1 de agosto Vendió 217 acciones ordinarias de LAF a $ 40 por acción.
1 de septiembre Recibió un dividendo en efectivo de $ 2 por acción sobre las acciones ordinarias de NCL.
31 de diciembre Recibió el interés anual de los bonos TRC.
31 Vendió los bonos de TRC por $ 77,665.
All of the following are disadvantages of using the average rate of return except a.The average rate of return method does not consider the expected timing of the expected cash flows. b.The average rate of return method does not use present values. c.The average rate of return method does not use the expected cash flows from the proposal. d.All of these choices are disadvantages.
Answer:
D
Explanation:
average rate of return = average net income / average book value
an advantage of average rate of return is that it is easy to calculate.
its disadvantages include :
a.The average rate of return method does not consider the expected timing of the expected cash flows like the NPV and IRR method.
b.The average rate of return method does not use present values.
c.The average rate of return method does not use the expected cash flows from the proposal. it makes use of accounting values instead.
Samuel, a longtime employee of the ABCD Corporation, was injured when he fell off a ladder while stocking widgets at ABDC at their East Lansing, Michigan location. Samuel believes ABCD Corporation was negligent for selling widgets. If Samuel sues his employer in a circuit court under a negligence theory of recovery:
a. he will lose
b. he will win
c. he will forfeit his rights to workers compensation benefits, completely
d. he will forfeit his rights to workers compensation benefits, but only if the court awards him non-economic damages
Answer:
Option B. He will win
Explanation:
If Samuel is desiring to sue his employer in a circuit court because he thinks that the employer was negligent then he will have to sue under negligence Act, which says that the employer is obliged to take all necessary precautions and if found negligent then the court may apply contributory negligent theory as well as comparative negligent theory. These two negligent theories means that the employer was partly responsible for injury, which means that this would result in compensation to Samuel.
Hence it is more likely that Samuel will win the case.
It is likely that if Samuel sues ABCD Corporation in a circuit court under a negligence theory of recovery, a. he will lose.
The question to ask is, is ABCD Corporation negligent in selling widgets? No. Is it the case that the corporation's sale of widgets caused Samuel to fall off a ladder while he was stocking them at the Michigan location? No.
For Samuel to be successful in the circuit court, he must prove that ABCD Corporation acted negligently with its sales of widgets, especially:
ABCD Corporation owed a duty to Samuel not to sell widgets ABCD Corporation breached this duty to Samuel ABCD's breach was the actual cause of Samuel's injury ABCD's breach was also the proximate cause of Samuel's fall and injury Samuel suffered actual damages as a result of the negligent act by ABCD Corporation.
Thus, based on the above, Samuel will lose the case because the corporation was not negligent for selling widgets nor for the fall of Samuel from the ladder.
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In your own words, assess the process of international strategy, competencies, planning, and international competitive advantage.
Explanation:
An international strategy can be understood as the set of processes and action plans that a company will implement to achieve its objectives in an external market.
An organization decides to internationalize its activities with the objective of conquering a different market that can bring different competitive and financial benefits to the company.
To be successful, the organizational strategy must comprise the set of requirements that must be followed to include itself in a different market, such as, for example, the set of policies that will guide the operation of the business.
In addition, it is necessary to plan its activities in such a way that they are in line with the fundamental requirements of the country, such as multicultural norms, values, tastes, preferences, etc.
Companies generally use internationalization as a competitive strategy, since this can be an effective means of reducing costs, due to the cheaper labor and the less bureaucratic process. A well-positioned brand also guarantees a differential that adds to the ease of an organization being successful in the process of conquering new markets.
Choose the best scenario for refinancing.
a. You have a current mortgage at 5% and have been approved for a new mortgage at 3.75%. You’ll break even on the closing costs in two years, and you don’t plan to move for at least five.
b. You intend to move in about nine months, but you have been approved for a mortgage with an interest rate two whole points lower than your current rate.
Answer:
Correct Answer: The best scenario for refinancing is:
a. You have a current mortgage at 5% and have been approved for a new mortgage at 3.75%. You’ll break even on the closing costs in two years, and you don’t plan to move for at least five.
