In this example, the delta of 0.40 shows that the call option has a positive relationship with the stock price, and its value will increase as the stock price increases. The risk-free rate is not used in the approximate delta calculation, but it is relevant for more advanced option pricing models, such as the Black-Scholes model.
The delta of an option measures the sensitivity of the option price to changes in the underlying asset price. The approximate equation for the delta of a call option is Delta = (Change in option price) / (Change in underlying asset price).
Using this formula, we can calculate the delta of the call option based on the information given. We know that the stock price today was $40 and the call premium was $3, and the next day the stock price was $39 and the call premium was $2.60. Therefore, the change in option price is $2.60 - $3 = -$0.40, and the change in underlying asset price is $39 - $40 = -$1.
Plugging these values into the delta formula, we get Delta = (-$0.40) / (-$1) = 0.4. This means that for every $1 decrease in the stock price, the call option price will decrease by $0.40.
It's important to note that the risk-free rate of 3% is not explicitly used in the delta calculation. However, it is still relevant because it affects the pricing of the option and therefore indirectly impacts the delta. Higher interest rates would increase the call option price and the delta, while lower interest rates would decrease them.
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which of the following is not considered a subjective forecasting method? group of answer choices juries of executive opinion. delphi methods. consumer surveys. naive methods. sales force composites.
Naive methods are not considered a subjective forecasting method. Therefore, correct option is Naive methods.
Which of the following is not considered a subjective forecasting method?Naive methods are not considered a subjective forecasting method. The other options, such as juries of executive opinion, Delphi methods, consumer surveys, and sales force composites, involve human judgment and opinions, making them subjective. In contrast, naive methods rely on historical data and do not incorporate any subjective input from individuals.
Therefore, Naive methods are not considered a subjective forecasting method. Therefore, correct option is Naive methods.
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john smith works 40 hours for abc corp. for $15 per hour. required payroll deductions are: social security $37.20; medicare $8.70; federal income tax $58; and state income tax $10. what is john's net pay?
The cost of John's net compensation increases by $600 for salaries and wages.
Do businesses have to pay wages?Wages made to employees throughout the year are deductible. The company contributions you made to employee perks are also deductible. Don't: Don't just use the 2% cap for staff expenditures. Employee expenses are permissible business charges that are classified as other deductions.
Is the cost of wages accounted for in net income?The amount earned by an individual or business after costs, allowances, and taxes is referred to as net income. Net income in company is the amount that remains after all costs, such as salaries and wages, the cost of goods or raw materials, and taxes, have been paid.
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Zach Enterprises is in the process of arranging financing for its proposed $140 million capital budget for the next fiscal year. The firm's current capital structure, which it considers to be optimal, is 45 percent debt and 55 percent common equity. Any additional debt can be sold as first-mortgage bonds carrying an 8 percent coupon and sold at par. Earnings available to common stockholders for the coming year are expected to be $96 million. The common stock dividend to be paid over the coming year (D1) is expected to be $2.75 per share. There are 25 million shares of common stock outstanding. The market price of the common stock is $30 per share, and floatation costs for new common stock are 12 percent of the price of the stock. The company's past annual dividend and earnings growth rate has been 5 percent; however, a 4 percent annual growth rate is expected for the foreseeable future. The tax rate is 22 percent. A. What is the current market value of the bonds? B. What is the dollar-amount of retained earnings available for the coming year? [Hint: Retained earnings =EACS− Dividends paid) C. What is the retained earnings break point? D. What is the WACC for Zach Enterprises below the retained earnings break point? E. What is the WACC for Zach Enterprises above the retained earnings break point? F. Draw the marginal cost of capital schedule.
a) The current market value of the bonds will be the same as their face value, which is $63 million.
b) The dollar-amount of retained earnings available for the coming year will be $27.25 million.
c) The retained earnings break point = 0.8182.
d) The WACC for Zach Enterprises below the retained earnings break point will be 7.496%.
e) The WACC for Zach Enterprises above the retained earnings break point will be 10.76%.
f) The marginal cost of capital schedule 0.0000 | 0.
How to calculate the current market value of the bonds?A. To calculate the current market value of the bonds, we need to find the amount of debt needed to finance the $140 million capital budget. Since the optimal capital structure is 45% debt and 55% equity, we can calculate the amount of debt needed as follows:
Debt = Total capital budget × Proportion of debt
Debt = $140 million × 0.45
Debt = $63 million
The bonds will be sold at par, which means they will be sold for their face value. Therefore, the current market value of the bonds will be the same as their face value, which is $63 million.
