The correct answer is e. i, iv, and v. The following are true, The profitability index is only completely reliable if the set of projects, taken following the profitability index ranking completely exhausts the available resource and there is only a single relevant resource constraint.
Since oil industry stocks have high standard deviations, such stocks should not be included in a well-diversified portfolio of a risk-averse investor. A downward-sloping term structure of interest rates often precedes a recession.
If a portfolio has a positive investment in every asset, the standard deviation on the portfolio should be greater than that on every asset in the portfolio.
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Robotic Atlanta Inc. just paid a dividend of $4.00 per share (that is, D0=4.00 ). The dividends of Robotic Atlanta are expected to grow at a rate of 20 percent next year (that is, g1=.20 ) and at a rate of 10 percent the following year (that is, g2 =.10 ). Thereafter (i.e., from year 3 to infinity) the growth rate in dividends is expected to be 5 percent per year. Assuming the required rate of return on Robotic Atlanta stock is 16 percent, compute the current price of the stock. (Round your answer to 2 decimal places and record your answer without dollar sign or commas). Your Answer
The current price of the stock is $277.92 (approx).Note: The formula used here is the Gordon Growth Model.
Given,
The dividend paid by Robotic Atlanta = D0 = $4.00
Expected growth rate of dividends next year = g1 = 20%
Expected growth rate of dividends in the following year = g2 = 10%
Thereafter growth rate = 5%
Required rate of return = r = 16%
We need to calculate the current price of the stock using the above data.
Now, the formula to calculate the price of the stock at any time t can be expressed as:
Pt = D(t+1) / (r-g)where D(t+1) is the dividend to be received at the end of period t+1Pt is the price of the stock at time t, and r and g are the required rate of return and the expected growth rate of dividends, respectively.
Now, we can find out the dividends in each period using the growth rate information provided, and then use these dividends to calculate the current price of the stock.
So, Dividend in the first year, D1 = D0 (1+g1) = 4.00 * (1+0.20) = $4.80
Dividend in the second year, D2 = D1 (1+g2) = 4.80 * (1+0.10) = $5.28
Now, the dividends will grow at 5% per year beyond the second year.
Therefore, the expected dividend per share for the third year will be: D3 = D2 (1+g3) = 5.28 * (1+0.05) = $5.54
Using the formula for the current price of the stock, we can now find out the current price of the stock:
P0 = D1 / (r-g1) + D2 / (1+r)^2 + D3 / (1+r)^3+ … + D(infinity) / (r-g(infinity))
P0 = D1 / (r-g1) + D2 / (1+r)^2 + D3 / (1+r)^3+ … + D(infinity) / (r-g(infinity))
P0 = 4.80 / (0.16-0.20) + 5.28 / (1.16)^2 + 5.54 / (1.16)^3+ … + D(infinity) / (0.16-0.05)P0 = $120.00 + $4.04 + $3.19+ … + $150.36P0 = $277.92 (approx)
Therefore, the current price of the stock is $277.92 (approx).Note: The formula used here is the Gordon Growth Model.
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Explain the following Quranic passage, discussing at least two relevant key concepts/principles from the class, esp. using material about belief in God/fundamentals of belief/the Quran. Write around two paragraphs. Use relevant class material, avoid fluff.
It is God who sends water down from the sky and with it revives the earth when it is dead. There truly is a sign in this for people who listen….
It is God who has created you and in time will cause you to die. Some of you will be reduced, in old age, to a most abject state, so that after having knowledge, they will know nothing at all: God is truly all knowing and all powerful. (Sura 16: 65 and 70)
This Quranic passage emphasizes two key concepts: the power of God in providing sustenance and life, and the reminder of mortality and the eventual return to God.
The first concept highlights God's role as the ultimate provider, who sends down water from the sky to revive the earth and bring it back to life. This serves as a sign for those who listen, indicating the existence and power of God. The second concept emphasizes the transitory nature of human life and the inevitability of death. It acknowledges that some individuals may experience a decline in knowledge and abilities as they age. These verses emphasize God's omniscience and omnipotence, underscoring the importance of recognizing God's authority and the temporary nature of worldly possessions and abilities. In these verses, the Quran emphasizes two fundamental principles of belief: the recognition of God's role as the sustainer and provider of life, and the acknowledgment of human mortality and the eventual return to God. The passage highlights the divine power of God, who sends down water from the sky to revive the earth, illustrating His ability to bring forth life from the dead. This serves as a clear sign for those who are attentive and perceptive, reinforcing the principle of recognizing and appreciating God's existence and authority.
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A woman deposits $6,000 at the end of each year for 9 years in an account paying 5% interest compounded annually. (a) Find the final amount she will have on deposit. (b) Her brother-in-law works in a bank that pays 4% compounded annually. If she deposits money in this bank instead of the other one, how much will she have in her account? (c) How much would she lose over 9 years by using her brother-in-law's bank? a (a) She will have a total of $ on deposit. (Simplify your answer. Round to the nearest cent as needed.) (b) she will have a total of $ on deposit in hia brother in law bank. (Simplify your answer. Round to the nearest cent as needed.) (c) She would loose $ over 9 years by using her brother in law bank. (Simplify your answer. Round to the nearest cent as needed.)
(a) The final amount she will have on deposit is $7,040.60.
(b) If she deposits money in her brother-in-law's bank, she will have a total of $6,751.56.
(c) She would lose $289.04 over 9 years by using her brother-in-law's bank.
(a) To calculate the final amount, we use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (initial deposit), r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years. Plugging in the values, we get A = 6000(1 + 0.05/1)^(1*9) = $7,040.60.
