An arbitrageur has an opportunity to take advantage of the discrepancy in prices for the one-month European put option on a non-dividend-paying stock. Currently, the stock price is $47, the strike price is $50, and the risk-free interest rate is 6 percent per annum.
Arbitrage involves simultaneously buying and selling a security in order to make a profit. In this case, the arbitrageur could buy the put option at a price of $2.50 and sell the stock at the current market price of $47. As a result, the arbitrageur would receive a net inflow of $44.50.
Then, after one month, the option will either be exercised or expire. If the stock price is below the strike price of $50, the option will be exercised, and the arbitrageur will have to buy the stock at the strike price of $50. This will result in a net outflow of $50 and the arbitrageur will incur a loss of $5.50.
On the other hand, if the stock price is above the strike price of $50, the option will expire and the arbitrageur will not be required to purchase the stock. In this case, the arbitrageur will keep the $2.50 option premium, resulting in a net inflow of $2.50. This will result in a net profit of $2.00 after one month.
Overall, the arbitrageur has an opportunity to make a risk-free profit by taking advantage of the discrepancy in prices for the one-month European put option on a non-dividend-paying stock. The arbitrageur will receive a net inflow of $44.50 and have the possibility of either making a net profit of $2.00 or incurring a loss of $5.50 after one month.
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The Custodial Division of Clark's Corporate Services (CCS) has assets of $1.2 million. During the past year, the division had profits of $276,000. CCS has a cost of capital of 7.5 percent. Ignore taxes. Required: a. Compute the divisional ROI for the Custodial Division. b. Compute the divisional RI for the Custodial Division. Complete this question by entering your answers in the tabs below. Compute the divisional ROI for the Custodial Division. The Custodial Division of Clark's Corporate Services (CCS) has assets of $1.2 million. During the past year, the division had profits of $276,000. CCS has a cost of capital of 7.5 percent. Ignore taxes. Required: a. Compute the divisional ROI for the Custodial Division. b. Compute the divisional RI for the Custodial Division. Complete this question by entering your answers in the tabs below. Compute the divisional RI for the Custodial Division. Note: Enter your answer in dollars, not in millions.
a. Compute the divisional ROI for the Custodial Division
ROI stands for return on investment. ROI is used to evaluate the efficiency of an investment or compare the efficiency of a range of investments. ROI is calculated by dividing the return of an investment by the cost of the investment.
ROI= Profits / Assets = $276,000/$1,200,000 = 0.23ROI= 23%
b. Compute the divisional RI for the Custodial Division RI stands for residual income. Residual income is an income earned by an entity beyond the minimum rate of return on the capital invested.
RI= Profits - Cost of Capital x Assets Cost of Capital= 7.5% x $1,200,000 = $90,000RI= $276,000 - $90,000 = $186,000RI= $186,000 in dollars.
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At what price would there be a shortage of 800 video games?
In general, the price at which there would be a shortage of 800 video games would depend on the elasticity of demand and supply for video games which on assertion can be around 2000 USD.
If demand is highly elastic (i.e., sensitive to price changes) and supply is relatively inelastic (i.e., not very responsive to price changes), then a small increase in price could cause a significant decrease in demand and a shortage of video games. Conversely, if demand is relatively inelastic and supply is highly elastic, then a small increase in price would not affect demand much, but it could lead to an increase in supply and a decrease in shortage.
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Develop a detailed market entry plan for Amazon to enter Nigeria
& Kenya analyzing and explaining the rationale, country
conditions, opportunities, business model and risks?
Amazon's market entry plan for Nigeria and Kenya should prioritize building local partnerships, establishing a strong logistics infrastructure, and adapting to local payment systems.
Nigeria and Kenya are rapidly growing economies with expanding e-commerce markets and rising middle classes. However, challenges include weak infrastructure, low digital literacy, and high levels of corruption.
Amazon's business model of offering a wide range of products and services, including its own branded products and third-party sellers, should be adapted to the local market.
Risks include intense competition from established local e-commerce companies and navigating complex regulations. Overall, successful entry into these markets could offer Amazon significant growth opportunities and help it establish a foothold in Africa.
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fill in the blank. that is known as (an)___operation. when the cpu compares two values, such as seeing if one number is greater than another, that is known as (an)___operation. conditional logical numerical arithmetic
When the CPU compares two values, such as seeing if one number is greater than another, that is known as a conditional operation. Here, the blank space is filled by the word conditional.
What is a conditional operation?A conditional operation is a process that uses conditional logic to test a particular condition, which is either true or false, and then executes some specified operation based on the outcome of the test.
For example, a simple conditional operation could test whether a given number is greater than 10, and if it is, then the operation could perform some specified action, such as adding 5 to the number or printing a message to the screen.
In computer programming, conditional operations are frequently used in decision-making procedures, such as if-else statements or switch statements, to determine which code block to execute based on a particular condition.
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Peter is on his way to class and doesn't really enjoy it very much and would rather go out to lunch with his friends; however, Peter goes to class anyway. If the purpose of life is to get as much utility as possible in life given our scarce resources, then how can we explain Peter's decision to go to class from an economic perspective?
Peter is forgoing the hedonic-type utility he could get right now and investing in human capital enhancing activities (getting an education) because it will have a bigger eudemonic-type utility payoff in the future.
Economically speaking, Peter is being irrational; to get the most utility he should go to lunch with his friends.
The elephant part of Peter's brain is more powerful than the rider part of his brain, so this explains why he has the economic drive to go to class rather than have lunch with his friends.
The "Be Proactive" habit has a central focus of:
Self-Paradigm: Response Ability
Physical Creation: Traveling the Path
Mental Creation: Destination and Path Planning
In terms of a rewarding career, the _______ hypothesis requires the existence of pre-existing passion while the _______ hypothesis posits that passion evolves over time with mastery.
