The value of the firm's stock is $13.25.
We can use the Gordon Growth Model to find the value of the firm's stock:
Value of Stock = Dividend / (Cost of Equity - Growth Rate)
where:
Dividend = $1.06 (the expected dividend per share at the end of the year)
Growth Rate = 6% (the expected constant growth rate)
Cost of Equity = Dividend Yield + Growth Rate
Since the dividend yield is expected to be 8%, we can calculate the cost of equity as:
Cost of Equity = 8% + 6% = 14%
Now we can substitute these values into the formula:
Value of Stock = $1.06 / (0.14 - 0.06) = $1.06 / 0.08 = $13.25
Therefore, the value of the firm's stock is $13.25.
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if the market price is $84.70 per bushel of wheat, and ali chooses to produce wheat, how much will he produce per month to maximize his profits in the short run?
Ali should produce 64.70 bushels of wheat per month to maximize his profits in the short run. At this level of output, his total revenue would be $5,481.59 (64.70 x $84.70), and his total cost would be $2,918.45 (20 x 64.70 + 0.5 x 64.70^2), resulting in a profit of $2,563.14.
To maximize his profits, Ali should produce the level of output where his marginal revenue (MR) equals his marginal cost (MC). In other words, he should produce until the additional revenue from selling one more unit of output is equal to the additional cost of producing one more unit of output.Given the market price of $84.70 per bushel of wheat, Ali's marginal revenue is also $84.70.
To determine his marginal cost, we need to know his total cost function. Let's assume that Ali's total cost function is given by TC = 20Q + 0.5Q^2, where Q is the quantity of wheat produced.
To find Ali's marginal cost, we take the derivative of the total cost function with respect to Q:
MC = dTC/dQ = 20 + Q
Setting MR = MC, we have:
84.70 = 20 + Q
Q = 64.70
Resulting in a profit of $2,563.14.
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you can construct a sources and uses statement for 2017 if you have a company’s year-end balance sheets for 2017 and 2018. True or false?
The given statement "you can construct a sources and uses statement for 2017 if you have a company’s year-end balance sheets for 2017 and 2018" is False because balance sheet does not show the changes in cash flows over the year.
The Balance sheets provide the information related to the financial position of a company at a specific point in time and it does not show the changes in cash flows over the year.
In order to make a sources and uses statement. Then, information on the company's cash inflows and outflows for the year is required and it is obtained from the statement of cash flows and other factors are also required.
Therefore, the given statement is false.
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Knights Development is considering buying a vacant lot that is
selling for $1.5 million. It will take them two years to permit and
construct a large retail center and will cost an additional $1
millio
Knights Development is considering a project that involves buying a vacant lot for $1.5 million, taking two years to permit and construct a large retail center, and spending an additional $1 million on construction.
What Knights Development looking for investment?Based on the information provided, Knights Development is looking to invest a total of $2.5 million ($1.5 million for the vacant lot and an additional $1 million for construction and permitting) in a large retail center. It is important for them to carefully analyze the potential return on this investment before proceeding with the purchase.
Factors that Knights Development should consider include the current demand for retail space in the area, potential competition from existing businesses, and the projected profitability of the retail center once it is up and running. They should also factor in any additional costs associated with running the center, such as maintenance, utilities, and marketing.
If Knights Development determines that the potential return on their investment is favorable and that they can generate a significant profit from the retail center, then it may be a good decision to move forward with the purchase of the vacant lot. However, it is important for them to carefully weigh the risks and rewards of this investment and to conduct thorough due diligence before making a final decision.
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Lanie is a single mom who has 3 children, ages 1, 5 and 9. While
she is struggling a bit, she would like to pay for half of their
education at a public college. Her children will go to college at
age 18 and be in college for 4 years. The annual cost of education
is currently $15,000 and has been increasing at 6% and is expected
to continue. Her portfolio that was established for education has
$10,000 in it and earns an average rate of return of 9%. If she
would like to fund half of four years of college for each of the
children, how much must she save each year at the end of the year,
for the next nine years (round to the nearest $100)?
$6,800
$8,400.
$10,700.
$11,800.
Lanie needs to save $8,400 each year for the next nine years to fund half of four years of college education for each of her three children.
To calculate the total cost of education for each child, we can use the formula for the future value of an annuity with annual payments and a fixed interest rate:
FV = [tex]$PMT \times \frac{(1+r)^n-1}{r}$[/tex]
Where:
PMT = annual cost of education
r = annual interest rate
n = number of years in college (4)
FV = future value of the annuity (total cost of education)
Using the current cost of education of $15,000 and an annual increase of 6%, we can calculate the total cost of education for each child:
Year 1: $15,900
Year 2: $16,854
Year 3: $17,855
Year 4: $18,905
So the total cost of education for each child will be $69,514.20.
