You need to calculate the ABC Corporation's cost of debt, cost of equity, and WACC. Here's what's known:
ABOUT THE MARKET: The expected return on the market portfolio is 11 percent. Treasury bills offer a 3.9 percent annual return.
ABOUT THE "ABC CORPORATION": It's a levered firm. (If it did not have debt, the Beta of its equity would have been 1.10.) Its target debt-to-equity ratio is .45 and it would like to maintain this ratio in the future. This firm has debt that matures in 23 years, has a $2,000 par value (per bond), and the coupon rate of 6.8 percent. Semiannual coupon payments are required until the debt matures. Today's price of each bond is $2,160. The firm pays taxes according to an income tax rate of 21 percent.
a. ABC's cost of debt (HINT: "annual yield to maturity"!) equals: (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. ABC's cost of equity equals: (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
c. ABC's WACC (TIP: if you're unsure how to go from "debt-to-equity ratio" to "weight of debt" and "weight of equity", watch my short video https://youtu.be/BAipMtb6N9k) equals: (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

On May 1, Larkin Hydraulics, a wholly owned subsidiary of Caterpillar (U.S.), sold a 12-megawatt compression turbine to Rebecke-Terwilleger Company of the Netherlands for €4,000,000 payable on August 1.

Larkin determined the €4,000,000 price tag on April 1 when the spot rate was $1.0800/€. By the time the order was received and booked on May 1, the euro strengthened to $1.100/€.

Nevertheless, Larkin’s Director of Finance now wonders if the firm should hedge against a reversal of the recent trend of the euro and proposes the following options:

OPTION 1: Hedge in the forward market – The 3-month forward exchange quote is $1.1060/€.

OPTION 2: Hedge in the money market – Larkin could borrow euros from the Frankfurt branch of its U.S. Bank at 8% per annum.

OPTION 3: Do nothing – Larkin could wait until the sales proceeds are received in August, hope the recent strengthening of the euro would continue, and sell the euros received for dollars in the spot market.

If Larkin’s cost of capital is 12%, what should Larkin do? At what cost of capital would Larkin be indifferent between Options 1 and 2?

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This rating would have decreased (downgraded). The 6%, 20-year bonds purchased by Art Levinsen Corporation have a yield to maturity of 9.24%, which is significantly higher than the market interest rate of 10%.

This suggests that the bond's rating has decreased because investors are not willing to pay the full face value for the bond and are, instead, requiring a higher yield to compensate them for the added default risk.

This means that, due to the higher risk of default, the bond issuer's credit rating has been downgraded, making the bond less attractive to potential investors. As a result, Art Levinsen Corporation must offer a higher yield if it wants to attract investors.

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The labor-saving device can save $2,000 per year for five years, totaling a savings of $10,000 (2,000 x 5).

It can be installed at a cost of $3,000. To evaluate this investment, we need to determine its rate of return. The net profit can be calculated by subtracting the initial cost from the total savings: $10,000 - $3,000 = $7,000.

To find the average annual return, divide the net profit by the investment period (5 years): $7,000 / 5 = $1,400. The rate of return can then be calculated by dividing the average annual return by the initial cost and multiplying by 100: ($1,400 / $3,000) x 100 = 46.67%.

Comparing this rate of return (46.67%) to the given options (12.36%, 10.36%, 10%, and 9.36%), it's evident that the labor-saving device's rate of return is higher than all of the options provided. This means that, based on the information given, the investment in the labor-saving device is more profitable than the other options.

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The RGM-7000 generates additional cash flows worth $2,257,199.09 in total.

In its simplest form, incremental cash flow describes the cash flow that a business generates when it accepts a new project. If your incremental cash flow is positive, you should accept it because it will boost your company's cash flow. That's a solid sign that a project is worthwhile to fund.

Depreciation plus tax rate equals depreciation tax shield.

Total cost / useful life equals $12,000,000 / 19 = $631,579.00 (depreciation).

