It is not possible to calculate the required rate of return on the Krause investment fund without this information. Hence, the answer is "Cannot be determined".
Given below are the necessary steps to calculate the required rate of return on the Krause investment fund, using the information provided in the question:
Step 1 : The total assets of the Krause investment fund are given as $1,000,000. Out of this, $600,000 is invested in Stock A, and $400,000 is invested in Stock B. So, the proportion of the fund's assets invested in Stock A can be calculated as follows:
Proportion invested in Stock A = $600,000 ÷ $1,000,000
Proportion invested in Stock A = 0.6
Alternatively, the proportion of the fund's assets invested in Stock B can be calculated as follows:
Proportion invested in Stock B = $400,000 ÷ $1,000,000
Proportion invested in Stock B = 0.4
Step 2: The correlation coefficient between Stock A and Stock B is given as ρ = 0.2.
Step 3: The required rate of return on the Krause investment fund can be calculated using the following formula:
Required rate of return = (Proportion invested in Stock A × Required rate of return on Stock A) + (Proportion invested in Stock B × Required rate of return on Stock B) + (2 × Proportion invested in Stock A × Proportion invested in Stock B × Correlation coefficient)where the symbol "×" represents multiplication.
Step 4: The required rate of return on Stock A and Stock B are not given in the question.
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[Table 1] The dollar amounts that go in blanks (A) and (B) are, respectively
Table-1 Price Quantity Marginal Sold Revenue $10 10
$10 11 (A)
$10 12 (B)
$10 13 (C)
$10 14 (D)
O a $11 and $11 O b. $10 and $10 O C $10 and $11 O d. $11 and $12
The dollar amounts that go in blanks (A) and (B) are $10 and $11, respectively, in Table 1.
In Table 1, the given price per unit is $10. To determine the dollar amounts in blanks (A) and (B), we need to calculate the marginal revenue for each corresponding quantity.
Marginal revenue represents the additional revenue generated from selling one more unit. It is calculated by multiplying the price per unit by the change in quantity.
Given that the initial quantity sold is 10 and the marginal revenue is not provided, we can infer that the next unit sold would have the same price per unit, which is $10. Therefore, the dollar amount in blank (A) is $10.
For blank (B), we observe that the quantity increases to 11. To calculate the marginal revenue for this additional unit, we multiply the price per unit ($10) by the change in quantity (1). Therefore, the dollar amount in blank (B) is $11.
Hence, the correct answer is option O a: $11 and $11, as stated in the summary.
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Q. Suppose that the attribute fraction is 50%. This means that:
The relative risk is 50%
Among those who are exposed, 1 in 2 outcomes are due to the exposure
Among the population, 1 in 2 outcomes are due to exposure
The prevalence of exposure is 50% in the population
The correct interpretation of the attribute fraction being 50% is:
Among the population, 1 in 2 outcomes are due to the exposure.
This means that in the population being considered, 50% of the outcomes or events can be attributed to the specific exposure being discussed. It represents the proportion of outcomes in the population that can be associated with the exposure of interest.
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BU 7 . In scenario 1, assume that COGS is 75% of sales (which means your profit margin will be 25% on every widget you sell). The first scenario assumes that no change occurs, either in reduction in costs, or, in sales revenues. We'll call this first scenario the "as is" or, "the status quo scenario." Your sales revenue in scenario 1 is $600 million. In scenario 2, you reduce the original COGS from, 75% to 65% (through improvements in purchasing and procurement). You had to spend money (on new software, etc.) to reduce your purchasing costs and so your S&A increased by $2.0 million. Remember that in scenario 2 you don't increase your sales at all---so your sales revenues stay the same (no change from scenario 1), as do your Promotional Expenses (don't change from scenario 1) In scenario 3, you increase promotional expenses by 15% (from a starting point of $35 million), resulting in a 25% increase in annual sales revenues. S&A costs increase by $5 million. Your purchasing costs do not decrease (i.e., COGS stays the same as it was in scenariol at 75%). Scenario 1 Annual sales: $600 million. S COGS: million Gross Profit $150 million Promotional Expenses Scenario 2 $600 million S $ million million Scenario 31 S $ million million million C T Promotional Expenses $35 million Sales/Administration $5 million Total profit before taxes: million Jad $35 million million million $ million million million 3 Point Question: Based on the scenarios presented above, what implication can be drawn from the above problem?
Based on the scenarios presented above, the following implications can be drawn from the given problem:Scenario 1 Annual sales: $600 million. S COGS:
million Gross Profit $150 millionPromotional Expenses $35 millionSales/Administration $30 millionTotal profit before taxes: $85 millionScenario 2Annual sales: $600 million.S COGS: million.Gross Profit: $210 millionPromotional Expenses: $35 millionSales/Administration: $32 millionTotal profit before taxes: $143 millionScenario 3Annual sales: $750 millionS COGS: millionGross Profit: $187.5 millionPromotional Expenses: $40.25 millionSales/Administration: $37 millionTotal profit before taxes: $110.25 million.
The scenario provided in the problem indicates that there are three different scenarios that are presented in order to analyze the company's financial performance and progress.The first scenario is the 'as-is' or the status quo scenario where there are no changes in the reduction of costs and sales revenues.The second scenario is where the company reduces the original COGS from 75% to 65% through improvements in purchasing and procurement, but the sales revenue remains the same.
The third scenario shows an increase of 15% in promotional expenses from a starting point of $35 million, resulting in a 25% increase in annual sales revenues. However, the purchasing costs remain the same.In conclusion, Scenario 2 results in the highest gross profit, while Scenario 1 yields the lowest. Therefore, it is important for the company to reduce COGS by purchasing more efficiently.
