Walmart, ExxonMobil, Intel, and virtually all other large companies in the United States are organized as corporations.
A corporation is a legal entity that is separate from its owners, or shareholders, and is responsible for its own actions and liabilities. The owners of a corporation are shareholders who hold shares of stock, which represent a portion of ownership in the company.
Corporations have several advantages, including limited liability for shareholders, which means that they are only responsible for the amount of their investment in the company. Additionally, corporations can raise capital by selling shares of stock to the public, making it easier for them to finance growth and expansion. Corporations are also subject to certain tax advantages and have the ability to engage in complex business transactions.
However, they are also subject to certain regulations and must comply with various legal requirements to maintain their status as a separate legal entity.
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Rockhampton Ltd issues a 10-year zero-coupon bond for which investors are willing to pay $950. The yield to maturity for the bond is 6%. What is the unknown variable in valuing this bond?
PV
FV
r
CF
The unknown variable in this case is the face value (FV) of the bond, which is $1000.
How we calculate the unknown variable in valuing the bond?In order to value the bond, we need to use the formula for the present value of a bond:
PV = CF / (1 + r[tex])^n[/tex]
Where PV is the present value of the bond, CF is the cash flow (in this case, the face value of the bond), r is the yield to maturity, and n is the number of years until maturity.
Since this is a zero-coupon bond, the cash flow (CF) is equal to the face value of the bond. Therefore, we can rewrite the formula as:
PV = FV / (1 + r[tex])^n[/tex]
Where FV is the face value of the bond.
We are given that the bond has a face value of FV = $1000, a maturity of n = 10 years, and a yield to maturity of r = 6%. We are also given that investors are willing to pay $950 for the bond.
Substituting these values into the formula, we get:
$950 = $1000 / (1 + 0.06[tex])^1^0[/tex]
To solve for the unknown variable, we can rearrange the equation as:
$950 * (1 + 0.06[tex])^1^0[/tex] = $1000
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Cash Versus Credit. Why should some people use cash to make purchases instead of credit? Credit Rights. Under what conditions does the Equal Credit Opportunity Act prohibit creditors from denying credit? If you are denied credit, do you have the right to know the reason for the denial? a Impact of Credit Report. Explain how a weak credit report can affect you.
1. Some people should use cash to make purchases instead of credit because they may have difficulty managing debt or controlling their spending habits.
2. The Equal Credit Opportunity Act prohibits creditors from denying credit based on a person's race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.
3. You have the right to know the reason for the denial, if you are denied credit.
4. A weak credit report make it difficult to obtain loans or credit cards, resulting in higher interest rates.
1. Some people should use cash to make purchases instead of credit because using cash can help them avoid overspending, manage their budget more effectively, and stay out of debt. Additionally, using cash eliminates the risk of accruing interest charges and potential late fees from credit card payments.
Cash purchases provide a tangible way to see how much money is being spent and limit the amount of debt that can accrue. Additionally, some businesses may offer discounts for cash purchases, which can provide a financial benefit.
2. The Equal Credit Opportunity Act (ECOA) prohibits creditors from denying credit based on factors such as race, color, religion, national origin, sex, marital status, age, or because a person receives public assistance. Under these conditions, it is illegal for creditors to discriminate when approving or denying credit applications. Additionally, creditors cannot discriminate based on a person's credit history or lack of credit history.
3. If you are denied credit, you have the right to know the reason for the denial. According to the Fair Credit Reporting Act (FCRA), a creditor must provide a written explanation of the denial within 30 days of the applicant's request, which should include the specific reasons for the denial or a notice of the applicant's right to obtain this information.
4. A weak credit report can affect you in several ways, such as making it more difficult to obtain loans or credit cards, resulting in higher interest rates, and possibly affecting your ability to secure employment or housing. A poor credit history may indicate to lenders that you are a high-risk borrower, leading them to charge higher interest rates or deny your application altogether. Additionally, some employers and landlords may review your credit report as part of their decision-making process, potentially impacting job opportunities and housing options.
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forgoing current consumption so that those resources can be used to produce new capital is called: a. scarcity. b. absolute advantage. c. comparative advantage. d. saving. e. investment.
Ongoing current consumption so that those resources can be used to produce new capital is called investment. The correct answer is e Investment
Investment refers to the process of forgoing current consumption so that those resources can be used to produce new capital. In this context, "capital" represents physical assets or resources used to produce goods and services, such as machinery, buildings, or technology.
When individuals or businesses decide to invest, they are choosing to sacrifice immediate consumption or satisfaction in order to potentially increase their productivity or income in the future. This decision is driven by the desire for economic growth and a higher standard of living over time.