Depreciation tax shield: $631, 579.00 multiplied by 0.29 is $183, 157.91

Annual net cash inflow = $2,257,199.09 - $3,170,000 - $729,643.00 - $183,157.91

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Assuming all else remains constant, if BGL Enterprises increases its operating efficiency by lowering costs while holding sales constant, price-earnings ratio will increase. Option A is correct.

The price-earnings (P/E) ratio is the market price per share of a company's stock divided by its earnings per share (EPS). If the company's operating efficiency improves by reducing costs while maintaining sales, its earnings will increase while the market price per share remains constant.

As a result, the EPS will increase, and the P/E ratio, which is calculated as the market price per share divided by EPS, will increase as well. This indicates that the stock is more attractive to investors, as they are willing to pay a higher price for each dollar of earnings.

Therefore, option A is correct.

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The GDP will eventually increase by $30.3 billion.

When the marginal propensity to save (MPS) is equal to 0.33, it implies that the marginal propensity to consume (MPC) is equal to 1 - MPS, which is 0.67. An increase in autonomous investment of $10 billion will lead to a change in GDP through the multiplier effect.

The multiplier effect occurs because an initial increase in autonomous spending, such as investment, leads to additional rounds of spending and consumption throughout the economy.

The size of the multiplier can be calculated using the formula:

Multiplier = 1 / (1 - MPC)

In this case, the multiplier would be:

Multiplier = 1 / (1 - 0.67) = 1 / 0.33 ≈ 3.03

Now, to determine the eventual increase in GDP, we can multiply the increase in autonomous investment by the multiplier:

GDP increase = Autonomous investment increase × Multiplier

GDP increase = $10 billion × 3.03 ≈ $30.3 billion

So, with a marginal propensity to save of 0.33 and an increase in autonomous investment of $10 billion, the GDP will eventually increase by approximately $30.3 billion. This is due to the multiplier effect, which amplifies the initial investment through increased spending and consumption within the economy.

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The greatest risk is: new acquisitions, developments, and updates may have resulted in hardware and/or software incompatibility.

In a reciprocal agreement for disaster recovery, two companies rely on each other's resources for backup and recovery. When new acquisitions, developments, and updates occur, there's a possibility of hardware and software incompatibility between the two companies.

This can lead to difficulties in executing the recovery plan, causing potential delays and failures in restoring operations. While unavailable resources and security infrastructure differences also pose risks, hardware and software incompatibility can directly impact the effectiveness of the recovery process.

Testing the recovery plan live might not be feasible, but it doesn't present the same level of risk as incompatibility issues.

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When policymakers are concerned about inflation, a countercyclical fiscal policy that would be appropriate to address this concern is contractionary fiscal policy. This type of policy involves decreasing government spending and/or increasing taxes, with the aim of reducing aggregate demand in the economy. By reducing aggregate demand, contractionary fiscal policy can help to address inflationary pressures by slowing down the economy and reducing price pressures.

Contractionary fiscal policy is considered counter cyclical because it is designed to counteract the natural economic cycle of expansion and contraction. During economic booms, inflationary pressures may arise due to an increase in aggregate demand, as consumers and businesses have more money to spend. Contractionary fiscal policy can help to address these pressures by reducing the amount of money available for spending and investment.

However, it is important to note that contractionary fiscal policy can have negative effects on the economy in the short term, as it can lead to decreased economic growth, higher unemployment, and reduced consumer and business confidence. Therefore, policymakers must carefully consider the potential risks and benefits of implementing contractionary fiscal policy to address inflationary pressures.

Another counter cyclical fiscal policy that may be used to address inflation is monetary policy. This involves manipulating the money supply and interest rates to influence borrowing and lending activity in the economy. For example, the central bank may increase interest rates to discourage borrowing and reduce the amount of money available for spending and investment, which can help to reduce inflationary pressures.