(b) Using the same formula with the interest rate of 4% and the same deposit and time period, we get A = 6000(1 + 0.04/1)^(1*9) = $6,751.56.
(c) The difference between the two amounts is $7,040.60 - $6,751.56 = $289.04, indicating the amount she would lose over 9 years by using her brother-in-law's bank.
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discuss what a poison distribution is and how it is used in a
business environment
I believe there might be a typo in your question. It seems like you meant to ask about "position distribution" instead of "poison distribution." I'll provide an explanation of position distribution in a business environment.
Position distribution, also known as channel distribution or place distribution, refers to the process of getting products or services from the manufacturer to the end consumer. It involves selecting and managing the channels or intermediaries through which goods or services are made available to customers.
In a business environment, position distribution is crucial for ensuring that products or services reach the intended target market efficiently and effectively. It involves making strategic decisions about the most appropriate channels to use, such as wholesalers, retailers, distributors, or direct sales. The goal is to create a distribution network that optimizes the availability, accessibility, and visibility of products or services.
Here are some key aspects and considerations related to position distribution in a business environment:
1. Channel Selection: Businesses need to carefully choose the most suitable channels to distribute their products or services. Factors to consider include the nature of the product, target market characteristics, geographical reach, cost-effectiveness, and channel partner capabilities.
2. Channel Management: Once channels are selected, effective management is essential to ensure smooth distribution operations. This involves establishing relationships with channel partners, providing necessary support and training, managing inventory, implementing pricing strategies, and monitoring performance.
3. Supply Chain Integration: Position distribution is closely tied to the broader supply chain management. Businesses need to coordinate activities with suppliers, manufacturers, distributors, and retailers to ensure a seamless flow of products or services from production to the end consumer.
4. Market Coverage: Position distribution allows businesses to extend their market reach by making products or services available in multiple locations. This helps increase customer accessibility and creates opportunities for growth in different geographic areas.
5. Customer Service: Position distribution plays a role in providing efficient customer service. By having products available in convenient locations and through various channels, businesses can enhance customer satisfaction and responsiveness to their needs.
6. Competitive Advantage: Well-executed position distribution strategies can provide a competitive edge by ensuring that products or services are more readily available and accessible to customers compared to competitors. It can contribute to brand positioning, customer loyalty, and market share growth.
In summary, position distribution is a critical component of a business's overall marketing and sales strategy. It involves managing the channels and intermediaries through which products or services are distributed, with the aim of efficiently reaching the target market and maximizing customer satisfaction.
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The Canadian Employment Insurance program has what impact on
labour supply?
It decreases it
It increases it
Little influence
Uncertain
It increases it in one respect, but decreases it in ano
The Canadian Employment Insurance program has a mixed impact on labor supply. It increases labor supply in one respect by providing income support during unemployment but may decrease it in another aspect by reducing the incentive to actively search for work.
The Canadian Employment Insurance (EI) program has a dual impact on labor supply. On one hand, it increases labor supply by incentivizing individuals who are unemployed to actively seek employment. To qualify for EI benefits, individuals must demonstrate that they are actively looking for work. This requirement encourages unemployed individuals to actively engage in job search activities, ultimately increasing the labor supply. On the other hand, the EI program can decrease labor supply in certain cases. Some individuals may choose to rely on the benefits provided by the program, leading them to reduce their job search efforts or become more selective in accepting job offers. This behavior can result in a decrease in overall labor supply as individuals may delay or avoid reentering the workforce, particularly if the benefits received are relatively high or long-lasting.
Therefore, while the EI program can increase labor supply by motivating job search, it can also have a diminishing effect if individuals rely heavily on the benefits, potentially reducing their incentive to actively participate in the labor market.
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A(n) ___________________________ is used to export products.
S/he assumes the risks of ownership, distribution and sale of the
products.
franchisor
franchisee
export-import merchant
export-import agen
An export-import merchant is used to export products. This type of businessperson is responsible for assuming the risks of ownership, distribution, and sale of the products they export.
This includes managing transportation, customs clearance, and any other legal requirements associated with exporting products.
Export-import merchants can act as intermediaries between manufacturers and customers, helping to bridge the gap between supply and demand in global markets. They typically have a good understanding of market trends and consumer preferences, as well as the logistics and legal requirements associated with international trade.
One of the key benefits of working with an export-import merchant is that they assume the risks associated with exporting products. This can include risks related to payment, transportation, and customs clearance. By working with an experienced export-import merchant, businesses can minimize their risk exposure and ensure that their products are delivered to customers in a timely and efficient manner.
Overall, export-import merchants play a vital role in the global economy by helping to facilitate the movement of goods between different countries and regions. Their expertise in international trade can be a valuable asset for businesses looking to expand their reach and grow their customer base in new markets.
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8-18 QZY, Inc. is evaluating new widget machines offered by three companies. (a) Construct a choice table for interest rates from \( 0 \% \) to \( 100 \% \). (b) MARR \( =15 \% \). From which company,
QZY, Inc. can use a choice table to compare the alternatives offered by three companies based on interest rates ranging from 0% to 100%.
By using a MARR of 15% and calculating the NPV for each alternative, the company can determine which option provides the highest NPV and is the best choice for acquiring new widget machines.
The choice table is a tool used to compare different alternatives based on a set of criteria. In the case of QZY, Inc. evaluating new widget machines offered by three companies, the choice table can be constructed to compare the alternatives based on interest rates ranging from 0% to 100%.
Using a minimum acceptable rate of return (MARR) of 15%, QZY, Inc. can determine which company offers the best option for acquiring new widget machines. The company that provides the highest net present value (NPV) based on the MARR would be the best option.