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Making Business Decisions I
The Broadway Cafe needs to take advantage of e-business strategies if it wants to remain competitive. Create a document that discusses the many e-business strategies that The Broadway Cafe could use to increase revenue. Be sure to focus on the different areas of business such as marketing, finance, accounting, sales, customer service, and human resources.
PROJECT FOCUS:
Explain how understanding e-business can help you achieve success in each of these areas. A few questions you might want to address include:
What type of e-business would you deploy at The Broadway Cafe?
How can an e-business strategy help The Broadway Cafe attract customers and increase sales?
What types of metrics would you want to track on your e-business Web site?
How could you use an e-business strategy to partner with suppliers?
How could a portal help your employees?
Would you use Kiosks in the cafe?
An e-business strategy is a kind of business strategy that employs web-based technologies to complete various activities such as online sales, marketing, and customer service. The Broadway Cafe can use a variety of e-business techniques to increase revenue by being competitive.
An e-business approach should focus on various business areas such as finance, sales, customer service, marketing, and human resources.How understanding e-business can help you achieve success in each of these areas?Finance: An e-business approach will assist the company's finance department in lowering costs and maximizing revenue. It will enable the cafe to easily handle accounting procedures, inventory management, and financial planning.
Customer Service: An e-business approach will allow the cafe to provide better customer service, such as 24-hour customer support, online chat support, and a user-friendly ordering system, which will improve customer satisfaction and help the cafe attract more customers.Marketing: The Broadway Cafe could use an e-business strategy to market its brand through various online channels, such as social media, email marketing, SEO optimization, and so on.
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Question 1 (15 marks) Explain how the four (4) factors of the incentive intensity principle apply to: (i) (5 marks) A linear contract with one agent? (ii) (5 marks) A multitasking linear contract with subjective performance evaluation (SPE)? (iii) (5 marks) A linear contract with two (2) agents and with a relative performance evaluation (RPE)?
The incentive intensity principle aims to ensure that agents put forth the required effort to achieve the goals of the contract.
What are the 4 factors?The four factors of the incentive intensity principle are the sensitivity of the contract to effort, the agent's degree of risk aversion, the degree of substitution between effort and other inputs, and the degree of complementarity between effort and other inputs.
These four factors are applied differently depending on the contract type, as described below:
(i) Linear contract with one agent:
(ii) Multitasking linear contract with subjective performance evaluation (SPE):
(iii) Linear contract with two agents and with a relative performance evaluation (RPE):
The sensitivity of the contract to effort: The greater the sensitivity of the contract to effort, the higher the effort level will be.
The agent's degree of risk aversion: The higher the degree of risk aversion, the lower the agent's effort level.
The degree of substitution between effort and other inputs: The lower the degree of substitution, the higher the effort level.
The degree of complementarity between effort and other inputs: The higher the degree of complementarity, the higher the effort level.
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How COVID-19 has affected the Food/Daily Essentials markets in
Bangladesh? Use economic concepts such as demand, supply,
elasticity, and graphs in explaining your answer.
COVID-19 has affected the food/daily essentials markets in Bangladesh by shifting the supply and demand curves, causing changes in price and quantity sold. The pandemic has caused a decrease in demand for some goods and an increase in demand for others. Additionally, the pandemic has caused supply chain disruptions, which have caused shortages of some goods and an oversupply of others.
The demand for food/daily essentials in Bangladesh has been affected by COVID-19. The pandemic has caused a decrease in demand for some goods and an increase in demand for others. For example, the demand for meat, poultry, and fish has decreased due to fears of contamination. On the other hand, the demand for dry food items like rice, pulses, oil, sugar, etc has increased due to the hoarding mentality of the consumers, which led to a surge in demand and price hikes.
The pandemic has also affected the supply chain of food/daily essentials in Bangladesh. The restrictions on movement and transportation have disrupted the supply chain of these goods, leading to shortages of some goods and oversupply of others. This has caused a shift in the supply curve, leading to changes in the price and quantity sold.
As a result of the pandemic, the market for food/daily essentials in Bangladesh has become more elastic. This means that changes in price are more likely to cause a change in the quantity demanded. Consumers are more sensitive to price changes because of the economic downturn and their low-income level.
Graphs can be used to illustrate the impact of COVID-19 on the food/daily essentials market in Bangladesh. The supply and demand curves can be used to show the shift in these curves due to the pandemic. The graph can show the effect of the shift on the equilibrium price and quantity. In addition, the price elasticity of demand can be illustrated on the graph to show the impact of price changes on the quantity demanded.
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Strategic Management
-How can a decision maker identify strategic factors in a
corporation’s external international environment? Your
answer shouldn't exceed 120 words.
Decision makers can gain a comprehensive understanding of the external international environment and identify the critical strategic factors that will shape the corporation's success in the global market.
A decision maker can identify strategic factors in a corporation's external international environment through the following steps:
Environmental scanning: Conduct a thorough analysis of the global market, considering political, economic, social, technological, and legal factors.
Competitor analysis: Assess the competitive landscape, including the strengths, weaknesses, opportunities, and threats posed by rival firms operating internationally.
Market research: Gather information about customer preferences, trends, and demands in various international markets.
Stakeholder analysis: Identify key stakeholders such as governments, regulatory bodies, suppliers, and partners, and evaluate their influence and impact on the corporation's international operations.
PESTEL analysis: Examine the political, economic, social, technological, environmental, and legal factors affecting the corporation's international environment.
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A loan where the borrower receives money today and repays only a single lump sum at some time in the future is called a(n) loan. Select one: a. amortized b. continuous c. balloon x d. pure discount e. interest-only f. recurring
A balloon loan is one in which the borrower obtains funds now and makes just one lump sum payment later on.
With a balloon loan, you can borrow more money and pay it back over a longer period of time than you would with a conventional loan.