Explanation:
This is because, being aware that you will break even on the closing cost in 2 years which is quite better when compared to no of years to stay (atleast five years) gives the person a competitive advantage.
Standards are set by a.manufacturing engineers. b.accountants. c.other management personnel. d.All of these choices are correct
Answer: d.All of these choices are correct.
Explanation: all of the listed options all make use of standar, manufacturing engineer, accountant, and other management personnel make use of standards to estimate the acceptable production efficiency. Standards are also set by this personnel’s to motivate employees so as to achieve efficient operations and use of man power.
Conventional wisdom says one should measure a manager's investment performance over an entire market cycle. What arguments support this contention? What arguments contradict it?
Answer:
In every form of analysis, it is always safer to take a macro or holistic view of the situation. This is true for the investment performance of a manager. One investment decision that went right does not suffice to classify an investment portfolio manager as proficient, neither is one that went south enough to tag him deficient.
The forecasting ability of managers, on the balance of probability, will vary for different cases, with a helicopter view of providing a more accurate measure of their performance.
However, if it was possible to analyse the market for volatility and adjust our forecasts it becomes unnecessary to look at and analyse all the information from a 12-month cycle before coming to terms about the performance of the manager.
Cheers!
Sheffield Auto Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $19,902. All sales are subject to a 7% sales tax. Compute sales taxes payable. Sales taxes payable
Answer:
Sales tax = Total sales / 100 + Sales Tax rate * Sales Tax rate
Sales tax = {$19,902 / (100 + 7)} * 7
Sales tax = ($19,902 / 107) * 7
Sales tax = $1,302
Date Account Title and Explanation Debit Credit
Cash $19,902
Sales Tax payable $1,302
Sales revenue $18,600
($19,902 / 107 * 100)
(To record sales and sales taxes payable)
Answer:
1,302
Explanation:
Sales without tax x (100%+sales tax rate) = sales with tax
sales without tax x 1.07 (100%+7%) = 19902
sales without tax = 19902/1.07
sales without tax = 18600
sales with tax - sales without tax = sales tax payable
19902 - 18600 = 1302
If the economy is normal, Charleston Freight stock is expected to return 16.5 percent. If the economy falls into a recession, the stock's return is projected at a negative 11.6 percent. The probability of a normal economy is 70 percent while the probability of a recession is 30 percent. What is the variance of the returns on this stock
Answer:
Variance of the returns of this stock is 0.01658177
Explanation:
Mean return = 0.7 * 16.5% + 0.3*-11.6%
Mean return = 0.1155 - 0.0348
Mean return = 0.0807
Mean return = 8.07%
Variance of the return = 0.7 * (16.5%-8.07%)^2 + 0.3 * (-11.6%-8.07%)^2
Variance of the return = 0.7 * (8.43%)^2 + 0.3 * (-19.67%)^2
Variance of the return = 0.7 * (0.0843)^2 + 0.3 * (-0.1967)^2
Variance of the return = 0.0049745 + 0.011607267
Variance of the return = 0.01658177
Kemp Corporation manufactures a variety of parts for use in its product. The company has always produced all of the necessary parts for its product, including all of the electronic circuits. The company sells 18,000 units of its product per year. An outside supplier has offered to sell electronic circuits to the company for a cost of $40 per unit. To evaluate this offer, the company has gathered the following information relating to its own cost of producing the electronic circuits internally: Per Unit 18,000 Units per Year Direct materials $ 18 $ 324,000 Direct labor 9 162,000 Variable manufacturing overhead 2 36,000 Fixed manufacturing overhead, traceable 9 * 162,000 Fixed manufacturing overhead, allocated 12 216,000 Total cost $ 50 $ 900,000 *One-third supervisory salary; two-thirds depreciation of special equipment (no resale value). Suppose that if the electronic circuits were purchased, the division supervisor position could be eliminated. Fixed manufacturing overhead will be allocated to other products made by the company. Also, the company could use the freed production capacity to launch a new product. The segment margin of the new product would be $180,000 per year. Given this new assumption, how much would be the financial advantage of buying 18,000 electronic circuits from the outside supplier
Answer:
financial advantage of purchasing from outside vendor = $36,000
Explanation:
outside vendor offers 18,000 units at $40 per unit = $720,000
current production costs (for 18,000 units):
Direct materials $324,000 Direct labor $162,000 Variable manufacturing overhead $36,000 Fixed manufacturing overhead, traceable $162,000 ($54,000 avoidable)Fixed manufacturing overhead, allocated $216,000 (not avoidable)Total cost $900,000total avoidable costs = $576,000
additional revenue generated by freed facilities = $180,000
financial advantage of purchasing from outside vendor = ($576,000 + $180,000) - $720,000 = $36,000
Skyline Corp. will invest $210,000 in a project that will not begin to produce returns until the end of the 3rd year. From the end of the 3rd year until the end of the 12th year (10 periods), the annual cash flow will be $46,000. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Calculate the net present value if the cost of capital is 12 percent.
