All of the statements are true of pure competition.
Pure competition is a market structure in which there are a large number of firms producing identical products and there is perfect information about prices and products.
Firms in a pure competitive market act as price takers, meaning that they must accept the market price and cannot influence it. The demand curve facing a competitive firm consists of a horizontal line at any price equal to or below the market price.
This means that the market demand curve and the demand curve facing a firm may be one and the same, at least at certain prices. Additionally, there must be a very large number of sellers in a pure competitive market in order for it to be an effective market structure.
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mckensie, inc., has outstanding 10,000 shares of $25 par value, 6% nonparticipating, cumulative preferred stock and 16,000 shares of $5 par value common stock. the dividend on preferred stock is two years in arrears, and the total cash dividend declared this year is $85,000. the total amounts distributed to preferred and common stockholders, respectively, are:
To calculate the amounts distributed to preferred and common stockholders, we need to follow a specific process. Total amounts distributed to preferred and common stockholders, respectively, are $75,000 and $10,000.
First, we need to determine the total amount of dividends that should be paid to preferred stockholders. Since the preferred stock has a cumulative feature, any unpaid dividends accumulate and must be paid before any dividends can be paid to common stockholders.
In this case, the dividend on preferred stock is two years in arrears, which means that $60,000 ($30,000 x 2 years) of unpaid dividends must be paid before any dividends can be paid to common stockholders.
Next, we need to calculate the total amount of dividends that can be paid to preferred stockholders this year. The preferred stock has a fixed dividend rate of 6% of its $25 par value, which is $1.50 per share. The total number of preferred shares outstanding is 10,000, so the total amount of dividends that should be paid to preferred stockholders is $15,000 ($1.50 x 10,000 shares).
However, since $60,000 of unpaid dividends must be paid this year, the total amount of dividends that should be paid to preferred stockholders this year is $75,000 ($60,000 + $15,000).
Finally, we can calculate the total amount of dividends that can be paid to common stockholders. The total cash dividend declared this year is $85,000, and $75,000 of this amount is allocated to preferred stockholders.
Therefore, the total amount of dividends that can be paid to common stockholders is $10,000 ($85,000 - $75,000).
In summary, the total amounts distributed to preferred and common stockholders, respectively, are $75,000 and $10,000. This is because the preferred stock has a cumulative feature, and any unpaid dividends must be paid before dividends can be paid to common stockholders.
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TRUE OR FALSE
Corporate bonds do not have default risk.
The statement "Corporate bonds do not have default risk." is false because Corporate bonds do have default risk, which refers to the possibility that a bond issuer may not be able to make interest payments or repay the principal amount on time.
Companies that issue corporate bonds are subject to various factors such as economic conditions, industry trends, and their own financial performance. These factors can affect a company's ability to meet its debt obligations. As a result, there is always a risk that the issuer may default on their bond payments.
Investors should consider the credit rating of a corporate bond, as it indicates the creditworthiness of the issuer and the associated default risk. Higher-rated bonds typically have lower default risk, while lower-rated bonds have higher default risk.
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clear agreements about authority, risks and sharing profits are needed when a business is organized as a(n)
When a business is organized as a partnership, clear agreements about authority, risks and sharing profits are crucial for a smooth operation.
Partnerships rely on trust and cooperation between the parties involved, and having clear agreements in place can help prevent misunderstandings and conflicts. Authority should be clearly defined to avoid disputes over decision-making and management responsibilities.
Risks should also be identified and agreed upon to ensure each partner understands their liability and responsibilities in case of any losses. Lastly, sharing profits should be agreed upon to ensure each partner receives a fair share of the business's success.
These agreements should be formalized in a partnership agreement, which should be reviewed and updated regularly.
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Nana Ekua opened a savings account this morning. Her money will earn 5 percent interest, compounded annually. After five years, her savings account will be worth GHS5,600. Assume she will not make any withdrawals. Given this, which one of the following statements is true? A. Nana Ekua deposited more than GHS5,600 this morning. B. The present value of Nana Ekua's account is GHS5,600. C. Nana Ekua could have deposited less money and still had GHS5,600 in five years if she could have earned 5.5 percent interest. D. Nana Ekua would have had to deposit more money to have GHS5,600 in five years if she could have earned 6 percent interest. E. Nana Ekua will earn an equal amount of interest every year for the next five years.
Nana Ekua opened a savings account to earn 5% interest rate. The statement is true: Nana Ekua could have deposited less money and still had GHS5,600 in five years if she could have earned 5.5% interest.
To explain this, we can use the formula for compound interest: [tex]A = P / (1 + r/n)^{nt}[/tex], where A is the final amount, P is the initial principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.
In this case, A = GHS5,600, r = 0.05, n = 1 (since it's compounded annually), and t = 5 years. We can rearrange the formula to solve for P, the initial deposit:
[tex]P = A / (1 + r/n)^{nt}[/tex]
[tex]= GHS\;5,600 / (1 + 0.05/1)^{1\times5} \approx GHS\;4,364.63[/tex]
Now, if Nana Ekua could have earned 5.5 percent interest instead:
[tex]P = GHS\;5,600 / (1 + 0.055/1)^{1\times5} \approx GHS\; 4,291.42[/tex]
Since GHS4,291.42 is less than the initial deposit of GHS4,364.63, statement C is true. If Nana Ekua could have earned 5.5% interest rate, she could have deposited less money and still had GHS5,600 in five years.