Balloon payments are larger-than-usual payments that are made at the end of a mortgage term in order to cover the remainder of the principal owed on the loan. To put it another way, the term "balloon" refers to a large final payment due at the end of a loan term.
Amortized loan: Amortization is the process of dividing a loan into smaller payments that are paid over time. The borrower will pay interest plus a portion of the principal in each payment.
Interest-only loan: For a specified period, the borrower only pays the interest on the loan.
Pure discount loan: A pure discount loan is one in which the borrower repays only the principal.
Balloon loan: The borrower receives money today and pays only one lump sum in the future.
Recurring loan: A recurring loan is a loan that is available to the borrower on an ongoing basis.
Continuous loan: Continuous loan refers to a line of credit that is accessible to the borrower on a continuing basis.
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Nina is able to select her weekly work hours. When a new bridge opened, it cut one hour off Nina’s total daily commute to work. Show on a graph the impact of this change on the budget constraint. Suppose that Nina did not change her weekly hours. Does Nina's labor supply curve slope upward, bend backward, or is it vertical? Show on a graph
When the new bridge opened, Nina's budget constraint shifted to the right in a parallel fashion, indicating an increase in the amount of available time for either work or leisure (excluding commuting time).
The graph the impact of this change on the budget constraint.This shift in her constraint created an income effect, allowing her to have the option to work more and consume more leisure. Since both income and leisure are considered normal goods, an increase in income leads to an increase in the quantity demanded for both.
In this scenario, the only way for Nina's income to increase is by working more hours. Therefore, we can conclude that her extra hour per day, gained from the shorter commute, is divided between allocating more time to work and enjoying more leisure. Consequently, Nina chooses to work more hours in response to the increased availability of time.
Based on this analysis, the labor supply curve for Nina would be upward sloping, indicating that as her wage rate increases, she would be willing to supply more labor by working additional hours.
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You are long a put option with an exercise price of $100. The option expires today and the underlying security is trading at $94. If youpurchased the option for $4, should you exercise the option?a. yes b. no
The net payoff is negative. Hence, it is not advisable to exercise the option. So, the correct is option (b) no.
It is asked whether to exercise the option if the option expires today and the underlying security is trading at $94. We will solve this question step by step below.
Let us first understand the given terms:
Put option: It is an option contract that gives the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a specified time.
Exercise price: Also called the strike price, it is the price at which an option can be exercised by the owner of the option.
Underlying security: It refers to the asset or security that an option derives its value from. In this case, it is not specified which underlying asset is being used.Let's now solve the question:
Given,
Exercise price = $100
Option premium paid = $4
Underlying security trading at = $94
Now, we have to decide whether to exercise the option or not.
For a put option, it is beneficial to exercise the option if the market price of the underlying asset is less than the exercise price.
In this case, the market price of the underlying asset is $94 which is less than the exercise price of $100.
Hence, it is profitable to exercise the option.
Now, let us calculate the net payoff of the option:
Net Payoff = Market price - Exercise price - Option premium
= $94 - $100 - $4
= -$10
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In your groups create a short report (min 3 pages, no maximum) for Taylor Guitar that outlines your FINAL RECOMMENDATION for the network design of the company in Canada. Include your detailed recommendation as it relates to facility locations, key transportation routes, supply chain flow and all rationale for your decisions
In this report, we will recommend the network design for Taylor Guitars in Canada that will help it to achieve an efficient and effective supply chain flow.
Facility Location Taylor Guitars is currently operating in Canada with two warehouses, one in Toronto and the other in Vancouver. The warehouses are situated at the two extreme ends of the country, which makes the transportation of raw materials and finished goods from the manufacturer's facilities to these warehouses a complicated process. We recommend the company relocate the Vancouver warehouse to Edmonton, which is centrally located in Canada.
We suggest Taylor Guitars adopts a hybrid supply chain model. This model combines elements of both push and pull strategies to optimize the supply chain. This hybrid model is designed to be more flexible than a pure push or pull model. It will enable the company to reduce costs and improve service levels while providing greater agility to respond to changes in customer demand. Rationale We recommend these changes because they will streamline the supply chain network, which will ultimately lead to cost savings, improved delivery times, and increased customer satisfaction.
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A particular security's default risk premium is 3 percent. For all securities, the inflation risk premium is \( 2.85 \) percent and the real riskfree rate is \( 1.90 \) percent. The security's liquidi
The required rate of return on the security is 7.75% when the default risk premium is 3%, the inflation risk premium is 2.85%, and the real risk-free rate is 1.90%.
The required rate of return on a security or investment is determined by the risk associated with it.
In this scenario, a security's default risk premium is 3%,
the inflation risk premium for all securities is 2.85%, and
the real risk-free rate is 1.90%.
The security's liquidity risk premium is unknown.
Hence, the formula to calculate the required rate of return is as follows:
Required Rate of Return = Real Risk-Free Rate + Inflation Risk Premium + Default Risk Premium + Liquidity Risk Premium
Based on the above formula, the security's required rate of return can be calculated as follows:
Required Rate of Return = 1.90% + 2.85% + 3% + Liquidity Risk Premium
Required Rate of Return = 7.75%
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A. What is the present value of a $250 perpetuity discounted
back to the present at 16 percent?
B. At a discount rate of 16.50%, find the present value of a
perpetual payment of $5500 per
A. The present value of a $250 perpetuity discounted back to the present at 16% is $1,562.50.
B. The present value of a perpetual payment of $5500 per period at a discount rate of 16.50% is $33,333.33.
A. To calculate the present value of a perpetuity discounted back to the present, we can use the formula:
Present Value = Payment / Discount Rate
In this case, the payment is $250 and the discount rate is 16%.
Present Value = $250 / 0.16 = $1,562.50
Therefore, the present value of a $250 perpetuity discounted back to the present at 16% is $1,562.50.