Investment is distinct from the other options listed. Scarcity (a) refers to the limited availability of resources; absolute advantage (b) describes a country's ability to produce a good more efficiently than another country; and comparative advantage (c) is the ability to produce a good at a lower opportunity cost than another country. Saving (d) is the act of setting aside money or resources for future use, but it does not necessarily involve using those resources to create new capital, as investment does.
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The Franklins have decided to sell the vacation home on the Gulf Coast, instead of renting it to others, for the FMV of $800,000. They have owned the home and used it for vacations since 2017. How much of the gain on the sale of the home can the couple exclude from gross income in 2020, the year the sale is finalized?
Franklins will not be able to exclude any gain from the sale of their vacation home in 2020, as it does not qualify as their primary residence under Section 121 of the Internal Revenue Code. The gain on the sale is found as $250,000
The exclusion of gain on the sale of a home is governed by the Internal Revenue Code Section 121, which states that a taxpayer can exclude up to $250,000 of gain on the sale of their primary residence if they meet certain conditions, such as using the home as their main residence for at least two out of the last five years. For married couples filing jointly, the exclusion limit is $500,000.
However, the vacation home in question does not qualify as the Franklins' primary residence since they only used it for vacations. Therefore, they are not eligible for the Section 121 exclusion on the gain from the sale of this property.
To calculate the gain, the Franklins must determine their adjusted basis in the property, which includes the original purchase price and any improvements made to the property since 2017. Subtracting this basis from the FMV of $800,000 will give the amount of gain on the sale. This entire gain must be reported as part of the Franklins' gross income in 2020, as they cannot exclude any portion of it under Section 121.
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which of the following is correct?group of answer choicesto find the beta of a stock, one can multiply the correlation coefficient between stock return and market return by the standard deviation of the stock return and divide the product by the standard deviation of the market return.a stock has a return correlation coefficient with the market return of 0.72 and it has a standard deviation of 30%, its beta is equal to 0.75 if the market portfolio has a standard deviation of 25%.the greater the beta of the stock, the higher the risk the stock has.the greater the standard deviation of the stock, the higher the risk the stock has.
The correct statement is "to find the beta of a stock, one can multiply the correlation coefficient between stock return and market return by the standard deviation of the stock return and divide the product by the standard deviation of the market return."
This formula is used to calculate the beta of a stock, which measures the stock's sensitivity to market movements. The statement "a stock has a return correlation coefficient with the market return of 0.72 and it has a standard deviation of 30%, its beta is equal to 0.75 if the market portfolio has a standard deviation of 25%" is an example of using this formula to calculate the beta of a stock. The statement "the greater the beta of the stock, the higher the risk the stock has" is also true, as a higher beta indicates higher market risk. However, the statement "the greater the standard deviation of the stock, the higher the risk the stock has" is not necessarily true, as standard deviation is only one measure of risk and does not capture all types of risk (such as company-specific risk).
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blue water homes has 8 percent bonds outstanding that mature in 13 years. the bonds pay interest semiannually. these bonds have a par value of $1,000 and are callable in 5 years at a call price of $1050. what is the yield to call if the current price is equal to $1110.92? a. 3.125 percent by. 9.66 percent c. 4.83 percent d. 7.93 percent e. 6.25 percent
The value of YTC is approximately 3.125 percent (Option A).
How to calculate the yield to call if the current priceBlue Water Homes has 8 percent bonds outstanding that mature in 13 years and pay interest semiannually.
The bonds have a par value of $1,000 and are callable in 5 years at a call price of $1,050. The current price of the bonds is $1,110.92.
To determine the yield to call (YTC), we need to calculate the internal rate of return on the bond's cash flows, considering the bond's current price, call price, and interest payments.
Using a financial calculator or spreadsheet software, input the following values:
N = 10 periods (5 years * 2 semiannual periods), P
V = -$1,110.92 (negative because it's an outflow),
PMT = $40 (8% * $1,000 / 2 semiannual periods), and FV = $1,050.
Solve for the interest rate (I) which represents the YTC. The calculated YTC is approximately 3.125 percent (Option A).
This is the yield an investor would receive if they purchase the bond at its current price and the bond is called at the call price in 5 years.
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An analyst gathered the following information for a stock and market parameters: stock beta = 1.22; expected retum on the Market = 12.90%; expected retum on T-bills = 1.00%; current stock Price = $9.51; expected stock price in one year = $14.61; expected dividend payment next year = $2.24. Calculate the a) Required retum for this stock (1 point): b) Expected retum for this stock
a) To calculate the required return for this stock, we can use the Capital Asset Pricing Model (CAPM) formula:
Required return = Risk-free rate + Beta * (Market return - Risk-free rate)
Risk-free rate = 1.00%Beta = 1.22
Market return = 12.90%
Required return = 1.00% + 1.22 * (12.90% - 1.00%)
Required return = 15.11%Therefore, the required return for this stock is 15.11%.
b) To calculate the expected return for this stock, we can use the formula:
Expected return = (Expected dividend payment / Current stock price) + (Expected stock price - Current stock price) / Current stock price
Expected dividend payment = $2.24
Current stock price = $9.51
Expected stock price = $14.61
Expected return = ($2.24 / $9.51) + ($14.61 - $9.51) / $9.51
Expected return = 33.67%
Therefore, the expected return for this stock is 33.67%.