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A cohesive marketing mix and the comprise a marketing program, Multiple Choice core competencies organizational structure basic marketing evaluation criteria traditional market related budget
A cohesive marketing mix refers to the combination of product, price, promotion, and place that work together to create a consistent and effective marketing message.
This mix is an important part of a marketing program, which is a comprehensive plan that outlines a company's marketing strategies and tactics to achieve its business objectives. To implement a successful marketing program, an organization must have the core competencies necessary to execute its strategies effectively.
This includes having a strong understanding of customer needs, a deep knowledge of the industry and competition, and the ability to create compelling messaging and creative materials.
Additionally, the organizational structure must be aligned to support the marketing program, with clear roles and responsibilities for all team members involved.
Finally, the program must be evaluated using basic marketing evaluation criteria, such as return on investment and customer satisfaction, and supported by a traditional market-related budget.
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when performing a disaster recovery audit, which of the following would be considered the most important to review? the organization has a hot site reserved which is available when needed the organization has developed a business continuity manual that is available and up to date the organization has purchased adequate disaster insurance coverage, and premiums are paid the organization performs backups in a timely manner, which are then stored offsite
The most important item to review when performing a disaster recovery audit is to ensure that the organization has a hot site reserved which is available when needed.
A hot site is a pre-arranged facility that is ready for use in the event of a disaster. This is essential for the organization to continue operations in the event of a disaster. It should also be verified that the organization has a business continuity manual that is available and up to date.
The manual should have the necessary steps and procedures to follow in the event of a disaster. Additionally, it is important to verify that the organization has purchased adequate disaster insurance coverage, and premiums are paid.
Finally, it is important to verify that the organization performs backups in a timely manner, which are then stored offsite. This will ensure that any data or information that is lost due to a disaster can be recovered. By performing these reviews, the organization can ensure that they have the proper measures in place to recover from a disaster.
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When performing a disaster recovery audit, all of the options mentioned are important to review. However, the most important factor to review would depend on the specific needs and circumstances of the organization.
That being said, if we have to choose one from the options provided, the most important to review would be the organization's backups and their offsite storage. This is because, in the event of a disaster, the organization's ability to restore its data and systems is critical to its recovery. If backups are not performed in a timely manner, or if they are not stored offsite, then the organization may not be able to recover its data and systems, which could result in significant business disruptions and losses.
Having a hot site, a business continuity manual, and adequate disaster insurance coverage are all important elements of a disaster recovery plan. However, without timely and properly stored backups, these other elements may not be effective in helping the organization recover from a disaster. Therefore, the backups and their storage are often considered the most critical aspect of disaster recovery planning and should be carefully reviewed during a disaster recovery audit.
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Bruce deposits 500 into a bank account. His account is credited interest at a nominal rate of interest a i convertible semiannually. At the same time, Peter deposits 500 into a separate account. Peter's account is credited interest at a force of interest S. After 10.25 years, the value of each account is 1500. Calculate (i-δ).
a. 0.20% b. 0.29% c. 0.12% d. 0.25% e. 0.16%
The correct answer is b. 0.29%. The force of interest is the effective interest rate paid on the account.
It is calculated by taking the nominal rate of interest a and subtracting the compounding frequency, or the number of times interest is compounded in a given period,
commonly denoted by δ. In this case, the nominal rate of interest a is convertible semiannually, meaning it is compounded twice a year, therefore δ is 0.5. To calculate the force of interest, we subtract δ from a. In this case, a would be 0.5, so the force of interest S is equal to 0.5 - 0.5 or 0.29%.
In other words, the force of interest is the actual rate of interest paid on the account, taking into account the compounding frequency.
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A 4-year project with an initial cost of $119,000 and a required rate of return of 17 percent has a chance of success of 9 percent. If the project succeeds, the annual cash flow will be $1,591,000. If the project fails, the annual cash flow will be −$214,000. The project can be shut down after the first two years, but all money invested will be lost. None of the initial cost can be recouped after four years. What is the net present value of this project at Time 0?
Answer:
The net present value of the project at Time 0 is $83,062.72. This means that the project is expected to generate a positive return, and it is worth investing in.
Explanation:
To calculate the net present value (NPV) of the project at Time 0, we need to find the present value of all cash flows associated with the project using the required rate of return of 17 percent.
First, let's calculate the expected cash flows for the project:
Chance of success = 9%
Chance of failure = 91% (100% - 9%)
If the project succeeds, the annual cash flow will be $1,591,000, and it will continue for four years. Therefore, the total cash flow for the project's life will be:
Total cash flow if the project succeeds = $1,591,000 x 4 = $6,364,000
If the project fails, the annual cash flow will be -$214,000, and it will also continue for four years. Therefore, the total cash flow for the project's life will be:
Total cash flow if the project fails = -$214,000 x 4 = -$856,000
Now, we can calculate the expected value of the project's cash flows:
Expected value = (Chance of success x Total cash flow if the project succeeds) + (Chance of failure x Total cash flow if the project fails)
Expected value = (0.09 x $6,364,000) + (0.91 x -$856,000) = $415,320
This means that the expected value of the project's cash flows is $415,320.
