The total payment amount at t = 4 would be $17,055, rounded to the nearest dollar.
To calculate the total payment amount at t = 4, we can use the present value formula for an annuity:
PV = C[(1 - (1 + r)^-n) / r]
where PV is the present value of the annuity, C is the annual payment amount, r is the interest rate per period, and n is the number of periods. We can use this formula to solve for the present value of the remaining loan balance at t = 4, and then add it to the previous payments to get the total payment amount.
Plugging in the given values, we get:
PV = 6000[(1 - (1 + 0.05)^-4) / 0.05] + 2000[(1 - (1 + 0.05)^-3) / 0.05] + 2000[(1 - (1 + 0.05)^-2) / 0.05] + x
where x is the present value of the remaining loan balance at t = 4. Solving for x, we get:
x = PV - 27000
x = 13960.96
Rounding to the nearest dollar, the total payment amount at t = 4 is $17,055.
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Hahn Manufacturing is expected to pay a dividend of $1.00 per share at the end of this year. The stock currently sells for $45 per share, and its required rate of return is 11%. The dividend is expect to grow at a constant rate, g, forever. What is Hahn's expected growth rate?
a. 8.50%
b. 9.50%
c.10.00%
d. 8.00%
e.9.00%
Hahn's expected growth rate (g) is (b) 9.50%. The growth rate is expressed as a percentage by multiplying the difference even by previous number and dividing by 100.
What do you mean by expected growth rate?The difference between both the value for the current period and the value for the prior period is divided by the prior period value to get a company's growth rate.
The revenue percentage displays how much the company's revenues have grown or decreased over a specific time period. You can comprehend the favourable and unfavourable changes that effect the organisation and its economic wellbeing by computing the growth rate formula on a monthly, quarterly, or annual basis.
Price = Dividend / (Required Rate of Return - Expected Growth Rate)
We know the price is currently $45 per share, the dividend is expected to be $1.00 per share, and the required rate of return is 11%. Plugging in these values, we get:
$45 = $1 / (0.11 - g)
Simplifying this equation, we get:
g = 0.095, or 9.5%
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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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NPV and IRR Each of the following scenarios is independent. All cash flows are after-tax cash flows. The present value tables provided in Exhibit 198.1 and Exhibit 19B.2 must be used to solve the following problems. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be $830,000 per year. The system costs $4,488,000 and will last ten years. Compute the NPV assuming a discount rate of 12 percent. $ Should the company buy the new system? Yes ✓ 2. Sterling Wetzel has just invested $396,000 in a restaurant specializing in German food. He expects to receive $53,804 per year for the next ten years. His cost of capital is 5.40 percent. Compute the internal rate of return. Round your answers to whole percentage value (for example, 16% should be entered as "16" in the answer box). % Did Sterling make a good decision? (Yes х
The internal rate of return is approximately 5%. Since the IRR is close to Sterling's cost of capital (5.40%), the decision to invest in the restaurant is marginally good.
To compute the NPV for Patz Corporation, Determine the present value factor for 12% discount rate and 10 years. Using the present value table, the factor is 5.650. Calculate the present value of cash benefits: $830,000 x 5.650 = $4,689,500. Subtract the initial cost: $4,689,500 - $4,488,000 = $201,500. The NPV is $201,500. Since the NPV is positive, the company should buy the new system.
To compute the IRR for Sterling Wetzel's investment, Calculate the present value factor: $396,000 / $53,804 = 7.36. Find the corresponding interest rate for the 10-year period. Using the present value table, the closest factor to 7.36 is 7.360 for a 5% discount rate. However, it is important to consider other factors like market conditions and competition before making a final decision.
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Trower Corp. has a debt-equity ratio of.85. The company is considering a new plant that will cost $114 million to build. When the company issues new equity, it incurs a flotation cost of 8.4 percent. The flotation cost on new debt is 3.9 percent. What is the initial cost of the plant if the company raises all equity externally? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Initial cash flow $ 121,707,014 What is the initial cost of the plant if the company typically uses 65 percent retained earnings? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Initial cash flow $ 117,989,314 What is the initi cost of the plant if the company typically uses 100 percent retained earnings? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Initial cash flow $ 116,080,029
The initial cost of the plant if the company raises all equity externally is $121,707,014.
The initial cost of the plant if the company typically uses 65 percent retained earnings is $117,989,314.
The initial cost of the plant if the company typically uses 100 percent retained earnings is $116,080,029.