To fund half of this amount, Lanie needs to save $34,757.10 for each child. Over nine years, she can use the formula for the present value of an annuity to calculate the annual savings needed:
PV =[tex]$PMT \times \frac{(1 - (1 + r)^{-n})}{r}$[/tex]
Where:
PV = present value of the annuity (amount Lanie needs to save)
PMT = annual savings needed
r = annual interest rate
n = number of years to save (9)
Using Lanie's portfolio with a current balance of $10,000 and an average rate of return of 9%, we can solve for PMT:
PV = $10,000
r = 9%
n = 9
[tex]PMT = \dfrac{10,000}{\left(1 - \left(1 + 0.09\right)^{-9}\right)/0.09}[/tex]
PMT = $8400
Therefore, Lanie needs to save $8,400 each year for the next nine years to fund half of four years of college education for each of her three children.
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A firm's bonds have a maturity of 12 years with a $1,000 face value, have an 11% semiannual coupon, are callable in 6 years at $1,199.90, and currently sell at a price of $1,349.76. What are their nominal yield to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places.
YTM: %
YTC: %
What return should investors expect to earn on these bonds?
A: Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM.
B: Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC.
C: Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC.
D: Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM
The right response is: A. Because the YTC is higher than the YTM, investors would anticipate that the bonds would be called and earn the YTC.
How much nominal yield is there until maturity?The interest rate on the bond is shown by its nominal yield. Periodically up until the date of maturity, interest payments are made to the investor. A coupon yield is another name for nominal yield. To determine the bond's coupon yield, divide the annual interest payment by the bond's face value.
How is the nominal yield on a callable bond determined?The nominal yield, which represents the stated yield for a bond, is a fixed percentage figure determined for fixed income securities. It is computed by dividing the bond's face value by the annual interest payments.
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Given the actual production is 11000 units for the penchmark. Use the average consumption method to estimate the demand for the first year. Assuming that the size of the population using this commodity is 6000 (targeted population) imports are 6000 and exports are 5000. The company is producing two products A with 30% and B with 30% and C 40%. The capacity of the factory is 15000 units when it is fully utilizing its resources. 1. The ACP is 3 units per person. 2. The targeted population is 6000 3. The feasibility study can be implemented even if the results show negative profitability, 4. The units needed for the first product (A) in the second scenario (average) are 945 units. 5. The units needed for the third product (C) at the full capacity is 5060.
Using the average consumption method and the given information, the estimated demand for the first year is 12,000 units.
To calculate the estimated demand using the average consumption method, we need to multiply the targeted population by the average consumption per person (ACP).
Given that the ACP is 3 units per person and the targeted population is 6000, the total estimated demand is 18,000 units. Subtracting the imports (6000) and adding the exports (5000) gives a net estimated demand of 12,000 units.
For product A, the units needed in the second scenario (average) is 945 units, and for product C at full capacity is 5060 units. These figures are derived from the given information about the production percentages and factory capacity.
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This question point posible Next question Shatin Intl has 9.8 milion shares an equity cost of capital of 13.1% and is expected to pay a total dividend of $206 millor actor increasing its dividend, it will keep it constant and will startopurchasing 395 million of stock cach year as wil What is your attivare of Shat's so primo Seomet test The stock price will be Round to the nearest cont.)
The stock price of Shatin Intl, rounded to the nearest cent, is $160.31.Shatin Intl, which has 9.8 million shares, an equity cost of capital of 13.1%, and is expected to pay a total dividend of $206 million before starting to purchase $395 million worth of stock each year.
You'd like to know the stock price, rounded to the nearest cent.
To find the stock price, follow these steps:
1. Calculate the dividend per share: Divide the total dividend ($206 million) by the number of shares (9.8 million).
Dividend per share = $206 million / 9.8 million = $21.02
2. Calculate the dividend yield: Divide the dividend per share ($21.02) by the stock price (let's call it "P").
Dividend yield = $21.02 / P
3. Use the dividend discount model: The stock price (P) equals the dividend per share ($21.02) divided by the equity cost of capital (13.1%). P = $21.02 / 0.131
4. Solve for the stock price (P): P = $160.31
So, the stock price of Shatin Intl, rounded to the nearest cent, is $160.31.
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Based on the given information, the estimated stock price of Shatin Intl is $209.58 per share (rounded to the nearest cent).
Dividend per share = Total dividend / Number of shares
Dividend per share = $206 million / 9.8 million shares
Dividend per share = $21.02
Growth rate = (Net income - Dividends) / (Share price x Number of shares)\
Growth rate = ($500 million - $206 million) / ($50 x 9.8 million)
Growth rate = 3.06%
Finally, we can use the dividend discount model to estimate the stock price:
Stock price = Dividend per share / (Cost of equity - Growth rate)
Stock price = $21.02 / (0.131 - 0.0306)
Stock price = $21.02 / 0.1004
Stock price = $209.58
A stock price is the current market value of a company's stock share. It is determined by the supply and demand of the stock on a given day and is influenced by a variety of factors including company performance, industry trends, economic conditions, and investor sentiment. When a company goes public, it sells shares of its stock to investors in order to raise capital. The value of those shares is determined by the market and can fluctuate on a daily basis based on a variety of factors.
Investors buy and sell shares of stock in order to profit from changes in the stock price. If they buy shares at a lower price and sell them at a higher price, they profit. If they buy shares at a higher price and sell them at a lower price, they incur a loss. Overall, stock prices play a crucial role in the world of business and finance, as they can impact the success of companies and the portfolios of investors.