In conclusion, when policymakers are concerned about inflation, countercyclical fiscal policy can be an effective tool to address these concerns. Specifically, contractionary fiscal policy can help to reduce aggregate demand and mitigate the effects of inflation by decreasing government spending and/or increasing taxes. However, policymakers must carefully consider the potential risks and benefits of implementing such policies, as they can have negative effects on the economy in the short term. Monetary policy is another countercyclical fiscal policy that can be used to address inflation, by manipulating the money supply and interest rates.

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Origins is a creative agency that works with Occasions, a company that manufactures greeting cards. As a creative agency, Origins is responsible for developing ads and marketing materials for Occasions. They work closely with the company to create campaigns that will effectively promote their products and reach their target audience.

Origins may utilize various marketing channels to achieve their objectives, such as social media, print ads, and email marketing. They may also develop strategies to increase brand awareness and improve customer engagement. Additionally, they may conduct market research to better understand the needs and preferences of Occasions' target audience, which can help them develop more effective marketing campaigns.
Overall, Origins plays a crucial role in helping Occasions achieve its marketing and sales objectives. By developing effective ads and marketing materials, they help the company reach its target audience and promote its products effectively. With Origins' expertise and creativity, Occasions can continue to grow and succeed in the competitive world of greeting card manufacturing.

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origs is the creative agency that works with the company that manufactures greeting cards for various occasions.

Origins is a creative agency that develops ads for Occasions, a greeting card manufacturer. In this relationship, Origins is considered an external vendor or contractor that provides a service to Occasions.

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The targeted proportion of debt financing for this firm is 29.41%. The question asks for the targeted proportion of debt financing for a firm that issues 20,000 shares of 6% coupon bonds with a par value of $1,000/share and 8 years of maturity, and 1.6 million shares of equity issue with a current price of $30/share. The corporate tax rate is 25%.

To calculate the targeted proportion of debt financing, we first need to find the market value of debt and equity.

1. Market value of debt: 20,000 shares * $1,000/share = $20,000,000
2. Market value of equity: 1.6 million shares * $30/share = $48,000,000

Next, we calculate the total value of the firm by adding the market values of debt and equity:
Total value = $20,000,000 (debt) + $48,000,000 (equity) = $68,000,000

Now, we find the proportion of debt financing by dividing the market value of debt by the total value of the firm:
Proportion of debt financing = $20,000,000 / $68,000,000 = 0.2941, or 29.41%.

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Diversification of product line by a restaurant by selling frozen dinners in grocery stores under a different brand name.

This is an example of diversification, which is a business strategy where a company enters a new market or develops a new product to expand its business operations. In this case, the restaurant has diversified its product line by selling frozen dinners in grocery stores under a different brand name. By doing so, the restaurant has opened up a new revenue stream and expanded its customer base. This strategy can be beneficial for businesses as it allows them to reduce their dependence on a single product or market and provides an opportunity for growth. However, diversification can also be risky as it requires significant investment and can take time to generate returns. It is important for businesses to carefully assess the potential benefits and risks before implementing a diversification strategy.

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This means that to sell all of your output, you need to increase your price by 0.652%. If you were previously selling each unit for $10, for example, you would need to increase the price by 6.52 cents to sell all of your output at the new quantity level.

As a firm, you always want to maximize your profits and increase your output. However, increasing your output alone may not necessarily lead to an increase in profits. You also need to consider the impact of price on demand. In this scenario, you have adopted a technology that allows you to increase your output by 15%, and you want to know how to adjust your price to sell all of your output given an elasticity of demand of 23.

Elasticity of demand measures the responsiveness of demand to a change in price. A high elasticity of demand means that consumers are very sensitive to changes in price, while a low elasticity of demand means that consumers are less sensitive to changes in price. In this case, an elasticity of demand of 23 indicates that a 1% increase in price will result in a 23% decrease in quantity demanded.

To sell all of your output, you need to find the price that maximizes your revenue. Revenue is calculated as price multiplied by quantity, so to maximize revenue, you need to find the price that generates the highest total revenue.