The construction of the choice table involves listing the alternatives (i.e. the three companies) and the criteria (i.e. interest rates), and then calculating the NPV for each alternative at each interest rate. The NPV is calculated as the present value of cash inflows minus the present value of cash outflows.
Once the NPVs are calculated, they can be compared across the different alternatives and interest rates to determine which company provides the best option for acquiring new widget machines. The company that provides the highest NPV at the MARR of 15% would be the recommended choice for QZY, Inc.
In conclusion, QZY, Inc. can use a choice table to compare the alternatives offered by three companies based on interest rates ranging from 0% to 100%. By using a MARR of 15% and calculating the NPV for each alternative, the company can determine which option provides the highest NPV and is the best choice for acquiring new widget machines.
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12. (Continued from Question 11). Suppose that five years ago the corporation had decided to own rather than lease the real estate. Λ ssume that it is now five years later and management is considering a sale-leaseback of the property. The property can be sold today for $4,550,000 and leased back at a rate of $600,000 per year on a 15 -year lease starting today. It was purchased five years ago for $4.5 million. Assume that the property will be worth $5.25 million at the end of the 15-year lease. (Please note that the corporation decides to use five years more than they originally planned in Question 11.) A. How much would the corporation receive from a sale-leaseback of the property? $1,700,385 B. What is the return from continuing to own the property over the saleleaseback option? 15.27%
A) Total present value from the sale-leaseback option is $9,955,385
B) the return from continuing to own the property over the sale-leaseback option is approximately 18.8%.
A. Sale-Leaseback Option:
The corporation will receive a one-time payment of $4,550,000 from the sale of the property. The lease payments over 15 years amount to $600,000 per year, totaling $9,000,000. At the end of the lease term, the property will be worth $5,250,000. To calculate the present value of these cash flows, we need to discount them to today's value using an appropriate discount rate.
Using a discount rate of 15%, we can calculate the present value of the lease payments and the future property value:
PV of lease payments = $600,000 × (1 - (1 + 0.15)^-15) / 0.15 = $4,440,559
PV of future property value = $5,250,000 / (1 + 0.15)^15 = $964,826
Total present value from the sale-leaseback option = $4,550,000 + $4,440,559 + $964,826 = $9,955,385
B. Ownership Option:
The corporation continues to own the property and receives rental income of $600,000 per year for 15 years. At the end of the 15-year period, the property is worth $5,250,000. We calculate the present value of these cash flows using the same discount rate of 15%:
PV of rental income = $600,000 × (1 - (1 + 0.15)^-15) / 0.15 = $4,440,559
PV of future property value = $5,250,000 / (1 + 0.15)^15 = $964,826
Total present value from the ownership option = $4,440,559 + $964,826 = $5,405,385
To calculate the return, we compare the present value from the ownership option to the amount received from the sale-leaseback option:
Return from ownership option = ($5,405,385 - $4,550,000) / $4,550,000 × 100% ≈ 18.8%
Therefore, the return from continuing to own the property over the sale-leaseback option is approximately 18.8%.
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1.
Discuss the definition of debt securities and equity securities.
2. Describe the various types of debt securities.
3. Describe the various types of equity securities.
Debt securities are borrowed funds, while equity securities represent ownership in a company. Types of debt securities: bonds, treasury bills, notes, commercial paper, and mortgage-backed securities. Types of equity securities: common stock, preferred stock, convertible securities, rights and warrants, and depository receipts.
1) Debt securities refer to financial instruments representing borrowed funds, where the issuer (such as a government, corporation, or organization) raises capital by issuing debt to investors. Investors who purchase debt securities essentially lend money to the issuer and receive periodic interest payments and the return of principal at maturity. Equity securities, on the other hand, represent ownership in a company and entitle the holder to a share of the company's assets and profits. Common forms of equity securities are stocks or shares in publicly traded companies.
2) Various types of debt securities include:
a. Bonds: Fixed-income securities issued by governments, municipalities, or corporations, with fixed interest payments and a maturity date.b. Treasury Bills: Short-term debt securities issued by governments to finance short-term obligations, typically with maturities of less than one year.c. Notes: Debt securities with maturities typically range from one to ten years, issued by governments or corporations.d. Commercial Paper: Short-term unsecured promissory notes issued by corporations to finance short-term funding needs.e. Mortgage-backed Securities: Debt securities backed by a pool of mortgage loans, where investors receive payments based on the underlying mortgage repayments.3) Various types of equity securities include:
a. Common Stock: Ownership shares in a company, granting shareholders voting rights and a share of the company's profits through dividends.b. Preferred Stock: Equity securities that have a higher claim on the company's assets and earnings compared to common stock, with fixed dividend payments.c. Convertible Securities: Securities, usually bonds or preferred stock, that can be converted into common stock at a predetermined conversion ratio.d. Rights and Warrants: Securities that give the holder the right to purchase additional shares of common stock at a predetermined price for a specific period.e. Depository Receipts: Equity securities representing shares of foreign companies traded on domestic exchanges, such as American Depositary Receipts (ADRs).Learn more about Commercial Paper: https://brainly.com/question/30168873
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1. Assume that a piece of property is purchased for $75, 000. A 20% down payment is made' and the rest is financed through a 30-year mortgage loan with a 12% annual interest rate, compounded monthly. The loan will be repaid in equal monthly payments. Calculate the monthly payments.
The monthly payment for a 30-year mortgage loan with a 12% annual interest rate, compounded monthly, and a $60,000 principal is approximately $659.96.