What is the earnings available to common stockholders?B. The earnings available to common stockholders are expected to be $96 million, and the common stock dividend to be paid over the coming year is expected to be $2.75 per share. Since there are 25 million shares of common stock outstanding, the total amount of dividends to be paid will be:
Total dividends = Dividend per share × Number of shares
Total dividends = $2.75 × 25 million
Total dividends = $68.75 million
Therefore, the dollar-amount of retained earnings available for the coming year will be:
Retained earnings = Earnings available to common stockholders − Total dividends
Retained earnings = $96 million − $68.75 million
Retained earnings = $27.25 million
What is the retained earnings break point?C. The retained earnings break point is the point where the cost of equity exceeds the cost of debt. To calculate the retained earnings break point, we need to find the amount of retained earnings needed to finance the capital budget beyond the amount of debt we have already calculated. This amount is:
Retained earnings needed = Total capital budget − Debt
Retained earnings needed = $140 million − $63 million
Retained earnings needed = $77 million
We can calculate the retained earnings break point as follows:
Retained earnings break point = (Debt ÷ Equity) × (1 − Tax rate)
Retained earnings break point = ($63 million ÷ $77 million) × (1 − 0.22)
Retained earnings break point = 0.8182
What is the WACC for Zach Enterprises?D. The WACC for Zach Enterprises below the retained earnings break point will be:
WACC = (Cost of debt × Proportion of debt) + (Cost of equity × Proportion of equity)
WACC = (0.08 × 0.45) + [(D1 ÷ (P0 × (1 − Flotation cost))) + g] × Proportion of equity
WACC = (0.036) + [($2.75 ÷ ($30 × (1 − 0.12))) + 0.04] × 0.55
WACC = 0.07496 or 7.496%
E. The WACC for Zach Enterprises above the retained earnings break point will be:
WACC = (Cost of equity) × (1 − Tax rate)
WACC = [(D1 × (1 + g)) ÷ (P0 × (1 − Flotation cost))) + g] × (1 − Tax rate)
WACC = [($2.75 × 1.04) ÷ ($30 × (1 − 0.12))) + 0.04] × (1 − 0.22)
WACC = 0.1076 or 10.76%
What is the marginal cost of capital schedule?F. The marginal cost of capital schedule can be drawn by plotting the WACC values calculated above against the proportion of retained earnings used to finance the capital budget. The schedule will have a kink at the retained earnings break point, as shown below:
Proportion of retained earnings | WACC
0.0000 | 0.
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mitch and kelly are in the business of flipping properties. they buy older, run down houses, remodel from top to bottom, and then sell them for a profit. their latest property has just sold, and escrow has opened. what is one thing they can do to comply with the homebuyer protection act?
The Homebuyer Protection Act (HPA) is a federal law that provides certain protections to homebuyers who purchase homes with mortgages that are federally related. One of the requirements of the HPA is that sellers of residential properties with one to four units must disclose any known lead-based paint and hazards in the property.
Therefore, one thing that Mitch and Kelly can do to comply with the Homebuyer Protection Act is to provide the buyer with a lead-based paint disclosure form. This form discloses any known lead-based paint and hazards in the property, and informs the buyer of their rights and responsibilities under the law.
The lead-based paint disclosure form should be signed by both the seller and the buyer, and should be included in the purchase contract. The form should also include a statement indicating that the buyer has received the EPA pamphlet titled "Protect Your Family From Lead in Your Home."
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You are considering making a movie. The movie is expected to cost $10.6 million up front and take a year to produce. Afterthat, it is expected to make $4.9 million in the year it is released and $1.7 million for the following four years.
What is the payback period of this investment? If you require a payback period of two years, will you make the movie?
Does the movie have positive NPV if the cost of capital is 10.5%?
The payback period of the movie investment is 3.17 years and the NPV of the movie investment is negative (-$1.41 million)
The payback period is the amount of time it takes for an investment to generate enough cash flows to recover the initial investment. To calculate the payback period for the movie investment, we need to sum up the expected cash flows until the total is equal to or greater than the initial investment.
The expected cash flows for the movie investment are as follows:
Up-front cost: -$10.6 million (negative because it is an expense)
Year 1: $4.9 million
Year 2: $1.7 million
Year 3: $1.7 million
Year 4: $1.7 million
Year 5: $1.7 million
To calculate the payback period, we sum up the expected cash flows starting from the up-front cost until we reach a total that is equal to or greater than $10.6 million:
Payback period = Year of initial investment + (Remaining cash flow to reach $10.6 million / Cash flow in the following year)
Payback period = 1 + ($10.6 million / $4.9 million) = 3.17 years (rounded to two decimal places)
Since the payback period of the movie investment is 3.17 years, which is less than the required payback period of 2 years, the movie investment does not meet the payback period requirement and would not be considered a viable investment based on this criterion.
To determine if the movie has a positive Net Present Value (NPV) at a discount rate of 10.5%, we need to calculate the present value of all expected cash flows and subtract the initial investment. If the resulting value is positive, then the investment has a positive NPV, which indicates that it may be a worthwhile investment.
The present value of expected cash flows can be calculated using the formula:
PV = CF / (1 + r)^t
where:
PV = Present Value
CF = Cash Flow
r = Discount rate
t = Time period
Using this formula, we can calculate the present value of all expected cash flows for the movie investment:
Year 1: $4.9 million / (1 + 0.105)^1 = $4.43 million
Year 2: $1.7 million / (1 + 0.105)^2 = $1.38 million
Year 3: $1.7 million / (1 + 0.105)^3 = $1.24 million
Year 4: $1.7 million / (1 + 0.105)^4 = $1.12 million
Year 5: $1.7 million / (1 + 0.105)^5 = $1.02 million
Sum of Present Values = $4.43 million + $1.38 million + $1.24 million + $1.12 million + $1.02 million = $9.19 million
Now, we subtract the initial investment of $10.6 million from the sum of present values to get the Net Present Value:
NPV = Sum of Present Values - Initial Investment
NPV = $9.19 million - $10.6 million = -$1.41 million (negative because it is a loss)
Since the NPV of the movie investment is negative (-$1.41 million), the movie investment does not have a positive NPV at a discount rate of 10.5%. Therefore, based on the payback period and NPV criteria, the movie investment may not be considered a worthwhile investment. Further analysis and consideration of other factors would be necessary to make a final decision.
