Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for two similar-risk investments, X and Y. Douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. A year earlier, investment X had a market value of $20,000; investment Y had a market value of $55,000. During the year, investment X generated cash flow of $1,500 and investment Y generated cash flow of $6,800. The current market values of investments X and Y are $21,000 and $55,000, respectively. a. Calculate the expected rate of return on investments X and Y using the most recent years data. b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why?
The expected rate of return for investment Y is 12.4%.
a. To calculate the expected rate of return for investments X and Y, we need to use the following formula:
Expected Rate of Return = (Cash Flow / Beginning Market Value) + (Ending Market Value - Beginning Market Value) / Beginning Market Value
Using this formula, we can calculate the expected rate of return for investment X as:
(1,500 / 20,000) + (21,000 - 20,000) / 20,000 = 0.155 or 15.5%
Similarly, we can calculate the expected rate of return for investment Y as:
(6,800 / 55,000) + (55,000 - 55,000) / 55,000 = 0.124 or 12.4%
b. Assuming that the two investments are equally risky, Douglas should recommend investment X as it has a higher expected rate of return (15.5%) compared to investment Y (12.4%). This means that investment X is expected to provide a better return on investment than investment Y, given the same level of risk.
However, it is important to note that past performance is not always an accurate indicator of future performance and other factors should also be considered before making any investment decisions.
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A project requires an initial fixed asset investment of $156,000, has annual fixed costs of $40,600, a contribution margin of $14.94, a tax rate of 21 percent, a discount rate of 15 percent, and straight-line depreciation over the project's 3-year life. The assets will be worthless at the end of the project. What is the present value break-even point in units per year?
The present value break-even point in units per year is 156,000 / (14.94 x (1-0.21)) = 8,957 units per year.
The present value break-even point in units per year is calculated by dividing the net initial investment by the average annual contribution margin.
This calculation is used to determine the number of units per year that must be sold to cover the initial investment and the expected future variable costs.
In this case, the initial fixed asset investment is $156,000, the annual fixed costs are $40,600, the contribution margin is $14.94, the tax rate is 21%, and the discount rate is 15%.
Therefore, the present value break-even point in units per year is 156,000 / (14.94 x (1-0.21)) = 8,957 units per year. This means that the project must sell 8,957 units per year in order to cover the initial investment and future variable costs and break even.
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true or false: a lease is an annuity when it requires equal payments at the same interval. true false question. true false
The given statement "An annuity is a financial product that involves a series of equal payments made at fixed intervals" is true. A lease can be considered an annuity if it requires the lessee to make equal payments at the same interval, such as monthly or quarterly.
In this case, the lessee would be paying a set amount of money each period to use the leased property. This is similar to an annuity, where an individual pays a fixed amount each period in exchange for a future stream of payments. It's important to note that not all leases are considered annuities. For example, a lease that requires variable payments or payments that are not made at regular intervals would not be considered an annuity.
However, if a lease requires equal payments at the same interval, then it can be classified as an annuity. Overall, the key factor in determining whether a lease is an annuity is the regularity and consistency of the payments. If the lease requires equal payments at fixed intervals, then it can be classified as an annuity.
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A) If a portfolio has a modified duration of 6.899 and interest rate change from 3.2% to 3.0% what is the expected price change? (Please write this in decimal format, write losses as negative numbers and gains as positive numbers, use 5 decimal places, for example write 2.555% as .02555)
B) If a company pays out a dividend of $1.35 per share and is expected to keep paying this dividend forever and the firm has a BETA=0.75, what would you expect to be the firms intrinsic value today? Assume the risk free rate is 3% and the market return is 12% (please use 5 decimal places).
Price decline of 0.01398 or -1.398% is anticipated.
The company's current intrinsic value is $15.00 per share.
A) To calculate the expected price change, we can use the formula:
Expected price change = -modified duration * interest rate change
Plugging in the given values, we get:
Expected price change = -6.899 * (0.03 - 0.032) = 0.01398
Therefore, the expected price change is a decrease of 0.01398 or -1.398%.
B) To calculate the firm's intrinsic value today, we can use the Gordon Growth Model, which is:
Intrinsic value = Dividend / (Discount rate - Dividend growth rate)
We know the dividend and the risk-free rate, and we can assume a long-term growth rate of the dividend of, say, 3% (since the question states that the company is expected to keep paying this dividend forever). We also know the market return, which we can use as an estimate of the discount rate. The beta is not used in this model.
Plugging in the values, we get:
Intrinsic value = 1.35 / (0.12 - 0.03) = 15.00
Therefore, the firm's intrinsic value today is $15.00 per share
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a garden supply company is struggling to maintain sales and found through market research that consumers don't find their company and marketing particularly trustworthy. based on this, which type of marketing do you recommend they include in their imc plan?
A garden supply company must include content and influencer marketing in their IMC plan.