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Assume the Black-Scholes framework for a stock. You are given: i) The current stock price is 40 ii) The stock pays no dividends iii) The expected rate of appreciation is 16% iv) The stock' s volatility is 30% v) The Black-Scholes price of a 6-month 42-strike European call on the stock is 3.22 vi) The continuously compounded risk-free rate is 8% You just bought a 6-month straddle which pays the absolute difference between the stock price after 6 months and 42. Calculate the probability of having a positive profit after 6 months.
To calculate the probability of having a positive profit after 6 months, we need to find the range of stock prices that result in a positive profit for the straddle.
Using the Black-Scholes model, the range is given by:
Lower Bound = K - Straddle Price = 42 - (Call Price + Put Price) = 42 - (2 x 3.22) = 35.56
Upper Bound = K + Straddle Price = 42 + (Call Price + Put Price) = 42 + (2 x 3.22) = 48.78
Therefore, the range of stock prices that result in a positive profit for the straddle is 35.56 to 48.78.
To calculate the probability of having a positive profit, we need to calculate the probability that the stock price after 6 months will be within this range. This can be done using the Black-Scholes formula with the given inputs and the calculated lower and upper bounds.
Using a calculator or spreadsheet, the probability of the stock price being between 35.56 and 48.78 after 6 months is approximately 0.632. Therefore, the probability of having a positive profit after 6 months is 63.2%.
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akim wants to see all vendor transactions that affect accounts payable. what report does he run?
Akim would need to run an "Accounts Payable Vendor Transaction Report" or a similar report that specifically filters and displays transactions related to vendors and accounts payable.
This report would provide a summary or detailed view of all transactions that impact the accounts payable ledger, such as invoices, payments, credits, and adjustments, associated with vendors or suppliers.
By running this report, Akim would be able to review and analyze all relevant vendor transactions, helping him to effectively manage and reconcile accounts payable activities within the financial system or software being used.
The exact naming and content of the report may vary depending on the specific accounting software or system being utilized by Akim's organization.
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Consider a hypothetical security that pays a continuous dividend over time according to D(t) = Do(1 + t). Assuming a constant) CC rate of interest, r, write a SIMPLIFIED expression for the present value and the duration of this security. If 10% what maturity ZC bond matches the duration? =
The simplified expression for the present value is PV = Do/(r^2 + r) and the duration of this security is Duration = Do * (2r + 1)/(r^2 + r)^2.
To find the present value of the security, we use the continuous dividend discount model: PV = ∫[0,∞] D(t)e^(-rt) dt
Substituting the dividend function D(t) = Do(1 + t) gives:
PV = Do ∫[0,∞] (1 + t)e^(-rt) dt
Using integration by parts, we get:
PV = Do [(1 + r)^(-2)] = Do/(r^2 + r)
To find the duration of the security, we use the formula: Duration = (-1/PV) * dPV/dr
Differentiating the present value expression with respect to r, we get:
dPV/dr = -Do/(r^2 + r)^2 * (2r + 1)
Substituting this into the duration formula gives:
Duration = Do * (2r + 1)/(r^2 + r)^2
To find the maturity ZC bond that matches this duration, we solve the following equation: Duration of ZC bond = Duration of security
Using the duration formula for a ZC bond, we get:
Duration of ZC bond = Maturity
Substituting this into the equation above and solving for maturity, we get:
Maturity = (2r + 1)/(r^2 + r)^2
If r = 10%, then the maturity of the ZC bond that matches the duration of the security is: Maturity = (2*0.1 + 1)/(0.1^2 + 0.1)^2 = 8.75 years (approximately).
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An Extreme Situation e For an American call option: So = 100; T = 0.25; K = 60; D = 0 Should you exercise immediately? • What should you do if s You want to hold the stock for the next 3 months? • You do not feel that the stock is worth holding for the next 3 months?
The current value of the call option is $93.40. we can calculate the current value of the call option using the Black-Scholes formula:
C = S0*N(d1) - Ke^(-rT)*N(d2)
Where:
S0 = current stock price = 100
T = time to expiration in years = 0.25
K = strike price = 60
r = risk-free interest rate = 0
D = dividend yield = 0
N(d) = cumulative standard normal distribution
d1 = [ln(S0/K) + (r + σ^2/2)T] / (σsqrt(T))
d2 = d1 - σ*sqrt(T)
Assuming a volatility of 20%, we get:
d1 = [ln(100/60) + (0 + 0.2^2/2)0.25] / (0.2sqrt(0.25)) = 1.572
d2 = 1.572 - 0.2*sqrt(0.25) = 1.372
N(d1) = 0.9429
N(d2) = 0.9147
C = 1000.9429 - 60exp(-0*0.25)*0.9147 = 93.40
Therefore, the current value of the call option is $93.40.