To calculate the monthly payments, we need to use the formula for a fixed monthly payment on a mortgage loan:
M = P * r * (1 + r)^n / ((1 + r)^n - 1)
Where:
M = Monthly payment
P = Loan principal (purchase price minus down payment)
r = Monthly interest rate (annual interest rate divided by 12 and expressed as a decimal)
n = Total number of monthly payments (number of years multiplied by 12)
Purchase price = $75,000
Down payment = 20% of purchase price = $75,000 * 0.20 = $15,000
Loan principal = Purchase price - Down payment = $75,000 - $15,000 = $60,000
Annual interest rate = 12%
Number of years = 30
First, let's calculate the monthly interest rate:
Monthly interest rate = Annual interest rate / 12 = 0.12 / 12 = 0.01
Next, let's calculate the total number of monthly payments:
Number of monthly payments = Number of years * 12 = 30 * 12 = 360
Now, we can calculate the monthly payment using the formula:
M = $60,000 * 0.01 * (1 + 0.01)^360 / ((1 + 0.01)^360 - 1)
After performing the calculation, the monthly payment is approximately $659.96.
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• A). In our section on the political economy, we talked about the optimal government provision of environmental quality in the public sector. Draw the model for this optimal government service. (15pts)
⚫ B). Why is that the market environment that this model illustrates is impossible in reality? (15pts)
A) The model for this optimal government service is marginal social cost (MSC).
B) The market environment that this model illustrates is impossible in reality because of economic incentives.
A)The optimal government provision of environmental quality in the public sector can be illustrated through a model that takes into account the marginal social cost (MSC) and marginal social benefit (MSB) of pollution. The MSC curve represents the cost to society of each additional unit of pollution, while the MSB curve represents the benefit to society of each additional unit of environmental quality.
The government can achieve this by imposing a tax on polluters equal to the MSC at the socially optimal level of pollution. This tax would incentivize polluters to reduce their emissions until they reach the socially optimal level.
The model can be illustrated graphically by plotting the MSC and MSB curves on a graph with pollution levels on the x-axis and cost/benefit on the y-axis. The socially optimal level of pollution is where these two curves intersect.
B) The market environment that this model illustrates is impossible in reality due to several reasons. Firstly, it assumes that all polluters are rational actors who respond to economic incentives in a predictable manner. In reality, some polluters may not be aware of or may not care about the environmental impact of their actions, making it difficult for them to respond to economic incentives.
Secondly, it assumes that there are no external factors that affect either the MSC or MSB curves. In reality, there may be factors such as technological advancements or natural disasters that affect these curves and make it difficult for the government to accurately determine the socially optimal level of pollution.
Lastly, it assumes that there is perfect information available to both polluters and the government. In reality, information about environmental impacts and economic incentives may not be readily available or easily accessible to all parties involved.
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Write on the variety of financial instruments that can be used by a company to raise finance. Examples of which are bonds, debentures, assets, gilt etc.
The choice of instrument depends on factors such as the company's financial needs, risk profile, cost of capital, and market conditions.
Here are some examples of common financial instruments used by companies: Equity Shares: Companies can raise finance by issuing equity shares, also known as common shares or ordinary shares. Equity shareholders become part-owners of the company and have voting rights. They receive dividends and may benefit from capital appreciation if the company performs well. Bonds: Bonds are debt instruments issued by companies to raise funds. They represent a loan taken by the company from investors. Bondholders receive regular interest payments (coupon payments) and the repayment of the principal amount at maturity. Bonds can be publicly traded, allowing investors to buy and sell them on the secondary market. Debentures: Debentures are similar to bonds but are typically unsecured debt instruments. They represent long-term loans provided by investors to the company. Debenture holders have a claim on the company's assets in case of default, but they are not granted any ownership rights or voting privileges.
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A tractor for over the road hauling is purchased for $ 90,000. It is expected to
be of use to the company for 6 years, after which it will be salvaged for $ 4,000.
Calculate the depreciation deduction and the unrecovered investment during each year of the tractor’s life
a. use straight line depreciation
b. Use declining balance depreciation sing a rate that ensures the book value equals the salvage value
c.Use double declining balance depreciation
d.Use double declining balance switching to straight line depreciation
The depreciation deduction and unrecovered investment for each year of the tractor's life using different depreciation methods are as follows:
a. Straight line depreciation:
Depreciation deduction per year = (Initial cost - Salvage value) / Useful life
Unrecovered investment per year = Initial cost - Accumulated depreciation
b. Declining balance depreciation (book value equals salvage value):
Depreciation deduction per year = Book value at the beginning of the year * Declining balance rate
Unrecovered investment per year = Initial cost - Accumulated depreciation
c. Double declining balance depreciation:
Depreciation deduction per year = Book value at the beginning of the year * Double declining balance rate
Unrecovered investment per year = Initial cost - Accumulated depreciation
d. Double declining balance switching to straight line depreciation:
Depreciation deduction per year = Calculated using double declining balance until the straight line rate is greater than the double declining balance rate, then switch to straight line depreciation
Unrecovered investment per year = Initial cost - Accumulated depreciation
a. Straight line depreciation evenly distributes the depreciation expense over the useful life of the tractor. Each year, the same amount is deducted, resulting in a linear reduction in the asset's value. The unrecovered investment decreases gradually over time.
b. Declining balance depreciation front-loads the depreciation expense, with higher deductions in the earlier years. This method aims to reflect the faster wear and tear of the asset in its early life. The unrecovered investment decreases more rapidly in the beginning and then slows down over time.
c. Double declining balance depreciation is an accelerated method that allows for higher deductions in the early years, gradually reducing the depreciation expense in subsequent years. It recognizes the asset's higher utility and higher depreciation during the initial years. The unrecovered investment decreases at a faster pace initially.
d. Double declining balance switching to straight line depreciation combines the advantages of both methods. It utilizes the accelerated depreciation in the initial years and then switches to straight line depreciation when the straight line rate becomes higher than the double declining balance rate.