B. Using the same formula, but with a discount rate of 16.50% and a payment of $5500, we can calculate the present value:
Present Value = $5500 / 0.165 = $33,333.33
Therefore, the present value of a perpetual payment of $5500 per period at a discount rate of 16.50% is $33,333.33.
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The spread between the yield on a 2-year corporate bond and the yield on a similar risk-free bond is 250 basis points. The recovery rate is 40%.
i) Estimate the average hazard rate over the 2-year period.
ii) Compute the probability that the company issuing the bond will default in 2 years
The estimated average hazard rate over the 2-year period is approximately 4.17%.
The probability that the company issuing the bond will default in 2 years is approximately 8.34%
i) To estimate the average hazard rate over the 2-year period,
we need to use the spread and the recovery rate.
The hazard rate is the probability of default within a specific time period.
In this case, the spread between the yield on the corporate bond and the risk-free bond is 250 basis points,
which is equivalent to 2.5%. Since the recovery rate is given as 40%, we can assume that the remaining 60% is the probability of default.
To estimate the average hazard rate,
we can divide the spread by the recovery rate:
Average Hazard Rate = Spread / (1 - Recovery Rate)
Average Hazard Rate = 2.5% / (1 - 40%) = 2.5% / 60% = 4.17%
ii) To compute the probability that the company issuing the bond will default in 2 years,
we can use the hazard rate. The hazard rate represents the instantaneous probability of default per year.
The probability of default in 2 years can be calculated by multiplying the hazard rate by the number of years:
Probability of Default in 2 years = Hazard Rate * 2
Using the estimated average hazard rate from part
(i), we can compute the probability of default in 2 years:
Probability of Default in 2 years = 4.17% * 2 = 8.34%
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i) The average hazard rate over the 2-year period 1 is approximately 4.17%
ii) The probability that the company issuing the bond will default in 2 years is approximately 0.0806 or 8.06%.
To estimate the average hazard rate over the 2-year period, we can use the following formula:
i) Average Hazard Rate = (Spread / (1 - Recovery Rate)) / 100
Given that, Spread = 250 basis points = 2.50%
Recovery Rate = 40% = 0.40
Average Hazard Rate = (2.50% / (1 - 0.40)) / 100
Average Hazard Rate = (2.50% / 0.60) / 100
Average Hazard Rate ≈ 4.17%
ii) To compute the probability of default in 2 years, we need to use the following formula:
Probability of Default = 1 - e^(-Average Hazard Rate * Time to Maturity)
Given, Time to Maturity = 2 years
Probability of Default = 1 - e^(-0.0417 * 2)
Probability of Default ≈ 1 - e^(-0.0834)
Probability of Default ≈ 1 - 0.9194
Probability of Default ≈ 0.0806
So, the probability that the company issuing the bond will default in 2 years is approximately 0.0806 or 8.06%.
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Your home insurance policy has a $250 deductible. If a small fire causes $660 damage to your home, what amount of the claim would the insurance compary pay? Muliple Cheice 5455 Not able to detemine trom this ritarmation 5410 1250 8650
If a small fire causes $660 damage to your home and your home insurance policy has a $250 deductible, then the insurance company would pay $410.The deductible is the amount the policyholder must pay out of pocket before the insurance company pays for any damages.
In this case, the deductible is $250, which means the policyholder must pay $250 towards the cost of the damages. After the deductible is paid, the insurance company will cover the remaining amount of the claim up to the policy limit. The calculation for the insurance payment is:$660 (damage to your home) - $250 (deductible) = $410So, the insurance company would pay $410 towards the claim.
Therefore, the correct answer is option 2: Not able to determine from this information.
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Question 6.Which of the following statements related to Canadian taxation is correct:A Interest income received by a corporation is tax-free.B Dividend income received by a Canadian corporation from another Canadian company is taxable.C Dividend paid out by a corporation is treated as tax deductible expense.D Interest paid by a corporation is treated as before-tax expense, so it is 100% tax deductible.Question 7. Which of the following items will show a cash inflow (cash flow increase) to the firm:A increase of inventory B. decrease of marketable securities C. increase in accounts receivablesD decrease of borrowings from banksE. increase of fixed assets
The correct option is B. Dividend income received by a Canadian corporation from another Canadian company is taxable.
The option that shows a cash inflow (cash flow increase) to the firm is C. increase in accounts receivables.Explanation for option 6:B. Dividend income received by a Canadian corporation from another Canadian company is taxable.In Canada, dividends received by Canadian corporations from other Canadian companies are subject to taxation. The dividend is taxed at a reduced rate because of the dividend tax credit (DTC). The DTC is a non-refundable tax credit that provides a tax break to Canadian taxpayers who receive dividends from Canadian corporations.
Increase in accounts receivables - An increase in accounts receivable would result in a cash inflow. Accounts receivable (AR) is the money owed to a company for goods or services that have already been delivered. When customers pay their bills, the company receives cash, which is reflected as a cash inflow in the cash flow statement.
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5. Explain how this statement can be true: "A long call position offers potentially ited gains if the underlying asset's price rises but a fixed, maximum loss if the bo ing asset's price drops to zero
The statement is true because a long call position gives the holder the right, but not the obligation, to buy the underlying asset at a predetermined price (strike price) within a specific time period (expiration date).
When the price of the underlying asset rises, the long call position allows the holder to benefit from the price increase. The potential gains are unlimited because the underlying asset's price can continue to rise, and the holder can exercise the call option to buy the asset at the lower strike price and then sell it at the higher market price.
On the other hand, the maximum loss for a long call position is limited to the premium paid for the option. If the price of the underlying asset drops to zero or remains below the strike price at expiration, the holder can simply choose not to exercise the option, allowing it to expire worthless. In this case, the loss is limited to the premium paid for the call option.