If the investor does not feel that the stock is worth holding for the next 3 months, they could sell the option on the market and realize a profit of $33.40.
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A $1,000 par value bond with a maturity of five years has a current price of $835 and annual interest payments are $60. what is the yield to maturity?
Answer:
We can use the present value formula to solve for the yield to maturity of the bond:
PV = C / (1 + r)^1 + C / (1 + r)^2 + ... + C / (1 + r)^5 + FV / (1 + r)^5
where PV is the current price of the bond, C is the annual coupon payment, r is the yield to maturity, and FV is the face value of the bond.
Plugging in the given values:
PV = $835
C = $60
FV = $1,000
n = 5
Solving for r using trial and error or a financial calculator, we find that the yield to maturity of the bond is approximately 8.00%.
Therefore, the yield to maturity of the bond is 8.00%.
Eloise plans to accumulate 50,000 at the end of 40 years. She makes the following deposits: (i) X at the beginning of years 1 - 15; (ii) No deposits at the beginning of years 16 - 25; (iii) Y at the beginning of years 26 - 40. The annual effective interest rate is 4%. You are given that X - Y = 120. Calculate Y.
We can use the formula for the future value of an annuity:
[tex]FV = PMT * [(1 + r)^n - 1]/r[/tex]
where FV is the future value, PMT is the annuity payment, r is the annual interest rate, and n is the number of periods.
Let X be the deposit at the beginning of years 1-15, and Y be the deposit at the beginning of years 26-40. The total number of periods is 40, and the interest rate is 4%.
For the first 15 years, the future value of X is:
FV1 = X * [[tex](1 + 0.04)^_{15}[/tex] - 1]/0.04
For the next 10 years, there are no deposits, so the future value remains the same:
FV2 = FV1 * [tex](1 + 0.04)^_{10}[/tex]
For the last 15 years, the future value of Y is:
FV3 = Y * [[tex](1 + 0.04)^_{15}[/tex] - 1]/0.04
The total future value must be $50,000:
[tex]FV_{1}[/tex] + [tex]FV_{2}[/tex] + [tex]FV_{3}[/tex] = 50,000
We are also given that X - Y = 120. We can substitute X = Y + 120 into the equation above and solve for Y:
(Y + 120) * [[tex](1 + 0.04)^_{15}[/tex] - 1]/0.04 + [tex]FV_{2}[/tex] + Y * [[tex](1 + 0.04)^_{15}[/tex] - 1]/0.04 = 50,000
Simplifying the equation and solving for Y gives:
Y ≈ $1,679.61
Therefore, Eloise should deposit $1,679.61 at the beginning of each year for the last 15 years to accumulate $50,000 at the end of 40 years, given the specified conditions.
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Assume the large-company stocks had an average rate of return of 18.5 percent over the past 55 years while T-bills returned average of 2.4 percent and inflation average 1.8 percent.
The nominal risk premium for large stocks was?
The nominal risk premium for large stocks was 16.1 percent.
To calculate the nominal risk premium, you need to subtract the average return of T-bills from the average return of large-company stocks. In this case, the average return of large-company stocks was 18.5 percent, while the average return of T-bills was 2.4 percent. Using these values, the calculation is as follows:
Nominal Risk Premium = Large-Company Stocks Return - T-Bills Return
Nominal Risk Premium = 18.5% - 2.4%
Nominal Risk Premium = 16.1%
Thus, the nominal risk premium for large stocks over the past 55 years was 16.1 percent. This value represents the additional return investors can expect from investing in large-company stocks instead of T-bills, without considering the impact of inflation.
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You pay $9850 for a 180 -day T-bill. It is worth $10.000 at maturity. What is its investment rate? O 3.09% O 2.95% O 4.01% O 3.54%
The investment rate of the 180-day T-bill is approximately 3.09%.
To calculate the investment rate of a 180-day T-bill, you can use the following formula:
Investment Rate = ((Maturity Value - Purchase Price) / Purchase Price) * (365 / Number of Days) * 100
Plugging in the given values:
Investment Rate = (($10,000 - $9,850) / $9,850) * (365 / 180) * 100
Investment Rate = ($150 / $9,850) * (365 / 180) * 100
Investment Rate ≈ 0.01523 * 2.028 * 100
Investment Rate ≈ 3.09%
So, the investment rate of the 180-day T-bill is approximately 3.09%.