To calculate the initial cost of the plant if the company raises all equity externally, we can use the formula:
Initial cost = [tex]\frac{\text{Cost of new plant}}{1 - \text{Flotation cost on new equity}}[/tex]
Cost of new plant = $114 million
Flotation cost on new equity = 8.4% = 0.084
Therefore, Initial cost = [tex]$\frac{114\text{ million}}{1-0.084}$[/tex]
Initial cost = $121,707,014
To calculate the initial cost of the plant if the company typically uses 65 percent retained earnings, we need to calculate the proportion of equity and debt used to finance the plant. Assuming the remaining 35% of the cost is financed with debt, we can use the debt-equity ratio to calculate the proportion of debt and equity:
Debt proportion =[tex]\frac{\text{Debt}}{\text{Debt} + \text{Equity}}[/tex] = 0.85
Equity proportion = 1 - Debt proportion = 0.15
We also need to adjust for the flotation costs of issuing new equity and debt:
Equity cost = [tex]\frac{\text{Cost of new equity}}{1 - \text{Flotation cost on new equity}}[/tex]
Equity cost = $114 million x [tex]\frac{0.15}{1-0.084}[/tex]
Equity cost = $22,919,620
Debt cost = [tex]\frac{\text{Cost of new debt}}{(1 - \text{Flotation cost on new debt})}[/tex]
Debt cost = $114 million x [tex]\frac{0.35}{1 - 0.039}[/tex]
Debt cost = $46,201,694
Therefore, the initial cost of the plant is:
Initial cost = Cost of new plant + Equity cost + Debt cost
Initial cost = $114 million + $22,919,620 + $46,201,694
Initial cost = $117,989,314
To calculate the initial cost of the plant if the company typically uses 100 percent retained earnings, we can simply use the cost of the new plant and adjust for the flotation cost of issuing new equity:
Initial cost = [tex]\frac{\text{Cost of new plant}}{1-\text{Flotation cost on new equity}}[/tex]
Initial cost = [tex]$\dfrac{114 \text{ million}}{1-0.084}$[/tex]
Initial cost = $116,080,029.
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The liquidity of secondary markets is NOT demonstrated by:
the daily turnover
the sale of securities by issuers at an acceptable price
the size of the bid-ask spread
the degree of price resilience.
An
The liquidity of secondary markets is NOT demonstrated by the sale of securities by issuers at an acceptable price. The correct option is the sale of securities by issuers at an acceptable price.
Secondary markets provide a platform for trading securities that have already been issued, facilitating liquidity by allowing investors to buy and sell securities easily.
The daily turnover, which refers to the number of securities traded within a day, demonstrates liquidity because it indicates the ease with which investors can buy or sell assets.
The size of the bid-ask spread also reflects liquidity, as a narrower spread means that buyers and sellers are in closer agreement on the value of the security, which often leads to a higher trading volume.
Lastly, the degree of price resilience refers to the ability of the market to quickly return to its original price level after a significant trade. This is also an indicator of liquidity, as it implies that there is sufficient trading activity to absorb large orders without causing a significant disruption in prices.
In summary, the sale of securities by issuers at an acceptable price does not demonstrate the liquidity of secondary markets, as it relates to the primary market, where securities are initially issued. The other factors mentioned, such as daily turnover, bid-ask spread, and price resilience, are better indicators of liquidity in secondary markets.
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When computing the expected return on a portfolio of stocks the portfolio weights are based on the:
number of shares owned in each stock.
price per share of each stock.
market value of the total shares held in each stock.
original amount invested in each stock.
cost per share of each stock held.
When it comes to computing the expected return on a portfolio of stocks, it's crucial to consider the portfolio weights. Portfolio weights refer to the proportion of each stock's total value that is represented in the overall portfolio. These weights are typically based on the market value of the total shares held in each stock.
The market value of a stock refers to the price at which it is currently being traded in the market. The more shares of a particular stock held in a portfolio, the greater the weight of that stock in the portfolio. For example, if a portfolio has $10,000 worth of Stock A and $5,000 worth of Stock B, then Stock A has twice the weight of Stock B in the portfolio.
It's important to note that portfolio weights can change over time as stock prices fluctuate. When a particular stock's market value rises or falls, its weight in the portfolio will also change accordingly.
Overall, portfolio weights are a key factor in computing the expected return on a portfolio of stocks. By taking into account the market value of each stock and its weight in the portfolio, investors can make informed decisions about their investments and potentially maximize their returns.
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Receivables are normally reported on the balance sheet at net realizable value. In contrast, payables are carried at face value.
Which accounting principle requires this treatment of payables?
A. Materiality concept.
B. Going concern assumption.
C. Monetary unit assumption.
D. Matching concept.
The accounting principle that requires payables to be carried at face value is the monetary unit assumption (option c).
