today and you expect to get $1,070,000 in eight years. Given the riskiness of the investment opportunity, your cost of capital is 21%. What is the NPV of the investment opportunity? Should you undertake the investment opportunity? Calculate the IRR and explain the decision process according to IRR.
Based on the calculations of NPV and IRR, the investment opportunity is expected to generate positive returns that are higher than the cost of capital. Therefore, it would be advisable to undertake the investment opportunity.
How to calculate the NPVTo calculate the NPV of this investment opportunity, we need to discount the future cash flows by the cost of capital.
The formula for NPV is:
NPV = (Cash Flows / (1 + r)^t) - Initial Investment
Where r is the cost of capital and t is the time period.
In this case, the cash flow in eight years is $1,070,000 and the initial investment is $290,000.
Therefore, the NPV is:
NPV = ($1,070,000 / (1 + 0.21)^8) - $290,000 NPV = $168,664.85
Since the NPV is positive, it means that the investment is expected to generate a return that is higher than the cost of capital. Therefore, it would be advisable to undertake the investment opportunity.
To calculate the IRR, we need to find the discount rate that makes the NPV equal to zero. We can use Excel or a financial calculator to do this. The IRR for this investment opportunity is 38.42%.
Since the IRR is higher than the cost of capital, it confirms that this investment opportunity is profitable and should be undertaken.
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Question 10 (1 point) The distinctive invention of capitalist societies is the business firm, Independent of the state. True O False Question 11 (1 point) A nation's greatest resource is its human capital. O True O False Question 12 (1 point The Catholic Church opposes all forms of liberalism. True O False
The first two statements are true and the last statement is false. Question 10: True. The business firm is a distinctive invention of capitalist societies because it operates independently of the state.
In capitalist societies, the state's role is to regulate and create conditions for businesses to thrive, but businesses operate independently of the state. The business firm is a key institution that drives economic growth and creates wealth in capitalist societies.
Question 11: True. A nation's greatest resource is its human capital, which refers to the knowledge, skills, and abilities of its people.
Human capital is a critical factor in economic development, and countries that invest in education and training for their citizens tend to have higher levels of economic growth and development.
Question 12: False. The Catholic Church does not oppose all forms of liberalism. While it has historically been critical of certain aspects of liberal ideology, such as individualism and secularism, it has also embraced other aspects, such as social justice and human rights.
The Catholic Church's stance on liberalism is complex and has evolved over time, and cannot be reduced to a simple statement of opposition.
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designing a product in one country, producing its parts in 10 other countries, assembling it in yet another country, and marketing it everywhere is an example of
Designing a product in one country, producing its parts in 10 other countries, assembling it in yet another country, and marketing it everywhere is an example of global supply chain management.
This approach involves coordinating all of the activities involved in the production and distribution of goods and services across different countries and regions.
In this scenario, the company is taking advantage of the specialized skills and resources available in different countries to create an efficient and cost-effective supply chain.
By producing the product parts in multiple countries, the company can take advantage of lower labor and production costs, access to raw materials, and specialized skills and technologies. Assembling the product in a country with low labor costs can also help reduce overall production costs.
Marketing the product everywhere allows the company to expand its customer base and maximize sales revenue. The company can take advantage of different marketing strategies and channels in each country to reach a wider audience and adapt to local market conditions.
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what is the difference between cash flow rights and control rights
. Explain these two rights in the context of debt verdus equity,
common equity versus perferred equity, and dual class shares.
cash flow rights and control rights are key distinctions between different types of financing and share classes. Debt provides cash flow rights but not control rights, while equity offers both. Common equity has more balanced cash flow and control rights compared to preferred equity and dual-class shares, where control rights may be limited or separated from cash flow rights.
The difference between cash flow rights and control rights, and how they apply to various types of financing.
Cash flow rights refer to the rights of investors to receive cash distributions from the company, such as dividends or liquidation proceeds. Control rights refer to the rights of investors to influence the management and decision-making processes within the company, typically through voting rights associated with shares.
Debt versus Equity:
1. In debt financing, lenders have cash flow rights to receive interest payments and principal repayments, but they generally do not have control rights, as they cannot vote on company matters.
2. In equity financing, shareholders have both cash flow rights (dividends) and control rights (voting rights) proportionate to their ownership stake in the company.
Common Equity versus Preferred Equity:
1. Common equity holders have both cash flow rights and control rights. They receive dividends and have voting rights in proportion to their ownership.
2. Preferred equity holders have a higher claim on cash flow rights compared to common equity holders, such as receiving dividends before common shareholders. However, their control rights are usually limited or nonexistent, as they often do not have voting rights.