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daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15 (listed from oldest to most recent). what are the forecast sales for the next day using a three-day weighted moving average where the weights are 3, 1, and 1 (the highest weight is for the most recent number)?
The forecast sales for the next day using a three-day weighted moving average where the weights are 3, 1, and 1 would be 13.
To use a three-day weighted moving average, we need to take the last three observations and multiply them by the respective weights (3, 1, 1) and add them together. Then we divide the result by the sum of the weights, which is 5 in this case.
So, for the last three days (i.e., days 8, 9, and 10), we have:
Day 8: 12 x 3 = 36
Day 9: 13 x 1 = 13
Day 10: 15 x 1 = 15
Total: 36 + 13 + 15 = 64
Forecasted sales for the next day would be 64 / 5 = 12.8, which we can round off to 13.
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please answer asap!no plagarism100 pts Initial Post due Day 3 Responses due Day 7 Explain why taxes and tax policy are important considerations in capital budgeting decisions. Give examples. Search entries or author Unread Subscrib
Taxes and tax policy are important considerations in capital budgeting decisions because they directly affect a company's cash flow, profitability, and overall financial performance.
For example, changes in tax rates, tax credits, and deductions can significantly impact a project's net present value (NPV) and internal rate of return (IRR), two key metrics used in capital budgeting decision-making.One example of the impact of taxes on capital budgeting decisions is the effect of depreciation allowances. Companies can claim depreciation on their assets, which reduces their taxable income and ultimately their tax liability. By considering the tax benefits of depreciation, a company can make better-informed capital investment decisions. Another example is the availability of tax credits for specific industries or activities, such as research and development (R&D) or renewable energy projects.
Companies considering investments in these areas need to factor in the tax credits they may receive, as this can significantly improve the project's financial attractiveness.
In summary, taxes and tax policy play a crucial role in capital budgeting decisions by directly affecting cash flows, profitability, and financial performance. By considering tax implications, companies can make more informed investment decisions that align with their overall business objectives.
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TexCorp is a manufacturer. It costs TexCorp $70 (parts and labor) to manufacturer each unit, and it incurs fixed overhead of $3.75 million per year. If TexCorp prices the widgets using a 40% markup on cost, how many widgets must it sell annually in order to break even? Show work.
Based on the information given, TexCorp must sell 133,930 widgets annually in order to break even.
To find the break-even point for TexCorp, we will use the following terms: variable cost per unit, fixed cost, markup percentage, and selling price.
1: Calculate the variable cost per unit.
The variable cost per unit for TexCorp is $70 (parts and labor).
2: Calculate the selling price per unit.
TexCorp uses a 40% markup on cost, so we will calculate the selling price as follows:
Selling price = Variable cost per unit * (1 + Markup percentage)
Selling price = $70 * (1 + 0.40)
Selling price = $70 * 1.40
Selling price = $98 per unit
3: Calculate the contribution margin per unit.
Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $98 - $70
Contribution margin per unit = $28
4: Calculate the break-even point in units.
Break-even point (units) = Fixed cost / Contribution margin per unit
Break-even point (units) = $3,750,000 / $28
Break-even point (units) = 133,929.29
Since TexCorp cannot sell a fraction of a widget, we round up to the nearest whole number.
Therefore, TexCorp must sell 133,930 widgets annually in order to break even.
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Flashy Company stock has a beta of 1.2, the risk free rate is
3.67, and the market risk premium is 7.18. What is the firm's
required rate of return. ______% (to two decimal places)
The required rate of return for Flashy Company stock can be calculated using the Capital Asset Pricing Model (CAPM):
Required rate of return = risk-free rate + beta * market risk premium
Required rate of return = 3.67 + 1.2 * 7.18
Required rate of return = 12.29%
To calculate Flashy Company's required rate of return, you need to use the Capital Asset Pricing Model (CAPM). The formula for CAPM is:
Required Rate of Return = Risk-Free Rate + (Beta × Market Risk Premium)
Calculating using the given terms: Risk-Free Rate = 3.67, Beta = 1.2, Market Risk Premium = 7.18
Required Rate of Return = 3.67 + (1.2 × 7.18)
Required Rate of Return = 3.67 + 8.616
Required Rate of Return = 12.286
Round the result to two decimal places: 12.29%
So, Flashy Company's required rate of return is 12.29%.
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problem 11-27 (lo. 3, 4) at the beginning of the tax year, melodie's basis in the mip llc was $60,000, including her $40,000 share of the llc's liabilities. at the end of the year, mip distributed to melodie cash of $10,000 and inventory (basis of $6,000, fair market value of $10,000). in addition, mip repaid all of its liabilities by the end of the year. question content area a. if this is a proportionate current distribution, what is the tax effect of the distribution to melodie and mip? after the distribution, what is melodie's basis in the inventory and in her mip interest? if this is a proportionate current distribution, the cash distribution plus relief of liabilitie
1. Tax effect of the distribution to melodie and mip is that MIP reduces its accumulated earnings and profits by $20,000.
2. Melodie's new basis is:
Inventory: $10,000
MIP LLC interest: $40,000
What method is used to calculate each part of the question?If this is a proportionate current distribution, it means that the distribution is made to all partners in proportion to their ownership interest in the LLC.