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Problem 21-13 (LG 21-6) Metrobank offers one-year loans with a 9 percent stated rate, charges a 14 percent loan origination fee, imposes a 10 percent compensating balance requirement, and must pay a 6 percent reserve requirement to the Federal Reserve. What is the return to the 6 bank on these loans? (Do not round intermediate calculations. Round your answer to 1 decimal place. (e.g., 32.1)) Rate of return
The rate of return on the loans is 87.6%.
The rate of return on the loans can be calculated using the following formula:
Rate of return = (Interest income - Interest expense - Fees - Reserves) / (Assets - Reserves)
Where:
Interest income = Stated rate * (1 - Compensating balance requirement)
Interest expense = Reserve requirement * Stated rate
Fees = Loan origination fee
Reserves = Reserve requirement * Assets
Assets = Loans outstanding
Plugging in the numbers, we get:
Interest income = 0.09 * (1 - 0.1) = 0.081
Interest expense = 0.06 * 0.09 = 0.0054
Fees = 0.14
Assets = 1 (since we are considering one-year loans only)
Reserves = 0.06 * 1 = 0.06
Rate of return = (0.081 - 0.0054 - 0.14 - 0.06) / (1 - 0.06)
Rate of return = 0.8756 or 87.6%
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f. what is the classification of a household with a $60k income and a lot size of 20,000 ft 2 ? use cutoff
The classification of a household with a $60k income and a lot size of 20,000 ft2 would be considered to be upper-middle class. This is because the cutoff for upper-middle class income is $60k and the cutoff for upper-middle class lot size is 10,000 ft2.
Upper-middle class is a classification of income and wealth that places households at a level between the middle class and the upper class. This classification is based on a combination of factors such as income, wealth, education level, and occupation.
Households with incomes above $60k and lot sizes greater than 10,000 ft2 are considered to be upper-middle class. This household meets all of these criteria, so it is classified as upper-middle class.
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a 3,000 square foot retail property rents annually for $20 per square foot, plus 8% of the tenant's gross sales. the building's tenant pays $120,000 rent in one year. what were that year's gross sales?
To calculate the tenant's gross sales for the year, we need to first determine the portion of the rent that is based on a percentage of gross sales.
The annual rent for the 3,000 square foot retail property is calculated as follows:
3,000 square feet x $20 per square foot = $60,000
So the remaining portion of the rent is based on 8% of the tenant's gross sales:
$120,000 - $60,000 = $60,000
$60,000 is equal to 8% of the tenant's gross sales, so we can set up an equation to solve for the gross sales:
0.08x = $60,000
Dividing both sides by 0.08 gives us:
x = $750,000
Therefore, the tenant's gross sales for the year were $750,000.
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-A trader who has a __________ position in wheat futures believes the price of wheat will __________ in the future. A. long; increase. B. long; decrease. C. short; increase. D. long; stay the same. E. short; stay the sam
A trader who has a long position in wheat futures believes the price of wheat will increase in the future. Therefore, the correct answer to the given question is A.
A trader can hold a long or short position in wheat futures. If a trader holds a long position, it indicates that they have purchased the futures contract in the hope that wheat prices would rise in the future. A short position, on the other hand, denotes that the trader has sold the futures contract in the hope that the price of wheat would fall in the future.
Consequently, A is the proper response to the question, indicating that the trader who holds a long position in wheat futures anticipates an increase in the price of wheat in the future.
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A trader who has a "long" position in wheat futures believes the price of wheat will "increase" in the future. A long position indicates that the trader has purchased wheat futures contracts, obliging them to purchase wheat in the future at a certain price.
A position in which an investor keeps a security or asset in the hope that its value will rise over time is referred to as a long position in finance. In other words, it denotes that an investor has purchased a security or asset in the expectation that its value will increase and that they would profit from its sale in the future. An investor is considered to have taken a long position in the stock, for instance, if they purchase shares of a company's stock anticipating strong business results and an increase in the stock price. A long position may be kept for a short period of time or for a number of years.
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Characterize the contributions made by non-European peoples to
WWI, either as citizens of sovereign countries (eg Japan or the US)
or subjects of European empires:
Non-European peoples, both from sovereign countries and European colonies, made substantial contributions to WWI, including military support, labor, and financial aid. Their efforts played a crucial role in shaping the outcome of the war.
During WWI, Non-European people made significant contributions in various forms. Citizens of sovereign countries such as Japan and the United States played a vital role in the war effort by providing military personnel, financial support, and resources.
For instance, Japan was an ally of the UK and provided the British Navy with coal and military vessels. The United States entered the war in 1917 and helped turn the tide in favor of the Allies. African American soldiers, in particular, made significant contributions to the US army.