Dual-Class Shares:
Dual-class shares refer to a company issuing multiple share classes with different levels of control rights.
1. Class A shares typically have more voting rights, providing the holder with greater control rights in the company.
2. Class B shares usually have fewer voting rights or no voting rights at all, resulting in limited control rights for the holder.
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Gustav Food's WACC is 10.00%, its FCF1 is expected to be $70.0 million, the FCFs are expected to grow at a constant rate of 5.00% a year in the future, the company has $200 million of long-term debt and preferred stock, and it has 30 million shares of common stock outstanding. The company doesn't have marketable securities. What is the firm's estimated intrinsic value per share of common stock?
The estimated intrinsic value per share of Gustav Food's common stock is $47.95.
To calculate the intrinsic value per share, we need to use the formula V₀ = (FCF₁ × (1 + g)) ÷ (r - g), where V₀ is the intrinsic value per share, FCF₁ is the expected free cash flow for the first year, g is the expected growth rate, and r is the weighted average cost of capital (WACC).
First, we need to calculate the total value of the company, which is the sum of the present value of the FCFs and the present value of the terminal value.
Using the Gordon growth model, the terminal value can be calculated as TV = FCF₂ × (1 + g) ÷ (r - g), where FCF₂ is the expected free cash flow for the second year. Since the FCFs are expected to grow at a constant rate of 5.00%, we can use the formula FCF₂ = FCF₁ × (1 + g).
Next, we need to calculate the present value of the FCFs and the terminal value. Using a discount rate of 10.00%, we can discount each year's FCF using the formula PV = FCF ÷ (1 + r)ⁿ, where PV is the present value, FCF is the free cash flow, r is the discount rate, and n is the number of years in the future.
Finally, we can calculate the intrinsic value per share by dividing the total value of the company by the number of shares outstanding. Gustav Food's intrinsic value per share is calculated as follows:
FCF₁ = $70.0 million
g = 5.00%
r = 10.00%
FCF₂ = $73.5 million ($70.0 million × (1 + 5.00%))
TV = $1,470.0 million ($73.5 million × (1 + 5.00%) ÷ (10.00% - 5.00%))
PV(FCF₁) = $63.6 million ($70.0 million ÷ (1 + 10.00%)¹)
PV(TV) = $943.6 million ($1,470.0 million ÷ (1 + 10.00%)¹⁰)
Total value = $1,007.2 million ($63.6 million + $943.6 million)
Intrinsic value per share = $33.57 ($1,007.2 million ÷ 30 million shares)
Therefore, the estimated intrinsic value per share of Gustav Food's common stock is $47.95 ($33.57 × (1 + 5.00%)).
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How it could be possible for a company to have a gross profit
margin that is increasing while having a profit margin that is
decreasing over the same time period? Show example.
Answer:
If a business's COGS are rising significantly and are outpacing its growth in sales revenue, the result could be a declining net profit margin while its gross profit margin is rising.
Explanation:
Yes, it is possible for a company to have an increasing gross profit margin while having a decreasing profit margin over the same time period. This scenario can occur when a company experiences an increase in its cost of goods sold (COGS) at a higher rate than its sales revenue, leading to a decrease in its net profit margin.
Here's an example to illustrate this concept:
Suppose ABC Inc. sells smartphones and has the following financial information for two consecutive years:
Year 1:
Sales revenue: $10 million
COGS: $6 million
Gross profit: $4 million
Operating expenses: $2 million
Net profit: $2 million
Gross profit margin: 40% ($4 million / $10 million)
Net profit margin: 20% ($2 million / $10 million)
Year 2:
Sales revenue: $12 million
COGS: $8 million
Gross profit: $4 million
Operating expenses: $3 million
Net profit: $1 million
Gross profit margin: 33.33% ($4 million / $12 million)
Net profit margin: 8.33% ($1 million / $12 million)
As you can see, in Year 2, ABC Inc. experienced an increase in sales revenue but also an increase in its COGS and operating expenses. The increase in COGS was higher than the increase in sales revenue, leading to a decrease in the gross profit margin. At the same time, the increase in operating expenses caused a decrease in net profit margin.
In this scenario, the company's gross profit margin decreased, but the company's gross profit margin increased. This happened because while the company experienced higher costs, it was still able to maintain a high markup on its products, resulting in a higher gross profit margin. However, because the increase in costs was too high, it was unable to maintain a high net profit margin.
In conclusion, a company can have a decreasing net profit margin while its gross profit margin is increasing if the company is experiencing a significant increase in its COGS, which is higher than its increase in sales revenue.
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