Next, we can calculate the NPV of the project at Time 0:
NPV = -Initial cost + PV of expected cash flows
NPV = -$119,000 + (PV factor for 4 years at 17% x $415,320)
NPV = -$119,000 + (0.486 x $415,320)
NPV = -$119,000 + $202,062.72
NPV = $83,062.72
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Demo Inc. is expected to generate a free cash flow (FCF) of $13,245.00 million this year (FCF1 = $13,245.00 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Demo Inc.'s weighted average cost of capital (WACC) is 12.78%, what is the current total firm value of Demo Inc.? (Note: Round all intermediate calculations to two decimal places.) $219,541.28 million $297,727.14 million $263,449.54 million $39,590.99 million
the current total firm value of Demo Inc. is $249,227.14 million. The closest option to this value is option (b) $297,727.14 million.
To calculate the total firm value of Demo Inc., we need to determine the present value of its future free cash flows (FCFs) discounted by the weighted average cost of capital (WACC).
1: Calculate the FCFs for years 2 and 3
FCF2 = FCF1 x (1 + g) = $13,245.00 million x (1 + 26.20%) = $16,722.69 million
FCF3 = FCF2 x (1 + g) = $16,722.69 million x (1 + 26.20%) = $21,100.90 million
2: Calculate the FCF for year 4 and beyond using the perpetuity formula
FCF4 = FCF3 x (1 + g) / (WACC - g) = $21,100.90 million x (1 + 4.26%) / (12.78% - 4.26%) = $303,321.11 million
3: Calculate the present value of the FCFs for years 1 to 4
[tex]PV(FCF1-4) = FCF1 + FCF2 / (1 + WACC)^2 + FCF3 / (1 + WACC)^3 + FCF4 / (1 + WACC)^3[/tex]
[tex]PV(FCF1-4) = $13,245.00 million + $16,722.69 million / (1 + 12.78%)^2 + $21,100.90 million / (1 + 12.78%)^3 + $303,321.11 million / (1 + 12.78%)^3[/tex]
PV(FCF1-4) = $13,245.00 million + $13,710.70 million + $15,474.14 million + $206,797.30 million
PV(FCF1-4) = $249,227.14 million
4: Calculate the total firm value
Total firm value = PV(FCF1-4)
Total firm value = $249,227.14 million.
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On your own paper, in the working papers, or using a spreadsheet, prepare the following:
a. Prepare a multiple-step income statement for the year ended December 31, 20Y5, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. (Round earnings per share to the nearest cent.) Save your calculations and enter the requested amounts below.
The EPS calculation would be: [tex]= ($xxx - $100,000) / 100,000= $x.xx per share[/tex]
To prepare a multiple-step income statement for the year ended December 31, 20Y5, follow these steps:
1. Determine the company's total sales revenue for the year. This should be listed at the top of the income statement.
2. Subtract the cost of goods sold (COGS) from the total sales revenue to arrive at the gross profit. This is the second line of the income statement.
3. List all operating expenses, such as salaries, rent, utilities, and depreciation, below the gross profit. Subtract the total operating expenses from the gross profit to arrive at the operating income.
4. Next, list any non-operating income, such as interest earned on investments or gains from the sale of assets. Add this income to the operating income to arrive at the total income before taxes.
5. Subtract the income tax expense from the total income before taxes to arrive at the net income. This should be listed at the bottom of the income statement.
6. To calculate earnings per share (EPS), divide the net income by the average number of common shares outstanding. In this case, the average number of common shares outstanding is 100,000 and the preferred dividends were $100,000.
Therefore, the EPS calculation would be:
Net income - preferred dividends / average number of common shares outstanding
[tex]= ($xxx - $100,000) / 100,000= $x.xx per share[/tex]
Remember to round EPS to the nearest cent.
Once you have completed these steps, you should have a complete multiple-step income statement for the year ended December 31, 20Y5, including earnings per share.
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which of the following statements about external auditors are true? (check all that apply.) multiple select question. they often have lucrative consulting contracts with the firms they audit. they are appointed by the federal government. they are nonprofit organizations. they often fail to catch accounting irregularities.
Based on the given options, the following statements about external auditors are true:
They often have lucrative consulting contracts with the firms they audit.They often fail to catch accounting irregularities.External auditors are typically hired by companies to provide an independent evaluation of their financial statements. These auditors may have consulting contracts with the firms they audit, which can be financially beneficial for them. However, it is important to note that auditor independence is crucial for maintaining the integrity of the audit process.
Additionally, external auditors may sometimes fail to catch accounting irregularities due to various factors such as the complexity of the financial information, time constraints, or limitations in their audit scope. This highlights the importance of having a robust internal control system in place for companies.
The other two options are incorrect, as external auditors are not appointed by the federal government (they are usually hired by the company's management or board of directors), and they are not necessarily nonprofit organizations (many external auditing firms are for-profit entities).
So, these option is correct;
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_____ is the percentage of net profit the owners' equity earns, before taxes. multiple choice return on equity surplus value return on net assets profit margin'
Return on equity (ROE) is the percentage of net profit the owner's equity earns, before taxes. ROE is a financial performance ratio that measures the ability of a company to generate profits from its shareholders' investments.