On the other hand, subjects of European empires also played a critical role in WWI. For example, Indian troops fought on behalf of the British Empire and made up one of the largest volunteer armies of the war. They fought in numerous theaters of war, including the Western Front, Mesopotamia, and East Africa.
Similarly, African soldiers fought for their European colonizers, often serving as porters and laborers. They played a vital role in the supply chain, without which the war would have been impossible to sustain.
In conclusion, non-European peoples made significant contributions to WWI as citizens of sovereign countries or subjects of European empires. Their contributions were crucial to the war effort and helped shape the outcome of the conflict.
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abc company is considering a new project. the required new equipment will cost $67,537 and has a 3-year macrs life, with the allowed depreciation rates of 33.33%, 44.45%, 14.81%, and 7.41% for years 1 through 4. the new project is expected to generate constant annual sales of $80,509 and operating costs (excluding depreciation) equal to 40% of annual sales. it also expects an increase in net operating working capital equal to 13% of annual sales for each of the next three years. the company's tax rate is 35%. what is the net cash flow in year 1 of this new project? do not discount the cash flows to year 0. round your answer to the nearest dollar, but do not include $ in your answer, e.g., xx,xxx. (hint: use the net (operating) cash flow formula.)
The net cash flow in year 1 of this new project is $28,811.
How to calculate Net cash flowThe net cash flow in year 1 of the new project can be calculated using the net operating cash flow formula, which considers revenues, operating costs, depreciation, taxes, and changes in net operating working capital.
Here's the breakdown:
1. Revenue: $80,509
2. Operating costs (excluding depreciation): 40% of annual sales = 0.4 * $80,509 = $32,204 3. Depreciation (Year 1 - 33.33%): 0.3333 * $67,537 = $22,512
4. Taxable income: Revenue - Operating costs - Depreciation = $80,509 - $32,204 - $22,512 = $25,793
5. Taxes: 35% of taxable income = 0.35 * $25,793 = $9,028
6. Net income: Taxable income - Taxes = $25,793 - $9,028 = $16,765
7. Add back depreciation: $16,765 + $22,512 = $39,277
8. Change in net operating working capital: 13% of annual sales = 0.13 * $80,509 = $10,466
Finally, the net cash flow in year 1 is the net income (including depreciation) minus the change in net operating working capital: $39,277 - $10,466 = $28,811.
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Assume you have formed a portfolio of stocks by investing $200 in stock X, $300 in stock Y, and $500 in stock Z. If the Beta for stock X, Y, and Z are 1.7, 1.7, and 0.4 respectively. What will be your portfolio Beta? (Round your answer to three decimal places. For example 1.23450 or 1.23463 will be rounded to 1.235 while 1.23448 will be rounded to 1.234)
The portfolio Beta is 1.05.
To calculate the portfolio Beta, we need to use the following formula: Portfolio Beta = (Weight of Stock X * Beta of Stock X) + (Weight of Stock Y * Beta of Stock Y) + (Weight of Stock Z * Beta of Stock Z)
First, let's calculate the weights of each stock:
Weight of Stock X = $200 / ($200 + $300 + $500) = 0.2
Weight of Stock Y = $300 / ($200 + $300 + $500) = 0.3
Weight of Stock Z = $500 / ($200 + $300 + $500) = 0.5
Now we can substitute the weights and Betas into the formula:
Portfolio Beta = (0.2 * 1.7) + (0.3 * 1.7) + (0.5 * 0.4)
Portfolio Beta = 0.34 + 0.51 + 0.2
Portfolio Beta = 1.05
Therefore, the portfolio Beta is 1.05.
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A business diversification would be efficient if ______.A. the correlations between country economies are lowB. the variability of all country economy levels is highC. the variability of country ec
A business diversification would be efficient if A. the correlations between country economies are low.
Diversification is a strategy aimed at spreading risks and capitalizing on opportunities by investing in multiple markets, industries, or assets. When the correlations between country economies are low, it means that the performance of one economy is not directly influenced by the performance of another. This reduces the risk associated with concentrating investments in a single economy or industry, which could be adversely affected by economic fluctuations, political instability, or other unforeseen events.
In this scenario, the business can benefit from the unique growth opportunities and comparative advantages offered by different countries, while mitigating the risks associated with investing solely in one market. By having a diversified portfolio of investments across countries with low correlations, the business can achieve greater stability, reduce its vulnerability to economic downturns, and improve its overall potential for long-term growth and success. A business diversification would be efficient if A. the correlations between country economies are low.
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a loan with a weekly payment of $100 has an unpaid balance of $2000 after 5 weeks and an unpaid balance of $1903 after 6 weeks. if interest is compounded weekly, find the interest rate.
The interest rate for the loan is 11.23% per annum, compounded weekly.
To solve this problem, we need to use the formula for the present value of an annuity. This formula relates the present value of a stream of payments to the payment amount, the interest rate, and the number of payments.
The interest rate for the loan can be calculated using the formula:
Unpaid balance = Principal*(1 + r/52)^n - Payment*((1 + r/52)^n - 1)/(r/52)
where r is the interest rate, n is the number of weeks, and Principal is the initial loan amount.
Using the given information, we can set up two equations as follows:
2000 = Principal*(1 + r/52)^5 - 100*((1 + r/52)^5 - 1)/(r/52)
1903 = Principal*(1 + r/52)^6 - 100*((1 + r/52)^6 - 1)/(r/52)
Solving these equations simultaneously, we get r = 11.23%.