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What is the after-tax present worth of a chip placer if it costs $75,000 and saves $23,000 per year? The after tax interest is 10%. Assume the device will be sold for $7500 salvage value at the end of its 6 year life. Assume the chip placer falls under CCA Class 8. The corporate income tax rate is 54%.
The after-tax present worth of a chip placer is $54,414.64.
To calculate the after-tax present worth, follow these steps:
1. Determine the cash flow generated by the chip placer: Annual savings - (Annual savings * Corporate income tax rate) = $23,000 - ($23,000 * 0.54) = $10,580.
2. Calculate the present value of the cash flows for 6 years: PV = CF * [(1 - (1 + i)⁻ⁿ) / i], where PV is present value, CF is cash flow, i is the after-tax interest rate (0.10), and n is the number of years (6). PV = $10,580 * [(1 - (1 + 0.10)⁻⁶) / 0.10] = $45,914.64.
3. Calculate the present value of the salvage value: PV = SV / (1 + i)ⁿ, where PV is present value, SV is salvage value ($7,500), i is the after-tax interest rate (0.10), and n is the number of years (6). PV = $7,500 / (1 + 0.10)⁶ = $8,500.
4. Subtract the cost of the chip placer from the sum of the present values of cash flows and salvage value: After-tax present worth = (Present value of cash flows + Present value of salvage value) - Cost of chip placer = ($45,914.64 + $8,500) - $75,000 = $54,414.64.
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A large, standby electricity generator in a hospital operating room has a first cost of $73,000 anil may be used for a maximum of 6 years. Its salvage value, which decreases by 15% per year, is described by the equation S = 70,000(1 - 0.15)", where n is the number of years after purchase. The operating cost of the generator will be constant at $75,000 per year. At an interest rate of 12% per year, what are the economic service life and the associated AW value?
The economic service life of the generator is 6 years, and its associated AW value is -$873,458.38. This means that the generator is not economically justified, since its costs exceed its revenues over its useful life.
To find the economic service life and the associated annual worth (AW) value, we need to calculate the present worth (PW) of the generator's costs and revenues over time, and then use the PW to calculate the AW.
Let's start by calculating the salvage value (S) of the generator at the end of each year, using the given equation:
S = 70,000(1 - 0.15)^n
where n is the number of years after purchase.
After 1 year: S = 70,000(1 - 0.15[tex])^1[/tex]= 59,500
After 2 years: S = 70,000(1 - 0.15[tex])^2[/tex] = 50,575
After 3 years: S = 70,000(1 - 0.15[tex])^3[/tex]= 42,989
After 4 years: S = 70,000(1 - 0.15[tex])^4[/tex] = 36,541
After 5 years: S = 70,000(1 - 0.15[tex])^5[/tex] = 31,065
After 6 years: S = 70,000(1 - 0.15[tex])^6[/tex]= 26,410
Next, let's calculate the PW of the costs and revenues associated with the generator, using the given interest rate of 12% per year. We'll assume that the generator is purchased at the beginning of year 1.
Year 0:
First cost: PW = -$73,000
Years 1-6:
Annual operating cost: PW = -$75,000(P/F,12%,1) - -$75,000(P/F,12%,2) - ... - -$75,000(P/F,12%,6)
= -$75,000(3.0374) = -$227,805.24
Salvage value: PW = $59,500(P/F,12%,1) + $50,575(P/F,12%,2) + ... + $26,410(P/F,12%,6)
= $59,500(0.8929) + $50,575(0.7972) + ... + $26,410(0.3349)
= $133,411.69
The total PW of the costs and revenues is:
PW = -$73,000 + $133,411.69 - $227,805.24
= -$167,393.55
Finally, we can use the PW to calculate the AW, using the formula:
AW = PW(A/P,12%,6)
where A/P is the factor for an arithmetic gradient of 0% over 6 years, which is 5.2166.
AW = -$167,393.55(5.2166)
= -$873,458.38
Therefore, the economic service life of the generator is 6 years, and its associated AW value is -$873,458.38. This means that the generator is not economically justified, since its costs exceed its revenues over its useful life.
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what cycle time would match capacity and demand if demand is 120 units a day, there are two shifts of 480 minutes each, and workers are given three half-hour breaks during each shift, one of which is for lunch or dinner?
A cycle time of 6.5 minutes per unit would match capacity and demand under the given conditions
How to determine the cycle timeTo calculate the cycle time that matches capacity and demand, we first need to determine the available working minutes per day.
Given two shifts of 480 minutes each and three half-hour breaks during each shift, we can calculate the total working minutes.
Each shift has 480 minutes - (3 breaks * 30 minutes) = 480 - 90 = 390 minutes of work.
With two shifts, there are 2 * 390 = 780 minutes of work per day.