Craftsman, Passion
Passion, Craftsman
Actualization, Craftsman
Passion, Actualization
From an economic perspective, Peter's decision to go to class can be explained through the concept of opportunity cost. Opportunity cost is the value of the next best alternative that is given up when a choice is made. In this case, Peter is giving up the immediate utility of going to lunch with his friends in order to invest in his human capital by going to class.
In terms of the "Be Proactive" habit, the central focus is on self-paradigm and response ability. This means that an individual should take responsibility for their own actions and choices, rather than blaming external factors or circumstances.
Finally, in terms of a rewarding career, the Passion hypothesis requires the existence of pre-existing passion while the Craftsman hypothesis posits that passion evolves over time with mastery. This means that the Passion hypothesis suggests that an individual should pursue a career that they are already passionate about, while the Craftsman hypothesis suggests that passion will develop as an individual becomes more skilled and knowledgeable in their chosen field.
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In July of 2015 Dr. Ronald Ware executed to United Capital Source a note in the amount of $150,000 with an accompanying security agreement covering the following property: "All equipment of the debtor of every description used or useful in the conduct of the debtor's business, now or hereafter existing or acquired . . . The listed assets held for collateral are presently located at 8950 Knolls Road, Myrtle Beach, South Carolina." In July of 2017 Dr. Ware moved some of his equipment to a new office owned by Jackson Properties, Inc. in Charleston, South Carolina. To finance this move, Dr. Ware procured a loan from a Charleston bank, and Jackson co-signed the note. The Charleston bank prepared a security agreement covering the same equipment as the 2015 security agreement. In September of 2017, Dr. Ware defaulted on the first note and absconded with the equipment from the Charleston office. Jackson received an insurance payment as cash proceeds from the missing equipment. United Capital Source claimed priority rights to the missing equipment or the insurance proceeds even though the equipment had been moved to Charleston. Do you think United Capital Source recovered this insurance money from Jackson? Why or why not? (Make sure your argument is supported by applicable law).
Yes, United Capital Source was likely able to recover the insurance money from Jackson. It is because United Capital Source had the right to reclaim the insurance money as the proceeds of the collateral.
According to the security agreement, United Capital Source had a valid security interest in the equipment, meaning they had the right to take possession of the collateral if the debtor failed to fulfill the terms of the loan. Since Dr. Ware defaulted on the loan and moved the equipment to a new office, United Capital Source had the right to reclaim the insurance money as the proceeds of the collateral. Under Article 9 of the Uniform Commercial Code (UCC), in the event of a default, a secured party has the right to take possession of the collateral and may recover any proceeds from the collateral. In this case, Jackson received the insurance money for the missing equipment and United Capital Source would have the right to recover these proceeds.
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When a hotel offers the same rate with the same conditions no matter how the room is booked it’s termed _____ 1. rate parity 2.rate changes 3.retail model
Option (a), Rate parity occurs when a hotel offers the same price and terms regardless of how a room is reserved.
What advantages does rate parity have for hotels?Rate parity is the practice of having consistent rates across all distribution channels. If the price shown on OTAs and other third-party websites is the same as the price listed on the hotel's own website, there is rate parity.
Since it ensures that customers see the same price for the same room across all channels and provides customers with pricing transparency, hotel rate parity is essential to the hospitality industry.
What does rate parity do?Rate parity is a contract that hotels and online travel agencies have in place. Its main objective is to guarantee that hotels provide the same pricing for identical hotel rooms across all distribution channels.
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a high school football player who was injured when his helmet failed to protect his head from severe injury after a normal tackle in a game wants to sue the helmet manufacturer for damages. through the discovery process, it was found the manufacturer knew its football helmets did not perform as well as others on crown (i.e., head) impacts. what would have been the best step for the manufacturer to have taken to avoid a lawsuit?
The best step for the manufacturer to have taken to avoid a lawsuit is to recall the helmets to prevent any further harm. Also, they could have issued a public statement or voluntary recall notice alerting users of the issue.
A lawsuit is a civil action where a plaintiff, a person, or entity who believes that they have been harmed or injured by the conduct of the defendant, seeks legal redress. It is a legal case in which a court of law adjudicates a matter that is in dispute. The best step for the manufacturer to have taken to avoid a lawsuit is to recall the helmets to prevent any further harm.
Also, they could have issued a public statement or voluntary recall notice alerting users of the issue. A helmet is supposed to protect the head, and if it fails to do that, it can cause severe damage or even death. If the manufacturer had known that their helmets were defective and could cause harm, they should have taken swift action to rectify the situation to prevent any more harm.
Therefore, a voluntary recall or public statement would have been the best step for the manufacturer to have taken to avoid a lawsuit.
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When overhead applied exceeds actual overhead cost, overhead is
said to be underapplied. True or False?
The statement "When overhead applied exceeds actual overhead cost, overhead is said to be underapplied" is true because underapplied overhead occurs when the actual overhead cost is greater than the overhead allocated to products.
What is overhead?Overhead is the indirect costs that are incurred during the production process. The cost of overhead is that it cannot be directly charged to a particular product, department, or project. Overhead includes costs such as rent, utilities, and salaries for management staff, as well as other costs that are necessary for the production process to function smoothly.
The allocation of overhead is necessary in order to calculate the cost of each unit of product. The overhead rate is determined by dividing the total overhead cost by the number of units produced. The rate is then used to allocate overhead to each unit produced.
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Use the information that you have learned in this section about various types of investments and their benefits and drawbacks to help your grandmother create an investment portfolio. The portfolio should detail the types of investments she should choose, how much she should devote to each investment, and the reasons for choosing those investments over others. She must choose to invest the money in at least two different types of investments. You must provide a description of each investment and explain your reasons for choosing those types. Keep in mind that her needs are different than your needs. For instance, she is nearing retirement age, so she may not be as interested in riskier investments as a younger person might be.