It is calculated by dividing the net profit (before taxes) by the owner's equity. The result is expressed as a percentage, indicating how effectively the company is using the invested funds to generate profits.
a. Return on equity - This is the correct answer because it specifically measures the percentage of net profit generated by the owner's equity before taxes.
b. Surplus value - This is not the correct answer as surplus value is an economic concept used in Marxist theory, referring to the excess value produced by workers over and above their wages.
c. Return on net assets - This is not the correct answer because it measures the efficiency of a company's management in using its net assets to generate profits, not specifically the owner's equity.
d. Profit margin - This is not the correct answer because the profit margin refers to the ratio of net profit to revenue, which shows the percentage of revenue that is converted into profit, not specifically related to owner's equity.
In conclusion, the correct answer is return on equity (ROE), as it directly measures the percentage of net profit the owner's equity earns before taxes. It is a key indicator for investors to assess the profitability and efficiency of a company in using its invested capital.
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Complete Question:
_____ is the percentage of net profit the owner's equity earns, before taxes.
multiple choice
a. return on equity
b. surplus value
c. return on net assets
d. profit margin.
Sardano and Sons is a large, publicly held company that is considering leasing a warehouse. One of the company’s divisions specializes in manufacturing steel, and this particular warehouse is the only facility in the area that suits the firm’s operations. The current price of steel is $784 per ton. If the price of steel falls over the next six months, the company will purchase 725 tons of steel and produce 79,750 steel rods. Each steel rod will cost $13 to manufacture and the company plans to sell the rods for $28 each. It will take only a matter of days to produce and sell the steel rods. If the price of steel rises or remains the same, it will not be profitable to undertake the project, and the company will allow the lease to expire without producing any steel rods. Treasury bills that mature in six months yield a continuously compounded interest rate of 5 percent and the standard deviation of the returns on steel is 45 percent.Use the Black-Scholes model to determine the maximum amount that the company should be willing to pay for the lease. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The maximum amount that the company should be willing to pay for the lease is approximately $1,156,956.38.
How to determine the maximum amount to be paidTo determine the maximum amount Sardano and Sons should be willing to pay for the lease using the Black-Scholes model, we first need to calculate the present value of the expected profits if the price of steel falls.
1. Calculate the profit per steel rod:
Profit per rod = Selling price - Manufacturing cost
Profit per rod = $28 - $13 = $15
2. Calculate the total profit from producing and selling 79,750 steel rods:
Total profit = Profit per rod × Number of rods
Total profit = $15 × 79,750 = $1,196,250
3. Calculate the present value of the total profit using the continuously compounded interest rate of 5%:
[tex]PV = Total \: profit \times {e}^{ - rt} [/tex]
PV = $1,196,250 × e^(-0.05 * 0.5)
PV ≈ $1,156,956.38
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true or false? offering consumers the opportunity to pay with a credit card provides the value of possession utility.
True, offering consumers the opportunity to pay with a credit card provides the value of possession utility.
Possession utility refers to the increased value or satisfaction a consumer gains when they are given the ability to use a product or service immediately or when it is most convenient for them. By offering credit card payment options, businesses enhance the customer's purchasing experience and overall satisfaction.
Credit cards enable customers to make purchases without having the full amount of money at the time of purchase. This convenience allows them to acquire the desired product or service immediately and pay later, thus increasing the possession utility. Additionally, credit cards offer security and flexibility, as customers can track their expenses, benefit from reward programs, and have protection against fraudulent transactions.
Moreover, businesses that accept credit card payments are more likely to attract a larger customer base, as many consumers prefer the convenience of using credit cards. This, in turn, increases sales and revenue for the company.
In summary, offering consumers the opportunity to pay with a credit card does provide the value of possession utility. The convenience, flexibility, and security that come with using credit cards enhance the overall customer experience, leading to higher satisfaction and increased business opportunities.
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fixed-price contracts are considered which of the following? very flexible very rigid always cheaper than any other option useless when considering a systems design always the best option for any project
Fixed-price contracts are considered a strangle includes holding both a put and a call on the same underlying asset. The correct answer is a. very flexible very rigid always.
Holding a call and a put on the same underlying asset is a typical option strategy known as a strangle. A strangle protects investors who anticipate a swift move in an asset but are unsure of the direction. A strangle is profitable only when the price of the underlying asset swings sharply.
You take a considerable price risk if you write short strangles on particular stocks. On an index, selling strangles is significantly safer. The worst scenario for traders may be a short strangle on Infosys or Reliance before the quarterly results.It is untrue that it is always preferable to enter into long-term contracts because they are normally less expensive and to avoid using any flexible capacity since it is more expensive because the choice depends on the type of industry and the situation. There are various market segments and industries, and each one has unique traits and elements that influence how decisions are made.
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when then number of needed items are computed based on the number of higher-level items produced, one is operating in a(n)
When the number of needed items are computed based on the number of higher-level items produced, one is operating in a bill of materials (BOM) system.
A bill of materials (BOM) is a comprehensive list of raw materials, assemblies, sub-assemblies, components, and parts needed to manufacture a finished product. It contains information about the quantity, unit of measure, and order of usage of each component in the manufacturing process.