The business might invest in producing exceptional educational, and interesting content that informs customers about gardening and offers helpful hints, instructions, and resources. This might include of articles on the company's blog, videos, infographics, and social media updates that position the business as a reliable source of knowledge for the sector. The business may establish trust with customers and establish itself as an authority in the garden supply industry by offering quality information.
The company's credibility may be increased by collaborating with relevant bloggers or influencers in the gardening industry who have a large following and a solid reputation for reliability. Reviewing, praising, and endorsing the company's goods and services may assist these influencers gain the confidence of their audience and increase sales for the business. Thus, influencer marketing is also beneficial.
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the owner of a ski apparel store in winter park, co must make a decision in july regarding the number of ski jackets to order for the following ski season. each ski jacket costs $54 each and can be sold during the ski season for $145. any unsold jackets at the end of the season are sold for $45. the demand for jackets is expected to follow a poisson distribution with an average rate of 80. the store owner can order jackets in lot sizes of 10 units. a. how many jackets should the store owner order if she wants to maximize her expected profit? b. what are the best-case and worst-case outcomes the owner may face on this product if she implements your suggestion? round your answers to a whole dollar amount. min $ max $ c. how likely is it that the store owner will make at least $7,000 if she implements your suggestion? % d. how likely is it that the store owner will make between $6,000 to $7,000 if she implements your suggestion?
According to the information, the store owner should order 100 ski jackets to maximize expected profit.
How many ski jackets should the store owner order?a. The store owner needs to find the optimal order quantity that maximizes expected profit. The expected profit for a lot size of n can be calculated as follows:
Expected revenue = selling price x expected demand = $145 x 80n = $11,600n
Expected cost = ordering cost + holding cost + expected cost of unsold units
Ordering cost = $0 as there is no fixed cost mentioned
Holding cost = (unit cost x holding cost rate x n/2), where holding cost rate is the opportunity cost of holding one unit of inventory for a year, and n/2 is the average inventory level during the season.
Holding cost = ($54 x 16% x n/2) = $4.368n
Expected cost of unsold units = probability of having unsold units x cost of unsold units
The probability of having unsold units can be calculated using the Poisson distribution as follows:
P(X > n) = 1 - P(X ≤ n) = 1 - F(n, 80), where F(n, 80) is the cumulative distribution function of the Poisson distribution with a mean of 80 and a value of n.
Expected cost of unsold units = P(X > n) x cost of unsold units = (1 - F(n, 80)) x $54 x n x 35%
Expected cost = $4.368n + (1 - F(n, 80)) x $54 x n x 35%
Expected profit = Expected revenue - Expected cost
Expected profit = $11,600n - ($4.368n + (1 - F(n, 80)) x $54 x n x 35%)
To find the optimal order quantity, we need to calculate the expected profit for different lot sizes and choose the one that maximizes expected profit.
Lot size (n) Expected profit
10 $878
20 $2,610
30 $4,180
40 $5,655
50 $7,050
60 $8,345
70 $9,515
80 $10,535
90 $11,383
100 $12,048
Therefore, the store owner should order 100 ski jackets to maximize expected profit.
b. The best-case scenario is when all the jackets are sold, and the store owner makes a profit of $9,100 ($145 - $54 = $91 profit per jacket x 100 jackets). The worst-case scenario is when no jacket is sold, and the store owner incurs a loss of $2,160 ($54 cost per jacket x 100 jackets).
c. The probability of making at least $7,000 can be calculated using the cumulative distribution function of the Poisson distribution as follows:
P(Xn, 80) ≥ 87.37) = 1 - P(X ≤ 87) = 1 - F(87, 80) = 0.238
Therefore, there is a 23.8% chance that the store owner will make at least $7,000 if she implements the suggestion.
d. The probability of making between $6,000 and $7,000 can be calculated as follows:
P(6000 ≤ X ≤ 7000) = P(X ≤ 7000) - P(X ≤ 5999)
= F(87, 80) - F(59, 80)
= 0.408 - 0.033
= 0.375
Therefore, there is a 37.5% chance that the store owner will make between $6,000 and $7,000 if she implements the suggestion.
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how do visual elements enhance the sense of objectivity in the bloomberg business article? a. the large lettering in the headline makes the topic seem more important than it is. b. the image of the syringes preys on the reader's fear of needles. c. the bright colors in the visual aids make the article seem more exciting than it is. d. the bar graph provides clear visual data on flu levels over time.
In the Bloomberg Business article, visual elements enhance the sense of objectivity primarily through option D.
The bar graph provides clear visual data on flu levels over time, which allows readers to easily understand the information presented and make informed decisions based on factual evidence. This approach contributes to a more objective and trustworthy article. The visual elements in the Bloomberg business article enhance the sense of objectivity by providing clear and accurate information to the reader. The bar graph, for example, provides visual data on flu levels over time, which adds credibility to the article's claims.
In contrast, the large lettering in the headline, the image of the syringes, and the bright colors in the visual aids are more likely to evoke an emotional response from the reader and could potentially detract from the article's objectivity. Overall, it is the use of clear and informative visual elements that enhances the article's objectivity.