This ensures a fair and consistent depreciation deduction throughout the asset's useful life. The unrecovered investment decreases accordingly, reflecting the change in depreciation method.
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9. Suppose you take a 1 year loan to buy a car and the bank charges a nominal interest rate of 10%. The bank expects that the inflation rate to be 4% during the life of your loan.
What is the expected or ex ante real interest rate?
Suppose that the actual inflation rate turns out to 6% during the life this loan. What is the realized real interest rate? Who has gained and who has lost due to unanticipated higher inflation rate?
Suppose that the actual inflation rate turns out to 2% during the life of this loan. What is the realized real interest rate? Who has gained and who has lost due to unanticipated lower inflation rate?
The real interest rate is the nominal interest rate minus the expected inflation rate. In this case, the nominal interest rate is 10% and the expected inflation rate is 4%, so the ex ante real interest rate is:10% - 4% = 6%
If the actual inflation rate turns out to be 6%, then the realized real interest rate is:10% - 6% = 4%The lender has gained due to the higher inflation rate, while the borrower has lost. This is because the borrower now has to pay more in real terms than they expected to when they took out the loan.If the actual inflation rate turns out to be 2%, then the realized real interest rate is:10% - 2% = 8%The borrower has gained due to the lower inflation rate, while the lender has lost. This is because the borrower now has to pay less in real terms than they expected to when they took out the loan.
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If
you choose to do excel, please provide the screenshot and the
formula. But if you choose , please explain to me how
you get monthly contribution and the initial deposit.
2) Calculate how much you would have to save each month for five years to meet your down payment goal of $17,000, assuming your bank offers you 1.70% APR on deposits. [Hint: use excel to solve it and/
To calculate the monthly savings needed to reach a down payment goal of $17,000 in five years with a 1.70% APR, you can use the Future Value (FV) formula in Excel. The formula is:
=FV(APR/12, nper, -pmt, -pv)
Where:
- APR/12 is the monthly interest rate (1.70% divided by 12)
- nper is the number of months (5 years * 12 months = 60)
- -pmt is the monthly contribution (the amount you want to calculate, entered as a negative value)
- -pv is the present value (the goal amount, entered as a negative value)
You can input these values into Excel, and by adjusting the monthly contribution (-pmt) until the future value (-fv) reaches $17,000, you can determine the monthly savings needed. The screenshot below shows an example of the Excel setup for this calculation:
By using the FV formula in Excel, we can calculate the monthly contribution required to reach the down payment goal. We adjust the monthly contribution until the future value matches the desired amount. In this case, by inputting the given values into the formula, we can find the monthly savings needed to accumulate $17,000 over five years with a 1.70% APR on deposits.
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a) Identify each of the following cash items whether it is fixed cost, variable cost, sunk cost, opportunity cost or implicit cost. (i) You spend RM 10,000 on the development of a new cell phone. Once the product is released, however, no consumers display an interest in purchasing your company's new cell phone (ii) Transaction fees associated with various payments needed to create a product or provide a service. (iii) The company incurs RM 550,000 in rental fees for its factory space. (iv) A commuter takes the train to work instead of driving. (v) Giving your workers a day off will lead to a drop in sales and income
Previous question
(i) Sunk cost (ii) Variable cost (iii) Fixed cost (iv) Opportunity cost (v) Implicit cost
Explanation:
i. You spend RM 10,000 on the development of a new cell phone. Once the product is released, however, no consumers display an interest in purchasing your company's new cell phone: This is a sunk cost because you have spent money on something that is not making you money back. You can't recoup the RM10,000 cost since nobody is interested in the product.
ii. Transaction fees associated with various payments needed to create a product or provide a service: This is a variable cost because the fees vary depending on the transactions you conduct.
iii. The company incurs RM 550,000 in rental fees for its factory space: This is a fixed cost because the rental fees are the same regardless of the amount of product being produced or sold.
iv. A commuter takes the train to work instead of driving: This is an opportunity cost since the person is giving up the opportunity to drive to work to take the train instead. This cost is measured by the benefits that could have been gained if they had taken the other option.
v. Giving your workers a day off will lead to a drop in sales and income:This is an implicit cost since it is not an expense that can be accounted for in the company's accounting records. The company is giving up the opportunity to make sales and income by giving the workers a day off.
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The Lenzie Corporation's common stock has a beta of 1.60. If the risk-free rate is 6.1% and the expected return on the market is 11%, hat is the company's cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percentage rounded 2 decimal places.) ost of equity capital %
Equity capital is funds paid into a business by investors in exchange for common stock or preferred stock. This represents the core funding of a business, to which debt funding may be added.
The formula to find the cost of equity capital of a company is, r_E = R_f + β_E × (R_m - R_f) Where, r_E = Cost of Equity Capital, R_f = Risk-Free Rate, \ beta_ E= Beta of the Equity, and R_m = Expected Return on the Market. Given, R_f = 6.1%, R_m = 11%, and \beta_E = 1.60.
Substituting the given values in the formula, we have; r_E = 6.1 + 1.60 × (11 - 6.1) Solving for r_E ; r_E = 6.1 + 1.60 × 4.9 r_E = 6.1 + 7.84 r_E = 13.94. The company's cost of equity capital is 13.94%. The answer is 13.94%.
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1. How do we measure riskiness of an asset?
2. What is unsystematic risk and systematic risk? Give two examples of each one of them.
3. What is a beta? How is different from standard deviation of returns?
4. What effect will diversifying your portfolio have on your returns?
1. Measuring Riskiness of an AssetInvestors use different measures to determine the riskiness of an asset. Standard deviation and beta are two common measures used to gauge the risk associated with an asset. Standard deviation measures the volatility of returns from a security or portfolio. On the other hand, Beta measures the systematic risk of an asset or portfolio. The higher the standard deviation, the higher the risk associated with the investment.