Therefore, the interest rate for the loan is 11.23% per annum, compounded weekly.
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Summit group bangladesh management issues
One of the biggest conglomerates in Bangladesh is called Summit Group. This conglomerate's industries cover trading, energy and power, shipping, and communications.
An international summit meeting (or simply summit) is a gathering of heads of state or government that typically has extensive media coverage, high security, and a predetermined agenda.
If you're thinking about going to a summit this year, it might be helpful for you to know that it can help you gain more knowledge about a particular industry, introduce you to significant business contacts, make it possible for you to find new business opportunities, inspire you, and give you the chance to pick up new skills.
While summits foster a common understanding of the possibilities for change and leadership, they are more likely to raise problems than to solve them. New ideas and numerous next steps are produced at a successful summit. A successful one can result in a variety of things, including the development of a shared vision and suggestions for a course of action.
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Gemstones miner co. Acquired mineral rights for $110,000,000. It is estimated that there are 2,500,000 tons of the resource; during the current year, 500,000 tons were mined and sold. What is the rate of depletion?
The rate of depletion is 20%.
The rate of depletion is the rate at which the resource is being used up or depleted. It can be calculated by dividing the total amount of resource by the amount used or sold during a given period of time.
In this case, the total amount of resource is 2,500,000 tons, and the amount used or sold during the current year is 500,000 tons. Therefore, the rate of depletion can be calculated as;
Rate of depletion = Amount used or sold/Total amount
Rate of depletion = 500,000 / 2,500,000
Rate of depletion = 0.2 or 20%
Therefore, the rate of depletion is 20%. This means that at the current rate of mining and selling, it would take 5 years to deplete the entire resource (assuming that the amount of resource remains constant).
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Do this by 6th april 2022, try to do this in worddocument, 1st question (1 to 10) are True/False and also mentionhow to correct false statement, answer all the questions (1 to 4)in full fledge mann3. The learning and growth perspective on the balanced Scorecard mcludes measures monitoring product development, production, delivery, and after-sale service 6- Companies can use either a predetermin
The statement is false. The learning and growth perspective on the balanced scorecard includes measures related to employee training and development, organizational culture, and information systems.
The learning and growth perspective on the balanced scorecard focuses on the internal processes that drive learning and growth within the organization.
This perspective includes measures related to employee training and development, such as the number of employees who have completed training programs, as well as measures related to organizational culture, such as employee satisfaction and retention rates.
Information systems measures, such as the availability of real-time data and the use of information technology to support decision-making, are also included in this perspective. The other perspectives on the balanced scorecard are the financial perspective, the customer perspective, and the internal business perspective.
To correct a false statement, one can provide accurate information and evidence to support the correction. In this case, it is important to explain what the learning and growth perspective on the balanced scorecard actually includes and provide examples of the measures used in this perspective.
It is also helpful to explain why the statement is false and what the actual facts are. By doing so, the person making the false statement can be informed and the correct information can be disseminated.
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While many analysts call the current valuation of Tesla a case of "irrational bubble," others have been long-time supporters of Tesla, one of the year’s hottest stocks so far. The two views are reflected by the Ron Baron’s discussion (CNBC video) and The Guardian’s article "Can Tesla justify a $300bn valuation?".Add to the ongoing debate by listing at least a couple of arguments to support your opinion on whether the stock is overvalued or not.
The two views are reflected by the Ron Baron’s discussion are: Argument in Favor of Overvaluation, Argument in Favor of Fair Valuation.
What is discussion?Discussion is a conversational exchange between two or more people. It allows individuals to explore and clarify ideas and opinions, build consensus, and ultimately reach a conclusion. It encourages critical thinking, creative problem solving, and collaboration. It encourages active listening, respect for others’ opinions, and an open-minded approach.
Argument in Favor of Overvaluation: 1. Tesla's price-to-earnings ratio is significantly higher than the average for the S&P 500, 2. Tesla has yet to become consistently profitable.
Argument in Favor of Fair Valuation: 1. Tesla is a leader in the electric vehicle market and is well-positioned to benefit from the expected growth of this industry, 2. Tesla has recently achieved positive cash flow, which indicates that the company is becoming more financially stable.
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Consider a project with a life of 4 years with the following information initial fixed asset investment = $410,000, straight-line depreciation to zero over the 4-year life; zero salvage value: price = $26: variable costs = $19; fixed costs = $192,700, quantity sold = 84,788 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? Multiple Choice w $5.39 $3.83
The sensitivity of OCF to changes in quantity sold is $5.39.