When putting together an investment portfolio, remember to take grandmother's requirements and objectives into account. Therefore the investment option are stocks and bonds, mutual funds, cash equivalent. These investment are low risk investment.
It is important to consider your grandmother's needs and goals when creating an investment portfolio. For instance, since she is nearing retirement age, it may be wise to focus more on low-risk investments. This will help to ensure that her money is safe and grows steadily over time.
One option would be to invest in stocks and bonds. Stocks offer the potential for high returns, but also come with a certain degree of risk. Bonds, on the other hand, are much less volatile and are typically a safer option.
Another option would be to invest in mutual funds. These investments are professionally managed, meaning that they are a good option for those who may not have a lot of experience with investing. Additionally, mutual funds can often be tailored to the investor's individual needs, making them a good option for those nearing retirement.
Finally, it would be wise to consider investing in cash equivalents, such as certificates of deposit (CDs). These investments have low risk and typically provide consistent returns, making them a good choice for those who need more predictable returns.
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Read the case study and answer the questions that follow:
STARPLUS LIMITED: PLANNING FOR 2023 Starplus Limited is well known for its focus on customer satisfaction and this is highlighted in the company profile. Their "About Us" page on their website tells a story of service and growth, all centred around their customers. This, combined with the excellent quality products offered, has contributed to its success in the marketplace. At the end of 2022 the fixed assets (at carrying value) totalled R5 300 000, inventories amounted to R5 200 000, R2 100 000 was owed by trade debtors, cash in the bank amounted to R400 000, the ordinary share capital balance was R4 500 000, the accumulated undistributed profits amounted to R1 700 000, an amount of R5 900 000 was owed to Zap Bank in respect of a long-term loan and R900 000 was owed to the trade creditors. The sales of Starplus Limited for 2022 amounted to R8 000 000. The following projections are forecasts were made for 2023: Machinery with a cost price of R1 000 000 and accumulated depreciation of R1 000 000 is expected to be scrapped at the end of 2023. Machinery with a cost price of R6 400 000 will be purchased to replace it. Total depreciation for 2023 is estimated to be R800 000. The sales (all on credit) for 2023 are expected to increase by 30%. The gross margin and net profit margin ratios are estimated to be 30% and 15% respectively. Purchases for 2023 (all on credit) are projected at R6 600 000. Accounts receivable is based on a collection period of 36.5 days. The company expects to show a net increase in cash of R130 000 during 2023. 250 000 ordinary shares are expected to be issued at R4 each during January 2023. Dividends of R800 000 are expected to be recommended by the directors at the end of December 2023. The dividends will be paid out during 2024. R1 500 000 will be paid to Zap Bank during 2023. This includes R500 000 for interest on loan. Accounts payable must be calculated using the percentage-ofsales method. The amount of external funding (non-current debt) required must be calculated.
In keeping with the company’s growth strategy, the directors have identified two possible investment opportunities for 2023 viz. Project A and Project B. An investment of R4 000 000 is required for each project and a scrap value of R400 000 is anticipated for Project A only. The useful life of each project is estimated to be five years. Project A is expected to generate net profits of R700 000 (Year 1), R650 000 (Year 2), R600 000 (Year 3), R450 000 (Year 4) and R400 000 (Year 5). Project B is expected to generate net a net profit of R520 000 per year over its useful life. Depreciation is calculated on a straightline basis. The company’s cost of capital is predicted to be 15%. The decision of which project to invest in, if any, will be made at a later stage.
QUESTIONS 1.
1. Prepare the Pro Forma Statement of Financial Position as at 31 December 2023. (Ignore the investment opportunities.) (15 marks)
2. Refer to the investment opportunities for 2023 and calculate the following. (Ignore taxes.)
2.1 Accounting Rate of Return on average investment of Project A (expressed to two decimal places). (4 marks)
2.2 Net Present Value of both projects. (6 marks)
2.3 Internal Rate of Return of Project B (expressed to two decimal places) using interpolation. (5 marks)
Your case study should include a Table of Contents page and a bibliography.
Text: Arial or Times New Roman (12); Spacing 1½ lines. All text must be justified at each margin.
Where applicable, use the formats and formulas from your module guide.
Number each solution according to the numbering in the case study. Solutions generated by software packages will not be marked.
Where applicable, the relevant workings must be shown.
A case study is an assessment of a particular circumstance. The benefit of a case study is that they produce a more itemized image of a person than different strategies do.
The case study is solved below -
2.0 Pro Forma Statement of Financial Position as at 31 December 2023
Assets
Non-Current Assets
Property, Plant and Equipment
Machinery (cost R6 400 000 less accumulated depreciation R1 800 000) R4 600 000
Total Non-Current Assets R4 600 000
Current Assets
Inventories R6 600 000
Trade Debtors (R2 100 000 x 1.3) R2 730 000
Cash in Bank R530 000
Total Current Assets R9 860 000
Total Assets R14 460 000
Equity and Liabilities
Equity
Ordinary Share Capital (R4 500 000 + R4 x 250 000) R5 500 000
Accumulated Undistributed Profits R1 700 000
Total Equity R7 200 000
Non-Current Liabilities
Long-term Loan R4 400 000
Current Liabilities
Trade Creditors R900 000
Accounts Payable (30% x R13 800 000) R4 140 000
Dividend Payable R800 000
Bank Overdraft R20 000
Total Current Liabilities R5 860 000
Total Equity and Liabilities R14 460 000
Investment opportunities for 2023
2.1 Accounting Rate of Return on an average investment of Project A
Average Investment = (Initial Investment + Scrap Value)/2 = (R4 000 000 + R400 000)/2 = R2 200 000
ARR = (Average Annual Net Income/Average Investment) x 100%
ARR for Project A = [(R700 000 + R650 000 + R600 000 + R450 000 + R400 000)/5]/R2 000 000) x 100%
= (R2 800 000/5)/R2 200 000) x 100%
= 25.45%
Therefore, the Accounting Rate of Return on average investment of Project A is 25.45%.