Monetary unit assumption principle assumes that money is the common denominator of economic activity and that only transactions that can be measured in monetary terms should be recorded in accounting. Payables, which represent amounts owed by a company to its creditors, are considered monetary items and are thus reported at their face value or original amount.
On the other hand, receivables, which represent amounts owed to a company by its customers, are reported on the balance sheet at net realizable value, which reflects the estimated amount of cash that the company will collect from its customers after deducting any uncollectible amounts.
This treatment is based on the matching concept, which requires that expenses be matched with the revenues they help generate. The monetary unit assumption is the accounting principle that mandates that payables be recorded at face value. Therefore, option C Monetary unit assumption is correct.
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Jarett & Sons' common stock currently trades at $31.00 a share. It is expected to pay an annual dividend of $1.25 a share at the end of the year (D1 = $1.25), and the constant growth rate is 6% a year.
What is the company's cost of common equity if all of its equity comes from retained earnings? Do not round intermediate calculations. Round your answer to two decimal places.
%
If the company issued new stock, it would incur an 8% flotation cost. What would be the cost of equity from new stock? Do not round intermediate calculations. Round your answer to two decimal places.
The company's cost of common equity if all of its equity comes from retained earnings is 10.19%. The cost of equity from new stock is 12.85%.
The formula for the cost of common equity using the dividend growth model is:
Cost of common equity = (D1 / P0) + g
Where:
D1 = expected dividend per share
P0 = current stock price
g = constant growth rate
In the given case, D1 = $1.25 a share, P0 = $31.00 a share, and g = 6% = 0.06
Substituting the given values, we get:
Cost of common equity = ($1.25 / $31.00) + 0.06
Cost of common equity = 0.1019 or 10.19%
Therefore, the company's cost of common equity is 10.19%.
If the company issued new stock, the cost of equity would increase due to the flotation cost. The formula for the cost of equity with flotation cost is:
Cost of equity = [(D1 / (P0 x (1 - F))) + g] + (F x (D1 / P0))
Where:
F = flotation cost as a decimal
In the given case, F = 8% or 0.08.
Substituting the given values, we get:
Cost of equity = [($1.25 / ($31.00 x (1 - 0.08))) + 0.06] + (0.08 x ($1.25 / $31.00))
Cost of equity = 0.1285 or 12.85%
Therefore, the company' new cost of common equity is 12.85%
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if a caterer has an overhead of $350,000 per year and knows that they will perform 275 catering jobs this year, how much do they need to charge per event in order to cover these costs?
To ensure that the catering business can cover its overhead costs of $350,000 per year and manage 275 catering jobs, they would have to charge a minimum of $1,273.64 per event.
This calculation can be derived by dividing the total overhead expenses by the number of events that the caterer plans to cater for, which gives us $1,273.64 per event as the minimum charge required.
This can be achieved by dividing the total overhead by the number of events:
$350,000 ÷ 275 = $1,273.64 per event.
In summary, the caterer has to charge at least $1,273.64 per event to break even and cover their overhead costs.
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when consumers are unhappy with a product, they may boycott the product and/or store and express dissatisfaction to friends. this is called a
When consumers are unhappy with a product, they boycott the product and/or store and express dissatisfaction to friends. This is called private response. The correct answer is A.
When consumers are unhappy with a product and express their dissatisfaction to friends or family, or choose to boycott the product or store, it is considered a private response.
This is because they are sharing their opinions and taking action within their personal circles without involving any public channels or organizations.
Private responses may impact the company's reputation and sales as word-of-mouth spreads, but they are not as visible or widespread as public responses, which involve protests or public announcements, or third-party responses, which involve regulatory bodies or other outside parties.
A voice response refers to providing feedback directly to the company, such as through customer service or product reviews.
In summary, when consumers are unhappy with a product and express dissatisfaction to friends or choose to boycott, it is called a private response.
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Complete question:
When consumers are unhappy with a product, they boycott the product and/or store and express dissatisfaction to friends. This is called ________ response.