2. Systematic Risk and Unsystematic Risk Systematic risk refers to the overall market risk that is beyond an individual's control, for example, inflation, recession, war, or changes in interest rates. In contrast, unsystematic risk refers to a specific company or industry risk and is controllable by investors. Two examples of systematic risks are inflation and war. Examples of unsystematic risks include labor strikes, poor management, and production problems.
3. Beta and Standard Deviation of ReturnsBeta is a measure of the relationship between the price movement of a stock and the movement of the overall market. It compares the risk of an asset or a portfolio to the overall market. The beta of the market is always 1.0.
The higher the beta, the higher the risk of the asset or portfolio. In contrast, the standard deviation is a measure of volatility or risk that provides information on how much an investment's returns differ from the mean return. Standard deviation measures the total risk of an investment, whereas beta measures systematic risk.
4. Effect of Diversifying Portfolio on Returns Diversification of a portfolio refers to the act of investing in different types of assets to reduce risks associated with any single asset. Diversification can help to reduce risk, including systematic and unsystematic risks.
By spreading investments across various asset classes, an investor can reduce their exposure to a particular type of risk. By diversifying your portfolio, you can minimize the impact of poor returns from a single investment and boost returns from other assets, thus reducing the overall risk of your portfolio.
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The stock market tends to move up when inflation goes up.
⊚ true ⊚ false
"The stock market tends to move up when inflation goes up" is FALSE. A share market trend is based on the concept that the past movements are windows to the future trends.
There are three main types of share market trends: short-term, intermediate-term and long-term. You can also classify trends as uptrend, downtrend or sideways trend. Inflation and stock market movements are two different aspects and they are not directly proportional to each other.
When the stock market is going up, inflation may or may not be high. Similarly, when inflation is high, the stock market may or may not be going up. The statement "The stock market tends to move up when inflation goes up" is false.
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Player 1 Up Middle Down Left P1:$23 P2:$23 P1:$34 P2:$21 P1:$32 P2:$35 Player 2 Middle P1:$6 P2:$23 P1:$37 P2:$14 P1:$3 P2:$45 Right P1:$21 P2:$34 P1:$11 P2:50 A. What are the Nash equilibrium to this
The Nash equilibrium for this scenario occurs when Player 1 chooses "Left" and Player 2 chooses "Middle" or "Right," resulting in payoffs of P1:$32 and P2:$35 for both players.
To determine the Nash equilibrium in this scenario, we need to identify strategies for both players that maximize their own payoffs given the strategy of the other player. A Nash equilibrium occurs when neither player has an incentive to unilaterally deviate from their chosen strategy.
Let's analyze the given information step by step:
In the first round, Player 1 chooses "Up," and Player 2 chooses "Middle." The payoffs are P1:$23 and P2:$23, respectively.
In the second round, Player 1 chooses "Down," and Player 2 chooses "Middle." The payoffs are P1:$34 and P2:$21, respectively.
In the third round, Player 1 chooses "Left," and Player 2 chooses "Right." The payoffs are P1:$32 and P2:$35, respectively.
Based on this information, we can analyze the strategies chosen by each player and their resulting payoffs:
Player 1's strategies: Up, Down, Left
Player 2's strategies: Middle, Right
To identify the Nash equilibrium, we need to compare the payoffs for each combination of strategies chosen by the players.
1. Up and Middle:
Player 1: P1:$23, P2:$23
Player 2: P1:$6, P2:$23
2. Up and Right:
Player 1: P1:$21, P2:$34
Player 2: P1:$21, P2:$34
3. Down and Middle:
Player 1: P1:$34, P2:$21
Player 2: P1:$37, P2:$14
4. Down and Right:
Player 1: P1:$11, P2:$50
Player 2: P1:$11, P2:$50
5. Left and Middle:
Player 1: P1:$32, P2:$35
Player 2: P1:$3, P2:$45
6. Left and Right:
Player 1: P1:$32, P2:$35
Player 2: P1:$3, P2:$45
The Nash equilibrium occurs when both players choose strategies that are optimal responses to each other's strategies. In this case, the Nash equilibrium is reached in the fifth and sixth rounds, where Player 1 chooses "Left" and Player 2 chooses "Middle" or "Right." This leads to payoffs of P1:$32 and P2:$35 for both players, and neither player has an incentive to deviate from this strategy unilaterally.
Therefore, the Nash equilibrium strategies for this scenario are:
Player 1: Left
Player 2: Middle or Right
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Indolaysia's Nominal GDP in 2017 was 240 billion pesos (their national currency). In 2018 the Nominal GDP was 280 billion pesos. The peso converts to the U.S. dollar at 4 pesos = $1 U.S. A representat
Nominal GDP refers to the total market value of all final goods and services that are produced in an economy within a particular period of time. In the year 2017, Indolaysia's nominal GDP was 240 billion pesos while in 2018, it was 280 billion pesos.
To convert pesos to US dollars, the conversion rate is 4 pesos = $1 US. Using this conversion rate, it's possible to calculate Indolaysia's nominal GDP in US dollars. In 2017, the nominal GDP in US dollars is:240 billion pesos ÷ 4 pesos/$1 = $60 billionIn 2018, the nominal GDP in US dollars is:
280 billion pesos ÷ 4 pesos/$1 = $70 billion. Therefore, Indolaysia's nominal GDP increased from $60 billion in 2017 to $70 billion in 2018.