2.2 Net Present Value of both projects
The discount factor for year 1 at 15% is calculated as:
Discount factor (DF) = 1 / (1 + r)t = 1 / (1 + 0.15)1 = 0.8696
The Net Present Value (NPV) of Project A is calculated as:
Year 0: -R4 000 000
Year 1: R700 000 x DF = R609 720
Year 2: R650 000 x DF^2 = R503 068
Year 3: R600 000 x DF^3 = R414 595
Year 4: R450 000 x DF^4 = R288 049
Year 5: R400 000 x DF^5 = R218 341
NPV of Project A = R34 773
The NPV of Project B is calculated as:
NPV of Project B = (R520 000 x (1 - (1 + 0.15)^-5))/0.15 - R4 000 000
= R1 732 281.64 - R4 000 000
= -R2 267 718.36 (as NPV is negative, the project is not acceptable)
Therefore, the company should not invest in Project B.
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Looking at the Treasury yield curve you see that the two-year Treasury bond is selling at an interest rate of 3.84 percent and the three-year Treasury bond sells at a rate of 3.97 percent. What is the implied one-year interest rate two years from now? (Enter the answer as a percentage accurate to two decimal places. Just enter a number - do not add a % symbol or any other punctuation.)
Answer : The implied one-year interest rate two years from now is -1.31 percent.
Looking at the Treasury yield curve you see that the two-year Treasury bond is selling at an interest rate of 3.84 percent and the three-year Treasury bond sells at a rate of 3.97 percent. Two-year and three-year Treasury bonds with interest rates of 3.84 percent and 3.97 percent, respectively, are used in this problem.
The implied one-year interest rate two years from now can be calculated using the equation that relates the two rates. The equation is as follows : One plus the yield on a two-year bond equals (one plus the yield on a one-year bond) multiplied by (one plus the implied yield on a one-year bond two years from now). (1 + r2)^2 = (1 + r1) * (1 + r1 2 )The formula is algebraically rearranged and simplified as follows : r1 2 = [(1 + r2) / (1 + r1)] - 1.
Plugging in the appropriate values, the implied one-year interest rate two years from now is: r1 2 = [(1 + 0.0384) / (1 + 0.0397)] - 1r1 2 = - 0.01306, or -1.31 percent. Therefore, the implied one-year interest rate two years from now is -1.31 percent.
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for a given downward-sloping, linear demand curve, total revenue is maximized at the point where for a given downward-sloping, linear demand curve, total revenue is maximized at the point where demand is perfectly elastic. price elasticity is 0. price elasticity is equal to 1. where demand is perfectly inelastic. price elasticity is greater than 1.
For a given downward-sloping, linear demand curve, total revenue is maximized at the point where price elasticity is equal to 1. This is known as the unit elastic point.
At this point, the quantity demanded and the price are at a level that produces the maximum amount of total revenue for the seller. If the price elasticity is greater than 1, it means that the demand is elastic and a small change in price will result in a larger change in quantity demanded. If the price elasticity is less than 1, it means that the demand is inelastic and a small change in price will result in a smaller change in quantity demanded. Therefore, the point where price elasticity is equal to 1 is the optimal point for maximizing total revenue.
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A household consists of a married couple, their two-year-old daughter. the couple's daughter has no income and lived with her parents all of last year. How many exemptions can the couple claim on last year's tax return if they file with the married filling jointly status
The total number of exemptions the couple can claim on their last year's tax return if they file with the married filing jointly status would be three. Option D
How many exemptions can the can the couple claim on last year's tax returnFor tax purposes, an exemption is a deduction from an individual's taxable income for themselves and their dependents. In the given scenario, the household consists of a married couple and their two-year-old daughter. The couple can claim one exemption for themselves and one exemption for their daughter, as she is their dependent and has no income.
Therefore, the total number of exemptions the couple can claim on their last year's tax return if they file with the married filing jointly status would be three (one for each spouse and one for their dependent daughter).
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suppose the government imposes a price ceiling on milk of $5 per gallon. a. how many gallons of milk will be bought and sold each day after the imposition of the price ceiling? 400 gallons per day b. what will be the excess demand for milk each day after the imposition of the price ceiling? 600 gallons per day c. what will be consumer surplus after the imposition of the price ceiling? $ 900 per day d. what will be producer surplus after the imposition of the price ceiling? $ 2100 per day e. what will be the loss in total economic surplus each day that results from the imposition of the price ceiling? $ 3000 per day
A price ceiling is a legal limit on the maximum price at which a good or service can be sold in the market. In this scenario, the government has imposed a price ceiling of $5 per gallon on milk.
As a result, the quantity of milk demanded by consumers exceeds the quantity supplied by producers, leading to excess demand or a shortage of 600 gallons per day. This shortage can lead to a black market or a rationing system, which can result in further inefficiencies. The quantity of milk bought and sold each day after the imposition of the price ceiling is 400 gallons per day, which is lower than the equilibrium quantity of milk that would have been sold in the absence of a price ceiling. This reduced quantity is due to the fact that the price ceiling creates a disincentive for producers to supply more milk to the market since they cannot charge a higher price for their product. Consumer surplus, which is the difference between the maximum price consumers are willing to pay and the actual price they pay, decreases after the imposition of the price ceiling. However, it is still present, and its value is $900 per day, which represents the net benefit that consumers receive from purchasing milk at a price lower than their maximum willingness to pay. Producer surplus, which is the difference between the price at which producers are willing to supply milk and the actual price they receive, increases after the imposition of the price ceiling. This increase is due to the fact that the price ceiling prevents producers from charging higher prices and allows them to charge a price that is closer to their minimum acceptable price. The value of producer surplus is $2100 per day. Finally, the total economic surplus, which is the sum of consumer surplus and producer surplus, decreases by $3000 per day after the imposition of the price ceiling. This loss in economic surplus represents the inefficiency caused by the price ceiling, which reduces the quantity of milk sold in the market and prevents the market from achieving the equilibrium price and quantity that would maximize economic welfare.