Answer:
$-2,801.13
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-210,000
Cash flow each year from year 1 to 2 = 0
Cash flow each year from year 3 to 12 = $46,000.
I = 12%
NPV = $-2,801.13
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
All of the following are factors that may complicate capital investment analysis except a.qualitative factors. b.changes in price levels. c.the federal income tax. d.the age of the current fixed assets.
Answer:
Correct Answer:
a.qualitative factors.
Explanation:
Capital investment analysis is the process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets. For example, in a situation where a decision was taken to install new equipment, replace old equipment, and purchase or construct a new building.
Answer:
d.the age of the current fixed assets.
Explanation:
The age of current fixed assets is straight forward since it was set at start of operation based on company`s usage thus within the entity`s control.
However the other factors makes capital investment analysis complex as they are not within the entity`s control.
When customers interact with technology and machines, the variability of the service encounter is reduced by
Answer: The standardization of equipment
its the right answer trust me !
When customers interact with technology and machines, the variability of the service encounter is reduced by the standardization of equipment. Thus, the correct option is C). the standardization of equipment
What is the importance of standardization of equipment?Standardization refers to the process of making something by implementing and developing technical standards. Standardization of equipment means improving the quality of equipment.
Standardization results in the improved clarity which makes the individual clear about about what they what they need to do and guesswork is eliminated. It offers higher quality by which employees can refine their methods and produce better results.
It also results in increased productivity as tasks become faster and easier with repetition.
Complete question is here:- When customers interact with technology and machines, the variability of the service encounter is reduced by A). societal norms B). complexity C). the standardization of equipment D). the customer's preferences
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When the actual cost of direct materials used exceeds the standard cost, the company must have experienced an unfavorable direct materials price variance.
a. True
b. False
Answer:
True
Explanation:
The cost was bigger than they had budgeted for, so it was an unfavorable variance.
The bargaining power of suppliers is low when Review Later Few substitute inputs are available Suppliers are large or concentrated There are many alternative suppliers Switching costs are high
Answer:
There are many alternative suppliers
Explanation:
Bargaining power of suppliers is one of Porters Five Forces. It refers to the extent to which a supplier can exert influence over buyers.
If there are many suppliers and a supplier raises price, consumer can easily change suppliers. But if the cost of changing suppliers is high (Switching costs), consumers would have less incentive to change suppliers. Thus, the bargaining power of suppliers would be high.
If there are few substitutes, there are few alternatives to the product offered by the supplier. so, the bargaining power of the supplier is high because consumers have little alternatives to the suppliers product.
As the workforce becomes more diverse, why does performance appraisal become a more difficult process?
Answer: The diversification of the employees in the organization will bring about a larger difference between the workers and raters and could invariably lead to bias at the workplace.
Explanation:
Performance appraisal is also called performance evaluation and it is when the performance of a worker in a company is being appraised or evaluated so as to improve efficiency and output.
The diversification of the employees in the organization will bring about a larger difference between the employees and the raters who are rating them. Hence, the above situation can lead to biases and unfairness in the workplace.