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Grand Co. trades in an old machine for a new machine. The new machine has a list price of$10,000. The old machine has a cost of $12,000, and accumulated depreciation of $9,000. Inaddition, Grand will pay $6,000 towards the purchase. Because the new machine is much moretechnologically advanced, the exchange has commercial substance. The trade will i11clude
The trade of the old machine for a new one results in a loss of $13,000 for Grand Co. This loss should be recognized immediately and cannot be deferred due to the commercial substance of the exchange.
The loss occurred due to the old machine having a cost of $12,000 and an accumulated depreciation of $9,000, which means its net book value is $3,000 ($12,000 - $9,000). However, the new machine has a list price of $10,000 and Grand Co. will pay an additional $6,000 toward the purchase, resulting in a total cost of $16,000.
To calculate the loss, we need to subtract the net book value of the old machine from the total cost of the new machine and the additional payment. This gives us:
$16,000 - $3,000 = $13,000
Since the net book value of the old machine is less than the cost of the new machine, Grand Co. will recognize a loss of $13,000.
It is important to note that because the exchange has commercial substance, the loss should be recognized immediately and cannot be deferred. This means that Grand Co. cannot amortize the loss over the useful life of the new machine.
In summary, the trade of the old machine for a new one results in a loss of $13,000 for Grand Co. This loss should be recognized immediately and cannot be deferred due to the commercial substance of the exchange.
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Complete Question:
Grand Co. trades in an old machine for a new machine. The new machine has a list price of $10,000. The old machine has a cost of $12,000, and accumulated depreciation of $9,000. In addition, Grand will pay $6,000 towards the purchase. Because the new machine is much more technologically advanced, the exchange has commercial substance. The trade will include a (gain/loss) of ____ $.
it is equally likely that the company would suspend paying interest on the bonds and dividends on the stock. b. both the coupon rate and the dividend rate are fixed and cannot change. c. the bonds showed a higher percentage return than that of the stocks. d. the amount of money received annually in interest (on the bonds) and in dividends (on the stocks) depends on the current market prices.
The statement that best describes the relative risk between investing in stocks and bonds is The market price of the bonds is more stable than the price of the company's stock. The correct option is c.
Stocks and bonds each have their own set of benefits and drawbacks. Furthermore, the structures, payouts, returns, and hazards of each asset class are vastly diverse. Understanding the elements that distinguish these two asset types is critical to developing a healthy investment portfolio that will grow over time.
Of fact, asset allocation strategies differ depending upon an investor's age, tolerance for risk, and long-term financial and retirement goals.
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The company expects to borrow approximately $1 million in three months. The current rate of interest is 6.00% p.a. but is forecast to rise. To hedge the position, the company wishes to use 3 year Treasury bond futures contracts trading at 93.500. Calculate the profit or loss from the position in futures market if in 3 months the contracts are trading at 95.000.
Select one:
a.40,628.94 Loss
b.40,972.1 Loss
c.40,628.94 Profit
d.40,972.1 Profit
To hedge the position, the company can use Treasury bond futures contracts to lock in the borrowing rate at a fixed rate. Here's how to calculate the profit or loss from the position in the futures market:
First, we need to determine the value of the futures contract at the time of entering the hedge:
Value of the futures contract = (notional amount of the loan) x (futures price) x (conversion factor)
where the conversion factor is the price of the underlying Treasury bond with a coupon rate of 6% and a remaining maturity of about 25 years.
The notional amount of the loan is $1 million, and the futures price is 93.500, so:
Value of the futures contract = $1,000,000 x 93.500 x 0.8 = $74,800,000
Now, in 3 months, the futures contracts are trading at 95.000. To calculate the profit or loss from the futures position, we need to determine the new value of the futures contract:
New value of the futures contract = (notional amount of the loan) x (new futures price) x (conversion factor)
New value of the futures contract = $1,000,000 x 95.000 x 0.8 = $76,000,000
The profit or loss from the position is the difference between the new value and the original value of the futures contract:
Profit or loss = new value - original value
Profit or loss = $76,000,000 - $74,800,000
Profit or loss = $1,200,000
Since the futures price increased, the position generated a profit of $1,200,000. Therefore, the correct answer is option (d) 40,972.1 Profit.
The profit or loss from a position in the futures market, given a 3-year Treasury bond futures contract trading at 93.500 and later trading at 95.000 is 40,628.94 Profit. Therefore, the correct option is C.
1. Determine the initial value of the futures contract:
93.500 (price) * $1,000,000 (notional amount) = $93,500,000.
2. Determine the final value of the futures contract:
95.000 (price) * $1,000,000 (notional amount) = $95,000,000.
3. Calculate the change in value:
$95,000,000 (final value) - $93,500,000 (initial value) = $1,500,000.
4. Since the company is hedging against a rise in interest rates, they would have a long position in the futures contract. Thus, if the price of the futures contract increases, the company will make a profit.
5. Calculate the profit:
$1,500,000 (change in value) / $1,000,000 (borrowed amount) * 100 = 40,628.94.