Therefore, a long call position offers potentially unlimited gains if the underlying asset's price rises, but a fixed, maximum loss if the underlying asset's price drops to zero.
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If you invest $10,000 today and another $10,000 a year from today, what will be the total value of your investments at the end of 10 years from today? Assume that your investments earn a 6% return.
Group of answer choices
$35,816.95
$34,803.27
$17,908.48
$16,894.79
The total value of the investment in 10 years from now, if you invest $10,000 today and another $10,000 a year from today, will be $216,097.12.
In the present case, let us assume that the annual compounding of the investment is done over 10 years, with a 6% return per annum.
In the first year, the investment will grow by 6% of $10,000 = $600. So the total investment at the end of the first year = $10,000 + $600 = $10,600
In the second year, there will be two investments - one of $10,000 and another of $10,600. Both will grow by 6%. Thus the investment at the end of the second year will be: $10,000 x 1.06 + $10,600 x 1.06 = $11,236
This way, we can calculate the investment at the end of every year up to the 10th year. At the end of the 10th year, the total investment will be $216,097.12.
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If demand in a perfectly competitive market is perfectly inelastic and supply is upward sloping, a specific tax placed on suppliers will:________
if demand in a perfectly competitive market is perfectly inelastic and supply is upward sloping, a specific tax placed on suppliers will be entirely borne by the suppliers and will not be passed on to consumers.
in a perfectly competitive market, the price is determined by the intersection of the demand and supply curves. when demand is perfectly inelastic, it means that consumers are unresponsive to changes in price. this implies that regardless of the price, consumers will continue to purchase the same quantity of the product.
on the other hand, if the supply curve is upward sloping, it indicates that suppliers require higher prices to produce and supply larger quantities of the product. in this scenario, a specific tax placed on suppliers will increase their cost of production, leading to a shift in the supply curve upward.
since demand is perfectly inelastic, the quantity demanded remains unchanged, and consumers are unwilling to pay a higher price. suppliers, they cannot pass on the tax to consumers by increasing the price because demand is insensitive to price changes.
as a result, the specific tax will directly reduce the suppliers' profits or returns. the entire burden of the tax falls on the suppliers, and consumers do not experience any increase in price or change in quantity purchased.
it's important to note that this analysis assumes a perfectly competitive market with ideal conditions, such as perfect information and no barriers to entry or exit. in real-world markets, the impact of taxes can be more complex, and the burden may be shared between suppliers and consumers depending on the elasticity of demand and supply.
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sarah U=100x0.5 y0.5
Jani U=50x0.4 y0.6
Px= 10
Py= 20
Current output
x= 58
y=36
sarah income I=600
Jani income I=700
1. Calculate MRS for sarah and jani.
2. calculate the quantities of x and y used by
MRS for Sarah is higher than Jani, indicating she is willing to give up more y for an additional unit of x. Sarah uses 34.55x and 26.54y, while Jani uses 23.37x and 28.44y.
1. To calculate the Marginal Rate of Substitution (MRS) for Sarah and Jani, we can use the formula:
MRS = (MUx / MUy)
where MUx is the marginal utility of x and MUy is the marginal utility of y.
For Sarah, we have:
MUx = (dU/dx) = 50x^(-0.5)y^(0.5) = 50(58)^(-0.5)(36)^(0.5) ≈ 8.21\
MUy = (dU/dy) = 50x^(0.5)y^(-0.5) = 50(58)^(0.5)(36)^(-0.5) ≈ 2.74
MRS of Sarah = MUx / MUy = 8.21 / 2.74 = 2.99
For Jani, we have:
MUx = (dU/dx) = 40x^(-0.6)y^(0.4) = 40(58)^(-0.6)(36)^(0.4) ≈ 6.04\
MUy = (dU/dy) = 40x^(0.4)y^(-0.6) = 40(58)^(0.4)(36)^(-0.6) ≈ 5.07
MRS of Jani = MUx / MUy = 6.04 / 5.07 = 1.19
Therefore, Sarah has a higher MRS than Jani, indicating that she is willing to give up more y for an additional unit of x than Jani.
2. To calculate the quantities of x and y used by Sarah and Jani, we can use the formula:
MRS = Px / Py
For Sarah, we have:
MRS = Px / Py = 10 / 20 = 0.5
Substituting the value of MRS and the given income, we get:
Px / Py = MUx / MUy\
10 / 20 = 50x^(-0.5)y^(0.5) / 50x^(0.5)y^(-0.5)\
y / x = (10 / 20) \* (58)^(0.5) / (36)^(0.5)\
y / x ≈ 0.77
Substituting the value of y / x in the budget equation, we get:
Px \* x + Py \* y = I\
10 \* x + 20 \* (0.77x) = 600\
x ≈ 34.55\
y ≈ 26.54
Therefore, Sarah uses approximately 34.55 units of x and 26.54 units of y.
For Jani, we have:
MRS = Px / Py = 10 / 20 = 0.5
Substituting the value of MRS and the given income, we get:
Px / Py = MUx / MUy\
10 / 20 = 40x^(-0.6)y^(0.4) / 40x^(0.4)y^(-0.6)\
y / x = (10 / 20) \* (58)^(0.4) / (36)^(0.6)\
y / x ≈ 1.22
Substituting the value of y / x in the budget equation, we get:
Px \* x + Py \* y = I\
10 \* x + 20 \* (1.22x) = 700\
x ≈ 23.37\
y ≈ 28.44
Therefore, Jani uses approximately 23.37 units of x and 28.44 units of y.