Melodie's initial basis in the LLC was $60,000, which includes her share of the LLC's liabilities of $40,000. Thus, her initial basis in the LLC's assets was $20,000 ($60,000 - $40,000).
The cash distribution of $10,000 and the inventory distribution of $10,000 have a total fair market value of $20,000. Since this is a proportionate distribution, Melodie will recognize gain or loss on the distribution based on the difference between the fair market value of the distribution and her basis in the LLC.
Melodie's basis in the LLC was $20,000, and her share of the distribution was also $20,000. Therefore, her gain or loss on the distribution is zero.
After the distribution, Melodie's basis in the inventory is its fair market value of $10,000. Her basis in the LLC is reduced by the amount of the distribution, so her new basis is $40,000 ($60,000 - $20,000).
To summarize:
Tax effect of the distribution:
Melodie recognizes no gain or loss on the distribution.
MIP reduces its accumulated earnings and profits by $20,000.
Melodie's new basis:
Inventory: $10,000
MIP LLC interest: $40,000
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Suppose that last year, the nominal exchange rate between the Japanese yen and the British pound was 225.0 Yen per 1.0 Euro, one unit of Japanese output cost 2000 Yen , and one unit of British output cost 8.0 Euro.
a. What was the real exchange rate between the U.K. and Japan last year, expressed as the cost of British output (i.e. - the quantity of Japanese output that exchanges for 1 unity of British output)? In which country are goods more expensive last year?
b. Suppose that between last year and this year the British pound appreciate by 20% against the Japanese yen (a 20% increase in the number of yen required to buy 1 pound). if the price of goods in the U.K. and Japan are unchanged from last year, what is this year's new real exchange rate? In which country are goods more expensive this year?
c. Now suppose, instead, that between last year and this year, the pound appreciated by 20% against the yen and Japan experienced a 30% increase in its price level (a 30% increase in the number of yen required to purchase one unit of Japanese output). All else equal, what is this year's real exchange rate in that case? In which country are goods more expensive this year?
An exchange rate determines the price at which one currency will be exchanged for another & has an impact on international trade & money transfers.
a. To calculate the real exchange rate, we need to divide the nominal exchange rate by the ratio of the price levels of the two countries.
The price level of Japan is given as 2000 Yen per unit of output, & the price level of the UK is given as 8.0 Euro per unit of output. Since we need the cost of British output in terms of Japanese output, we need to convert the British price level into Yen. Using the given nominal exchange rate, we have:
8.0 Euro/unit * 225.0 Yen/Euro = 1800 Yen/unit of British output
Therefore, the ratio of the price levels is:
2000 Yen/unit of Japanese output / 1800 Yen/unit of British output = 1.111
The real exchange rate is then:
225.0 Yen/Euro / 1.111 = 202.5 Yen/unit of British output
Goods are more expensive in Japan last year, since it takes more Yen to buy one unit of Japanese output than it takes to buy one unit of British output.
b. If the British pound appreciated by 20%, then the new nominal exchange rate is:
225.0 Yen/Euro / (1 + 0.2) = 187.5 Yen/Euro
Using the same price levels as last year, the new real exchange rate is:
187.5 Yen/Euro / 1.111 = 168.75 Yen/unit of British output
Goods are more expensive in Japan this year, since it takes more Yen to buy one unit of Japanese output than it takes to buy one unit of British output.
c. If the pound appreciated by 20% & Japan experienced a 30% increase in its price level, then the new price level in Japan is:
2000 Yen/unit of Japanese output * (1 + 0.3) = 2600 Yen/unit of Japanese output
The new nominal exchange rate is the same as in part (b):
225.0 Yen/Euro / (1 + 0.2) = 187.5 Yen/Euro
The new real exchange rate is then:
187.5 Yen/Euro / (2600 Yen/unit of Japanese output / 1800 Yen/unit of British output) = 129.17 Yen/unit of British output
Goods are more expensive in Japan this year, since it takes more Yen to buy one unit of Japanese output than it takes to buy one unit of British output, & the increase in the price level of Japan makes Japanese goods even more expensive.
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a. Real exchange rate last year: 28.125. Goods more expensive in Japan.
b. New real exchange rate: 33.75. Goods more expensive in Japan.
c. New real exchange rate: 37.5. Goods more expensive in Japan.
a. In the previous year, the real exchange rate between the UK and Japan was 28.125 (225/8). A unit of British output cost 8.0 Euro, which is comparable to 7.14 pounds (8/1.12), but a unit of Japanese output cost 2000 yen, or 8.89 pounds (2000/225), making last year's prices in Japan higher.
b. The new real exchange rate for this year is 33.75 (225/6.67), which means that goods in Japan are now more expensive. One unit of Japanese output continues to cost 2000 yen, which is now equivalent to 29.85 pounds (2000/67), while one unit of British output now costs 150 euros (81.2), which is equivalent to 1000 yen (1506.67).
c. A unit of Japanese output now costs 2600 yen (20001.3), which is equivalent to 1040 pounds (2600/2.5), while a unit of British output continues to cost 150 euros (81.2), which is equivalent to 1000 yen (150*6.67). c. This year's new real exchange rate is 37.5 (225/6), meaning that goods in Japan are now more expensive this year.