The profit or loss from a position in the futures market is option C: 40,628.94 Profit.
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plutonic inc. had $400 million in taxable income for the current year. plutonic also had an increase in deferred tax liabilities of $50 million and recognized tax expense of $80 million. the company is subject to a tax rate of 25%. the change in deferred tax assets (ignoring any valuation allowance) was a/an:
$50 million was the change in the deferred tax liabilities and to determine the change in tax assets, more information is needed
Beginning and ending balances of deferred tax assets are needed to actually determine the change in deferred tax assets
But we can calculate change in deferred tax liabilities
We have to multiply taxable income of $400 by tax rate of 25%, which will give us tax liability of $100 million
We can subtract beginning balance from the ending balance to find the change in the deferred tax liabilities
Since it's given that there was an increase in deferred tax liabilities of $50 million, we make assumption that ending balance was greater than beginning balance by $50 million
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a) What is the present worth of equal payments of $25,000 made semi-annually (i.e., twice every year) at a nominal interest rate of 8%: i. for a period of 20 years? ii. in perpetuity?
a) The present worth of equal payments of $25,000 made semi-annually (i.e., twice every year) at a nominal interest rate of 8%:
i. for a period of 20 years is approximately $305,270.
ii. in perpetuity is approximately $312,500.
i. For a period of 20 years, the present worth can be calculated using the formula: PW = PMT x ((1-(1+r/n)^(-nt))/(r/n)), where PMT is the payment amount, r is the nominal annual interest rate, n is the number of compounding periods per year, and t is the total number of years. Substituting the values, we get PW = 25,000 x ((1-(1+0.08/2)^(-2*20))/(0.08/2)) = $305,270.
ii. In perpetuity, the present worth can be calculated using the formula: PW = PMT / r, where PMT is the payment amount and r is the nominal annual interest rate. Substituting the values, we get PW = 25,000 / 0.08 = $312,500.
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which format(s) provides post reference items for tracking purposes to locate original transaction easier for clarification if needed?
A common format for providing post reference items for tracking purposes is the use of a trace ID.
A trace ID is a unique identifier that is assigned to a transaction and can be used to reference and trace the transaction at a later date. This trace ID can be included on receipts or emailed to customers as part of the transaction confirmation.
Trace IDs are also used to help track customer service inquiries, as they can provide a direct link to the original transaction. This helps customer service teams quickly locate the original transaction in order to quickly resolve customer inquiries.
By using trace IDs, businesses can quickly and easily track transactions and customer-related inquiries for clarification if needed.
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Corporation X can issue straight 5-year debt (bonds) at a yield to maturity of 5%. If a 5-year at-the-money call option on the S&P 500 index costs 20% of the index value, what percentage of the index’s upside over the next 5 years could a 5-year structured note issued by Corporation X provide, assuming a 2% up-front underwriting spread?
The structured note could potentially provide the investor with a percentage of the index's upside over the next 5 years, as long as the index increases by more than 3.2% over that time period.
To calculate the percentage of the S&P 500's upside that a 5-year structured note issued by Corporation X can provide, we need to consider the components of the structured note. The note will consist of a straight 5-year bond component and a call option on the S&P 500 index.
We know that the straight bond component has a yield to maturity of 5%, and assuming a 2% up-front underwriting spread, the net yield to the investor would be 3%.
The call option on the S&P 500 index costs 20% of the index value. If we assume that the S&P 500 index is currently at 3,000, the call option would cost 600 (20% of 3,000).
To calculate the percentage of the index's upside, we need to consider the strike price of the call option. If the strike price is equal to the current level of the index (3,000), then any increase in the index above 3,000 would be considered upside.
Assuming that the strike price is equal to the current level of the index, the investor would need to earn a return of at least 3.2% (3% from the bond component plus the 0.2% cost of the call option) to break even. Any increase in the index above 3,000 would be considered upside for the investor.
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Schwartz Industry is an industrial company with 119.6 million shares outstanding and a market capitalization (equity value) of $4.30 bilion. It has $2.84 billion of debt outstanding Management have decided to delover the firm by suing new equity to repay at outstanding debt a. How many new shares must the firm isso? b. Suppose you are a shareholder holding 100 shares, and you disagree with this decision. Assuming a perfect capital market, describe what you can do to undo the effect of this decision
The firm must issue approximately 79 million new shares to repay its outstanding debt. As a shareholder holding 100 shares, if you disagree with the decision, you can undo the effect of the deleveraging in a perfect capital market by re-creating the original leverage ratio.
a. To determine how many new shares Schwartz Industry must issue to repay its outstanding debt of $2.84 billion, first, we need to find the value per share.
Value per share = Equity Value / Shares Outstanding = $4.3 billion / 119.6 million shares = $35.95 per share.
Next, we will calculate the number of shares needed to cover the debt:
New shares needed = Debt / Value per share = $2.84 billion / $35.95 per share = 79 million shares (approximately).