The nominal GDP is a useful measure of an economy's size, as it takes into account changes in both prices and the quantity of goods and services produced. However, it does not adjust for inflation or changes in purchasing power, which is why real GDP is a more accurate measure of economic growth.
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The strategic management process is the set of activities that firm managers undertake to put their firms in the best possible position to compete successfully in the marketplace. Explain on strategic management and explain why it is important.
1. It refers to the process of formulating and implementing strategies to achieve an organization's long-term goals.
2. Reasons: Direction and Focus, Competitive Advantage, Adaptation to Change, Resource Allocation and Risk Management.
Strategic management involves analyzing the internal and external environment, setting strategic objectives, making strategic choices, and executing plans to ensure the firm's success in a competitive marketplace.
There are several key reasons why strategic management is important for organizations:
Direction and Focus: Strategic management provides a clear direction and focus for the organization. It helps align the efforts of various departments and employees towards a common goal, ensuring that everyone is working towards the same objectives.Competitive Advantage: In a dynamic and competitive business environment, organizations need to identify and leverage their unique strengths and capabilities to gain a competitive advantage. Adaptation to Change: By constantly scanning the external environment, monitoring market trends, and evaluating internal capabilities, firms can proactively adapt their strategies to meet evolving customer needs, technological advancements, and competitive challenges.Resource Allocation: It helps organizations prioritize investments, allocate funds, and allocate human capital to strategic initiatives that are aligned with the long-term goals of the company.Risk Management: Strategic management helps organizations identify and mitigate risks. By conducting a thorough analysis of the internal and external environment, firms can identify potential risks and develop contingency plans to minimize their impact.For such more question on Management:
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please do it in 10 minutes will upvote
Question 3 Not yet answered Marked out of 1.00 P Flag question Which of the following questions is an example of a microeconomic question? Select one: a. What will be the effect of a decrease in the p
The question "What will be the effect of a decrease in the price of smartphones on consumer demand?" is an example of a microeconomic question.
A microeconomic question focuses on individual economic agents, such as households, firms, or industries, and examines their behavior and decision-making processes. It analyzes the allocation of resources at a smaller scale and studies how individuals and firms make choices based on their preferences, constraints, and incentives. Based on this understanding, we can evaluate the given options to identify the microeconomic question:
a. "What will be the effect of a decrease in the price of smartphones on consumer demand?" This question is an example of a microeconomic question. It examines the relationship between the price of smartphones and consumer demand, which relates to individual buying decisions and behavior. It focuses on the interaction between consumers and the specific market for smartphones, exploring how changes in price might impact consumers' choices.
By investigating this question, microeconomics can help analyze factors such as the price elasticity of demand, substitution effects, income effects, and market equilibrium. It explores how changes in price influence the quantity of smartphones demanded by consumers, potentially leading to shifts in demand and market dynamics.
Overall, the given question regarding the effect of a decrease in the price of smartphones on consumer demand aligns with the principles and scope of microeconomics, making it an example of a microeconomic question.
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a. What differences are there between futures and forward contracts? Explain your answer. (8 marks) b. The investment return generating process of commodities is different to that of private equity, real estate and infrastructure projects. Comment and give your opinion. (8 marks)'
a) Futures contracts carry counterparty risk, which means that traders are exposed to the financial stability of their counterparties, whereas forward contracts carry credit risk. and b) both types of investments have their place in a well-diversified portfolio, and the choice between them depends on the investor's risk tolerance, investment horizon, and market outlook.
a. Futures and forward contracts are both used for managing the risk associated with price changes in commodities, currencies, interest rates, and equities. However, there are some key differences between these two types of contracts. Futures contracts are standardized agreements traded on a regulated exchange, while forward contracts are privately negotiated between two parties. The exchange-traded nature of futures contracts makes them more liquid and easier to trade, while forward contracts are more flexible and customizable. Futures contracts require margin accounts and daily mark-to-market settlements, whereas forward contracts require upfront cash settlements or credit arrangements. Finally, futures contracts carry counterparty risk, which means that traders are exposed to the financial stability of their counterparties, whereas forward contracts carry credit risk.
b. The investment return generating process of commodities is different from that of private equity, real estate, and infrastructure projects. Commodities generate returns through price changes and supply and demand dynamics in global markets. Private equity, real estate, and infrastructure projects generate returns through ownership of assets and cash flows from those assets. Commodities are more volatile and have a shorter investment horizon, while private equity, real estate, and infrastructure projects are typically long-term investments. Commodities are also more liquid and easily tradable, while private equity, real estate, and infrastructure projects are more illiquid and require specialized knowledge to evaluate and manage. In my opinion, both types of investments have their place in a well-diversified portfolio, and the choice between them depends on the investor's risk tolerance, investment horizon, and market outlook.
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The Buffalo News headline read "Start up by UB student sold for
$250 million to major tech firm". But, a deeper dive into the story
revealed that these benefits would be realized over 5 years afte
Headline: "UB student's start-up sold for $250 million to major tech firm, benefits to be realized over 5 years."
The headline states that a start-up founded by a University at Buffalo (UB) student has been acquired by a major tech firm for $250 million. However, upon reading the entire story, it is revealed that the benefits from the acquisition will be realized gradually over a period of five years.
In other words, while the initial transaction involves a significant financial sum, the full impact of the acquisition and its associated benefits will take place over the course of five years. This suggests that the financial gains and other positive outcomes resulting from the acquisition will be distributed and realized gradually, rather than all at once.
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If the Canadian price level falls by 10% relative to the price level in the U.S., according to the theory of purchasing power parity, the value of the Canadian dollar in terms of the U.S. dollar will decline
According to purchasing power parity theory, if the Canadian price level falls by 10% relative to the U.S., the value of the Canadian dollar will decline against the U.S. dollar.