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An investor has $92,000 to invest in a $376,000 property. He can obtain either Alternative 1: A $284,000 loan at 9.8 percent for 20 years or Alternative 2: A $212,000 loan at 9 percent for 20 years and a second mortgage for $72,000 at 13 percent for 20 years. All loans require monthly payments and are fully amortizing. Required: a. Which alternative should the borrower choose, assuming he will own the property for the full loan term? b. Which alternative should the borrower choose if the borrower plans to own the property only five years? c1. Which alternative should the borrower choose, assuming he will own the property for the full loan term and the second mortgage has a 10-year term? c2. Which alternative should the borrower choose, assuming that the borrower plans to own the property only for five years and the second mortgage has a 10-year term?
The alternative which the borrower should choose assuming that the borrower plans to own the property only for 5 years is:
a. The investor should choose Alternative 1. This loan will have a lower interest rate and overall cost over the course of the full loan term.
b. The investor should choose Alternative 1. Although the second mortgage has a lower interest rate, this loan will be more expensive over the course of the shorter term.
c1. The investor should choose Alternative 2. This loan will be more cost effective over the full 10-year term of the second mortgage.
c2. The investor should choose Alternative 1. This loan will be more cost effective over the shorter 5-year term.
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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $310,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product Selling Price Quarterly Output A $ 12. 00 per pound 11,400 pounds B $ 6. 00 per pound 17,900 pounds C $ 18. 00 per gallon 2,600 gallons
Product A and Product C unit selling prices and total output at the split-off point.
Any company that turns raw materials into finished products is a manufacturer. They offer these products for sale to consumers, wholesalers, distributors, retailers, and other producers who want to make more intricate products.
Product A Product B Product C
Selling price after further processing 27.30 22.3 36.30
Selling price at the split-off point 22.00 16.00 28.00
Incremental revenue per pound or gallon 5.30 6.30 8.30
Total quarterly output in pounds or gallons 13400 20900 4600
Total incremental revenue 71020 131670 38180
Total incremental processing costs 75970 109395 48260
Financial advantage (disadvantage)
of further processing (4950) 22275 (10080)
2 Product A and Product C should be sold at the split-off point
Product B should be processed further.
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Big Pear has 10,000 outstanding bonds. These bonds have a 30-year maturity and $1,000 par value. Their yield to maturity is 10%, they pay interest semiannually, and they sell at a price of $810.71. What is the bond's coupon interest rate?
Question 16 options:
6%
7%
8%
9%
10%
4%
The answer to the question is that the bond's coupon interest rate is approximately 6%.
To calculate the coupon interest rate of the bonds, we first need to understand the relationship between the bond's price, its par value, its yield to maturity, and its coupon rate.
The coupon rate of a bond is the annual interest rate that the bond pays. It is based on the bond's par value, which in this case is $1,000.
The yield to maturity (YTM) is the total return anticipated on a bond if it is held until it matures. It takes into account the bond's current market price, its par value, the coupon interest paid, and the time left until maturity.
The price of a bond can be calculated using the formula:
Price = (Coupon payment / (1 + YTM/2)^n) + (Coupon payment / (1 + YTM/2)^(n-1)) + ... + (Coupon payment + Par value) / (1 + YTM/2)^n
where n is the number of semiannual periods.
With the given values, we can plug them into the formula and solve for the coupon payment, which will give us the coupon rate since we know the par value. Alternatively, we can iterate through different coupon rates until we find one that matches the given values.
Using the first method, we can set up the equation as follows:
[tex]810.71 = 50 / (1 + 0.05)^1 + 50 / (1 + 0.05)^2 + ... + 50 / (1 + 0.05)^60 + 1000 / (1 + 0.05)^60[/tex]
Simplifying this equation gives us:
[tex]810.71 = 50 * (1 - 1 / (1 + 0.05)^60) / 0.05 + 1000 / (1 + 0.05)^60[/tex]
Solving for the unknown variable of 0.05 (which represents the semiannual interest rate) gives us the answer of approximately 6.14%.
Therefore, the answer to the question is that the bond's coupon interest rate is approximately 6%.
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oposal should be prepared for which of the following reasons? to announce a new wellness program for employees to make an offer to solve problems, provide services, or sell products to deliver bad news to employees
The proposal should be prepared to announce a new wellness program for employees, make an offer to solve problems, provide services, or sell products, and to deliver bad news to employees.
A proposal is an important document that outlines a plan of action or provides an offer from one party to another. Proposals are often used to announce new programs or services to customers or employees.
They can also be used to make an offer to solve problems, provide services, or sell products. Finally, proposals can also be used to deliver bad news to employees.
When creating a proposal, the writer should ensure that all relevant information is included and that the language used is clear and concise.
All information should be factually accurate, and the proposal should include a step-by-step explanation of the plan or offer. Additionally, the proposal should include any terms and conditions that both parties must agree to in order to move forward.
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our client turned 22 years old today and expects to start working today. Your client expects to be paid once a year, at the end of each year. Your client expects to be paid $50,000 at the end of the first year and for this amount to grow each year by five percent. Your client expects to earn eight percent per year on all investments forever.