When the number of needed items are computed based on the number of higher-level items produced, it means that the BOM system is used to determine the required quantity of each raw material, assembly, sub-assembly, component, and part based on the production order of the finished product.
The BOM system is commonly used in manufacturing, engineering, and supply chain management to ensure the accurate and efficient production of products.
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A global positioning system (GPS) receiver is purchased for $6,000. The IRS informs your company that the useful (class) life of the system is six years. The expected market (salvage) value is $450 at the end of year six a. Use the straight line method to calculate depreciation in year two b. Use the 200% declining balance method to calculate the cumulative depreciation through year three c. Use the MACRS method to calculate the cumulative depreciation through year four d. What is the book value of the GPS receiver at the end of year three when straight line depreciation is used?
a. Year 2 straight line depreciation: $925.
b. Cumulative depreciation through Year 3, 200% declining balance method: $3,332.
c. Cumulative depreciation through Year 4, MACRS method: $3,450.68. d. Book value at end of Year 3 using straight-line method: $3,791.67.
a. Straight-line depreciation method:
Annual depreciation = (cost - salvage value) / useful life
Annual depreciation = ($6,000 - $450) / 6 = $925
Depreciation in year two = $925
b. 200% declining balance method:
Depreciation rate = 2 * (1 / useful life) = 2 * (1 / 6) = 0.3333
Year 1 depreciation = cost * depreciation rate = $6,000 * 0.3333 = $2,000
Year 2 depreciation = (cost - year 1 depreciation) * depreciation rate = ($6,000 - $2,000) * 0.3333 = $1,332
Cumulative depreciation through year three = year 1 depreciation + year 2 depreciation = $2,000 + $1,332 = $3,332
c. MACRS method:
MACRS allows for more accelerated depreciation in the early years of an asset's life. The depreciation percentage depends on the asset's class life and recovery period.
Class life for GPS receiver = 6 years
Recovery period for GPS receiver = 5 years
Using the MACRS table for 5-year recovery period and 6-year class life, the depreciation percentages are:
Year 1 = 20.00%
Year 2 = 32.00%
Year 3 = 19.20%
Year 4 = 11.52%
Year 5 = 11.52%
Year 6 = 5.76%
Depreciation in year one = $6,000 * 20% = $1,200
Depreciation in year two = ($6,000 - $1,200) * 32% = $1,824
Depreciation in year three = ($6,000 - $1,200 - $1,824) * 19.20% = $776.83
Cumulative depreciation through year four = $1,200 + $1,824 + $776.83 + ($6,000 - $1,200 - $1,824 - $776.83) * 11.52% = $3,450.68
d. Book value of the GPS receiver at the end of year three using straight line depreciation:
Depreciation in year one = ($6,000 - $450) / 6 = $925
Depreciation in year two = ($6,000 - $450 - $925) / 6 = $725
Depreciation in year three = ($6,000 - $450 - $925 - $725) / 6 = $558.33
Book value at the end of year three = $6,000 - $925 - $725 - $558.33 = $3,791.67
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Use the work you completed for Parts, I, II, and III with your CLC group to inform your analysis for this assignment. Write a 500-750-word analysis of the significance of the three Matrices regarding their relevance for strategic planning. Describe the key information for each of the three matrices and how information from each will influence recommendations for strategic plans to improve the position of the company. Without prematurely determining and formalizing strategic goals and objectives, begin thinking about possible strategies to capitalize and add value to the organization based on the analysis of this information.
Under Armour
The three matrices (SWOT, SPACE, and BCG) play a crucial role in Under Armour's strategic planning, providing key insights to improve the company's position and capitalize on opportunities, while adding value to the organization.
The significance of the three matrices (SWOT, SPACE, and BCG) in Under Armour's strategic planning lies in their ability to provide essential information for decision-making.
The SWOT matrix identifies the company's strengths, weaknesses, opportunities, and threats, allowing for a comprehensive internal and external analysis.
The SPACE matrix examines the competitive position and market growth of the company, revealing areas for improvement and potential expansion. Lastly, the BCG matrix categorizes the company's products into different growth categories, highlighting which product lines to invest in or divest from.
By analyzing information from these matrices, Under Armour can develop well-informed recommendations for strategic plans to improve its market position. This process will involve considering various strategies to capitalize on identified opportunities and add value to the organization, all without finalizing specific goals and objectives at this stage.
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You bought 100 shares of Apple inc on October 5th, 2020 at the closing price. You sold your shares on October 5, 2021 at the opening price. Answer the following:
Cost when purchased
Income when sold
Dividend income
Cap gain/loss
Total gain =
The total gain from buying 100 shares of Apple on October 5th, 2020, and selling them on October 5, 2021, was $2,387, which includes a capital gain of $2,299 and a dividend income of $88.
How to calculate the gain from buying and selling 100 shares of Apple on specific dates?To answer your question about buying 100 shares of Apple on October 5th, 2020 and selling them on October 5, 2021, I will provide a step-by-step explanation for each term:
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An oil company is willing to pay the following dividends: Year 1: €4; Year 2: €5; Year 3 and following years (4, 5, 6...infinite): €2. The required rate of return for firms in this sector is 11%. Compute the price at which one share of INCARSA Corp is expected to trade in the secondary market: a. 22.42 b. 23.45 C. 20.35 d. None of the above
The correct answer is A: 22.42. The price of a share of INCARSA Corp expected to trade in the secondary market can be calculated by using the present value of dividends formula.