Suppose your yearly demand for renting DVDs is Q = 20 − 4P. If there is a rental club that charges $2 per rental plus an annual membership fee, what is the most that you would be willing to pay for the annual membership fee?
Answer:
$12
Explanation:
If P = $2 then the Q will be;
Q = 20 - 4 * 2
Q = 20 - 8
Q = 12
The maximum annual membership fee will be equal to the amount of demand. The annual membership fee cannot be greater than the demand function if so there will be decline in the demand.
You are the financial manager of the Crossrail 1 project in London. The Board overseeing the project, acting on behalf of the UK Government, has asked you to provide a financial analysis of the project for business planning purposes. With two years to go before the commencement of train operations, you have assembled the most recent estimates of the capital investment cost and net revenues, which were forecast 1 year ago. While the user benefits and ticket revenues are assumed to remain the same each year of the 60-year useful life, it is anticipated that maintenance costs will be higher in the final 30 years of the project. They are shown in Table.
Item of cash flow Today Each year (for the first Each year (for years
(£bn) 30 years) (£bn) 31 to 60) (£bn)
Capital investment -9.4
User benefits (Includes
Time savings, Traffic
congestion relief) 0.843 0.843
Ticket revenues 0.3 0.3
Operational costs and maintenance -0.422 -0.609
For projects such as Crossrail 1, the UK Government typically estimates a 60-year useful life and uses a discount rate of 3.5%.
a) What is the net present value (NPV) of the project?
a. "£15.04".
b. "£8.83".
c. "£7.36".
d. "£16.76".
b) What is the payback period of the project?
a. "13.04".
b. "8.22".
c. "17.60".
d. "7.49".
c) What is the internal rate of return (IRR) of the project?
a. "7.57%".
b. "7.35%".
c. "5.44%".
d. "6.52%".
d) Based on your calculations is Crossrail 1 a viable project at the discount rate?
a. "Yes".
b. "No".
You have been asked by the Board to present an analysis that incorporates more recent cash flow information about the Crossrail 1 project. Before the project becomes operational, the capital investment has been given a worse scenario estimate that is 35% above the forecast in table 1. The Board would like to see the analysis if the net cash inflows will also be 35% below expectation over the 60-year life whether under the existing hurdle rate of 3.5% it would remain viable.
a) What is the net present value (NPV) of the project?
a. "-£2.16".
b. "£4.78".
c. "£3.20".
d. "-£1.80".
b) What is the internal rate of return (IRR) of the project?
a. "2.72%".
b. "3.10%".
c. "1.79%".
d/ "0.67%".
c) Based on your calculations is Crossrail 1 a viable project at the discount rate?
a. "Yes".
b. "No".
Crossrail 1 project is about to start in London.
This project will require an initial investment of 9.4 billion. The project will start earning cash flows from year and it will continue to year 60 which is useful life of the project.
The NPV for the project will be 7.36 which is positive. The correct answer is c.
The payback period for project is 13.04 years which is given in the option a so correct answer is a.
The internal rate of return for the project is b. 7.35 .
Based on our analytics and calculation since NPV is positive so cross rail project is beneficial. The board should consider launching this project.
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On January 1, Power House Co. prepaid the annual rent of $10,140. Prepare the journal entry to record this transaction.
Answer and Explanation:
The journal entry to record the given transaction is shown below:
Prepaid rent Dr $10,140
To Cash $10,140
(Being the prepaid annual rent paid in cash is recorded)
For recording this we debited the prepaid rent as it increased the assets and credited the cash as it reduced the cash so that the proper posting could be done
The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Budgeted unit
sales 12,200 13,200 15,200 14,200
The selling price of the company’s product is $21 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $72,600.
The company expects to start the first quarter with 2,440 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,640 units.