Your client’s pays a Social Security tax of 6.2% on all income at or below the Social Security taxable income limit. If your client’s income is above the threshold then your client’s tax is capped, i.e., your client would pay 6.2% of the threshold. The current Social Security taxable income limit is $160,200 and this threshold is expected to grow by 4% each year forever.
Your client can either retire at 62, 65, or 70 years. Once your client retires, this individual expects to receive Social Security disbursements once per year, with the first payment one year after the retirement date, and continuing in annual increments. So, if an individual retires at 62, the first Social Security disbursement would be at 63.
Today, Social Security paid $13,236 to individuals that retired at 62 years of age, $16,809.72 to individuals that retired at 65 years of age, and $23,427.72 to individuals that retired at 70 years of age. In one year, these disbursements will be $13,765.44 to individuals that retired at 62 years of age, $17,482.11 to individuals that retired at 65 years of age, and $24,364.83 to individuals that retired at 70 years of age. After one year, these disbursements are expected to continue to grow each year by four percent forever.
You should assume that your client receives a salary in the year your client retires and starts receiving social security one year after the retirement date
Our client will pay a Social Security tax of 6.2% on all income at or below the Social Security taxable income limit, which is currently $160,200. This limit is expected to grow by 4% each year.
Our client, who turned 22 years old today, expects to start working today and to be paid once a year, at the end of each year. This amount will be $50,000 at the end of the first year, and then increase by five percent each year. In addition, our client can expect to earn eight percent per year on all investments.
Our client will pay a Social Security tax of 6.2% on all income at or below the Social Security taxable income limit, which is currently $160,200. This limit is expected to grow by 4% each year.
When the time comes for our client to retire, they can choose to do so at 62, 65, or 70 years of age. Once our client retires, they can expect to receive Social Security disbursements once per year, with the first payment one year after the retirement date.
For example, if the individual retires at 62, they will receive their first Social Security disbursement at 63.
Currently, Social Security disbursements are $13,236 for individuals that retired at 62 years of age, $16,809.72 for individuals that retired at 65 years of age, and $23,427.72 for individuals that retired at 70 years of age. In one year, these amounts are expected to increase to $13,765.44, $17,482.11, and $24,364.83, respectively.
After that, these disbursements are expected to continue to grow each year by four percent forever.
Finally, it should be noted that your client can still receive a salary in the year that they retire and start receiving Social Security one year after their retirement date.
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in general, compared with firms that compete in only one market, among firms that face one another in multiple markets there is: a. similar competitive rivalry. b. more competitive rivalry. c. less competitive rivalry. d. no competitive rivalry.
The correct answer is b, more competitive rivalry. Firms that compete in multiple markets typically have a more intense competitive rivalry than firms that only compete in one market.
This is because the firms that compete in multiple markets are exposed to a larger customer base, and thus have a greater incentive to differentiate their product or service from those of their competitors in order to gain an advantage in the market. Furthermore, firms that compete in multiple markets may encounter more competition from new entrants due to the larger customer base and more attractive market.
This can further drive up competition in the market, leading to a more intense competitive rivalry. On the other hand, firms that only compete in one market may face less intense competition due to the smaller customer base, as well as fewer threats from new entrants. This can lead to a less intense competitive rivalry.
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In our previous discussions, we have been motivated by the idea that putting $200 per month ($2,400 per year) into the S&P 500 index can result in a portfolio of $1 million after 40 years (age 25 to 65). Investing $200 per month is called "dollar cost averaging" because you invest no matter if the market is up or down. The stock market has a lot of ups and downs, which means that return on investment is risky (i.e., return is uncertain, as shown by the plot below for the S&P 500 and Nasdaq indexes. As shown by the plot above, markets have a "two steps forward and one step backward" movement over time. But the interesting fact is that the risk decreases as investment holding period increases. The plot below shows that the probability of a positive return on investment increases the longer that you hold the stock. Ideally, we would like to "time the market" by trading the ups and downs – that is, increase our return by selling when the market starts going down and buying back in when the market starts going back up. The problem is that markets are very noisy, and start / stop erratically, so it is difficult to predict the market. As shown in the articles below, the market tends to make big moves up or down – so that gains or losses are concentrated in a few days – most of the time, the market is going sideways. question: The market is way down right now (see plot at top of page) because of concerns over economic issues such as interest rates and inflation. Should people with cash invest now, or wait for the market to recover? Explain your thinking.
To seek security from investment, it's best to wait for the market to recover. This is because if the market is unstable it will increase the risk of loss.
The decision to invest now or wait for the market to recover depends on a person's individual risk tolerance and financial goals. It is important to consider how long you plan to stay invested in the market, as the risk of loss decreases the longer you hold.
Dollar cost averaging can be used to help manage risk and increase the chance of a positive return on investment. With dollar cost averaging, you invest a fixed amount at regular intervals (e.g. $200 per month) regardless of whether the market is up or down. This allows you to take advantage of dips in the market, buying more shares when the price is low.
Additionally, it may be beneficial to take a long-term approach to investing, as the markets tend to go up and down in the short-term, but are generally rising in the long-term. That being said, it is important to assess your own risk tolerance before investing, as there is no guarantee that the market will recover.
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the production possibilities frontier shifts inward if: group of answer choices technology improves. the capital stock increases. either unemployment increases or resources are destroyed. unemployment increases. resources are destroyed.
The production possibilities frontier shifts inward if either unemployment increases or resources are destroyed. The correct option is C.
The production possibilities frontier (PPF) is a visual depiction of the potential outcomes of two items that an economy can manufacture with a fixed amount of resources. It shows the optimum mix of two goods that an economy can generate, provided that all other variables are consistent. The PPF is a graphical representation of the economy's opportunity costs. The economy's capacity to manufacture goods is limited by its resource availability.