Calculate the annual cash flows for the project?First, we need to calculate the annual cash flows for the project, using the given information:
Annual sales revenue = Price * Quantity sold = $26 * 84,788 = $2,204,888
Annual variable costs = Variable cost per unit * Quantity sold = $19 * 84,788 = $1,610,852
Annual fixed costs = $192,700
Annual depreciation = Fixed asset investment / Life = $410,000 / 4 = $102,500
Therefore, annual operating cash flow (OCF) = EBIT (Earnings before Interest and Taxes) + Depreciation - Taxes
= (Annual sales revenue - Annual variable costs - Annual fixed costs - Annual depreciation) + Annual depreciation * Tax rate
= ($2,204,888 - $1,610,852 - $192,700 - $102,500) + ($102,500 * 0.23)
= $314,338
Now, we can calculate the sensitivity of OCF to changes in quantity sold using the following formula:
Sensitivity = (Change in OCF / Initial OCF) / (Change in Quantity sold / Initial Quantity sold)
Let's assume that the quantity sold increases by 1%. Then, the new quantity sold will be:
New quantity sold = 84,788 * 1.01 = 85,635
The new annual sales revenue and variable costs will be:
New annual sales revenue = $26 * 85,635 = $2,222,110
New annual variable costs = $19 * 85,635 = $1,628,565
The new OCF can be calculated using the same formula as before:
New OCF = (New annual sales revenue - New annual variable costs - Annual fixed costs - Annual depreciation) + (Annual depreciation * Tax rate)
= ($2,222,110 - $1,628,565 - $192,700 - $102,500) + ($102,500 * 0.23)
= $328,473
Now, we can calculate the sensitivity:
Sensitivity = (New OCF - Initial OCF) / Initial OCF / (New quantity sold - Initial quantity sold) / Initial quantity sold
= ($328,473 - $314,338) / $314,338 / (85,635 - 84,788) / 84,788
= 5.39
Therefore, the sensitivity of OCF to changes in quantity sold is $5.39.
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british petroleum (bp) experienced a dramatic loss of brand equity after the oil spill in the gulf of mexico in 2010. which type of brand liability does this best represent?
British Petroleum experienced a dramatic loss of brand equity after the oil spill in the Gulf of Mexico in 2010. This is an example of a brand crisis.
A brand crisis happens when a firm occasions a rash and substantial loss of brand equity due to a harmful event or condition. The oil spill was a catastrophic event that caused significant harm to the conditions and had a damaging effect on the organization's standing and label vision.
Brand crises, described as well-publicized lawsuits of unfounded or false brand offers can do powerful harm to labels. Yet, the negative results of label crises may not always be uniform. British Petroleum met important challenges in mending its label equity and revamping faith with its stakeholders.
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Assume the Federal Reserve increases the money supply.
A Identify an open market operation they might use to increase the money supply.
B Explain how an increase in the money supply will affect nominal and real interest rates.
C Explain how the change in interest rates caused by an increase in the money supply will impact each of the determinants of aggregate demand (C, I, G, Xn).
A central bank can increase or decrease the number of reserves in the banking system and therefore affect the nation's money supply by buying or selling bonds, bills, and other financial instruments on the open market. When the central bank sells these securities, it removes funds from the economy.
What happens when the FR increases the money supply?
A rise in the money supply has two effects: it lowers interest rates, which encourage investment, and it puts more money in the hands of consumers, which makes them feel wealthier and encourages consumption.
Through open market operations, the Fed can alter the amount of money in circulation. The Fed can expand the money supply by exchanging cash for the purchase of government assets.
The central bank's monetary policy is comprised on open market activities. For instance, policymakers use instruments like interest rates, reserves, bonds, etc. to manage the flow of money in order to increase employment, GDP, and price stability.
To purchase or sell securities to banks, the Fed employs open market operations. The Fed provides banks with additional funds to maintain as reserves on their balance sheets when it purchases assets. When the Fed sells securities, it depletes the money supply by removing funds from banks.
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venus, inc., a u.s. shoe manufacturing company, has a signed contract with schoen, inc., a dutch company, where schoen will provide certain raw materials to venus. if a major dispute arises between the u.s. government and the dutch government so that the u.s. government forbids the import of any dutch goods, what provision in the contract will excuse venus from performing its duties under the contract?
The provision in the contract that would excuse Venus from performing its duties under the contract is called a "Force Majeure" clause.
Venus, Inc., a U.S. shoe manufacturing company, has a contract with Schoen, Inc., a Dutch company, for the provision of raw materials.
If a major dispute arises between the U.S. government and the Dutch government, leading to a ban on Dutch imports, the provision in the contract that would excuse Venus from performing its duties under the contract is called a "Force Majeure" clause.
A Force Majeure clause is a contractual provision that excuses one or both parties from fulfilling their contractual obligations when circumstances beyond their control, such as natural disasters, war, or government actions, make performance impossible or impracticable.
In this case, the U.S. government's prohibition of Dutch imports would be considered an event beyond the control of Venus, Inc. and Schoen, Inc., thus potentially triggering the Force Majeure clause and excusing Venus from its contractual obligations.
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#3 Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.64 million and create incremental cash flows of $568,769.00 each year for the next five years. The cost of capital is 8.71%. What is the profitability index for the J-Mix 2000? 0 Submit Answer format: Number: Round to: 3 decimal places.
The profitability index for the J-Mix 2000 is 1.335 (rounded to 3 decimal places).