Since you know that a 1% increase in price will result in a 23% decrease in quantity demanded, you can use this information to determine the price that maximizes revenue. Specifically, you need to find the price point at which a 15% increase in output is exactly offset by the decrease in quantity demanded due to a price increase. In other words, you need to find the price at which the increase in revenue from selling more units is exactly equal to the decrease in revenue from selling each unit at a higher price.

To calculate the optimal price, you can use the following formula:

Price elasticity of demand = (% change in quantity demanded) / (% change in price)

Rearranging the formula to solve for the change in price, you get:

% change in price = (% change in quantity demanded) / Price elasticity of demand

Plugging in the values, you get:

% change in price = 15% / 23

% change in price = 0.652%

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a. The new value of the portfolio is:

GoldFinger: 0.52 x 34,000 shares x $33/share = $591,200

Moosehead: 0.19 x 4,444.44 shares x $59/share = $495,377.78

Venture Associates: 0.29 x 200,000 shares x $11/share = $6,380,000

Total value of portfolio = $7,466,577.78

b. The portfolio earned a return of:

[(New Value - Original Value)/Original Value] x 100%

= [($7,466,577.78 - $400,000)/$400,000] x 100%

= 1766.64%

c. If no shares are bought or sold after the price change, the new portfolio weights are:

GoldFinger: (0.52 x $33 x 34,000) / ($33 x 34,000 + $59 x 4,444.44 + $11 x 200,000) = 0.0376 or 3.76%

Moosehead: (0.19 x $59 x 4,444.44) / ($33 x 34,000 + $59 x 4,444.44 + $11 x 200,000) = 0.0175 or 1.75%

Venture Associates: (0.29 x $11 x 200,000) / ($33 x 34,000 + $59 x 4,444.44 + $11 x 200,000) = 0.9449 or 94.49%

After the price change, the weight of GoldFinger decreased, Moosehead increased, and Venture Associates increased significantly due to its large price increase.

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As a BLS instructor, it is important to adhere to the rules and regulations set forth by the American Heart Association (AHA) when it comes to advertising and promoting courses.

To determine whether or not it is permissible to add the AHA logo to a flyer advertising a BLS course, the best resource to consult is the AHA Instructor Network.

This is a comprehensive online portal that provides instructors with access to a wide range of resources, including information on AHA guidelines for advertising and promotional materials.

Instructors can also use the Instructor Network to connect with other AHA instructors, access training materials, and stay up-to-date on the latest news and developments in the field of cardiopulmonary resuscitation (CPR) and emergency cardiac care.

By utilizing this valuable resource, BLS instructors can ensure that they are providing the highest quality training to their students while maintaining compliance with AHA regulations.

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The lender is only willing to lend $94,400 on this property.

The LTV or loan-to-value ratio is a critical factor in determining how much a lender is willing to lend on a property.

In this case, the seller has accepted the buyer's offer of $200,000 to buy a home, but the appraisal on the property came in at only $118,000.

This means that the lender will only provide a loan for 80% of the appraised value, which in this case is $118,000 x 0.80 = $94,400.

Therefore, the lender is only willing to lend $94,400 on this property.

This means that the buyer will need to provide the remaining amount of $105,600 as a down payment to complete the purchase of the home.

It's essential to note that lenders use the LTV ratio to determine the level of risk involved in a loan and determine the maximum amount they are willing to lend.

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The initial burden of proof in discrimination claims lies with the plaintiff or the A) defendant. It is the responsibility of the plaintiff to present evidence that shows they have been subjected to discrimination.

Once the plaintiff has presented a prima facie case, the burden of proof then shifts to the defendant to provide a legitimate, nondiscriminatory reason for their actions.

If the defendant is able to provide such a reason, the burden shifts back to the plaintiff to show that the reason given is merely a pretext for discrimination. The court and federal agency may assist in determining the validity of the evidence presented, but the burden of proof ultimately lies with the plaintiff.

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Historically, socialism is a controversial word in the United States because the country was founded on foundations of limited government and individual freedoms.