Hence, the economy must choose the most efficient and optimal approach to use those resources to generate goods. The inward shift of the production possibilities frontier means the economy's capacity to manufacture products is declining.
Factors that can cause this shift include a reduction in the workforce, a reduction in resources, natural disasters, and inadequate technical expertise, among others. In the current question, either increasing unemployment or destroying resources could cause the PPF to shift inwards. Hence, the correct answer is option C.
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Question 2 (25 Marks) Beef and Steak are prestigious chefs and partners in an upmarket gourmet restaurant trading as "The Grill House". They share profits and losses in the ratio 3:2. On 31 July 2021 the statement of financial position indicated the following: 1. On 1 August 2021 Mouton obtained a one third (1/3) in interest in the partnership by depositing
N$450000
into the cheque account of the partnership. 2. The partners do not want to show the general reserve on the statement of financial position after the admission of Mouton. 3. The partnership agreement states the following:
3.1
Each partner is entitled to salary of N
$5000
per month. 3.2 Partners are entitled to interest on capital of
10%
of the opening balance of their capital accounts. Newly admitted partners earn
10%
of their contribution apportioned for the number of months that they served as partners. 4. Sales for the year amounted to
N$3000000
. All sales were made in cash. 5. Inventory purchases for the year amounted to
N$2500000
. All purchases were made in cash. 6. Inventory on hand at 31 July 2022 amounted to
N$320000
. 7. Operating expenses of
N$160000
was incurred and paid in cash during the year. 8. Cash withdrawals by the partners during the year were as follows: REQUIRED: 1. Calculate the new profit share ratio after the admission of Mouton on 1 August 2021. (2 marks) 2. Provide the journal entries to record the admission of Mouton on 1 August 2021. Journal narrations are not required. ( 8 marks) 3. Prepare the statement of financial position of the partnership on 31 July 2022. (15 marks) Comparative figures are not required.
After a new partner has been admitted or an existing partner retires, the partners divide their profits and losses according to their new profit sharing ratio.
What is new profit sharing ratio?A change in the former partners' profit-sharing percentage also occurs at the time of the admission of a new partner. After accounting for both the former partners' and the new partner's respective losses, the new profit sharing ratio is determined. Here, we'll go over several scenarios that will help us figure out the new profit-sharing ratio. The new profit sharing ratio is the percentage that all partners, including new or incoming partners, will use to divide the company's future gains and losses.
Calculation of New Profit Share Ratio:
Before the admission of Mouton:
Beef's profit share = 3 / (3+2) = 3/5
Steak's profit share = 2 / (3+2) = 2/5
After the admission of Mouton:
The partnership agreement states the following: 3.1
Hence, new profit sharing ratio = 3 : 1
New profit sharing ration = old ratio * combined share
Since Mouton takes 1/3 th of the share, let us assume that the total profit for share after Mouton is admitted is 1.
Therefore, Beef and Steak share after Mouton is admitted = 1 - 1/3 = 4/5 = combined share of Beef and Steak.
New profit sharing ration = old ratio * combined share
Hence the new sharing ratio = 3/5 : 2/5 : 4/5
The journal entries of "The Grill House" are shown below:
On July 31
Cr Sales $3000000
Dr Inventory purchases $2500000
Cr Inventory on hand N$320000
Dr Operating expenses $160000
Cr Mouton $450000
Dr Mouton 750,000
Dr Beef, capital, 65,000
Dr Steak, capital, 30.00
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The articles of Milkline (Z) Ltd provide that any dispute between the company and its members should be referred to arbitration. Tick Tembo who is both Director and Shareholder is alleged to have improperly drawn allowances. The Company has commenced proceedings in the High Court to recover the money. Tick Tembo wishes to have the proceedings in the High Court discontinued and the matter referred to arbitration as provided for in the articles. advise Tembo
The most popular method for resolving shareholder agreement disputes is arbitration. Shareholder agreements contain arbitration clauses to settle disputes and are governed by Indian law.
A shareholder suing a director is it legal?Because only the corporation, not a particular shareholder, may initiate a lawsuit against a negligent director, a shareholder may attempt to file what is known as a "derivative claim" against the corporation. It is essential that the accusations are directed towards the company's executives.
What exactly are shareholder and director conflicts?Allegations made against the majority of the directors by a minority shareholder who is not a director are at the heart of the majority of shareholder disputes. If the directors' acts go against their fiduciary duties, the litigation is frequently filed.
How is an investor dispute resolved?By a majority vote at board meetings or by a shareholders' meeting based on share ownership, the majority of less significant issues can typically be resolved. Yet most often, there are two owners who both have an equal ownership stake in the business, which might result in a deadlock if neither side is willing to give ground.
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on march 31, 2024, a company purchased the right to remove gravel from an old rock quarry. the gravel is to be sold as roadbed for highway construction. the cost of the quarry rights was $197,800, with estimated salable rock of 23,000 tons. during 2024, the company loaded and sold 5,100 tons of rock and estimated that 17,900 tons remained on december 31, 2024. on january 1, 2025, the company estimated that 10,200 tons still remained. during 2025, the company loaded and sold 15,300 tons. the company uses the units-of-production method. the company would record depletion in 2024 in the amount of: note: do not round depletion rate per ton. multiple choice $44,785. $56,356. $43,860. $32,895.
The company would record depletion in 2024 in the amount of $44,785.
To calculate depletion, we need to determine the depletion rate per ton and then multiply it by the number of tons sold during the year.