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The President of the United States semiconductor corporation made this statement in the companies annual report: "United's primary goal is to increase the value of the common stockholders equity overtime". Later in the report the following announcements were made:
A: The company contributed $1.5 million to the symphony orchestra in San Francisco, it’s headquarters city.
B: United is pending $5 million to open a new plant in Mexico. no revenues will be produced by the plant for four years, so earnings will be depressed during this period versus what they would have been had the company not open the new plant.
C: The company is increasing its relative use of debt. Assets were formally financed with 35% debt and 65% equity; henceforth, the financing mix will be 50-50
D. The company uses a great deal of electricity and its manufacturing operations, and it generates most of this power itself. United plans to utilize nuclear fuel rather than coal to produce electricity in the future.
E: The company has been paying out half of its earnings as dividends and retaining the other half. Henceforth, it will pay only 30% as dividends.
These measures were indicative of the company’s commitment not just to the shareholders but also to a broader set of social and environmental responsibilities.
The President of the United States semiconductor corporation's statement in the annual report that “United's primary goal is to increase the value of the common stockholders equity overtime” displayed the focus on the stock price and shareholder value.
To achieve this, the company made a few key announcements that enabled it to not just increase equity value long-term, but also meet its potential socially and environmentally. The first announcement that it contributed $1.5 million to the symphony orchestra in its headquarters city, San Francisco, showed its commitment to meet social and environmental responsibilities and integrate cultural and artistic aspects into its corporate life. This showed that it was aware of its role in the larger community and gave it a public image boost.
The second announcement that it was pending $5 million to open a new plant in Mexico was indicative of its commitment to increase its geographical presence and in turn its market share. Even though the plant will not produce any revenues for a period of four years, this commitment was necessary for the company’s long-term prospects.
The third announcement that the company was increasing its relative use of debt and converting its financing mix from 35/65 debt/equity to a 50/50 ratio reflected an update in its financial strategy. The company was taking on more risk in an effort to increase long-term returns for its stockholders equity. The fourth announcement that United planned to switch from coal to nuclear fuel to produce electricity was in line with its environmental commitments. The company was aware of the energy it was using and was making a conscious decision to switch to an emission-free fuel source.
Finally, the fifth announcement that the company will pay out only 30% of its earnings as dividends rather than 50% showed its focus on financial mobilization for the company’s long-term rewards. This indicated that United was being more strategic with its finances and planning for the future. In conclusion, all of these announcements were aimed at increasing the value of the common stockholders equity for the company in the long run.
Hence, these measures were indicative of the company’s commitment not just to the shareholders but also to a broader set of social and environmental responsibilities.
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Explain how an appreciation of the US$ can be expected to impact economic growth, interest rates and the stock market in the US.
An appreciation of the US dollar can be expected to impact economic growth, interest rates, and the stock market in the US as follows:
Economic Growth: When the US dollar appreciates, exports become more expensive, making them less competitive on the international market. As a result, foreign demand for US goods and services decreases, which might slow down economic growth.
Interest Rates: An appreciation of the US dollar can lead to lower interest rates. When foreign investors buy US dollars, they are also acquiring US Treasuries, which lowers bond yields and leads to lower interest rates in the US.
Stock Market: An appreciation of the US dollar can have a negative impact on the US stock market. When the dollar appreciates, US firms with international operations, such as those that rely on exports, may experience lower revenues and earnings, leading to lower stock prices. Furthermore, when the dollar appreciates, foreign investors find US investments less appealing, causing a drop in foreign investment.
An appreciation of the US dollar is a situation in which the US dollar's value rises relative to that of other currencies. As the US dollar appreciates, the economy's effects can be seen in several areas. Economic growth may be slowed due to less foreign demand for US products, interest rates may be lowered as more people buy US Treasuries, and the stock market may be negatively impacted by reduced revenues and foreign investment.
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Radovilsky Manufacturing Company, in Hayward, Califomia, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 11,500 flashing lights per year and has the capability of producing 95 per day. Setting up the light production costs $48. The cost of each light is $1.05. The holding cost is $0.15 per light per year. a) What is the optimal size of the production run? units (round your response to the nearest whole number).
Find the following:
A. Optimal Size of Production
B. Average Inventory
C.Average set up cost per year
D. Annual purchase cost of lights
The optimal size of the production run is 121 units, the average inventory is 60.5 units, the average setup cost per year is $4,528.10, and the annual purchase cost of lights is $12,075.
To calculate the optimal production run size, we can use the economic order quantity (EOQ) formula. The EOQ formula is given by:
EOQ = sqrt((2DS) / H)
Where:
D = Annual demand (11,500 units)
S = Setup cost per production run ($48)
H = Holding cost per unit per year ($0.15)
Plugging in the values, we get:
EOQ = sqrt((2 * 11,500 * 48) / 0.15) = 120.83
Rounding this to the nearest whole number, the optimal size of the production run is 121 units.
To find the average inventory, we can use the EOQ formula:
Average Inventory = EOQ / 2 = 121 / 2 = 60.5 units
The average setup cost per year can be calculated by multiplying the number of production runs per year by the setup cost:
Average Setup Cost per Year = Number of Production Runs * Setup Cost = 11,500 / 121 * 48 = $4,528.10
The annual purchase cost of lights can be calculated by multiplying the annual demand by the cost per light:
Annual Purchase Cost of Lights = Annual Demand * Cost per Light = 11,500 * $1.05 = $12,075
Therefore, the optimal size of the production run is 121 units, the average inventory is 60.5 units, the average setup cost per year is $4,528.10, and the annual purchase cost of lights is $12,075.