Required
1-A. Complete the company's sales budget.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Budgeted Units Sales
Selling Price Per Unit
Total Sales
1-B. Complete the schedule of expected cash collections.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Beginning Accts Receivable
1st Quarter Sales
2nd Quarter Sales
3rd Quarter Sales
4th Quarter Sales
Total Cash Collections
2. Prepare the company’s production budget for the upcoming fiscal year.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Budgeted Unit Sales
Total Needs
Required Production in Units
Answer:
1-A. Sales budget
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Year
Sales units 12,200 13,200 15,200 14,200 54,800
Price per unit $21 $21 $21 $21 $21
Total sales $256,200 $277,200 $319,200 $298,200 $1,150,800
1-B. Cash collections budget
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Year
Collections from $72,600 $76,860 $83,160 $95,760 $72,600
previous quarter
Collections from $166,530 $180,180 $207,480 $193,830 $1,003,900
current quarter
Total $239,130 $257,040 $290,640 $289,690 $1,076,500
2. Productions budget
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Year
Sales units 12,200 13,200 15,200 14,200 54,800
Planned ending 2,640 3,040 2,840 2,640 2,640
inventory
Total production 14,840 16,240 18,040 16,840 65,960
required
- Beginning 2,440 2,640 3,040 2,840 2,440
inventory
Units to be 12,400 13,600 15,000 14,000 63,520
produced
Answer:
sells budget
Explanation:
Jenny Corp. needs to raise $53 million to fund a new project. The company will sell shares at a price of $29.00 in a general cash offer and the company's underwriters will charge a spread of 7.5 percent. The direct flotation costs associated with the issue are $925,000. How many shares need to be sold?
Answer:
2,010,252 Shares
Explanation:
The funds that are to be raised = $53,000,000
Spread = 7.5%
Share price = $29.00
Flotation cost with issue = 925,000
We have that:
(53000000+925000)/92.5 * 100
(539,250,000/92.5)x100
= $58297.973 x 100
= $58297297.3
The offer per share is placed at $29.00
So to get the number of shares sold:
$58297297.3 / $29.00
= 2,010,252 shares are to be sold.
our parents have made you two offers. The first offer includes annual gifts of $5,000, $6,000, and $8,000 at the end of each of the next three years, respectively. The other offer is the payment of one lump sum amount today. You are trying to decide which offer to accept given the fact that your discount rate is 6.2 percent. What is the minimum amount that you will accept today if you are to select the lump sum offer? D) $17,709.48 C) $16,360.42 B) $16,407.78 E) $17,856.42 A) $16,707.06
Answer:
A) $16,707.06
Explanation:
The computation of the minimum amount is shown below:
Here we find the present value which is shown below:
(in dollars) (in dollars)
Year Cash flows Discount factor Present value
1 5000 0.9416195857 4708.098
2 6000 0.8866474442 5319.885
3 8000 0.834884599 6679.077
Total 16707.059
As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Bohemian Manufacturing Company: Bohemian Manufacturing Company has no debt in its capital structure and has $300,000,000 in assets. Its sales revenues last year were $120,000,000 with a net income of $2,000,000. The company distributed $180,000 as dividends to its shareholders last year. Given the information above, what is Bohemian Manufacturing Company’s sustainable growth rate? 0.0601562% 0.5181384% 0.61% 4.1464268% Which of the following are assumptions of the sustainable (self-supporting) growth model? Check all that apply. The firm maintains a constant net profit margin. The firm’s liabilities and equity must increase at the same rate. The firm pays no dividends. The firm maintains a constant ratio of liabilities to equity.
Answer:
Sustainable growth rate = 0.67148%
The firm maintains a constant ratio of liabilities to equity.
Explanation:
Sustainable growth rate = ROE *Plow back Ratio / (1-ROE * Plow back Ratio)
When ROE = Net Income / Total Assets
= $2,000,000/$300,000,000
= 0.00667
Plow back Ratio = 1 - (Dividend / Net Income)
= 1 - ($180,000/$2,000,000)
= 1 - 0.09
=0.91
Sustainable growth rate = ROE * Plow back Ratio / (1-ROE * Plow back Ratio)
= 0.00667 * 0.91 / (1 - 0.00667 * 0.91)
= 0.0060697 / 0.9039303
=0.0067148
= 0.67148%
Therefore, the sustainable growth rate is 0.67148%
The firm maintains a constant ratio of liabilities to equity is the correct assumption for the sustainable growth model.