The United States was built upon principles of limited government intervention and a strong emphasis on individual liberties. Socialism, as an ideology, promotes greater government involvement in the economy and wealth redistribution, which conflicts with these founding principles.

Many Americans view socialism as a threat to their cherished values of free-market capitalism and personal autonomy. Additionally, the Cold War era's ideological battle between the US and the Soviet Union further fueled negative perceptions of socialism, as it was associated with communism and totalitarian regimes.

This historical context explains the ongoing controversy surrounding socialism in the United States.

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A Press release is a specialized document used to share relevant information with the news media.

A press release is a specialized record used to proportion relevant data with the information media. it's far normally written in a journalistic fashion and is aimed at producing media coverage for a selected corporation, organisation, or occasion.

Press releases can be used to announce a new services or products, a commercial enterprise merger or acquisition, a new partnership, or every other news-worth occasion. they may be regularly allotted to a huge variety of media shops, inclusive of newspapers, magazines, tv and radio stations, and online news web sites.

The purpose of a press release is to generate interest and exposure for the organization or organisation in query, and to speak key messages to the public in a clean and concise way.

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a). The specialized document used to share relevant information with the news media is a press release.

In order to announce anything noteworthy, a press release is a written statement sent to members of the news media. It is frequently used to disseminate information like a product launch, an occasion, or other business news. A headline, dateline, body text, and contact information are often included in press release writing. A press release's main objective is to grab journalists' attention and persuade them to publish a news article on the information being released. Email, wire services, social media, and other means can all be used to deliver press releases.

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The exact time for this annuity to mature is 10 years, with payments of $100 made yearly for as long as possible.

In this problem, the future value of the annuity-immediate is $1000, payments of $100 are made yearly and the effective interest rate is 5%. Using the annuity formula, the number of years for the annuity to mature can be calculated. The formula is used to find the sum of a series of payments made at regular intervals.

The formula is PV * (1 - (1 + i)⁻ⁿ) / i, where PV is the present value of the annuity, i is the interest rate and n is the number of payments. In this case, PV is $100, i is 5% and the future value is $1000. Solving for n gives us 10. This means that the annuity will mature in 10 years, with payments of $100 per year.

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The form of business organization that is established as a legal entity separate from its owners is the corporation, option (C) is correct.

Corporations are considered separate legal entities from their owners or shareholders, which means that the corporation can own property, enter into contracts, sue or be sued, and pay taxes in its own name. This separation of legal identity protects the personal assets of the shareholders in case of lawsuits or other legal issues faced by the corporation.

On the other hand, sole proprietorships and partnerships are not considered separate legal entities from their owners. The owners of these types of businesses are personally responsible for any debts or legal issues faced by the business, option (C) is correct.

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The complete question is :

Which form of business organization is established as a legal entity separate from its owners? multiple choice

A) sole proprietorship

B) partnership

C) corporation

D) none of these

The net present value of the proposed credit policy switch is $1,740.

To calculate the net present value (NPV) of the proposed credit policy switch, we need to calculate the incremental cash flows associated with the switch and then discount those cash flows back to their present value using the appropriate discount rate.

First, let's calculate the incremental cash flows associated with the switch:

Additional units sold per month = 8

Selling price per unit = $49

Variable cost per unit = $20

Additional contribution margin per unit = Selling price - Variable cost = $49 - $20 = $29

Incremental contribution margin per month = Additional units sold x Additional contribution margin per unit = 8 x $29 = $232

Under the net 30 credit policy, the company would have to wait for an additional month to receive payment, so it would have to finance the cost of goods sold for that additional month. Assuming an interest rate of 2.5% per month, the cost of financing the additional credit sales would be:

Financing cost per month = Cost of goods sold x Interest rate = 120 x $20 x 2.5% = $60

Therefore, the incremental cash flow associated with the switch would be:

Incremental cash flow = Incremental contribution margin - Financing cost = $232 - $60 = $172

Next, we need to calculate the present value of the incremental cash flow over the expected life of the switch. Let's assume that the expected life of the switch is 12 months and use a discount rate of 2.5% per month:

PV of incremental cash flow = $172 x [1 - (1 + 2.5%)^-12] / 2.5% = $1,740

Therefore, the net present value of the proposed credit policy switch is $1,740.