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As a manager, Jason spends much of his time coaching his employees and making sure that any required information from upper management reaches them in an understandable format. Jason would best be described as an) Multiple Choice tactical manager frontline manager top-level manager operational manager Institutional controller
Jason would best be described as a frontline manager. Option b is answer.
Frontline managers are responsible for managing and coaching employees directly involved in producing goods or delivering services. They are often the first level of management in an organization and spend much of their time overseeing daily operations and providing guidance and support to employees.
In the scenario described, Jason's role as a manager involves coaching his employees and ensuring that important information is effectively communicated to them. This suggests that he is working closely with frontline employees and is involved in day-to-day operations. Therefore, Jason is most likely a frontline manager.
Option b is answer.
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lockboxes are pointed out in the text as a good method of internal control over cash. a major advantage to a lockbox account is
The major advantage of a lockbox account as a method of internal control over cash is that it reduces the time it takes for a company to process incoming cash receipts.
A lockbox account is a bank-managed account that allows a company to receive payments directly from customers to a designated post office box, with the bank collecting and depositing the funds on behalf of the company.
This method of internal control provides several advantages, including reducing the time it takes for a company to process incoming cash receipts, as the funds are collected and deposited by the bank faster than if they were collected and deposited by the company itself.
This can help improve the company's cash flow and provide better control over its cash receipts, as the funds are deposited more quickly and accurately, reducing the risk of errors or misappropriation of funds.
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If WiseGuy Inc. uses payback period rule to choose projects, which of the projects (Project A or Project B) will WiseGuy Inc. prefer? Project A Project B
Time 0 -10000 -10000
Time 1 5000 4000
Time 2 4000 3000
Time 3 3000 10000
a) Project A b) Project B c) Project A and Project B have the same ranking. d) Cannot calculate a payback period without a discount rate If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest? a) Project A b) Project B c) Project A and Project B have the same ranking. d) Cannot calculate an IRR without a discount rate
WiseGuy Inc. would prefer Project B, as it has a shorter payback period of 1.3 years compared to Project A's payback period of 3.25 years.
How can we decide which projects (Project A or Project B) WiseGuy Inc. will prefer?To determine which project WiseGuy Inc. will prefer using the payback period rule, we need to calculate the payback period for each project. The payback period is the amount of time it takes for a project to recoup its initial investment.
For Project A:
Payback period = 2 years + ((10000-5000)/4000) years
Payback period = 3.25 years
For Project B:
Payback period = 1 year + ((10000-4000-3000)/10000) years
Payback period = 1.3 years
According to the payback period rule, WiseGuy Inc. would prefer Project B, as it has a shorter payback period of 1.3 years compared to Project A's payback period of 3.25 years. This means that WiseGuy Inc. will recoup its initial investment in Project B sooner, making it a more attractive option.
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Should a life insurance policy be freely assignable? If so, why?
If not, can the objectives of an assignability clause still be
achieved in the absence of such a clause?
Yes, a life insurance policy should be freely assignable. This means that the policyholder can transfer ownership of the policy to another person or entity.
The reason for this is that it allows for greater flexibility and control over the policy. For example, if the policyholder no longer needs the coverage, they can sell or transfer the policy to someone else who does.
Additionally, if the policyholder becomes unable to pay the premiums, they can assign the policy to a third-party who can continue paying the premiums and receive the death benefit upon the policyholder's passing.
Without this option, policyholders may be stuck with a policy that no longer meets their needs or may lapse if they are unable to continue paying premiums.
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dormer is the only fine dining restaurant in a small town. the opening of a new restaurant is viewed as a threat by some of the employees at dormer. others see it as an opportunity for dormer to strengthen itself by looking out for its weaknesses and ironing them out. this is an example of strategy as:
Dormer is the only fine dining restaurant in a small town. The opening of a new restaurant is viewed as a threat by some of the employees at dormer by looking out for its weaknesses and ironing them out. This is an example of strategy as "SWOT analysis".
The SWOT analysis which involves assessing an organization's internal strengths and weaknesses as well as external opportunities and threats.
In this case, the opening of a new restaurant in the town presents an external threat to Dormer, the only fine dining restaurant in the area. Some of the employees at Dormer view this as a threat and are worried about the impact it could have on their business.
By conducting a SWOT analysis, Dormer can identify its internal strengths and weaknesses and external opportunities and threats. Based on this analysis, Dormer can develop strategies to leverage its strengths, address its weaknesses, capitalize on opportunities, and mitigate threats to maintain its competitive advantage in the market.
Therefore, this is an example of strategy as SWOT analysis.
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X Your answer is incorrect. A project has an NPV of $51,500. Calculate the cost of capital of this project if it generates the following cash flows for six years after an initial investment of $205,000: (Round answer to 4 decimal places, eg. 25.2513%.) Year 1: $51,500 Year 2: $51,500 Year 3: $32,500 Year 4: $79,500 Year 5: $63,500 Year 6: $74,500 Cost of capital ___ %
$74,500 Cost of capital 13.9272 %.
The cost of capital for this project can be calculated using the Net Present Value (NPV) equation. The NPV equation is used to determine the present value of a series of future cash flows. In this case, the initial investment of $205,000 and the cash flows for the following six years are considered. From the equation, we can calculate the cost of capital as 13.9272%.