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Wayne, Erin, Alan and Kirk are all ex-police officers and have decided to start a private security business. Due to tax and ownership issues and the obvious benefits associated with having limited liability, their lawyer recommends that they should register a company for the business. They agree and instruct their lawyer to register a company to be called WEAK Security Pty Ltd. It is agreed that Wayne, Erin, Alan and Kirk will each be allotted 100 ordinary shares in WEAK Security Pty Ltd. After the company is registered, they decide to employ Rodger as a receptionist in the office. Rodger is given strict instructions that he is not to enter into contracts on behalf of the company.
Wanda works in used car sales and a good friend of Rodger. Rodger tells Wanda about his new position at WEAK Security Pty Ltd . Wanda tells Rodger that she has been trying to sell a truck and it would be perfect for the security business. Wanda shows Rodger the truck and lets him drive it. Rodger agrees that the truck would be a great addition to the security business and thinks the price Wanda is asking is very reasonable. Rodger agrees to buy the truck on behalf of WEAK Security Pty Ltd.
Can Wanda rely on any of the assumptions in section 129 of the Corporations Act in order to enforce the contract against WEAK Security Pty Ltd?
Please use the PIRAC method to analyze the case. Is there any same type of case for referencing? Thankyou!!
Wayne, Erin, Alan and Kirk are all ex-police officers and have decided to start a private security business. Due to tax and ownership issues and the obvious benefits associated with having limited liability, their lawyer recommends that they should register a company for the business.
The PIRAC method to analyze the case of issue is the issue is whether Wanda can rely on any of the assumptions in section 129 of the Corporations Act to enforce the contract against WEAK Security Pty Ltd.
The principle refers to Section 129 of the corporations act deals with the assumption of authority. It states that a person dealing with a company in good faith can assume that the company's officers have the authority to bind the company in transactions within its ordinary course of business.
Application was given strict instructions not to enter into contracts on behalf of WEAK Security Pty Ltd. Therefore, Wanda cannot reasonably assume that Rodger had the authority to bind the company in the purchase of the truck.
Conclusion is Wanda cannot rely on the assumptions in section 129 of the Corporations Act because Rodger exceeded his authority by entering into the contract on behalf of WEAK Security Pty Ltd.
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"Heart Limited has one bond in issue expiring in eight years, paying 0 coupon and has a face value of $1000. It is currently traded at $720, Beta =1.2, risk free rate is 2%, historic market risk premium is 5.5%. Assume the ratio of debt to equity is 2:1, and corporate tax rate is 20%." (c) Determine the WACC for Heart Limited.
The Weighted Average Cost of Capital (WACC) for Heart Limited is 5.73%.
1. Calculate the cost of equity (Ke):
Ke = Risk-Free Rate + Beta * Market Risk Premium
Ke = 2% + 1.2 * 5.5% = 8.6%
2. Calculate the cost of debt (Kd):
Since the bond pays no coupon and is currently traded at a discount, the yield to maturity (YTM) can be used as the cost of debt.
Given that the bond has a face value of $1000 and is currently traded at $720, the discount is $1000 - $720 = $280.
The YTM can be calculated using the bond's discount and time to maturity:
YTM = (Discount / Purchase Price) * (1 / Time to Maturity)
YTM = ($280 / $720) * (1 / 8) = 0.0486 or 4.86%
3. Calculate the weights of equity (We) and debt (Wd):
Since the debt-to-equity ratio is 2:1, the weights can be calculated as follows:
We = 2 / (2 + 1) = 0.6667 or 66.67%
Wd = 1 / (2 + 1) = 0.3333 or 33.33%
4. Calculate the WACC:
WACC = (We * Ke) + (Wd * Kd)
WACC = (0.6667 * 8.6%) + (0.3333 * 4.86%)
WACC = 5.73%
Therefore, the WACC for Heart Limited is 5.73%.
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8. Ron Corporation had 8 million shares of common stock outstanding during the current calendar year. On July 1, Ron issued ten thousand $1,000 face value, convertible bonds. Each bond is convertible into 50 shares of common stock. The bonds were issued at face amount and pay interest semi annually for 20 years. They have a stated rate of 12%. Jet had income before tax of $24 million and a net income of $18 million. Ron would report the following EPS data (rounded): a. Basic EPS $2.25 Diluted EPS $2.24 b. $2.25 n/a antidilutive c. $2.25 $2.16 d. $2.25 $2.12
Based on the information provided, Ron Corporation would report the following EPS data (rounded):
a. Basic EPS: $2.25
Diluted EPS: $2.24
Basic EPS calculates earnings per share based on the weighted average number of common shares outstanding during the period. In this case, there were 8 million shares outstanding throughout the year.
To calculate diluted EPS, potential common shares from convertible securities need to be considered. Ron issued convertible bond on July 1, which are convertible into 50 shares of common stock each. Since the bonds were issued halfway through the year, the impact on diluted EPS would be proportional.
To calculate the diluted EPS, we need to determine the potential number of shares that would be added if all the bonds were converted. Since each bond is convertible into 50 shares, the total number of potential additional shares is 10,000 bonds * 50 shares/bond = 500,000 shares.
the diluted EPS is calculated by dividing the net income of $18 million by the sum of the weighted average shares outstanding (8 million) and the potential additional shares (500,000), resulting in $2.24.
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Hyperion Inc., currently sells its latest high-speed color printer, the Hyper 500, for $349. It plans to lower the price to $308 next year. Its cost of goods sold for the Hyper 500 is $191 per unit, and this year's sales (at the current price of $349) are expected to be 20,800 units. a. Suppose that if Hyperion drops the price to $308 immediately (rather than waiting one year) it can increase this year's sales by 30% to 27,040 units. What would be the incremental impact on this year's EBIT of such a price drop? b. Suppose that for each printer sold, Hyperion expects additional sales of $95 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 81% on ink cartridges. What is the incremental impact on EBIT for the next three years of such a price drop?
The incremental impact on this year's EBIT of such a price drop is $1,080,000. The incremental impact on EBIT for the next three years of such a price drop is $1,657,952.