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The correct answer is  option C. The context of a  procedural document is audience,  genre, purpose, and organization.

Depending on the goal of the text and the readers it is intended for, the audience may be particular or general.

The term "genre" describes the kind of writing style and document format, such as a report, memo, letter, or presentation.

Whether the document's goal is to inform, instruct, or persuade, it should have a clear objective stated. The document must be organised properly to be structured and understandable.

Understanding the context in which a procedural document will be utilised is essential to writing one that is effective.

Complete Question:

Which words describe the context of a procedural document?

A. Audience, opinion, facts, and genre

B. Supervisor knowledge, peer knowledge, and customer knowledge

C. Purpose, audience, genre, and organization

D. How many pages are needed to communicate the process

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Auto transmissions is expected to pay annual dividends of $1.90 and $2.10 over the next two years, respectively. After that, the company expects to pay a constant dividend of $2.30 a share. The value of stock at a required return of 15 percent is "$38.83". The correct option is E.

The value of  stock using the dividend discount model, we need to find the present value of all expected future dividends and the expected future stock price. Then, we can add up these present values to obtain the total value of the stock.

Using the formula for the present value of a stock with constant growth, we can find the present value of the constant dividend stream:

P = D / (r - g)

where P is the price of the stock,

D is the expected dividend payment,

r is the required return,

and g is the expected constant growth rate.

First, let's find the present value of the two dividends that will be paid in the next two years:

PV(D1) = D1 / (1 + r)^1 = 1.90 / (1 + 0.15)^1 = 1.65

PV(D2) = D2 / (1 + r)^2 = 2.10 / (1 + 0.15)^2 = 1.63

Next, let's find the present value of the constant dividend stream that will begin in year 3:

PV(D3) = D3 / (r - g) = 2.30 / (0.15 - 0.04) = 18.33

Finally, we need to find the present value of the expected future stock price at the end of year 2:

PV(P2) = P2 / (1 + r)^2

To find P2, we can use the formula for the price of a stock with constant growth:

P2 = D3 / (r - g) = 2.30 / (0.15 - 0.04) = 23.00

Substituting the values, we get:

PV(P2) = 23.00 / (1 + 0.15)^2 = 17.14

Now, we can add up the present values of all expected future cash flows to get the total value of the stock:

P = PV(D1) + PV(D2) + PV(D3) + PV(P2)

P = 1.65 + 1.63 + 18.33 + 17.14 = 38.75

Therefore, the value of the stock is $38.75 at a required return of 15 percent. Among the given options, the closest match to this value is $38.83, so the answer is (E) $38.83.

The question's option is incorrect, the correct question is:

Auto transmissions is expected to pay annual dividends of $1.90 and $2.10 over the next two years, respectively. after that, the company expects to pay a constant dividend of $2.30 a share. What is the value of this stock at a required return of 15 percent? group of answer choices

a. $13.67

b. $14.21

c. $15.60

d. $15.08

e. $38.83.

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Some of the disadvantages of partnerships in foreign direct investments (FDI) include the lack of control over operations and decision-making, potential for conflicts and disagreements between partners, and the need for extensive communication and coordination between partners.

Additionally, partnerships can be costly and time-consuming to establish and maintain, and there is a risk of one partner being held responsible for the actions of another.

Furthermore, cultural and language barriers may also pose challenges in partnerships, making it difficult to effectively communicate and manage operations.

Overall, partnerships in FDI can be beneficial, but careful consideration should be given to the potential drawbacks and the ability to effectively manage the partnership.

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C. $21.92.

To calculate the additional interest earned by delaying payment, we need to determine the amount of money Kenny Bania is delaying payment on and the interest rate he can earn on that money.