This formula takes into account the expected dividends that will be paid out and the required rate of return for firms in this sector.
Since the dividends paid out in Year 1 and Year 2 are higher than the subsequent dividends of €2, the present value of dividends formula takes this into account by assigning a higher value to the earlier years.
By plugging in the given dividend amounts and the required rate of return of 11%, we can calculate that the share price is expected to be 22.42.
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you buy an seven-year bond that has a 5.00% current yield and a 5.00% coupon (paid annually). in one year, promised yields to maturity have risen to 6.00%. what is your holding-period return?
Your holding-period return would be 8.33%
How to calculate the holding-period returnThe holding-period return of your seven-year bond would be calculated as follows:
- First, calculate the purchase price of the bond. Assuming a face value of $1,000, the bond's price would have been $1,000 * 5.00% = $50 (the annual coupon payment) / 5.00% (the current yield) = $1,000.
- After one year, the promised yield to maturity has risen to 6.00%. This means that if you were to sell the bond at that point, its price would have decreased.
Using the bond pricing formula, we can estimate that the new price of the bond would be $50 / 6.00% + $1,000 = $1,083.33.
- Therefore, your holding-period return would be ($1,083.33 - $1,000) / $1,000 = 8.33%, or the percentage increase in the bond's price over the one-year period.
However, it's important to note that this calculation doesn't take into account any reinvestment of the coupon payments or the effect of taxes or fees bond's.
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Two years ago, Pierre and Jane purchased a home for $300,000. It has increased in value over the past two years and is currently worth $400,000. Their current mortgage balance is $150,000. Calculate the credit limit they would receive on a home equity loan. Assume that the financial institution they deal with will provide home equity loans of up to 80% of the market value of the home, less outstanding mortgages.
a) $170,000
b) $75,000
c) $300,000
d) $225,000
The credit limit that Pierre and Jane would receive on a home equity loan can be calculated by using the formula: (Market value of the home x 80%) - outstanding mortgage balance.
Using the given information, the market value of their home is $400,000 and their outstanding mortgage balance is $150,000. Therefore, the credit limit they would receive on a home equity loan is:
($400,000 x 80%) - $150,000 = $230,000 - $150,000 = $80,000
So the correct answer is not listed among the options given. The credit limit they would receive on a home equity loan is $80,000.
A home equity loan is a type of loan in which the borrower uses the equity of their home as collateral. The equity of a home is the difference between the market value of the home and the outstanding mortgage balance. Home equity loans are a popular option for homeowners who need access to funds for home improvements, debt consolidation, or other financial needs.
In this case, Pierre and Jane have built up $250,000 ($400,000 - $150,000) in equity in their home over the past two years. Based on the assumption that their financial institution provides home equity loans of up to 80% of the market value of the home, less outstanding mortgages, they would be eligible for a credit limit of up to $80,000.
It's important to note that the credit limit they receive may not necessarily be the full amount they are eligible for. Financial institutions will take into account the borrower's creditworthiness, income, and other factors when determining the actual amount they will lend.
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A French investor buys 240 shares of Teck for $16,800 ($70 per share). Over the course of a year, Teck goes up by $8.65. a. If there is a 10 percent gain in the value of the dollar versus the euro, wh
The French investor gains $2,076 in terms of euros after a 10% gain in the value of the dollar versus the euro.
1. Calculate the initial investment in dollars: 240 shares * $70/share = $16,800
2. Determine the increase in stock value: $8.65 * 240 shares = $2,076
3. Calculate the new total investment value: $16,800 + $2,076 = $18,876
4. Factor in the 10% gain in the value of the dollar versus the euro: $18,876 * 0.9 = €16,988.40
5. Determine the initial investment in euros: $16,800 * 0.9 = €15,120
6. Calculate the gain in terms of euros: €16,988.40 - €15,120 = €1,868.40
The French investor gains €1,868.40 after a 10% gain in the value of the dollar versus the euro.
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Question:Choose the Commercial Bank of any country and highlights thefollowing points:· Functions· Role inthe economic development of that country
The Commercial Bank of any country and highlights the following points:· Functions· Role inthe economic development of that country is the State Bank of India (SBI), the largest public sector bank in India.
SBI functions are provides a wide range of banking services to customers, it accepts deposits in the form of savings accounts, current accounts, and fixed deposits. The bank also extends loans and advances to individuals, businesses, and industries, thereby facilitating economic growth. SBI offers various financial services such as insurance, asset management, and credit cards. Furthermore, the bank provides international banking and foreign exchange services, facilitating cross-border trade and investment.
SBI plays a crucial role in India's economic development, it supports infrastructure projects, small and medium enterprises (SMEs), and the agricultural sector by providing loans and financial assistance. The bank's extensive network, particularly in rural and remote areas, promotes financial inclusion, empowering individuals and communities with access to banking services. Additionally, SBI helps attract foreign investment by providing a robust banking platform for international businesses. By extending credit and supporting various sectors, the State Bank of India contributes significantly to the country's overall economic growth and development.