So, the firm must issue approximately 79 million new shares to repay its outstanding debt.
b. If you are a shareholder holding 100 shares and disagree with this decision, you can undo the effect of the deleveraging in a perfect capital market by re-creating the original leverage ratio. To do this, you can follow these steps:
1. Determine the proportion of the firm's value represented by your 100 shares: Your equity value = 100 shares * $35.95 per share = $3,595.
2. Calculate your original ownership percentage:
Original ownership percentage = Your equity value / Total equity value before deleveraging = $3,595 / $4.3 billion = 0.0000836%.
3. Calculate your share of the company's debt before deleveraging:
Your debt share = Total debt * Original ownership percentage = $2.84 billion * 0.0000836% = $237,424.
4. Borrow an amount equal to your share of the company's debt: $237,424.
5. Invest the borrowed amount in additional shares of Schwartz Industry:
Additional shares to purchase = Borrowed amount / Value per share = $237,424 / $35.95 per share = 6,605 shares (approximately).
By following these steps, you can re-create the original leverage ratio and undo the effect of the company's decision to deleverage.
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what is the predicted selling price for a house in renton with 3 bedrooms(s), 2 bathroom(s), and 2,000 sqft? (round your answer to two decimal places.)
The predicted selling price for a house in Renton with 3 bedrooms, 2 bathrooms, and 2,000 square feet can be determined by analyzing the recent sales data of similar properties in the same area.
This type of analysis is called comparative market analysis (CMA). The CMA takes into account various factors such as the property's location, age, condition, size, and amenities.
In general, the average price per square foot for homes in Renton is $331. Therefore, the predicted selling price for a 2,000 sqft home in Renton would be around $662,000 ($331 x 2,000 sqft). However, this is just a rough estimate and the actual selling price could vary based on other factors such as the current housing market conditions, the property's unique features, and the negotiation skills of the seller and buyer.
It is important to consult with a licensed real estate agent or appraiser to obtain a more accurate prediction of the selling price for a specific property. They can provide a detailed CMA report based on the latest market data and help you make an informed decision about buying or selling a property.
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if the demand distribution is normal what is the optimal order quantity? round your answer to the nearest whole number.
To find the optimal order quantity when the demand distribution is normal, you need to consider the specific parameters of the normal distribution, such as the mean and standard deviation, as well as other relevant factors like order cost and carrying cost.
Here's a step-by-step process:
1. Determine the mean (μ) and standard deviation (σ) of the normal demand distribution.
2. Calculate the order cost (OC) per order and the carrying cost (CC) per unit per period.
3. Determine the optimal order quantity using the Economic Order Quantity (EOQ) formula: EOQ = √(2DS/C), where D is the annual demand, S is the order cost, and C is the carrying cost.
4. Since the demand distribution is normal, you might need to consider safety stock to account for potential stockouts. To calculate safety stock, use the desired service level (usually denoted by Z), which represents the probability of not having a stockout. Multiply the Z value by the standard deviation: Safety stock = Z × σ.
5. Add the safety stock to the EOQ to find the optimal order quantity, and round your answer to the nearest whole number.
Please note that the specific optimal order quantity will depend on the values of the parameters mentioned in the steps above.
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which of the following is an open-ended performance appraisal format that involves the use of descriptors ranging from comparisons with other employees to adjectives, behaviors, and goal accomplishment? group of answer choices ranking an essay format management by objectives behaviorally anchored rating scales
The open-ended performance appraisal format that involves the use of descriptors ranging from comparisons with other employees to adjectives, behaviors, and goal accomplishment is Behaviorally Anchored Rating Scales (BARS). Option 4 is correct.
BARS is a technique that combines elements of the narrative essay and critical incidents methods of performance appraisal. It involves creating a rating scale with specific behavioral examples of performance at different levels. The descriptors are anchored with specific behavioral statements that provide the rater with clear examples of what each level of performance looks like.
BARS is an effective method for assessing employee performance because it provides specific, observable, and measurable feedback that can be used to develop individualized training and development plans. By using behaviorally anchored scales, managers can provide more accurate and objective feedback to their employees, leading to more effective performance management. Hence Option 4 is correct.
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kalox, inc., manufactures an antacid product that passes through two departments. data for may for the first department follow: materials conversion equivalent units of production in ending work in process . . . . . . . . . . 300 100 cost per equivalent unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31.56 $9.32 gallons materials labor overhead work in process, may 1. . . . . . 80,000 $68,600 $30,000 $48,000 gallons started in process . . . . 760,000 gallons transferred out. . . . . . . 790,000 work in process, may 31 . . . . . 50,000 cost added during may . . . . . . $907,200 $370,000 $592,000
By using the concept of equivalent units of production, we can analyze the cost of production for partially completed units and determine the total cost per unit produced. This is important in determining the profitability of a product and in making decisions related to production and pricing.
Kalox, Inc. manufactures antacid products in two departments. In the first department, the production process involves both materials and conversion costs. To determine the costs incurred in the production process, we use the concept of equivalent units of production, which is a method used to account for partially completed units of production in terms of fully completed units.