(a) The present EBIT with the current sales of 20,800 units is given by EBIT = $349 × 20,800 – $191 × 20,800 = $3,964,800 – $3,977,280 = −$12,480. If the company lowers its price to $308 and increases its sales by 30% to 27,040 units, then the new revenue and cost are $308 × 27,040 = $8,326,720 and $191 × 27,040 = $5,167,840, respectively. The new EBIT will be $3,158,880. Thus, the incremental impact on this year's EBIT of such a price drop is $3,158,880 − (−$12,480) = $1,080,000.
(b) For each printer sold, Hyperion expects additional sales of $95 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 81% on ink cartridges. The incremental annual profit from ink cartridges will be $95 × 81% = $76.95. The incremental profit from ink cartridges for the next three years will be $76.95 × 27,040 × 3 = $6,590,752.
Hence, the incremental impact on EBIT for the next three years of such a price drop is $6,590,752 − $1,932,800 = $1,657,952. Therefore, the incremental impact on EBIT for the next three years of such a price drop is $1,657,952.
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CC Rainger is a business to business distributor of MRO (maintain, repair and operate) products. They have more than 300 retail stores that they serve from a central warehouse. The company uses a 98% service level calculated on the proportion that can be satisfied directly from stock (demand fill rate). The cost for placing an order is $100 and the annual holding cost is 20%. They work 365 days/year.
Item propertyData valueLead time from supplier14 daysLead time to Retailer3 daysInternal price$25Daily demand75 unitsσ, Standard deviation during lead time103 unitsInventory carrying cost20 %
Tables that might be useful for answering the questions (click to open):
Normal Distribution function table
Service loss function table
1a. What is the Economic Order Quantity (EOQ)?
Enter the correct value in the input field. Round off to the closest 10 units.
units incorrect
1b. What Safety Stock level does the company need to reach the desired service level?
Enter the correct value in the input field. Round off to the closest 10 units.
units incorrect
1c. What Re-Order Point (ROP) level does the company need to reach the desired service level?
Enter the correct value in the input field. Round off to the closest 10 units, if needed.
The economic order quantity (eoq) is approximately 2,340 units.1b.
1a. the economic order quantity (eoq) can be calculated using the following formula:
eoq = √[(2 * annual demand * ordering cost) / holding cost]
given:
- annual demand: 75 units/day * 365 days = 27,375 units
- ordering cost: $100
- holding cost: 20%
plugging these values into the formula:
eoq = √[(2 * 27,375 * 100) / 0.2] = √(5,475,000) ≈ 2,340 units to determine the safety stock level, we need to calculate the standard deviation during the lead time (σl) using the formula:
σl = σ * √(lead time)
given:
- standard deviation during lead time (σl): 103 units
- lead time from supplier: 14 days
plugging these values into the formula:
σl = 103 * √(14) ≈ 435 units
next, we can use the service loss function table to find the corresponding value for a 98% service level, which is 2% service loss. from the table, we find that the value closest to 2% service loss is 2.05.
safety stock = σl * service loss factor
safety stock = 435 * 2.05 ≈ 892 units
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at the federal level, an _______ functions within an established
cabinet department.
a. Independent agency. b. Executive agency. c. State agency. d.
Legislative agency.
The correct answer is option a. Independent agency. At the federal level, a functions within an established cabinet department is Independent agency.
At the federal level, an independent agency functions within an established cabinet department. Independent agencies are federal agencies that operate independently from the executive departments and are created by Congress to carry out specific functions.
They have specific missions and often have regulatory or oversight authority in their respective areas.
Examples of independent agencies include the Environmental Protection Agency (EPA), Federal Trade Commission (FTC), and Securities and Exchange Commission (SEC).
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Ashburn Company issued 17-year bonds two years ago at a coupon rate of 9.6 percent. The bonds make semiannual payments. If these bonds currently sell for 103 percent of par value, what is the YTM? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,
To find the yield to maturity (YTM) of the bonds, we can use the present value formula. The YTM is the discount rate that equates the present value of all future cash flows (coupon payments and the face value) with the current market price of the bonds.
Given:
Coupon rate = 9.6% (coupon payments are made semiannually)
Bonds currently sell for 103% of par value
To calculate the YTM, we need to determine the present value of the bond's future cash flows and solve for the discount rate (YTM).
Step 1: Calculate the coupon payment:
Since the coupon payments are made semiannually, the coupon payment will be (Coupon Rate / 2) * Par Value.
Coupon payment = (9.6% / 2) * Par Value
Step 2: Calculate the number of periods:
Since the bonds were issued 2 years ago and have a maturity of 17 years, the number of periods remaining until maturity is (17 - 2) * 2 (as there are two semiannual periods in a year).
Step 3: Calculate the present value of the coupon payments:
To calculate the present value of the coupon payments, we need to discount each coupon payment back to the present value using the discount rate (YTM).
PV of coupon payments = (Coupon payment / (1 + (YTM / 2))) + (Coupon payment / (1 + (YTM / 2))^2) + ... + (Coupon payment / (1 + (YTM / 2))^n)
Step 4: Calculate the present value of the face value:
To calculate the present value of the face value, we need to discount it back to the present value using the discount rate (YTM).
PV of face value = Face Value / (1 + (YTM / 2))^n
Step 5: Calculate the present value of all future cash flows:
The present value of all future cash flows can be calculated by adding the present value of the coupon payments (from Step 3) and the present value of the face value (from Step 4).
Step 6: Solve for the YTM:
We need to solve for the discount rate (YTM) that makes the present value of all future cash flows equal to the current market price of the bonds (103% of par value).
To summarize, the YTM is the discount rate that makes the present value of all future cash flows equal to the current market price of the bonds.
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