The cost of capital is the rate of return required to make the project worthwhile. It is the minimum rate of return that investors expect to receive in order to invest in a project. In this case, the cost of capital is 13.9272%, meaning that if the project generates a return greater than or equal to 13.9272%, then it is a sensible investment.
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8. 5 pts. What is the current rate on a bond with a coupon rate of 5% selling at $900? Why is the current rate higher than the coupon rate? Show math for credit.
The current rate on a bond with a coupon rate of 5% selling at $900 can be calculated using the following formula:
Current Rate = Annual Coupon Payment / Bond Price
The annual coupon payment is calculated as 5% of the face value of the bond, which is $1,000 (5% x $1,000 = $50). So, the current rate can be calculated as follows:
Current Rate = $50 / $900 = 5.56%
Therefore, the current rate on a bond with a coupon rate of 5% selling at $900 is 5.56%.
The reason why the current rate is higher than the coupon rate is because the bond is selling at a discount. When a bond sells at a discount, it means that its price is lower than its face value. In this case, the bond is selling at $900, which is $100 less than its face value of $1,000. This is because the market demand for the bond is low, which causes its price to drop.
As a result, investors who purchase the bond at a discount will receive a higher yield than the coupon rate. This is because they are effectively paying less for the bond but will still receive the same coupon payments. In other words, the yield is higher to compensate for the lower price paid for the bond.
In summary, the current rate on a bond with a coupon rate of 5% selling at $900 is 5.56%. The current rate is higher than the coupon rate because the bond is selling at a discount, which causes its yield to increase.
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Weston Corporation just pold a dividend of $2 a shore (Do- 52). The dividend is expected to grow 11% a year for the next years and then at 4% a year thereafter. What is the expected dividend per share for each of the next 5 years?
The expected dividend per share for each of the next 5 years is $2.22, $2.47, $2.75, $3.06, and $3.41, respectively.
We can use the dividend growth model to calculate the expected dividend per share for each of the next 5 years. The formula for the dividend growth model is:
[tex]Dn = D0 x (1 + g)^n[/tex]
Where:
Dn = the expected dividend per share at year n
D0 = the current dividend per share
g = the expected growth rate of dividends
n = the number of years in the future
Using the information provided in the problem, we have:
D0 = $2 per share
g = 11% for the first five years, then 4% thereafter
So, the expected dividend per share for each of the next 5 years is:
[tex]D1 = D0 x (1 + g)^1 = $2 x (1 + 0.11)^1 = $2.22\\D2 = D0 x (1 + g)^2 = $2 x (1 + 0.11)^2 = $2.47\\D3 = D0 x (1 + g)^3 = $2 x (1 + 0.11)^3 = $2.75\\D4 = D0 x (1 + g)^4 = $2 x (1 + 0.11)^4 = $3.06\\D5 = D0 x (1 + g)^5 = $2 x (1 + 0.11)^5 = $3.41[/tex]
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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
Under the new operating plan, Midwest Packaging's return on equity will be 26.6%.
To calculate Midwest Packaging's return on equity (ROE) after the proposed changes, we first need to calculate the company's new net income using the given information.
Net Income = EBIT - Interest - Taxes
Interest = $300,000
EBIT = $1,000,000
Tax rate = 34%
Net Income = $1,000,000 - $300,000 - ($1,000,000 - $300,000) x 34%
Net Income = $532,000
Next, we need to calculate the new equity of the company.
Total Assets = Sales / Total Assets Turnover Ratio
Total Assets = $10,000,000 / 2.0
Total Assets = $5,000,000
Total Debt = Total Assets x Total Debt Ratio
Total Debt = $5,000,000 x 60%
Total Debt = $3,000,000
Equity = Total Assets - Total Debt
Equity = $5,000,000 - $3,000,000
Equity = $2,000,000
Finally, we can calculate the new ROE:
ROE = Net Income / Equity
ROE = $532,000 / $2,000,000
ROE = 0.266 or 26.6%
Therefore, Midwest Packaging's return on equity would increase to 26.6% after the proposed changes.
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marine international tries decide whether to produce the filter system in-house or sign an outsourcing contract with bayfront manufacturing. to establish a filter system production area at marine international, the fixed cost is $300,000 per year and the company estimates their variable cost of production in-house at $14 per filter system. if marine outsources the production of the filter system to bayfront, bayfront will charge marine $30 per filter system. what is the break-even quantity that marine international can produce in-house or outsource the filter system from bayfront manufacturing? a. 18,740 filter systems b. 18,750 filter systems c. 18,760 filter systems d. 18,770 filter systems e. 18,780 filter systems
The break-even quantity for Marine International is 18,750 filter systems. This means that if they produce more than 18,750 filter systems in-house, it will be more cost-effective to produce them in-house rather than outsourcing from Bayfront Manufacturing. If they produce less than 18,750 filter systems, it will be more cost-effective to outsource from Bayfront Manufacturing.
To determine the break-even quantity, we need to find the point where the cost of producing in-house is equal to the cost of outsourcing from Bayfront Manufacturing. We can set up an equation to represent this:
$300,000 + $14q = $30q
where q is the quantity of filter systems produced.