Suppose a monopolist's costs and revenues are as follows: ATC = $50.00; MC = $35.00; MR = $45.00; P = $55.00. The firm should
Answer:
The firm should increase output and reduce price
Explanation:
For a monopolist, there can be one of the following three scenarios at a time point in time:
Scenario one, MR = MC: For a monopolist, profit is maximized at the point where marginal revenue (MR) is equal to to marginal cost (MC), i.e. where MR = MC.
Scenario two, MR < MC: But when the MR < MC, it indicates that the monopolist is currently producing a higher quantity of output and it is not maximizing profit. In order to maximize profit, the monopolist has to reduce output until MR = MC.
Scenario three , MR > MC: But when the MR > MC, it indicates that the monopolist is currently producing a lower quantity of output and it is not maximizing profit. In order to maximize profit, the monopolist has to increase output until MR = MC. Also, the monopolist has to reduce price in order to sell the increased quantity of output.
From the question, the monopolist falls into scenerio three as MR > MC, i.e. $45 > $35. Therefore, the monopolist should increase output until MR = MC and reduce price in order to maximize profit.
Which of the following goals of a performance evaluation system is accomplished when the company's actual results are compared to industry standards?
A) Benchmarking
B) Motivating unit managers
C) Promoting goal congruence
D) Providing feedback
Answer:
A) Benchmarking
Explanation:
Benchmarking refers to a process in which the performance of the company could be measured with respect to the product, services, processes as compared with the industry performance
Here in the given situation, when an actual result is compared with the industry standards than we called as a benchmarking and the same is to be used for the evaluation of the performance system
All else being equal, an increased demand for U.S. products in the European Union will create a A.)supply of euros. B.)surplus of euros. C.)shortage of euros. D.)demand for euros.
Answer:
Correct Answer:
B.)surplus of euros.
Explanation:
United States of America as one of the most industrialized country with factories and firms producing goods and services engages in trade with other countries. Should their goods and services be demanded by European countries, it would create surplus of Euros due to the fact that, all the goods would be paid for by the common currency used by the European countries which is Euros.
Kansas Enterprises purchased equipment for $73,500 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $6,450 at the end of five years. Using the double-declining balance method, depreciation expense for 2022 would be
Answer:
The answer is $17,640
Explanation:
Equipment was bought on Jan. 1, 2022 for $73,500. This is the historical cost of the asset.
Residual value is $6,450. This is the amount the equipment is being expected to sell for at the end of its useful life.
Useful life is 5 years.
To know the percentage to be used for the depreciation, we have:
100percent / 5 years
= 20 percent
Double-declining is 40 percent(20 percent x 2)
Depreciation for 2021 is
$73,500 x 40 percent
= $29,400.
Carrying amount at the end of 2021 which will also be for the beginning of 2022 is $44,100 ($73,500 - $29,400)
Depreciation for 2022:
$44,100 x 40 percent
$17,640.
Therefore, the depreciation for 2022 is $17,640.
The Herfindahl-Hirschman Index (HHI) is a mathematical approach to understanding market concentration that provides a single concentration indicator. What is the HHI for an industry characterized by the below noted data?
a. Firm 1 has a market share of 40%
b. Firm 2 has a market share of 20%
c. Firm 3 has a market share of 15%
d. Firm 4 has a market share of 15%
e. Firm 5 has a market share of 10%
HHI=___
Answer: 2,550
Explanation;
The Herfindahl-Hirschman Index (HHI) is used to measure market saturation to see the concentration of a market. It ranges from around 0 to 10,000 and is calculated by squaring the market share of every firm in the market and then adding the squares up.
= 40² + 20² + 15² + 15² + 10²
= 1600 + 400 + 225 + 225 + 100
= 2,550
2. Roth retirement funds require you to pay taxes on your investment dollars up-front, while
traditional IRAs allow you to pay taxes only when you withdraw your investment at age 59.5 or
older. What are the pros and cons of each option?