A) private
B) third-party
C) voice
D) public
If a credit card pays 5% interest compounded quarterly, what is the effective annual interest rate? a. 6% b.5% c.5.4% O d. 5.09%
The effective annual interest rate is the interest rate that is earned on an investment over a year when the interest is compounded more than once a year. In this case, credit card pays 5% interest compounded quarterly. Effective annual interest rate is 5.09%, Correct answer is option D
To calculate the effective annual interest rate, we need to use the formula: Effective annual interest rate = (1 + (nominal interest rate / number of compounding periods)).number of compounding periods - 1. In this case, the nominal interest rate is 5% and the number of compounding periods is 4 (since interest is compounded quarterly). So, we can plug these values into the formula:
Effective annual interest rate =[tex](1 + (0.05 / 4))^4 - 1[/tex]. Simplifying this expression gives us: Effective annual interest rate = 1.0509 - 1, Effective annual interest rate = 0.0509 or 5.09%
This means that if you invest $1000 on this credit card, you will earn 5.09% interest on it in a year. It's important to note that the effective annual interest rate takes into account the effect of compounding, which means that the interest you earn will be reinvested and earn interest itself. Therefore, the answer is option d.
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The bailiff keeps order in the courtroom, calls the witnesses and is in charge of the jury, as directed by the judge. It is the bailiff's duty to be certain no one attempts to influence the jury. the judge's rulings on those objections.
The bailiff is responsible for maintaining courtroom decorum, summoning witnesses, and overseeing the jury under the guidance of the judge.
The bailiff also ensures that no one tries to influence the jury and reports any such attempts to the judge, who makes the final decision on such objections. The bailiff's role is essential in the functioning of the court system, as they serve as a link between the judge, the jury, and the witnesses.
Their presence helps to maintain order and ensure that the court proceedings are conducted in a fair and impartial manner. By enforcing the rules of the court and monitoring the behavior of those present, the bailiff plays a vital role in upholding the integrity of the justice system.
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describe situations in which data might be a source for sustainable competitive advantage. when might data not yield sustainable advantage?
Data can be a valuable source for sustainable competitive advantage in many situations.
For example, a company may use customer data to personalize its marketing and improve its product offerings, leading to increased customer loyalty and retention. Additionally, a company may use data to optimize its supply chain, resulting in lower costs and higher efficiency. However, there are situations where data may not yield sustainable advantage. For example, if a company's competitors also have access to the same data, then the advantage gained may be temporary. Additionally, if a company relies solely on data without considering other factors such as innovation and creativity, it may not be able to maintain its advantage in the long term. Therefore, it is important for companies to continuously innovate and adapt to changing market conditions in order to maintain a sustainable competitive advantage.
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The following two payment options each has a present value of X. (i) 140 at the end of each year, forever, with the first payment due at t = 1. (ii) A payment of 1971.24 at t = 10, followed by 140 at the end of each year, forever, with the first payment of 140 due at t = 11. Find X. a. 1.740.54 b. 1.854.05 c. 1.778.38 d. 1.891.89 e. 1.816.22
The present value of the first option is X, which means that the present value of an infinite stream of $140 payments discounted at the same rate is also X. Therefore, X = 140/0.12 = 1166.67.
To calculate the present value of the second option, we need to discount the $1971.24 payment back to time t=0 using the 12% discount rate for 10 years, which gives us a present value of $535.68. Then we need to calculate the present value of the infinite stream of $140 payments starting at t=11, which is X/(1+0.12)^10. Therefore, X/(1+0.12)^10 + $535.68 = X. Solving for X, we get X = $1740.54.
Therefore, the answer is (a) $1,740.54.
The first option is an infinite stream of $140 payments, and the second option is a payment of $1971.24 followed by an infinite stream of $140 payments. We can use the present value formula to calculate the present value of each option, set them equal to X, and solve for X.
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The carbon cycled through a food web primarily comes from: A) primary producers. B) consumers. C) decomposers.
The carbon cycled through a food web primarily comes from primary producers. The correct option is A.
Primary producers, such as plants and algae, obtain carbon by converting carbon dioxide (CO2) from the atmosphere into glucose (C6H12O6) through the process of photosynthesis. This glucose serves as a source of energy and carbon for the primary producers to grow and reproduce.
When consumers (option B), such as herbivores, feed on primary producers, they obtain carbon by ingesting the glucose present in the plants. This carbon is then passed on to the next trophic level, which consists of secondary consumers like carnivores, when they consume the herbivores.
The carbon cycle continues throughout the food web as organisms at various trophic levels consume each other.
Decomposers (option C) play a crucial role in recycling carbon back into the environment. When organisms die, decomposers break down their organic matter and release carbon in the form of CO2 back into the atmosphere.
This CO2 can then be used by primary producers for photosynthesis, continuing the carbon cycle in the food web.
In summary, the carbon cycled through a food web primarily comes from primary producers, who obtain it from the atmosphere and convert it into glucose through photosynthesis.
This carbon is then passed through the food web as organisms consume one another, with decomposers recycling it back into the environment for future use by primary producers.
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Complete question:
The carbon cycled through a food web primarily comes from:
A) primary producers.