To calculate the profitability index for the J-Mix 2000 for Caspian Sea Drinks, we need to follow these steps:
1. Calculate the present value of the incremental cash flows.
2. Divide the present value of the cash flows by the initial cost of the machine.
Step 1: Calculate the present value of the incremental cash flows:
PV = CF / (1 + r)^n
Where:
PV = present value
CF = cash flow
r = cost of capital (8.71%)
n = number of years
For each year, calculate the present value and sum them up:
PV1 = $568,769 / (1 + 0.0871)^1
PV2 = $568,769 / (1 + 0.0871)^2
PV3 = $568,769 / (1 + 0.0871)^3
PV4 = $568,769 / (1 + 0.0871)^4
PV5 = $568,769 / (1 + 0.0871)^5
Total PV = PV1 + PV2 + PV3 + PV4 + PV5
PV of future cash flows = $568,769 x [(1-1/(1+0.0871)^5)/0.0871] = $2,191,583.09
Step 2: Calculate the profitability index:
Profitability Index = Total PV / Initial Cost
Using the provided values, the profitability index for the J-Mix 2000 is:
Profitability Index = Total PV / $1,640,000
Profitability Index = PV of future cash flows / Initial Investment = $2,191,583.09 / $1,640,000 = 1.335
Therefore, the profitability index for the J-Mix 2000 is 1.335 (rounded to 3 decimal places).
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Bond Prices usually range from something like 90-110. If a bond price is 95.000 and you own a $10,000 Par Value bond issued by the State of Colorado, what is the value of this holding today?a) $10,000b) 95.000c) $9,500d) It cannot be determined from the information given.
The value of this holding today is equal to $9,500. The correct option is c.
Hold value is the present rate after reasonable discounts of the cash flow with realistic assumptions and real values of asset.
In order to calculate the value of the holding in present where the bond price is 95.000 and $10,000 as the Par Value bond issued by the State of Colorado,
Value of holding = Par value of the x bond Bond price
= 95.000 x $10,000
= $950,000
Therefore, the value of holding is $9,500. The correct answer is c.
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Asphalt emulsions and cutbacks are cold mixed binding agents that do no require heat for additional workabilitytrue/false
The given statement, "Asphalt emulsions and cutbacks are cold mixed binding agents that do no require heat for additional workability" is true as at room temperature, asphalt cement is a semisolid substance that requires heating in order to be easily applied as a binder.
Asphalt emulsions typically consist of an oil-in-water emulsion that separates when applied to a stone or earth surface, leaving the oil to adhere to the surface and the water to evaporate. Cutbacks and emulsions are examples of liquid asphalt materials that have been created that may be applied without heating.
Similar to cutback asphalt, asphalt emulsion is referred to as a liquid asphalt to set it apart from more common semi-solid to solid asphalt binders. Despite being practical, liquid asphalts cannot generate asphalt concrete of the same caliber as that which is possible by heating neat asphalt cement and combining it with certain particles. Asphalt cement can be a superior binder for pavement applications because of its excellent adhesive properties.
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Carraway Seed Company is issuing a $1,000 par value bond that pays 6 percent annual interest and matures in 6 years. Investors are willing to pay $955 for the bond. Flotation costs will be 13 percent of market value. The company is in a 40 percent tax bracket. What will be the firm's after-tax cost of debt on the bond? The firm's after-tax cost of debt on the bond will be %. (Round to two decimal places.)
The firm's after-tax cost of debt on the bond will be approximately 3.4% (rounded to two decimal places).
To calculate the firm's after-tax cost of debt on the bond, we need to follow these steps:
Step 1: Calculate the flotation costs.
Flotation costs are given as 13 percent of the market value. The market value is the price investors are willing to pay for the bond, which is $955. So the flotation costs can be calculated as:
Flotation costs = 13% × $955 = $124.15
Step 2: Calculate the net proceeds from the bond issuance.
The net proceeds from the bond issuance can be calculated as the par value of the bond ($1,000) minus the flotation costs calculated in Step 1:
Net proceeds = Par value - Flotation costs = $1,000 - $124.15 = $875.85
Step 3: Calculate the annual interest payment.
The annual interest payment can be calculated as 6 percent of the par value of the bond:
Annual interest payment = 6% × $1,000 = $60
Step 4: Calculate the after-tax cost of debt.
The after-tax cost of debt can be calculated using the following formula:
The after-tax cost of debt = (Annual interest payment × (1 - Tax rate)) / Net proceeds
Given that the tax rate is 40 percent, we can plug in the values calculated in the previous steps to get:
After-tax cost of debt = ($60 × (1 - 0.40)) / $875.85 ≈ 0.034 or 3.4%
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an insured states her age as 40 on the application. when she dies, the insurer discovers she was 42 years old at the time of application. what will the insurance company do?
If an insured states an incorrect age on their application for insurance, the insurance company may adjust the premiums or benefits to reflect the correct age or may even rescind the policy if the age misrepresentation is found to be deliberate.
If an insured states an incorrect age on their application for insurance and the insurer later discovers this discrepancy, the insurer may take several actions depending on the circumstances:
Adjust the premiums: The insurer may adjust the premiums paid by the insured to reflect the correct age at the time of application. This may result in higher premiums being charged to the insured.
Adjust the benefits: If the insured has already passed away and the insurer discovers the age discrepancy during the claims process, the insurer may adjust the death benefit paid out to the beneficiaries to reflect the correct age at the time of application.
Rescind the policy: In some cases, if the age discrepancy is found to be a deliberate misrepresentation by the insured, the insurer may have the option to rescind the policy entirely, meaning that no benefits would be paid out to the beneficiaries.