The theory of purchasing power parity (PPP) suggests that exchange rates between currencies should adjust to equalize the purchasing power of each currency. If the Canadian price level falls by 10% compared to the price level in the U.S., it means that goods and services in Canada have become relatively cheaper. According to PPP, this should result in a decline in the value of the Canadian dollar relative to the U.S. dollar. As Canadian goods become less expensive, there will likely be a decrease in demand for the U.S. dollar in exchange for the Canadian dollar. This decrease in demand for the Canadian dollar, coupled with increased demand for the U.S. dollar, would put downward pressure on the value of the Canadian dollar, causing it to decline against the U.S. dollar in foreign exchange markets.
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What will be the Competitive map for E watch for children
safety
The competitive map for E watch for children safety can be explained as the analysis of key players and their market share. This will help to identify the strengths and weaknesses of each competitor and how they are positioned in the market in relation to each other.
There are several competitors in the market for E watch for children safety. They are Xiaomi, Apple, Huawei, and Samsung. Xiaomi is the leading competitor in terms of market share with its affordable and feature-rich watches. Apple follows closely with its superior brand image and premium features. Huawei and Samsung are also strong competitors, offering their own unique features and pricing strategies.
In order to succeed in this competitive market, E watch needs to offer competitive pricing and innovative features that cater to the specific needs of parents and children. It is also important to establish a strong brand image and reputation for reliability and safety. By doing so, E watch can carve out its own space in the market and attract a loyal customer base.
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1. What role does technology play in U.S. companies?
2. Why is it important for the United States to innovate and
improve on current technologies globally?
Include Reference Page (If applicable)
Technology plays a crucial role in U.S. companies by increasing productivity, efficiency, and innovation, while it is important for the United States to innovate globally to remain competitive and drive economic growth.
1. Technology plays a vital role in U.S. companies, enhancing productivity, efficiency, and innovation. With advancements in technology, companies can improve their operations, produce goods and services faster and at reduced costs, and even outsource jobs globally.
2. It is crucial for the United States to innovate and enhance current technologies globally to maintain competitiveness in the global market. By staying updated with technological trends, the U.S. can drive economic growth, create job opportunities, and increase revenue through exports, ultimately boosting the country's GDP.
Reference:
How the US can stay competitive with China and enhance global economic growth?
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(Common stock valuation) Assume the following: - the investor's required rate of return is 13 percent, - the expected level of earnings at the end of this year (E 1
) is $14, - the retention ratio is 35 percent, - the return on equity (ROE) is 13 percent (that is, it can earn 13 percent on reinvested earnings), and - similar shares of stock sell at multiples of 7.692 times earnings per share. Questions: a. Determine the expected growth rate for dividends. b. Determine the price earnings ratio (PIE 1
). c. What is the stock price using the P/E ratio valuation method? d. What is the stock price usina the dividend discount model? a. What is the expected growth rate for dividends? % (Round to two decimal places.) b. What is the price earnings ratio (PIE 1
) ? (Round to three decimal places.) c. What is the stock price using the P/E ratio valuation method? (Round to the nearest cent.) d. What is the stock price using the dividend discount model?
a. To determine the expected growth rate for dividends, we can use the retention ratio and the return on equity.
Retention Ratio = 35% (given)
Return on Equity (ROE) = 13% (given)
Expected Growth Rate = Retention Ratio * Return on Equity
Expected Growth Rate = 0.35 * 0.13
Expected Growth Rate = 0.0455 or 4.55%
Therefore, the expected growth rate for dividends is 4.55%.
b. The price-earnings ratio (P/E ratio) is calculated as the market price per share divided by the earnings per share (EPS).
P/E ratio = Market Price per Share / Earnings per Share
Given that similar shares of stock sell at multiples of 7.692 times earnings per share, we can calculate the earnings per share (EPS) as follows:
EPS = E1 * Retention Ratio
EPS = $14 * 0.35
EPS = $4.90
P/E ratio = 7.692
Therefore, the price-earnings ratio (P/E ratio) is 7.692.
c. The stock price using the P/E ratio valuation method is calculated by multiplying the earnings per share (EPS) by the price-earnings ratio (P/E ratio).
Stock Price = EPS * P/E ratio
Stock Price = $4.90 * 7.692
Stock Price ≈ $37.78
Therefore, the stock price using the P/E ratio valuation method is approximately $37.78.
d. The stock price using the dividend discount model is calculated by discounting the expected dividends using the investor's required rate of return.
Dividends for the next year (D1) = E1 * Retention Ratio
Dividends for the next year (D1) = $14 * 0.35
Dividends for the next year (D1) = $4.90
Using the dividend discount model formula:
Stock Price = D1 / (Required Rate of Return - Expected Growth Rate)
Stock Price = $4.90 / (0.13 - 0.0455)
Stock Price ≈ $47.06
Therefore, the stock price using the dividend discount model is approximately $47.06.
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Assume that a competitive firm has a total function: \[ \mathrm{TC}=1 \mathrm{q}^{\wedge} 3-40 \mathrm{q}^{\wedge} 2+770 \mathrm{q}+1700 \] suppose the price of the firms output( sold in integer units
We must understand the firm's demand function or the market circumstances it faces in order to calculate the price of the firm's production.
We are unable to directly determine the pricing without that information.On the basis of the provided total cost function, we can offer some insights. The link between the amount of output (q) and the total costs incurred by the company is depicted by the total cost function (TC). The dynamics of market demand and supply typically determine the price of the firm's output.In a completely competitive market, the price (P) would be set by the market equilibrium, where supply and demand are equal. In this situation, the company is a price taker and is powerless to change the market price. The company would
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