B) consumers.
C) decomposers.
why was electricity the most important power source for the second industrial revolution? group of answer choices electrical power generation plants were pollution-free. britain was rich in coal, so it did not have to rely on foreign supplies to power its factories. some new industries, such as the iron industry, were dependent solely on electricity. factories could be located near concentrations of workers and production costs were lower
The most important power source for the second industrial revolution was electricity because "factories could be located near concentrations of workers, and production costs were lower" (Option d).
With the availability of electricity, factories no longer needed to be located near rivers or coalfields for power. Instead, they could be built in urban areas closer to a concentration of workers, which made it easier to recruit and manage employees. Additionally, electrical power could be transmitted over longer distances, allowing factories to be located farther away from raw materials and closer to markets.
Furthermore, the use of electricity in manufacturing processes improved efficiency and productivity, as machines could be powered continuously and uniformly, leading to greater output and reduced costs. This was particularly important in new industries such as the iron industry, where electricity was the only viable power source for certain manufacturing processes.
Finally, the development of electrical power generation plants meant that businesses could rely on a more consistent and reliable source of power compared to earlier methods such as steam engines. This allowed for smoother production processes and fewer interruptions due to power outages.
Overall, the widespread adoption of electricity in the second industrial revolution was a significant factor in the growth and success of manufacturing industries during that time.
Option d is answer.
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1. Suppose that US dollar (USD) has a continuously compounded interest rate of 1% per annum and Australian dollar (AUD) has a continuously compounded interest rate of 3% per annum. The spot exchange rate is 0.98 USD per AUD. (a) Show that the no-arbitrage 2-year forward rate is 0.9416 USD per AUD. (b) Suppose that the 2-year forward rate is 0.93 USD per AUD in the market.
First, let's define the terms "interest" and "compounded." Interest refers to the amount of money that is earned or paid on an investment or loan, usually expressed as a percentage of the principal amount. Compounded means that the interest earned on an investment is added to the principal, and the interest for the next period is calculated based on the new, higher principal amount.
Now, let's look at the problem:
(a) To calculate the no-arbitrage 2-year forward rate, we can use the formula:
Forward rate = Spot rate x (1 + domestic interest rate) / (1 + foreign interest rate)
In this case, the domestic currency is USD and the foreign currency is AUD. So, using the given interest rates and spot rate:
Forward rate = 0.98 x (1 + 0.01) ^ 2 / (1 + 0.03) ^ 2
Forward rate = 0.9416 USD per AUD
Therefore, the no-arbitrage 2-year forward rate is 0.9416 USD per AUD.
(b) If the market forward rate is 0.93 USD per AUD, then there is an opportunity for arbitrage. We can buy AUD at the spot rate of 0.98 USD per AUD, invest it in Australia for two years at 3% interest, and then sell it in the forward market at 0.93 USD per AUD. This would give us a profit of:
Profit = Principal x (1 + foreign interest rate) ^ 2 x (forward rate - spot rate)
Profit = 1 USD x (1 + 0.03) ^ 2 x (0.93 - 0.98)
Profit = 0.0457 USD
Therefore, there is an arbitrage opportunity and the market is not in equilibrium. Traders would take advantage of this opportunity by buying AUD, investing it in Australia, and selling it in the forward market to make a profit.
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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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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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the "standard consumer package" of the 1950s included a car, house, and television. (True or False)
False. While it is true that the car, house, and television were all popular consumer goods in the 1950s, they were not typically sold as a package or bundle. The idea of a "standard consumer package" including these items is a myth or exaggeration.
During the 1950s, owning a car became more common and accessible to middle-class families, as the post-war economic boom led to increased prosperity and a growing automobile industry.
Similarly, the rise of suburbanization and the Baby Boom led to a housing boom, as families sought out new homes in the suburbs.
Television also became increasingly popular during this time, as more households acquired sets and programming expanded.
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False. While it is true that the car, house, and television were all popular consumer goods in the 1950s, they were not typically sold as a package or bundle. The idea of a "standard consumer package" .
including these items is a myth or exaggeration. During the 1950s, owning a car became more common and accessible to middle-class families, as the post-war economic boom led to increased prosperity and a growing automobile industry. Similarly, the rise of suburbanization and the Baby Boom led to a housing boom, as families sought out new homes in the suburbs. Television also became increasingly popular during this time, as more households acquired sets and programming expanded.
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which of the following are components of the unity-of-command perspective on ceo duality? (check all that apply.) multiple select question. a ceo has a clear focus on both objectives and operations. confusion and conflict between the ceo and chairman is increased. confusion and conflict between the ceo and chairman is eliminated. a ceo can act more efficiently and effectively when holding both positions.