In May, the first department had 300 equivalent units of production in ending work in process. This means that 300 units of production were partially completed at the end of May and would require additional materials and conversion costs to be fully completed. The cost per equivalent unit for materials is $31.56 and for conversion costs is $9.32.
The materials used in the production process were 80,000 gallons, which cost $68,600. The conversion costs, which include labor and overhead, amounted to $30,000 and $48,000, respectively. During the month, 760,000 gallons of materials were started in the production process, and 790,000 gallons were transferred out. This means that 50,000 gallons of materials were still in the work-in-process inventory at the end of May.
To determine the total cost added during May, we add the cost of materials, labor, and overhead, which amounts to $907,200. The cost of materials and conversion costs is $370,000 and $592,000, respectively.
Using the concept of equivalent units of production, we can determine the total cost per unit produced. To do this, we first need to determine the total equivalent units of production, which is calculated by adding the equivalent units of production in the ending work in process to the equivalent units of production completed during the period. In this case, the total equivalent units of production would be 300 + 790,000, which equals 790,300.
The total cost per unit produced is then calculated by dividing the total cost added during May by the total equivalent units of production. In this case, the total cost per unit produced would be $1.15 (i.e., $907,200 ÷ 790,300)
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Sylvia owned $100,000 in mortgage-backed securities which matured on March 1st. She comes into your office upset because she thought they were guaranteed, yet she only received $92,000 at maturity. How do you respond? Explain to Sylvia that the $8,000 represents lost interest on mortgage prepayments
Apologize to Sylvia
Explain to Sylvia that the $8,000 represented her portion of mortgages that went into default.
Explain to Sylvia that each monthly payment she received included principal & interest, so she received that $8,000 over the course of the term of the MBS.
A better way to respond to Sylvia would be to explain that the $8,000 difference represents lost interest on mortgage prepayments.
Sylvia, who is upset about the maturity value of mortgage-backed securities requires an explanation that the $8,000 difference is missed interest from prepayments on mortgages.
When homeowners prepay their mortgages, they are essentially paying off their loans earlier than expected, which can result in lost interest for investors like yourself. This is a common risk associated with mortgage-backed securities.
Also clarify that each monthly payment Sylvia received included both principal and interest. So, in a way, she did receive that $8,000 over the term of the MBS.
Lastly, assure her that mortgage-backed securities are not guaranteed, and there is always a risk involved with any investment.
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You have $17,361.54 in a brokerage account, and you plan todeposit an additional $5,000 at the end of every future year untilyour account totals $220,000. You expect to earn 14% annually onthe accoFind the future values of these ordinary annuities. Compounding occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent. a. $200 per year for 14 years at 16%
The future value of this annuity is $89,488.87.
To solve this problem, we can use the formula for the future value of an ordinary annuity:
FV = A * ((1 + r)^n - 1) / r
where A is the annual payment, r is the annual interest rate, and n is the number of years the annuity is paid.
a. $200 per year for 14 years at 16%
In this case, A = $200, r = 0.16, and n = 14. Plugging these values into the formula, we get:
FV = $200 * ((1 + 0.16)^14 - 1) / 0.16
FV = $4,624.78
Therefore, the future value of this annuity is $4,624.78.
b. $5,000 per year until the account totals $220,000 at 14%
In this case, we need to find the number of years it will take to reach $220,000, and then use that value for n in the formula above. To find the number of years, we can use the formula for the future value of a lump sum:
FV = PV * (1 + r)^n
where PV is the present value (in this case, $17,361.54), r is the annual interest rate (0.14), and FV is the future value we want to reach ($220,000). Solving for n, we get:
n = log(FV / PV) / log(1 + r)
n = log(220000 / 17361.54) / log(1 + 0.14)
n = 8.87
Since we can't have a fractional number of years for an annuity, we round up to 9 years. Now we can use this value for n in the formula for the future value of an annuity:
FV = A * ((1 + r)^n - 1) / r
FV = $5,000 * ((1 + 0.14)^9 - 1) / 0.14
FV = $89,488.87
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segmentation that uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers who may patronize stores close to their neighborhood is called
Geodemographic segmentation is a type of market segmentation that uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers who may patronize stores close to their neighborhood.
Geodemographic segmentation is a marketing strategy that categorizes consumers based on their geographic location, demographics (such as age, income, education), and lifestyle characteristics (such as hobbies, interests, and behaviors).
This type of segmentation assumes that people who live in the same geographic area are likely to have similar demographic and lifestyle characteristics, and therefore may exhibit similar purchasing behaviors.
Geodemographic segmentation is often used by retailers and marketers to identify potential target markets for their products or services, especially those that are location-dependent, such as brick-and-mortar stores.
By understanding the unique characteristics of different geodemographic segments, businesses can tailor their marketing efforts to effectively reach and engage with these specific consumer groups, potentially leading to increased sales and customer loyalty.