(10 points: 5 for at least one pro and 5 for at least con)
Answer:
The Pros and Cons of Roth IRA and the Traditional IRA or 401(K):
Roth IRA is not advantageous to those, who are starting to save late in their career. It favors the younger worker, who is starting out with low-paying jobs at lower-paying tax rates, who will later be earning more.
With Roth IRA, you suffer the tax burden upfront when you are active and while making your contributions, so that you can enjoy your retirement benefits tax-free. This is why the younger worker benefits more. In the prime of life with little responsibilities, you can settle the taxman so that you can be free of him later in older age. But, if you are in the high tax bracket, this category is not funny for you, anyway. The IRS has an income limit for this category, therefore, you must go for the traditional IRA.
The traditional IRA saves you the tax burden initially, but you can never be free of the IRS. It must take its share later, having allowed you to enjoy tax-free contributions. When the net is filled, the IRS cuts its percentage off.
You will never feel bad then, because your tax rate will surely be reduced in comparison with when you are making the contributions. So, it is just and right to allow the IRS, who generously helped you to grow the nest in the first place to take its just and lawful cut. It does not bleed too much then, afterall you are drying up with life's responsibilities, including reduced tax bracket, and many of your children have started answering to the IRS independently. This is the better time to deal with IRS, anyway.
Explanation:
The question has the explanation: ROTH IRAs are retirement funds that allow you to pay taxes on your investments into retirement funds as you are making the contributions, so that you are free to make your withdrawals after at least 5 years without paying additional taxes.
The traditional IRAs or the 401(K) encourage you to make your retirement contributions without paying taxes on them so that you can contribute more. Then the IRS will bounce on you to pay the taxes when you are making withdrawals having grown the investments.
IRAs mean Individual Retirement Accounts which individuals use to save and accumulate their retirement funds.
Sonny's BBQ Company recently issued $85 par value preferred stock that pays an annual dividend of $9. Analysts estimate that the stock has a beta of 1.01. The current T-bill rate is 2.4%. The S&P 500's expected return is 12.1%. Assuming that CAPM holds, what is the intrinsic value of this preferred stock?
Answer:
Intrinsic value=$73.77
Explanation:
The Dividend Valuation Model(DVM) is a technique used to value the worth of an asset.
According to this model, the value of an asset is the sum of the present values of the future cash flows would that arise from the asset discounted at the required rate of return.
Price = D/Kp
D- Dividend payable
Kp- cost of preferred stock
So will need to work out the cost of equity using CAPM
The capital asset pricing model (CAPM): relates the price of a share to the market risk or systematic risk. The systematic risk is that which affects all the all the economic agents, e.g inflation, interest rate e.t.c
This model is considered superior to DVM. Hence, we will use the CAPM
Using the CAPM , the expected return on a asset is given as follows:
E(r)= Rf +β(Rm-Rf)
E(r) =? , Rf- 2.4%, Rm- 12.1% β- 1.01
E(r) = 2.4% + 1.23×(12.1- 2.4)% = 12.20 %
Cost of preferred stock= 12.20 %
Using the dividend valuation model
Intrinsic value = 9/0.1220=73.77
Intrinsic value=$73.77
Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year:
Cost Retail
Beginning inventory $ 30,000 $ 45,000
Purchases 190,000 260,000
Freight-in 2,500 —
Net markups — 8,500
Net markdowns — 10,000
Employee discounts — 1,000
Sales revenue — 205,000
If the ending inventory is to be valued at the lower-of-cost-or-market, what is the cost-to-retail ratio?
a) $220,000 ÷ $315,000
b) $222,500 ÷ $305,000
c) $222,500 ÷ $313,500
d) $222,500 ÷ $303,500
Answer:
C. $222,500 ÷ $313,500
Explanation:
Calculation for cost to retail ratio
COST
Beginning inventory $30,000
Add; Purchases $190,000
Add: Freight in $2,500
Cost $222,500
RETAIL
Beginning inventory $45,000
Add: Purchases $260,000
Add: Net mark ups $8,500
Retail $313,500
Therefore, the cost to retail ratio will be
$222,500 $313,500