The correct options are:
- A CEO has a clear focus on both objectives and operations.
- A CEO can act more efficiently and effectively when holding both positions.
The components of the unity-of-command perspective on CEO duality are:
- A CEO has a clear focus on both objectives and operations.
- A CEO can act more efficiently and effectively when holding both positions. Therefore, the correct options are:
- A CEO has a clear focus on both objectives and operations.
- A CEO can act more efficiently and effectively when holding both positions.
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A collection of smaller budgets that leads to pro-forma financial statements is referred to as the ____A. overall budget.B. summary budget.C. pro-forma budget.D. master budget.
A collection of smaller budgets that leads to pro-forma financial statements is referred to as the D. master budget.
A master budget is a company's valuable monetary making plans document. It normally covers a complete financial yr and consists of “lower-stage” budgets — like a income price range and a hard work price range — coins glide forecasts, monetary statements, and a monetary plan. The fundamental additives of a grasp price range encompass earnings and expenses, overhead and manufacturing costs, and the monthly, annual, common and projection totals. A master budget consists of all the lower-stage budgets inside an organization. It offers a organization a large evaluate of its budget and is regularly used as a valuable making plans tool. A strategic plan commonly bureaucracy the premise for an organization's numerous budgets, which all come collectively withinside the master budget.
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A collection of smaller budgets that leads to pro-forma financial statements is referred to as the master budget.
The correct answer is D. master budget.
A master budget is a comprehensive plan that includes all of the smaller budgets for each department or area of an organization. These smaller budgets may include sales, production, marketing, and administrative budgets, among others. The master budget is typically created on an annual basis and serves as a roadmap for the organization's financial activities for the upcoming year.Once the individual budgets are compiled and reviewed, they are consolidated into the master budget, which includes pro-forma financial statements such as a projected income statement, balance sheet, and cash flow statement.
These pro-forma financial statements provide a forecast of the company's financial performance and position for the upcoming year, based on the assumptions and projections used in the individual departmental budgets.The master budget is an important tool for management to use in planning and decision-making, as it provides a comprehensive view of the organization's financial position and performance.
It is also useful in tracking actual financial results against the budgeted amounts, allowing management to identify any areas where corrective action may be necessary. Overall, the master budget serves as a critical component of an organization's financial planning and control processes. The correct answer is D. master budget.
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in what way can audit procedures be modified to address assessed fraud risks?
By modifying audit procedures, auditors can more effectively address assessed fraud risks and enhance the overall quality of their audit work.
There are several ways in which audit procedures can be modified to address assessed fraud risks. Here are a few examples:
1. Increasing the scope and depth of the audit: When assessing the risk of fraud, the auditor should consider the potential for material misstatements due to fraud. Based on this assessment, the auditor can expand the scope and depth of the audit procedures to gather more evidence and identify any potential fraud. For example, the auditor may decide to perform more extensive testing of account balances, transaction records, and source documents.
2. Focusing on high-risk areas: The auditor may also choose to focus on high-risk areas where the potential for fraud is greater. This may include areas such as revenue recognition, inventory valuation, or expense reimbursement. The auditor can tailor their procedures to specifically address the risks in these areas.
3. Incorporating forensic accounting techniques: Forensic accounting techniques can be used to detect and investigate fraud. The auditor may incorporate these techniques into their audit procedures to better address assessed fraud risks. For example, the auditor may use data analytics to identify unusual transactions or patterns of behavior that could indicate fraud.
4. Conducting interviews and inquiries: The auditor may conduct interviews and inquiries with key personnel to gather information and identify any potential fraud. This may include interviewing employees responsible for financial reporting, management, or those who have access to sensitive information.
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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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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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RJS generated $65,000 net income this year. The firm's financial statements also show that it interest expense was $40,000, its marginal tax rate was 35%, and its invested capital was $800,000. If its average cost of funds is 12%, what was RJS's economic value added (EVA) this year?