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44.19 and 4.20 is the wronganswerBefore and after-tax cost of debt For the following $1,000-par-value bond paying semi-annual interest payments, calculate the before and after-tax cost of debt. Use the 21% corporate tax rate. Issuer Name Walt Disney Co. Coupon Rate 5.30% Years to Maturity 30 Price $989.67 .. The before-tax cost of debt for Walt Disney Co. is 5.37 %. (Round to two decimal places.) The after-tax cost of debt for Walt Disney Co. is 4.19 %. (Round to two decimal places.)
The before-tax cost of debt for Walt Disney Co. is 5.37%, and the after-tax cost of debt is 4.19%.
Before-tax cost of debt = Annual coupon payment / Bond price
The annual coupon payment can be calculated as:
Annual coupon payment = Coupon rate x Par value = 5.30% x $1,000 = $53
The bond price given is $989.67.
Plugging in these values, we get:
Before-tax cost of debt = $53 / $989.67 = 0.0537 or 5.37%
To calculate the after-tax cost of debt, we need to first calculate the tax shield:
Tax shield = Tax rate x Annual coupon payment = 0.21 x $53 = $11.13
The after-tax cost of debt can be calculated as:
After-tax cost of debt = Before-tax cost of debt x (1 - Tax rate)
Plugging in the values, we get:
After-tax cost of debt = 0.0537 x (1 - 0.21) = 0.0419 or 4.19%
Therefore, the before-tax cost of debt for Walt Disney Co. is 5.37%, and the after-tax cost of debt is 4.19%.
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Income versus Cash Flow (LO3) Ponzi Products produced 100 chain-letter kits this quarter, resulting in a total cash outlay of $10 per unit. It will sell 50 of the kits next quarter at a price of $11, and the other 50 kits in the third quarter at a price of $12. It takes a full quarter for Ponzi to collect its bills from its customers. (Ignore possible sales in earlier or later quarters.) (Negative amount should be indicated by a minus sign.) a. What is the net income for Ponzi next quarter? Net Income in second quarter s 550 b. What are the cash flows for the company this quarter?
The cash flows for Ponzi this quarter include the $10 per unit cash outlay for producing the 100 chain-letter kits, which amounts to a total cash outflow of $1,000. There are no cash inflows this quarter since no kits are being sold. So the cash flow for the company this quarter is a negative $1,000.
a. To calculate the net income for Ponzi next quarter, we need to determine the revenue and expenses for the second quarter.
Step 1: Calculate the revenue for the second quarter
Revenue = Number of kits sold * Price per kit
Revenue = 50 kits * $11
Revenue = $550
Step 2: Calculate the expenses for the second quarter
Expenses = Number of kits produced * Cost per unit
Expenses = 100 kits * $10
Expenses = $1,000
However, since only 50 kits were sold in the second quarter, we should consider only 50% of the expenses for this quarter.
Expenses (second quarter) = 50% * $1,000
Expenses (second quarter) = $500
Step 3: Calculate the net income
Net Income = Revenue - Expenses
Net Income = $550 - $500
Net Income in the second quarter = $50
b. To calculate the cash flows for the company this quarter, we need to consider the cash inflow and outflow.
Step 1: Calculate cash outflow (cash spent on producing the kits)
Cash outflow = Number of kits produced * Cost per unit
Cash outflow = 100 kits * $10
Cash outflow = $1,000
Step 2: Calculate cash inflow (cash collected from customers)
Since it takes a full quarter for Ponzi to collect its bills, there will be no cash inflow in the first quarter.
Cash inflow = $0
Step 3: Calculate the cash flow
Cash flow = Cash inflow - Cash outflow
Cash flow = $0 - $1,000
Cash flow for the company this quarter = -$1,000
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2. An individual with zero initial wealth and the utility function U(Y) = Y.4 is confronted with the gamble Li (16,4;.40). Answer the following: (a) What is the certainty equivalent for the gamble? (b) What is the maximum he would pay for an insurance policy that guarantees the expected payoff of the gamble? (c) What is the probability premium? The probability premium is the increase in the probability of good state that matches the U(E(L1)). (d) Now assume the individual is confronted with the gamble L2 = (36, 16;.50). What is the certainty equivalent, maximum insurance payment, and probability premium for L2?
For the gamble L1 with outcomes (16,4; 0.4), the certainty equivalent is $11.42, the maximum insurance payment is $6.57, and the probability premium is 0.07. For the gamble L2 with outcomes (36, 16; 0.5), the certainty equivalent is $22.68, the maximum insurance payment is $13.32, and the probability premium is 0.05.
(a) To find the certainty equivalent for the gamble L1(16,4;.40), we need to find the amount of certain money that gives the same level of utility as the expected utility of the gamble. The expected utility of the gamble is:
EU(L1) = (.40)×(16)^.4 + (.60)×(4)^.4 = 6.73
To find the certainty equivalent, we set U(CE) = EU(L1) and solve for CE:
CE^.4 = 6.73
CE = (6.73)^2.5 = $27.22
Therefore, the certainty equivalent for the gamble is $27.22.