To solve for q, we can start by isolating q on one side of the equation:
$300,000 = $16q
q = $300,000 / $16
q = 18,750
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b. after receiving the second coupon payment (at the end of the second year), arjay decides to sell his bond in the bond market. what price can he expect for his bond if the one-year interest rate at that time is 3 percent? 8 percent? 10 percent?
If the one-year interest rate is 3 percent, Arjay can expect to sell his bond for $1,027.18, if the one-year interest rate is 8 percent, he can expect to sell it for $935.26, and if the one-year interest rate is 10 percent, he can expect to sell it for $881.35.
To determine the price that Arjay can expect to sell his bond for, we need to calculate the bond's current market value using the prevailing interest rates. The current market value of a bond is the present value of its future cash flows, which include both the remaining coupon payments and the principal repayment.
Let's assume the following details for the bond:
Face value = $1,000
Coupon rate = 6%
Coupon payments = $60 per year (=$1,000 x 6%)
Time to maturity = 3 years
Using these details, we can calculate the present value of the bond's cash flows at different interest rates:
If the one-year interest rate is 3 percent:
To calculate the bond price, we need to discount each cash flow by the corresponding discount factor. The discount factor for year 1 is 1/(1+3%) = 0.9709, for year 2 is 1/(1+3%)^2 = 0.9426, and for year 3 is 1/(1+3%)^3 = 0.9151.
Therefore, the current market value of the bond at a 3% interest rate would be:
Bond price = (60 x 0.9709) + (60 x 0.9426) + (1,060 x 0.9151) = $1,027.18
If the one-year interest rate is 8 percent:
Using the same methodology, we can calculate the present value of the bond's cash flows at an 8% interest rate:
Discount factor for year 1 = 1/(1+8%) = 0.9259
Discount factor for year 2 = 1/(1+8%)^2 = 0.8573
Discount factor for year 3 = 1/(1+8%)^3 = 0.7938
Therefore, the current market value of the bond at an 8% interest rate would be:
Bond price = (60 x 0.9259) + (60 x 0.8573) + (1,060 x 0.7938) = $935.26
If the one-year interest rate is 10 percent:
Using the same methodology, we can calculate the present value of the bond's cash flows at a 10% interest rate:
Discount factor for year 1 = 1/(1+10%) = 0.9091
Discount factor for year 2 = 1/(1+10%)^2 = 0.8264
Discount factor for year 3 = 1/(1+10%)^3 = 0.7513
Therefore, the current market value of the bond at a 10% interest rate would be:
Bond price = (60 x 0.9091) + (60 x 0.8264) + (1,060 x 0.7513) = $881.35
Therefore, if the one-year interest rate is 3 percent, Arjay can expect to sell his bond for $1,027.18, if the one-year interest rate is 8 percent, he can expect to sell it for $935.26, and if the one-year interest rate is 10 percent, he can expect to sell it for $881.35.
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Because of the discouraged worker effect, the stated ________ rate may __________ the true magnitude of the problem being studied.Unemployment, Understate or Underestimate how bad the problem isInflation, Exaggerate or make it appear worse than it isInflation, Understate or Underestimate how bad the problem isUnemployment, Exaggerate or make it appear worse than it is
The Discouraged Worker Effect is an economic phenomenon that occurs when a person who is unemployed and actively seeking work is no longer counted as part of the labor force, either because they become discouraged from their job search or because they have been out of work for so long that they are no longer considered employable.
This effect can have a significant impact on the accuracy of economic indicators, such as the unemployment rate. As the number of discouraged workers increases, the stated unemployment rate will underestimate the true magnitude of the problem, as these individuals are no longer counted as unemployed. Conversely, when the number of discouraged workers decreases, the stated unemployment rate will overestimate the true magnitude of the problem, as these individuals are now included in the unemployment rate.
Therefore, the Discouraged Worker Effect can have a significant impact on the accuracy of economic indicators such as the unemployment rate, making it important to take into account when interpreting economic data.
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what is the expected dollar rate of return on euro deposits it today's exchange rate is $1.167 per euro, next year's expected exchange rate is $1.10 per euro
The expected dollar rate of return on Euro deposits, today's exchange rate of $1.167 per Euro, and next year's expected exchange rate of $1.10 per Euro is -5.74%.
To calculate the expected dollar rate of return on Euro deposits, you need to consider today's exchange rate and next year's expected exchange rate. Here's a step-by-step explanation:
1. Today's exchange rate: $1.167 per Euro.
2. Next year's expected exchange rate: $1.10 per Euro.
3. Calculate the difference in exchange rates: $1.10 - $1.167 = -$0.067.
4. Divide the difference by today's exchange rate: -$0.067 / $1.167 = -0.0574.
5. Multiply the result by 100 to convert it to a percentage: -0.0574 * 100 = -5.74%.
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in 2 years, zeke wants to buy a bicycle that costs $600.00. if he opens a savings account that earns 5% interest compounded quarterly, how much will he have to deposit as principal to have enough money in 2 years to buy the bike?
Zeke will need to deposit $498.35 as principal to have enough money in 2 years to buy the $600.00 bicycle.