To calculate RJS's economic value added (EVA) for the year, we need to use the following formula:
EVA = Net Operating Profit After Tax (NOPAT) - (Weighted Average Cost of Capital (WACC) x Invested Capital)
First, let's calculate NOPAT. We know that RJS's net income for the year was $65,000 and its marginal tax rate was 35%. Therefore:
NOPAT = Net Income x (1 - Marginal Tax Rate)
NOPAT = $65,000 x (1 - 0.35)
NOPAT = $42,250
Next, let's calculate the WACC. We know that RJS's average cost of funds is 12%. To calculate the WACC, we need to take into account the cost of debt and the cost of equity. We know the cost of debt, which is the interest expense of $40,000. To calculate the cost of equity, we can use the Capital Asset Pricing Model (CAPM) formula:
Cost of Equity = Risk-Free Rate + Beta x (Expected Market Return - Risk-Free Rate)
Assuming a risk-free rate of 2%, a beta of 1.5, and an expected market return of 10%, the cost of equity would be:
Cost of Equity = 2% + 1.5 x (10% - 2%)
Cost of Equity = 2% + 1.5 x 8%
Cost of Equity = 14%
Now we can calculate the WACC:
WACC = (Cost of Debt x (1 - Marginal Tax Rate) x Debt/Total Capital) + (Cost of Equity x Equity/Total Capital)
WACC = (12% x (1 - 0.35) x 40%/80%) + (14% x 60%/80%)
WACC = 4.68% + 10.5%
WACC = 15.18%
Finally, we can calculate the EVA:
EVA = NOPAT - (WACC x Invested Capital)
EVA = $42,250 - (15.18% x $800,000)
EVA = $42,250 - $121,440
EVA = -$79,190
The negative EVA indicates that RJS did not generate enough returns to cover its cost of capital. This means that the company's investments are not generating value for its shareholders. To increase EVA, RJS would need to improve its profitability or reduce its cost of capital.
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I need answer for this question. It's urgentplease.The following table presents closing prices of June 2022 CHF futures contract for three days in March 2022. Each contract requires the delivery of CHF 125,000. The initial and maintenance margin per c ontract are $2,500, and $2,000, respectively. Date 3/01 3/02 3/03 h June 2022 CHF Futures $0.5350 $0.5375 $0.5315 Contract Based on prices during the three-day period, which one of the following statements is true. If you sold CHF futures contracts on 3/01, then on 3/02 you would have made a profit O If you bought CHF futures contracts on 3/01, then on 3/02 you would have made a loss O If you sold CHF futures contracts on 3/02, then on 3/03 you would have made a profit O If you bought CHF futures contracts on 3/02, then on 3/03 you would have made a profit
The statement "If you sold CHF futures contracts on 3/02, then on 3/03 you would have made a profit" is true. The correct option is C.
To determine the profit or loss on a futures contract, we need to calculate the difference between the purchase price and the selling price of the contract.
On 3/02, the closing price of the June 2022 CHF futures contract was $0.5375. If you sold one contract, you would have sold it for $0.5375 × CHF 125,000 = $67,188.
On 3/03, the closing price of the June 2022 CHF futures contract was $0.5315. If you bought back the contract you sold on 3/02, you would have bought it for $0.5315 × CHF 125,000 = $66,438. The profit would be $67,188 - $66,438 = $750.
Therefore, option C is true.
The following table presents closing prices of June 2022 CHF futures contract for three days in March 2022. Each contract requires the delivery of CHF 125,000. The initial and maintenance margin per c ontract are $2,500, and $2,000, respectively.
Date 3/01 3/02 3/03
June 2022 CHF Futures $0.5350 $0.5375 $0.5315
Contract Based on prices during the three-day period, which one of the following statements is true.
A. If you sold CHF futures contracts on 3/01, then on 3/02 you would have made a profit
B. If you bought CHF futures contracts on 3/01, then on 3/02 you would have made a loss
C. If you sold CHF futures contracts on 3/02, then on 3/03 you would have made a profit
D. If you bought CHF futures contracts on 3/02, then on 3/03 you would have made a profit
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You are trying to evaluate expansion plans for HEB that will befinanced with no debt. For this project the discount rate is 9%.Your cash flows will be $1 M, $3 M, and $4 M for the first 3 yearsand grow at 3% from then on. If this expansion costs $50 M, what is the NPV?A) $0.7 MB) $5.2 MC) $9.6 MD) $25.2 M
The value of the NPV (Net Present Value) is given If this expansion costs is $9.6 M that is option C.
The difference between the current value of cash inflows and withdrawals over a period of time is known as net present value (NPV). To evaluate the profitability of a proposed investment or project, NPV is used in capital budgeting and investment planning.
Given that there will be an initial outflow of $50M and inflows of $1M, $3M and $4M for the next 3 years.
Hence, Terminal Value = $4M x (1+3%)/(9%-3%) = 68.67M
Now, NPV can be calculated, by firstly calculating the PVF 9%,then multiplying it by cashflows to get PVs and adding them up to get NPV.