Depletion rate per ton = Cost of quarry rights / Estimated salable rock
Depletion rate per ton = $197,800 / 23,000 tons = $8.60 per ton
Depletion expense for 2024 = Depletion rate per ton x Tons sold in 2024
Depletion expense for 2024 = $8.60 x 5,100 tons = $43,860
The remaining estimated salable rock as of December 31, 2024, was 17,900 tons, so the remaining cost to be depleted was:
Cost to be depleted = Depletion rate per ton x Remaining estimated salable rock
Cost to be depleted = $8.60 x 17,900 tons = $153,940
The total cost to be depleted over the life of the quarry is:
Total cost to be depleted = Cost of quarry rights - Salvage value
Total cost to be depleted = $197,800 - 0 = $197,800
Therefore, the depletion rate for 2025 is:
Depletion rate per ton = (Total cost to be depleted - Cost to be depleted as of December 31, 2024) / Estimated remaining salable rock
Depletion rate per ton = ($197,800 - $153,940) / 10,200 tons = $4.29 per ton
Depletion expense for 2025 = Depletion rate per ton x Tons sold in 2025
Depletion expense for 2025 = $4.29 x 15,300 tons = $65,697
Thus, the company would record depletion in 2024 in the amount of $44,785 ($43,860 + ($153,940/$197,800)*($65,697))
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The management has agreed not to take further action, ________ you do not commit any further violations of company policy
The management has promised to refrain from taking further action until you refrain from breaking company rules in the future.
The optimal utilisation of resources is facilitated by organisation management through strict planning and control at work. In order for each employee to perform their tasks within the allotted time, it helps to bring out their greatest qualities. According to its organisational structure, an organization's aims are focused on particular duties. Good organisational structures outline each employee's responsibilities and how they fit into the overall system. In contrast to a centralised structure, which has a clearly defined line of command, a decentralised organisation offers practically every employee a significant amount of personal agency.
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The stock market jumped 1% today. Lending Tree, a peer-to-peer
lender, has a average daily range of 5.5%. Are these large
movements and how do we tell?
A 1% jump in stock market may be considered a moderate movement, as daily fluctuations of up to 2-3% are not uncommon.
What is stock market?The stock market is platform where investors can buy and sell the shares of publicly traded companies. These companies issue shares of stock as a way to raise capital, and investors can purchase these shares as a way to invest in the company's growth and future profits. The stock market serves as a marketplace for these transactions, with buyers and sellers coming together to determine the price of a particular stock. The price of a stock is influenced by a variety of factors, including the company's financial performance, overall market conditions, and investor sentiment. Investors can make money through buying stocks that increase in value and selling them for a profit, or by earning dividends from the company's profits.
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Roy's Welding common stock sells for $51.92 a share and pays an annual dividend that increases by 2.6 percent annually. The market rate of return on this stock is 11.2 percent. What is the amount of the last dividend paid?
Given Information: Common stock of Roy's Welding sells for $51.92 per shareIt pays an annual dividend that increases by 2.6%The market rate of return on this stock is 11.2%.The amount of the last dividend paid To determine the amount of the last dividend paid, we will apply the formula; Gordon Model, Dividend (D) = D0 * (1+g)
Where;D0 = Dividend at the start of the first year g = Annual dividend growth rate.
Therefore, the amount of the last dividend paid (D0) = D1 / (1+g)Where;D1 = Dividend paid in the first year
Steps involved in the solution;
Step 1: Calculate the dividend growth rate
Step 2: Calculate the required rate of return
Step 3: Calculate the price of the stock
Step 4: Calculate the dividend amount
Solution:
Step 1: Calculation of dividend growth rate. Annual dividend growth rate, g = 2.6%Therefore, g = 2.6 / 100 = 0.026
Step 2: Calculation of required rate of return. The market rate of return on this stock, r = 11.2%Therefore, r = 11.2 / 100 = 0.112
Step 3: Calculation of the price of the stock The price of a share of common stock is given as $51.92Step 4: Calculation of the dividend amount, We can use the formula, Dividend (D) = D0 * (1+g)The last dividend amount paid (D0) = D1 / (1+g)Where;D1 = Dividend paid in the first year
We can use the Gordon Model to calculate D1D1 = D0 * (1+g) => D0 = D1 / (1+g)We will use the Gordon model to calculate the dividend in the first yearD1 = D0 * (1+g)D1 = D0 * (1+0.026)D1 = D0 * 1.026Let D0 = x
Since the stock pays annual dividends, we can assume that the last dividend paid is the dividend paid in the previous year. Therefore, D0 is equal to the dividend paid last year. Using the formula; $51.92 = x / (0.112 - 0.026)X = 51.92 * 0.086 = $4.47The amount of the last dividend paid is $4.47Answer: The amount of the last dividend paid is $4.47.
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there are two bonds, corporate bond yields 12% rate of return while municipal bond yield 7% rate of return. if your marginal tax rate is 26%, what is the after-tax rate for corporate bond? what is the after-tax rate for municipal bond? which one would you choose?
The after-tax rate for the municipal bond is 5.18%
Given, Corporate bond yields 12% rate of return while municipal bond yield 7% rate of return. If your marginal tax rate is 26%, we have to calculate the after-tax rate for corporate bond and municipal bond. After-tax rate for corporate bond:
The formula to calculate the after-tax rate for corporate bond is: After-tax rate = (1 - tax rate) × Yield
After substituting the given values, we get
After-tax rate = (1 - 0.26) × 12
After-tax rate = 0.74 × 12
After-tax rate = 8.88
Therefore, the after-tax rate for the corporate bond is 8.88%. After-tax rate for municipal bond:
The formula to calculate the after-tax rate for municipal bond is:
After-tax rate = Yield × (1 - tax rate)
After substituting the given values, we get
After-tax rate = 7 × (1 - 0.26)
After-tax rate = 7 × 0.74
After-tax rate = 5.18
Therefore, the after-tax rate for the municipal bond is 5.18%.
As we can see, the after-tax rate for the corporate bond is more than the after-tax rate for the municipal bond. So, we would choose the corporate bond over the municipal bond.
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