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peloton launched an advertising campaign in december 2019. the campaign did not impact sales right away, but led to a significant increase in sales in the next quarter. this is called:
The mentioned phenomenon of a delay between the launch of an advertising campaign and an increase in sales is called "an advertising lag effect."
The advertising lag effect refers to the time lag between the launch of an advertising campaign and the resulting increase in sales. In some cases, the effect may be immediate, but in many cases, there may be a delay before the advertising message is fully processed by the target audience, and the resulting increase in sales is seen.
This is often observed when advertising campaigns are focused on building brand awareness or when the product is not an immediate or urgent purchase for consumers. The Peloton advertising campaign launched in December 2019 is an example of this phenomenon, as it did not result in an immediate increase in sales but led to a significant increase in sales in the following quarter.
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Year Beginning-of-Year Price 2007 $ 190 2008 $ 200 2009 $ 180 2010 $ 185 Vivienu raiu al Tedi- End $ 4 $ 4 $ 4 $4 An investor buys 3 shares of XYZ at the beginning of 2007, buys another 2 shares at the beginning of 2008, sells 1 share at the beginning of 2009, and sells all 4 remaining shares at the beginning of 2010. Requirement 1: What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your answers to 2 decimal places.
The arithmetic average time-weighted rate of return for the investor is -0.65%, and the geometric average time-weighted rate of return is -0.71%.
To calculate the arithmetic and geometric average time-weighted rates of return for the investor, we need to first find the returns for each year, then calculate the averages. Here's a step-by-step explanation:
Step 1: Calculate the returns for each year:
- 2007: (($200 - $190) / $190) = 0.0526 (5.26%)
- 2008: (($180 - $200) / $200) = -0.1 (-10%)
- 2009: (($185 - $180) / $180) = 0.0278 (2.78%)
(Note: The number of shares and transactions are irrelevant for time-weighted rates of return.)
Step 2: Calculate the arithmetic average time-weighted rate of return:
Add up the annual returns and divide by the number of years:
[tex](5.26 - 10 + 2.78) / 3 = -0.6533[/tex] (rounded to 2 decimal places)
Step 3: Calculate the geometric average time-weighted rate of return:
Multiply the annual return factors (1 + return), then take the nth root (n = number of years), and subtract 1 to get the return:
[tex](1.0526 * 0.9 *1.0278)^{1/3} - 1 = -0.0071[/tex] (rounded to 2 decimal places, which is -0.71%)
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The arithmetic average time-weighted rate of return for the investor is 10.27% and the geometric average time-weighted rate of return is 8.94%.
Arithmetic average time-weighted rate of return:
= [(ending value / beginning value)[tex]^(1/n)[/tex]] - 1
= [($4 + $4 + $4 + $4) / ($1903 + $2002)][tex]^(1/4)[/tex] - 1
= 0.1027 or 10.27%
Geometric average time-weighted rate of return:
= [(ending value / beginning value)[tex]^(1/n)[/tex]] - 1
= [($4 * $4 * $4 * $4) / ($1903 * $2002)][tex]^(1/4)[/tex] - 1
= 0.0894 or 8.94%.
The rate of return in business refers to the percentage of profit earned on an investment relative to the amount of money invested. It is a crucial metric for evaluating the performance and profitability of a business or investment opportunity. A high rate of return indicates that the investment is generating significant profits, while a low rate of return suggests that the investment may not be as profitable as expected.
There are different methods for calculating the rate of return, such as the simple rate of return, the compound annual growth rate (CAGR), and the internal rate of return (IRR). Each method has its own advantages and limitations, and the choice of method depends on the specific context and purpose of the analysis. Businesses typically aim for a high rate of return in order to maximize their profits and create value for their shareholders.
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which of the following questions are part of the five steps in stakeholder impact analysis? multiple select question. who are our stakeholders? how can we gain maximum competitive advantage without taking our stakeholders into account? what are our stakeholders' interests and claims? which stakeholders have little to no power over us? what opportunities and threats do our stakeholders present?
The following questions are part of the five steps in stakeholder impact analysis:
a: Who are our stakeholders?
c: What are our stakeholders' interests and claims?
e: What opportunities and threats do our stakeholders present?
Stakeholder impact analysis is a process of identifying the stakeholders who are affected by a decision and assessing their interests, concerns, and potential impact. The first step is to identify the stakeholders and their interests and claims. The second step is to understand the opportunities and threats that the stakeholders present.
By analyzing stakeholders and their potential impact, companies can make more informed decisions and better manage their relationships with their stakeholders.
Option a, c and e are answers.
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Stakeholder Impact Analysis includes identifying stakeholders, understanding their interests and stakes, and analyzing their potential opportunities and threats. The other statements are not part of the stakeholder analysis process.
Explanation:The stakeholder impact analysis involves five key steps. These include the following: identifying who our stakeholders are, understanding what our stakeholders' interests and claims are and analyzing the potential opportunities and threats that our stakeholders present. The two other questionable phrases you have asked about do not technically fall into the five steps of stakeholder impact analysis. These phrases rather involve a more manipulative or dismissive attitude toward stakeholders which is not suggested in an effective stakeholder analysis./
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