How much Zeke will need to deposit as principalTo calculate how much Zeke will need to deposit as principal to have enough money to buy the $600.00 bicycle in 2 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
where A is the amount accumulated, P is the principal (the initial deposit), r is the annual interest rate (in decimal form), n is the number of times the interest is compounded per year, and t is the number of years. In this case, r = 0.05 (5% interest rate), n = 4 (compounded quarterly), t = 2 (2 years).
We want to solve for P.
First, we need to calculate the total amount Zeke will need in 2 years:
$600.00.
Next, we can plug in the values we know and solve for
P: $600.00 = P(1 + 0.05/4)^(4*2)
Simplifying the equation, we get:
$600.00 = P(1.0125)^8
Dividing both sides by (1.0125)^8, we get:
P = $498.35 (rounded to the nearest cent)
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suppose you are a risk-averse person that does not like volatile returns. stock a offers a steady return of 5% per year. stock b offers a 3% return with 50% probability and a 10% return with 50% probability. which stock do you prefer?
As a risk-averse person, I would prefer the steady return offered by stock A at 5% per year.
As a risk-averse person who does not like volatile returns, you would prefer a stock with a steady return rather than one with more variability. In this case, stock A offers a steady return of 5% per year, while stock B offers a range of returns, with a 50% chance of a 3% return and a 50% chance of a 10% return.
The expected return of stock B is calculated as follows:
Expected return of stock B = (0.5 x 3%) + (0.5 x 10%) = 6.5%
However, the expected return does not take into account the variability of returns. Given that you are risk-averse, the potential for a 3% return would not be appealing, even with a 50% chance of getting a higher return. Therefore, you would prefer the steady return of 5% offered by stock A.
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You are invested 38.00% in growth stocks with a beta of 1.839, 25.40% in value stocks with a beta of 1.412, and 36.60% in the market portfolio. What is the beta of your portfolio?
To calculate the beta of the portfolio, we need to first understand what beta represents. Beta is a measure of an investment's volatility in relation to the overall market. A beta of 1 means that the investment's volatility is equal to that of the market, while a beta greater than 1 indicates higher volatility and a beta less than 1 indicates lower volatility.
Using the information given, we can calculate the weighted average beta of the portfolio. To do this, we multiply the percentage of each investment by its respective beta, and then sum the results.
For the growth stocks, the calculation is 38.00% x 1.839 = 0.69982 ,For the value stocks, the calculation is 25.40% x 1.412 = 0.358968, For the market portfolio, the calculation is 36.60% x 1 = 0.366.
The sum of these calculations is 1.424788. This means that the portfolio has a beta of 1.424788, which is higher than the market beta of 1. This indicates that the portfolio is more volatile than the market as a whole, likely due to the higher weightings in growth and value stocks.
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Omni Enterprises is considering whether to borrow funds and purchase an asset or to lease the asset under an operating lease arrangement. If it purchases the asset, the cost will be $22,000. It can borrow funds for four years at 8 percent interest. The asset will qualify for a 25 percent CCA. Assume a tax rate of 35 percent. The other alternative is to sign two operating leases, one with payments of $6,000 for the first two years and the other with payments of $8,000 for the last two years. The leases would be treated as operating leases. a. Compute the aftertax cost of the lease for the four years. (Negative answers should be indicated by a minus sign. Round the final answers to nearest whole dollar.) Year Aftertax cost 0 $ 1 2 3 4
The total aftertax cost of leasing the asset for four years is: Total aftertax cost: $3,900 + $3,900 + $5,200 + $5,200 = $18,200
To compare the aftertax cost of purchasing the asset versus leasing it, we need to calculate the aftertax cost of each option.
If Omni Enterprises purchases the asset, it can claim CCA of 25% on the cost of the asset, which will reduce its taxable income. Therefore, the aftertax cost of purchasing the asset can be calculated as:
Cost of asset: $22,000
CCA (25% of cost): $5,500
Taxable income: $22,000 - $5,500 = $16,500
Tax at 35%: $5,775
Aftertax cost: $22,000 + $5,775 = $27,775
If Omni Enterprises leases the asset, the aftertax cost of the lease for each year can be calculated as follows:
Year 1: $6,000
Tax deduction (lease payment): $6,000
Tax savings (at 35%): $2,100
Aftertax cost: $6,000 - $2,100 = $3,900
Year 2: $6,000
Tax deduction (lease payment): $6,000
Tax savings (at 35%): $2,100
Aftertax cost: $6,000 - $2,100 = $3,900
Year 3: $8,000
Tax deduction (lease payment): $8,000
Tax savings (at 35%): $2,800
Aftertax cost: $8,000 - $2,800 = $5,200
Year 4: $8,000
Tax deduction (lease payment): $8,000
Tax savings (at 35%): $2,800
Aftertax cost: $8,000 - $2,800 = $5,200
Therefore, the total aftertax cost of leasing the asset for four years is:
Total aftertax cost: $3,900 + $3,900 + $5,200 + $5,200 = $18,200
Comparing the aftertax cost of purchasing the asset ($27,775) with the aftertax cost of leasing the asset ($18,200), it is cheaper to lease the asset under the given conditions.
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