Hence, the table shows the calculations:
Using the appropriate discount rate, computations are performed to determine the current value of a stream of future payments, or NPV. Projects that have a positive NPV are generally worthwhile pursuing, whereas those that have a negative NPV are not.
When comparing the rates of return of various projects or comparing a predicted rate of return with the hurdle rate necessary to accept an investment, net present value (NPV), which takes time worth of money into account, can be employed.
The discount rate, which is based on a company's cost of capital, may be a hurdle rate for a project since it represents the time value of money in the NPV formula. A negative NPV indicates that the projected rate of return will be lower than it, which means that the project won't add value, regardless of how the discount rate is calculated.
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select all that apply when frito-lay decided to introduce a salsa product line, it used the existing tostitos brand (under which it sells taco chips). what advantages did this strategy provide frito-lay? (choose every correct answer.)
When Frito-Lay decided to introduce a salsa product line under the existing Tostitos brand, it provided the company with several advantages. These include: Brand recognition, Cost savings, Cross-promotion opportunities, Faster market penetration, Consistent brand image.
1. Brand recognition: By using the existing Tostitos brand, Frito-Lay was able to leverage the brand's popularity and trust among consumers, making it easier to introduce the new salsa product line.
2. Cost savings: Using the existing brand infrastructure, including packaging design, logo, and marketing channels, Frito-Lay saved on costs that would otherwise be incurred if they were to create a completely new brand.
3. Cross-promotion opportunities: With the Tostitos brand already selling taco chips, Frito-Lay could promote the new salsa products alongside the chips, encouraging consumers to purchase both items together.
4. Faster market penetration: Since Tostitos was already a well-known brand, it was likely that retailers and distributors were more willing to stock the new salsa product line, allowing for a quicker entry into the market.
5. Consistent brand image: By adding the salsa product line under the Tostitos brand, Frito-Lay maintained a consistent brand image focused on Mexican-inspired snack foods, which could reinforce the brand's identity among consumers.
By choosing this strategy, Frito-Lay was able to capitalize on the existing Tostitos brand equity and streamline the introduction of the new salsa product line.
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Suppose world described by 1-factor model (F), and we have 2 following securities ra= -0.050 – 1.2F + EA TB = 0.050 +0.8F+EB a. [2pts] What are the weights on each security A and B if we want to track the asset that has a loading of 0.5 on factor F? b. [3pts] What is the expected risk-free rate in this world? (Hint: construct the tracking portfolio that has zero loading on factor F) 1 c. [3pts] What is the expected return of factor F? (Hint: construct the tracking portfolio that has a loading of 1 on factor F) d. [1pt] Is there any arbitrage opportunity if expected return on asset, that has a loading of 0.5 on factor F, is 4.50%?
If the expected securities risk-free rate is less than 4.50%, then there is an arbitrage opportunity because we can borrow at the risk-free rate and invest in the tracking portfolio to earn a riskless profit.
If the expected risk-free rate is greater than 4.50%, then there is no arbitrage opportunity. If the expected risk-free rate is exactly 4.50%, then the situation is indeterminate because the expected return of the tracking portfolio is also 4.50%.
a. To track the asset that has a loading of 0.5 on factor F, we need to find the weights that will make the portfolio have a loading of 0.5 on factor F. Let x be the weight on security A and (1-x) be the weight on security B. The portfolio's factor loading is then:
0.5 = 0.5(-1.2x + 0.8(1-x))
0.5 = -0.6x + 0.4
0.1 = x
Therefore, the weights on securities A and B are 0.1 and 0.9, respectively.
b. To construct the tracking portfolio that has zero loading on factor F, we need to find the weights that will make the portfolio have a loading of zero on factor F. Let y be the weight on security A and (1-y) be the weight on security B. The portfolio's factor loading is then:
0 = -1.2y + 0.8(1-y)
0 = -0.4y + 0.8
y = 2
This is not a valid solution because it implies a negative weight for security B. Therefore, there is no portfolio that has zero loading on factor F.
c. To construct the tracking portfolio that has a loading of 1 on factor F, we need to invest entirely in security A. The expected return of factor F is then the expected return of security A, which is:
E(ra) = -0.050 - 1.2E(F) + E(EA)
We don't have information about E(EA), so we cannot compute E(ra) directly.
d. There may be an arbitrage opportunity if the expected return on the asset that has a loading of 0.5 on factor F is 4.50%, depending on the risk-free rate in this world. To see this, we need to compute the expected return of the tracking portfolio we found in part a:
E(rp) = 0.1E(ra) + 0.9E(rb)
E(rp) = 0.1(-0.050 - 1.2(0.5)) + 0.9(0.050 + 0.8(0.5) = 0.035
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