Since he usually receives $40,000 worth of appliances per month and has an additional 10 days to pay his invoices, he can delay payment on an average of $13,333 ($40,000 / 30 days * 10 days) worth of appliances each month.

If he can earn 2% interest on that money, he will earn an additional $21.92 ($13,333 * 0.02 / 12 months) per month.

Therefore, the additional interest earned by delaying payment is $21.92.

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Felicia cannot retain her health insurance but some some businesses offer group insurance to their staff and cover all or a portion of the payment.

The Group Insurance Plan offered by your employer often expires on the employee's final day of employment. Yet, some businesses in the nation offer group insurance for their staff and cover the cost in full or in part. After completing the necessary paperwork, an employee can switch the group coverage to an individual health insurance plan from the same insurance provider.

Having said that, the insurance company has complete authority to determine the specifics of the new policy. Just a select number of insurance providers and corporations provide the option to move from group insurance to individual insurance.

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The company's expected total cash receipts in August is $45,920.. So, the correct answer is A.

Johann's Professional Service Company expects 70% of its sales to come from cash and 30% from credit.

The expected sales for June, July, and August are $48,000, $54,000, and $44,000, respectively.

In August, the cash sales will be 70% of $44,000, which equals $30,800.

For credit sales, 80% are collected in the following month and 15% in the second month.

So, in August, the company will collect:

- 80% of July's credit sales (30% of $54,000):

0.8 x (0.3 x $54,000) = $12,960 - 15% of June's credit sales (30% of $48,000): 0.15 x (0.3 x $48,000) = $2,160

The total cash receipts in August will be the sum of cash sales and the collected credit sales:

$30,800 (cash sales) + $12,960 (July's credit) + $2,160 (June's credit) = $45,920

The correct answer is A. $45,920.

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As we add securities of other companies to our portfolio, the type of risk that declines is unsystematic risk.

This is because by diversifying our investment across multiple companies, we reduce the risk associated with any one particular company's performance. However, non-diversifiable risk, market risk, and systematic risk are not impacted by diversification. Non-diversifiable risk refers to risks that affect the overall market, such as economic downturns or geopolitical events. Market risk refers to the risk of overall market fluctuations impacting the value of our investments. Systematic risk refers to risks inherent in the specific industry or sector in which the companies we are investing in operate.

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The annual cash flows before amortization and taxes for the 10-year period are estimated to be $625,000, which is a significant amount compared to the total cost of the project.

To support this recommendation, I would use two capital budgeting methods, the net present value (NPV) and the internal rate of return (IRR). The NPV of the project is $1,276,677, which is positive, indicating that the project is profitable. The IRR is 22.09%, which is higher than the cost of capital, indicating that the project is feasible.

Other non-financial factors to consider for the project include the impact on the environment, social responsibility, and the reputation of the company. Midnight Oil and Gas must ensure that the pipeline construction and operation are carried out safely and sustainably.

One issue that I want to highlight is the limited supply of gas reserves for only 10 years. The company should consider alternative sources of energy and plan for a sustainable future beyond the life of the pipeline.

Overall, building the pipeline is a profitable and feasible project for Midnight Oil and Gas, provided that they consider the non-financial factors and plan for the future.

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Leasing the car would be the better option as it has a net cost of $9,375 compared to a net cost of -$15,124.64.

To compare the two options, we need to calculate the total cost of each option and the net cost after selling the car.

Option 1: Lease the car

Total cost of lease = $97 + ($497 x 24) = $12,625

Net cost after selling the car = $22,000 - $12,625 = $9,375

Option 2: Purchase the car with a two-year loan

Monthly payment = $34,000 / [((1+0.06/12)^24) x (0.06/12)] = $1,546.86

Total cost of loan = $1,546.86 x 24 = $37,124.64

Net cost after selling the car = $22,000 - $37,124.64 = -$15,124.64

Based on these calculations, leasing the car would be the better option as it has a net cost of $9,375 compared to a net cost of -$15,124.64 for purchasing the car with a two-year loan.

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