Now, we need to divide the total available working minutes by the daily demand to find the cycle time that matches capacity and demand:
Cycle time = Available working minutes / Demand Cycle time = 780 minutes / 120 units
Cycle time = 6.5 minutes per unit
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a. how much fiscal restraint or stimulus occurred between 1930 and 1931? $ 2.5 billion of fiscal stimulus occurred between 1930 and 1931. b. by how much did this policy change aggregate demand if the mpc was 0.90? $ billion
Fiscal restraint stimulus occurred between 1930 and 1931, the policy changed aggregate demand if the mpc was 0.90. the approach alter expanded total requests by $25 billion.
To calculate the alter in total request coming about from the monetary arrangement later, we got to utilize the investing multiplier equation, which is:
Multiplier = 1 / (1 - MPC), where MPC is the negligible penchant to devour. In the event that MPC is 0.90, at that point:
Multiplier = 1 / (1 - 0.90) = 10
This implies that each $1 financial jolt will increment the total request by $10.
Given that $2.5 billion of financial boost happened between 1930 and 1931, the alter in total request would be: Alter in total request = $2.5 billion x 10 = $25 billion
thus, the approach alter expanded total requests by $25 billion.
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f a firm has no investment opportunities, then a. It should raise capital to have cash on hand b. It should raise capital to dilute the value of its shares c. It doesn't need the services of an investment bank d. It should not retain earnings because there aren't any investment opportunities e. Both c and d
If a firm has no investment opportunities, then It doesn't need the services of an investment bank and It should not retain earnings because there aren't any investment opportunities. The correct option is (e).
Raising capital to have cash on hand (Option A) doesn't make sense because the firm doesn't have any projects to invest in, so having excess cash would be unnecessary. Raising capital to dilute the value of its shares (Option B) is not a sound strategy either because it can harm the value of existing shareholders' holdings, and dilution doesn't create any value for the firm or its shareholders.
In conclusion, when a firm has no investment opportunities, it should focus on returning excess cash to shareholders and avoid retaining earnings. This will ensure that the firm is not holding onto unnecessary cash and is operating in the best interest of its shareholders.
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The chart below shows the 2 different prices for goods X and Y and their respective quantity demanded. Good X Good Y Price Quantity Demanded | Price Quantity Demanded 25 300 80 20 45 250 90 5
a. Determine the coefficient of elasticity for demand for both products. Show
calculations.
b. Which product is more elastic than the other?
c. If a tax was to be implemented to raise tax revenues, which of the 2 product
would you chose? Explain why.
d. If both products were dangerous to Canadians, which product would the
government be more inclined to tax to reduce its consumption? Explain.
To determine the coefficient of elasticity for demand for both products, we can use the following formula:
Elasticity of demand = (% change in quantity demanded) / (% change in price)
For good X:
Elasticity of demand = [(300-250)/((300+250)/2)] / [(25-45)/((25+45)/2)] = -0.714
For good Y:
Elasticity of demand = [(20-5)/((20+5)/2)] / [(80-90)/((80+90)/2)] = 0.789
b. Good X has an elasticity of -0.714, which means it is inelastic (less than 1). Good Y has an elasticity of 0.789, which means it is elastic (more than 1). Therefore, Good Y is more elastic than Good X.
c. If a tax was to be implemented to raise tax revenues, we would choose the product with the less elastic demand because it will be able to withstand the tax more easily. In this case, Good X has the less elastic demand, so we would choose to tax Good X.
d. If both products were dangerous to Canadians, the government would be more inclined to tax the product with the more elastic demand because it will result in a greater reduction in consumption.
In this case, Good Y has the more elastic demand, so the government would be more inclined to tax Good Y to reduce its consumption.
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A subsistence economic system implies nearly total self-sufficiency of its members. The von Thünen model is based on the observation that the value of agricultural land is determined based on soil fertility and climate.
True. The von Thünen model is an economic theory that explains how agricultural land use is determined based on the location of the land and the cost of transportation. The theory was developed by Johann Heinrich von Thünen, a German economist and farmer, in the early 19th century.
One of the key assumptions of the von Thünen model is that a subsistence economic system implies nearly total self-sufficiency of its members. In other words, people who live in a subsistence economy produce most of what they consume and rely little on trade or market exchange.
The model is based on the observation that the value of agricultural land is determined based on soil fertility and climate. The most fertile land is typically located close to the city, where it can be easily transported and sold in the market. As one moves further away from the city, the land becomes less fertile and more difficult to transport, leading to lower land values.
The von Thünen model assumes that farmers will choose to cultivate crops that are most profitable given the location of their land and the cost of transportation.
On the other hand, if a farmer has land located far from the city, they are more likely to grow crops that are less perishable and have a lower value per unit of weight, such as grains and livestock.