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what can be done to deal with the principal-agent problem?group of answer choicesforbid managers from owning any company stockhave the ceo be a rotating positionthreaten to liquidate the firmlink top manager salaries to the profits of the firm or the price of the firm's stock
To deal with the principal-agent problem, there are several options that can be considered. One approach could be to link top manager salaries to the profits of the firm or the price of the firm's stock.
This would incentivize managers to work towards maximizing the firm's profits and share price, aligning their interests with those of shareholders. Another option could be to forbid managers from owning any company stock to prevent conflicts of interest. Alternatively, the CEO position could be made into a rotating position to prevent any one individual from accumulating too much power and becoming entrenched in the organization.
Lastly, a more drastic measure could be to threaten to liquidate the firm, creating a sense of urgency among managers to prioritize the long-term success of the organization over their own self-interest. To deal with the principal-agent problem, one effective solution is to link top manager salaries to the profits of the firm or the price of the firm's stock. This approach aligns the interests of managers (agents) with those of shareholders (principals), incentivizing managers to make decisions that benefit the overall performance and value of the company.
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spencer enterprises is attempting to choose among a series of new investment alternatives. the potential investment alternatives, the net present value of the future stream of returns, and the capital requirements are summarized in the attached file. the available capital funds over the next three years are $10,000, $10,000 and $10,000. solve the model to maximize the net present value in dollars. what is the maximum net present value in dollars?
Based on the information provided, Spencer Enterprises has a number of potential investment alternatives with varying net present values and capital requirements. the available capital funds.
To solve the model and identify the investment alternatives that offer the greatest potential for maximizing net present value, Spencer Enterprises will need to evaluate each option using a discounted cash flow analysis. This involves calculating the present value of the future cash flows associated with each investment alternative, based on a specified discount rate and the expected timing of each cash flow.
Once the net present value of each investment alternative has been calculated, Spencer Enterprises can compare the results to determine which options are likely to generate the greatest returns. Given the available capital funds of $10,000 over each of the next three years, the company will need to carefully balance the expected return on investment against the required capital outlays for each alternative.Without access to the specific details of the investment alternatives and associated cash flows, it is not possible to determine the maximum net present value in dollars for Spencer Enterprises. maximizing returns and achieving long-term success.
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what are the types of personal property that may be used as collateral under article 9? choose three answers.
The types of personal property that may be used as collateral under article 9 are goods that are tangible, movable, and used in business.
Article 9 of the Uniform Commercial Code governs secured transactions in personal property. Personal property can be used as collateral to secure a loan or other obligation. In order to be eligible, the property must meet certain requirements, such as being tangible, movable, and used in business.
Examples of eligible collateral may include inventory, equipment, and accounts receivable. However, certain types of property, such as real estate or intangible assets like patents or copyrights, are generally not eligible.
It is important for both the lender and the borrower to understand the rules and requirements of article 9 to ensure that the collateral is properly secured and the transaction is valid.
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sohr corporation processes sugar beets that it purchases from farmers. sugar beets are processed in batches. a batch of sugar beets costs $63 to buy from farmers and $22 to crush in the company's plant. two intermediate products, beet fiber and beet juice, emerge from the crushing process. the beet fiber can be sold as is for $33 or processed further for $35 to make the end product industrial fiber that is sold for $83. the beet juice can be sold as is for $54 or processed further for $39 to make the end product refined sugar that is sold for $83. how much profit (loss) does the company make by processing one batch of sugar beets into the end products industrial fiber and refined sugar?
By processing one batch of sugar beets into industrial fiber and refined sugar, the company makes a profit of $7.
Determine how much company makes profitTo calculate the profit (or loss) for processing one batch of sugar beets into industrial fiber and refined sugar, we will first determine the total costs and revenues for each end product.
For industrial fiber:
- Cost of sugar beets: $63
- Cost to crush: $22
- Cost to process beet fiber: $35
Total costs: $63 + $22 + $35 = $120
Revenue from selling industrial fiber: $83
For refined sugar:
- Cost of sugar beets: $63 (already accounted for in the industrial fiber costs)
- Cost to crush: $22 (already accounted for in the industrial fiber costs)
- Cost to process beet juice: $39
Total costs: $39 Revenue from selling refined sugar: $83
Total costs for both products: $120 + $39 = $159
Total revenue for both products: $83 + $83 = $166
Profit (or loss): Total revenue - Total costs = $166 - $159 = $7
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Government and business leaders in South Korea revived the economy by focusing on self-reliance, while North Korea focused on its exports.
True
False
It is false that it is actually the other way around, South Korea focused on exports and relied heavily on the global trade to revive its economy.
What is trade?Trade refers to the exchange of goods, services, or capital between individuals, companies, or countries. It can take various forms, including international trade, domestic trade, bartering, or online trade. The purpose of trade is to meet the needs and wants of consumers and producers by facilitating the movement of goods and services from those who produce them to those who demand them. Trade allows countries and individuals to specialize in the production of certain goods or services where they have a comparative advantage, leading to increased efficiency and productivity. The history of trade dates back to ancient times, and with the growth of globalization, trade has become increasingly important for economic growth and development. However, trade can also create issues such as trade imbalances, job loss, and cultural conflicts.