(b) The maximum amount the individual would pay for an insurance policy that guarantees the expected payoff of the gamble is the expected value of the gamble minus the certainty equivalent:
Max insurance payment = E(L1) - CE = (.40)×16 + (.60)×4 - 27.22 = $2.78
(c) The probability premium is the increase in the probability of the good state that matches the certainty equivalent of the gamble. Since the certainty equivalent is $27.22, we need to find the probability of the good state that gives a utility of $27.22:
(16)^.4 × (p) + (4)^.4 × (1-p) = 27.22
Solving for p, we get:
p = 0.787
Therefore, the probability premium is 0.787 - 0.40 = 0.387 or 38.7%.
(d) For the gamble L2 = (36, 16;.50), the expected utility is:
EU(L2) = (.50)×(36)^.4 + (.50)×(16)^.4 = 13.32
To find the certainty equivalent, we solve U(CE) = EU(L2) for CE:
CE^.4 = 13.32
CE = (13.32)^2.5 = $48.72
Therefore, the certainty equivalent for the gamble L2 is $48.72.
The maximum amount the individual would pay for an insurance policy that guarantees the expected payoff of the gamble is:
Max insurance payment = E(L2) - CE = (.50)×36 + (.50)×16 - 48.72 = $1.28
The probability premium is:
(36)^.4 × (p) + (16)^.4 × (1-p) = 48.72
Solving for p, we get:p = 0.943
Therefore, the probability premium is 0.943 - 0.50 = 0.443 or 44.3%.
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6) Baldwin Corp. just paid a dividend of $2.00. Over the next two years, this dividend is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. If the required rate of return on Baldwin stock is 12%, what should be the price of Baldwin stock today?
Baldwin Corp. paid a dividend of $2.00 which is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. Given the required rate of return on Baldwin stock is 12%. The price of Baldwin stock today should be $162.90.
To calculate the price of Baldwin stock today, we need to use the dividend discount model (DDM), which states that the current stock price is equal to the present value of all future dividends.
In this case, we can calculate the present value of the dividends over the first two years using the following formula:
PV of Dividends (Years 1-2) = D1 / (1 + r) + D2 / (1 + r) ^ 2
where:
D1 is the expected dividend at the end of the first year
D2 is the expected dividend at the end of the second year
r is the required rate of return
We are given that D1 = $2.00 * 1.2 = $2.40 and D2 = $2.40 * 1.2 = $2.88. Plugging in these values and r = 12%, we get:
PV of Dividends (Years 1-2) = $2.40 / (1 + 0.12) + $2.88 / (1 + 0.12) ^ 2
= $2.14 + $2.26
= $4.40
Next, we can calculate the present value of all future dividends beyond the second year using the Gordon growth model, which states that the price of the stock is equal to the next dividend divided by the difference between the required rate of return and the growth rate. In this case, the growth rate is 10% after the first two years, so we have:
PV of Future Dividends = D3 / (r - g)
where:
D3 is the dividend in the third year, which is equal to D2 * (1 + g) = $2.88 * 1.1 = $3.17
g is the long-term growth rate, which is 10%
Plugging in these values and r = 12%, we get:
PV of Future Dividends = $3.17 / (0.12 - 0.1)
= $158.50
Finally, we can calculate the price of the stock today by adding the present value of the dividends over the first two years to the present value of all future dividends beyond the second year:
Price of Baldwin Stock Today = PV of Dividends (Years 1-2) + PV of Future Dividends
= $4.40 + $158.50
= $162.90
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if i filed a federal return for a refund and don't owe and state taxes do you still have to file mo state return?
Yes, even if you don't owe any state taxes, you still need to file a Missouri state return if you filed a federal return for a refund.
Yes, even if you don't owe any state taxes, you still need to file a Missouri state return if you filed a federal return for a refund. This is because Missouri requires taxpayers to file a state return if they filed a federal return, regardless of whether they owe any state taxes or not. It's important to follow all state and federal tax laws to avoid any penalties or fees.
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A firm's bonds have a maturity of 8 years with a $1,000 face value, have an 11% semiannual coupon, are callable in 4 years at $1,154, and currently sell at a price of $1,283.09.
What is their nominal yield to maturity? Round your answer to two decimal places.
What is their nominal yield to call? Round your answer to two decimal places. %
What return should investors expect to earn on these bonds?
The nominal yield to maturity is 8.28%, and the nominal yield to call is 7.11%. Investors should expect to earn a return of approximately 8.28% until maturity or 7.11% until the bond is called.
The bond's semiannual coupon rate is 11%, which means the annual coupon rate is 22% (11% x 2). The bond has a face value of $1,000 and a maturity of 8 years, making it a long-term bond. The bond is currently selling for $1,283.09.
To calculate the nominal yield to maturity, we need to use the bond pricing formula:
PV = C * [1 - (1 + r/2)^(-2t)]/ (r/2) + FV/(1+r/2)^2t
where PV = present value of the bond, C = coupon payment, r = nominal yield to maturity, t = number of periods, and FV = face value of the bond.
Using the given values, we can solve for r using trial and error or financial calculator to get a nominal yield to maturity of 8.28%.
To calculate the nominal yield to call, we need to use the bond pricing formula again, but we set the call price ($1,154) as the present value (PV) and solve for r using the same formula. The nominal yield to call is found to be 7.11%.
Investors should expect to earn a return of approximately 8.28% until maturity or 7.11% until the bond is called, depending on which occurs first.
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