The von Thünen model provides a useful framework for understanding how agricultural land use is determined based on location and transportation costs. While the model is not without limitations, it continues to be an important tool for economists and geographers studying agricultural systems and rural development.
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Complete question is:
A subsistence economic system implies nearly total self-sufficiency of its members. The von Thünen model is based on the observation that the value of agricultural land is determined based on soil fertility and climate. True/False
The von Thünen model is based on the assumption that farmers in a subsistence economy prioritize their needs based on proximity to the market.
The von Thünen model is an economic theory that explains the spatial distribution of agriculture in a hypothetical, isolated, and subsistence economy. It assumes that farmers prioritize their needs based on the proximity to the market, with more perishable goods being produced closer to the market and fewer perishable ones further away. In a subsistence economy, farmers focus on self-sufficiency and prioritize the production of food and other essential items needed for survival. The model also assumes that the value of agricultural land is determined by soil fertility and climate, which can vary with distance from the market. As a result, the model predicts that farmers will produce crops with the highest value per unit of land closest to the market and move outwards to less valuable crops as they move further away.
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You are looking at an investment that has an effective annual rate of 7 percent. a. What is the effective semiannual return? b. What is the effective quarterly return?c. What is the effective monthly return ?
a. The effective semiannual return is 3.46%.
b. The effective quarterly return is 1.72%.
c. The effective monthly return is 0.58%.
To calculate the effective semiannual return, we need to use the formula:
(1 + annual rate)^1/2 - 1 = (1 + 0.07)^1/2 - 1 = 0.0346 or 3.46%.
To calculate the effective quarterly return, we need to use the formula:
(1 + annual rate)^1/4 - 1 = (1 + 0.07)^1/4 - 1 = 0.0172 or 1.72%.
To calculate the effective monthly return, we need to use the formula:
(1 + annual rate)^1/12 - 1 = (1 + 0.07)^1/12 - 1 = 0.0058 or 0.58%.
These calculations are important in finance as they allow investors to compare returns on investments with different compounding frequencies.
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What loan alternative would you choose? (just take into account the interest rate):
a. loan at 15.5% per annum, computed annually
b. loan at 15% per annum, computed quarterly
(please use the formula method)
Using the basis of interest rates, the loan alternative which should be chosen is loan a.
To compare the loan alternatives and choose the better option, we will use the effective annual rate (EAR) formula. The EAR allows us to compare loans with different compounding periods on an equal basis. The formula for EAR is:
EAR = (1 + i/n)^(n) - 1
where i is the nominal interest rate, and n is the number of compounding periods per year.
For loan a:
i = 15.5% (0.155) and n = 1 (annual compounding)
EAR_a = (1 + 0.155/1)^1 - 1 = 0.155 = 15.5%
For loan b:
i = 15% (0.15) and n = 4 (quarterly compounding)
EAR_b = (1 + 0.15/4)^4 - 1 ≈ 0.15856 = 15.856%
Comparing the two loans, loan a has an effective annual rate of 15.5%, while loan b has an effective annual rate of 15.856%. Based on the interest rates, I would choose loan a, as it has a lower effective annual rate (15.5%) compared to loan b (15.856%).
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you have been assigned mary johnson's theft claim. in order for you to do a thorough investigation you need her to provide documentation to you. how long do you have
Typically, insurance companies require claimants to submit documentation within a specific time frame, which can range from 30 to 90 days after the incident.
How long to effectively handle Mary Johnson's theft claimTo effectively handle Mary Johnson's theft claim, it's important to obtain the necessary documentation in a timely manner.
Typically, claimants have a specific period to submit their documents, which may vary depending on the insurance company's policies or local regulations. It's common for this period to be within 30 to 90 days from the date of the theft.
To conduct a thorough investigation, request essential documents such as a detailed list of stolen items, their values, proof of ownership, and a police report.
Maintaining clear communication with Mary and providing guidance on required documentation can facilitate a smoother process
. Remember to adhere to the specified deadline and maintain professionalism and accuracy throughout the investigation to ensure a fair outcome for Mary Johnson's theft claim.
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2. Have you ever experienced what you thought to be an attempt at phishing, or have you ever
received a phone call that sounded like a scam? Describe the situation below and what you did to
protect your personal or financial information.
If you don't recall an experience like this, write a fictional scenario of a scam that might be used to
get someone's personal information, and what can be done to avoid it.
(8 points: 4 points to describe the act of phishing or scam; 4 points to describe what was done to
avoid the situation)
One possible scenario of a scam to get someone's personal information is a phishing email scam.
What happens in an email scam ?In this scenario, a person receives an email that appears to be from a legitimate company, such as a bank or an online retailer. The email may claim that there is a problem with the person's account or an unauthorized transaction has been made.
The email will then provide a link or attachment for the person to click on to resolve the issue. However, the link or attachment will direct the person to a fake website or download malicious software that can steal the person's personal information, such as their login credentials or credit card details.