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A company will mature in 13 years. The bond has a coupon rate of 10% and current market interest rate is 7%. The bond is callable in 7 years with call price of 1050. What is YTC? Assuming the bond is semi-annually compounding.
The yield to call (YTC) of the bond is 8.95%.
To calculate the YTC, we need to first calculate the bond's present value. The bond has a face value (FV) of $1,000, a coupon rate (C) of 10%, and semi-annual payments for 13 years.
The current market interest rate (YTM) is 7%. Using the formula for present value of a bond, we get:
[tex]PV = (C/2) * [1 - (1/(1 + YTM/2)^{(2n)})] / (YTM/2) + (FV/(1 + YTM/2)^{(2n)})[/tex]
Where n is the number of semi-annual periods (in this case, 13*2 = 26).
Plugging in the numbers, we get:
PV = ($50 * [1 - (1/1.035)²⁶]) / 0.035 + ($1,000 / 1.035²⁶) = $1,080.67
Next, we need to calculate the bond's call value. The bond is callable in 7 years with a call price of $1,050. Using the same formula as above, but with only 14 semi-annual periods (7 years * 2), we get:
Call value = ($50 * [1 - (1/1.035)¹⁴]) / 0.035 + ($1,050 / 1.035¹⁴) = $1,067.36
Since the bond is callable at a price lower than its current value, the YTC is the interest rate that makes the present value of the bond equal to the call price. Using trial and error or a financial calculator, we find that the YTC is 8.95%.
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Assuming the bond is semi-annually compounding the yield to call (YTC) of the bond is 7.84%.
The bond's maturity value (FV) is not given, so let's assume it to be $1000.
Coupon rate (C) = 10% * $1000/2 = $50 (as it's a semi-annual coupon)
Current market interest rate (YTM) = 7%/2 = 3.5%
Number of periods to maturity (n) = 13*2 = 26
Number of periods to call (m) = 7*2 = 14
Call price (CP) = $1050
Using the bond pricing formula, we can calculate the present value of the bond as follows:
PV = C * (1 - (1 + YTM)^(-n)) / YTM + FV / (1 + YTM)^n
PV = $50 * (1 - (1 + 3.5%)^(-26)) / 3.5% + $1000 / (1 + 3.5%)^26
PV = $906.52
If the bond is called in 7 years, the investor will receive $1050. We can use trial and error or a financial calculator to find that the yield to call (YTC) is 7.84%.
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with respect to the american recovery and reinvestment act, there seems to be a consensus that a lot of the tax cuts in the united states were: please choose the correct answer from the following choices, and then select the submit answer button. answer choices spent. saved. gifted. donated.
With respect to the American Recovery and Reinvestment Act, there seems to be a consensus that the spending was highly effective at creating jobs and boosting economic growth, the correct option is (b).
The American Recovery and Reinvestment Act (ARRA) was passed in 2009 to stimulate the US economy in the aftermath of the Great Recession. The consensus among economists is that the ARRA was effective in achieving its goal of boosting economic growth and creating jobs.
Studies have shown that the ARRA had a significant impact on reducing unemployment and increasing GDP growth. According to a study by the Congressional Budget Office, the ARRA increased employment by between 0.3 and 3.3 million jobs in 2010 and between 0.2 and 1.9 million jobs in 2011, the correct option is (b).
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The complete question is:
With respect to the American Recovery and Reinvestment Act, there seems to be a consensus that the:
a. spending may not have targeted unemployed labor very successfully.
b. spending was highly effective at creating jobs and boosting economic growth.
c. spending had no impact on the overall economy.
d. spending caused inflation and harmed the economy.
Last year, a decision was made to keep the same equipment in lieu of buying new equipment. The old equipment's trade-in value last year was $6000 and its value this year is $2500. The operating cost was $1000 last year. If bought last year, the new equipment would have cost $12000, the salvage value after 10 years would be $3000, and it would have an annual operating cost of $5600. What was the Total EAC for the new equipment? Assume i = 5%
The Total EAC for the new equipment is $16,360.70.
To calculate the Total EAC, we need to find the present value of all costs associated with each option and then sum them up. For the old equipment, the present value of the trade-in value and operating cost is:
PV = $6000/(1+5%) + $1000/(1+5%) = $6705.21
For the new equipment, the present value of the initial cost, salvage value, and operating cost is:
PV = -$12000 + $3000/(1+5%)^10 + $5600/(1+5%) + $5600/(1+5%)^2 + ... + $5600/(1+5%)^10
= -$12000 + $1954.48 + $4963.18
= $16,360.70
Therefore, the Total EAC for the new equipment is $16,360.70, which is greater than the present value of the old equipment's costs. Hence, it would have been more economical to purchase the new equipment last year.
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