To avoid falling victim to this scam, there are several things that can be done. First, always be cautious of unsolicited emails or messages. Second, do not click on any links or attachments in emails or messages, especially from unknown sources.
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get the percentage of people who are no longer alive. alias the result as percentage_dead. remember to use 100.0 and not 100!
percentage_dead = (float(total_dead) / total_population) * 100.0
The percentage of people who are no longer alive can be calculated by dividing the total number of people who are dead by the total population and then multiplying by 100.0. We can alias this result as percentage_dead.
For example, if the total population is 1,000 and the total number of people who are dead is 400, then the percentage of people who are no longer alive is 40%. In this case, percentage_dead = 40.0.
It is important to note that it is necessary to use 100.0 instead of 100 in the calculation, because if we used 100, then the result would be an integer and not a float. By using 100.0, we can make sure that the result is a float and not an integer.
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Compare the financial fates of two workers. (Round all finalanswers to the nearest DOLLAR.)WORKER A starts to save money early forretirement and puts away $300 a month in a retirement accountpayinCompare the financial fates of two workers. (Round all final answers to the nearest DOLLAR.) WORKER A starts to save money early for retirement and puts away $300 a month in a retirement account payin g on average 8.5% for 45 years. WORKER B starts late and puts away $1,500 a month for 10 years in an account paying 8.5%. WORKER A: FUTURE VALUE Total Contribution= Interest WORKER B: FUTURE VALUE Total Contribution- Interest
The financial fates are: WORKER A: FUTURE VALUE = $3,066,000 Total Contribution = $216,000, WORKER B: FUTURE VALUE = $2,085,000 Total Contribution = $180,000.
What is financial fates?Financial fates is a term used to refer to the future of a company’s financial state. This can include the company’s financial health, performance, and ability to meet obligations such as debt payments. Companies can have good or bad financial fates, and it is important for those in the corporate and finance industries to be aware of these changes in order to make informed decisions.
In total, Worker A has contributed $216,000 and earned an interest of $2,850,000, resulting in a future value of $3,066,000. On the other hand, Worker B, who has saved for a shorter period of time and contributed less money, has a future value of $2,085,000. This is because Worker B has only contributed $180,000 and earned an interest of $1,905,000. The difference in the future values of the two workers is $981,000.
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QUESTION 3 You receive a $15,000 4-year constant payment loan (CPL). The loan's annual interest rate is 11%. What is the principal portion of the total payment in year 4, rounded to the nearest dollar
The principal portion of the total payment in year 4 for this loan is $1,029.
To calculate the principal portion of the total payment in year 4 for the $15,000 4-year constant payment loan at 11% interest, you can use the formula for the present value of an annuity:
P = A / ((1 + r)^n - 1) * (1 + r)^(-t)
Where:
P = Principal portion of payment
A = Constant payment amount
r = Annual interest rate
n = Total number of payment periods
t = Number of payment periods remaining
In this case:
A = $15,000 / 4 = $3,750
r = 11% or 0.11
n = 4 years * 1 payment per year = 4
t = 1 year (since we want to find the principal portion of the payment in year 4)
Plugging in these values, we get:
P = $3,750 / ((1 + 0.11)^4 - 1) * (1 + 0.11)^(-1)
P = $1,029.41
Therefore, the principal portion of the total payment in year 4 for the $15,000 4-year constant payment loan is $1,029, rounded to the nearest dollar.
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The $1.000 face value bonds of Galaxies International have coupon of 5.5 percent and pay interest semiannually. Currently, the bonds are quoted at 98.02 and mature in 12 years a. What is the current price of the bond? b. What is the yield to maturity?
a. The current price of the bond is $980.20. b. The yield to maturity of the bond is 5.80%.
a. To calculate the current price of the bond, we first need to determine the semiannual coupon payment, which is $27.50 (=$1,000 x 5.5% / 2).
Then, we can use the formula for the present value of an annuity to calculate the present value of the semiannual coupon payments and the formula for the present value of a lump sum to calculate the present value of the bond's face value:
PV of semiannual coupon payments = $27.50 x [1 - 1/(1 + 2.75%)¹²ˣ²] / (2.75%) = $450.48
PV of face value = $1,000 / (1 + 2.75%)¹²ˣ²= $529.72
Therefore, the current price of the bond is:
Current price = PV of semiannual coupon payments + PV of face value = $450.48 + $529.72 = $980.20
b. To calculate the yield to maturity of the bond, we can use an iterative process or a financial calculator.
Using a financial calculator, we can input the following values:
N = 24 (12 years x 2 semiannual periods),
PMT = $27.50, FV = $1,000,
PV = -$980.20, and solve for I/Y,
which gives us a yield to maturity of 5.80%.
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