Answer:
The amount of accumulated depreciation on the equipment shown in
the company's December 31, 2022 balance sheet is $16,500.
Explanation:
Depreciation Expense (Units of Production) = (Cost - Residual Value) × (Period`s Production / Total Estimated Production)
2021.
Depreciation Expense = ($74,000 - $8,000) × ( 11,000 units / 120,000 units )
= $6,050
2022
Depreciation Expense = ($74,000 - $8,000) × ( 19,000 units / 120,000 units )
= $10,450
Accumulated Depreciation - December 31, 2022
2021 = $6,050
2022 = $10,450
Total = $16,500
TwitterMe, Inc., is a new company and currently has negative earnings. The company’s sales are $2.1 million and there are 130,000 shares outstanding. a. If the benchmark price-sales ratio is 4.3, what is your estimate of an appropriate stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if the price-sales ratio were 3.6? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a. $69.46
b. 58.15
Explanation:
a. Price = Benchmark PS ratio × Sales per share
Sales per Share
= Sales / Shares outstanding
= 2,100,000/130,000
= $16.15
Price = 4.3 * 16.15
Price = $69.46
b. PS Ratio is 3.6
Price = Benchmark PS ratio × Sales per share
Price = 3.6 * 16.15
Price = $58.15
Consider a 11-period binomial model with R=1.02R=1.02, S_0 = 100S 0 =100, u=1/d= 1.05u=1/d=1.05. Compute the value of a European call option on the stock with strike K=102K=102. The stock does not pay dividends. Please submit your answer rounded to two decimal places. So for example, if your answer is 3.45673.4567 then you should submit an answer of 3.463.46. 1 point
Answer: 1.76
Explanation:
Given the following :
R=1.02,
S0 = 100
u=1/d= 1.05
Strike(k) = 102
Total Payoff = (probability of upside × upside Payoff) + (probability of downside × downside Payoff)
Upside Price = u × S0 = 1.05 × 100 = 105
downside Price = S0/u = 100/1.05 = 95.24
Upside Payoff = upside price - strike rate =(105 - 102) = 3
Upside probability :
[e^(r - q) - d] / u - d
E = exponential, q = Dividend (Dividend is 0, since the stock does not pay dividend)
d = 1/d = 1/1.05 = 0.9523809
e = 2.7182818
[2.7182818^(1.02% - 0) - 0.9523809] / (1.05 - 0.9523809)
[1.0102521 - 0.9523809] / 0.0976191
0.0578712 / 0.0976191
= 0.5928266
Probability of downside = 1 - p(upside)
P(downside) = 1 - 0.5928266
P(downside) = 0.4071733
Therefore, total Payoff =
(0.5928266 × 3) + (0.4071733 × 0)
= 1.7784798
European. Call option:
Total Payoff / (1 + r%)
1.7784798 / (1 + 1.02%)
=1.7784798/ (1 + 0.0102)
= 1.7784798 / 1.0102
= 1.7605224
= 1.76
A summary of the time tickets for the current month follows:
Job No. Amount
100 $1,640
101 1,360
104 2,490
108 2,870
Indirect 8,740
111 1,750
115 1,150
117 7,780
Journalize the entry to record the factory labor costs.
Answer:
Journal Entries:
a)
General Journal
Description Debit Credit
Direct labor:
Job 100 $1,640
Job 101 1,360
Job 104 2,490
Job 108 2,870
Job 111 1,750
Job 115 1,150
Job 117 7,780
Factory overhead:
Indirect labor 8,740
Factory labor costs $27,780
To record the labor costs to jobs and indirect labor
Explanation:
Factory labor costs consist of direct labor costs which are attributed to the specific jobs and the indirect labor costs which cannot be traced to any particular job. These are treated as factory overhead costs.
The journal entries recording the labor costs for each job, debit the indicated job title while crediting the factory labor costs.
"Its East Division has operating assets of $7,500,000, profit margin of 15%, and asset turnover of 0.80. Calculate the East Division's residual income."
Answer:
$150,000
Explanation:
Residual Income = Net Operating Income - (Operating assets x ROI)
Residual Income = 900,000 - ( 7,500,000 x 10%)
Residual Income = 900,000 - 750,000
Residual income = 150,000
NOTE: Assume ROI is 10%
Workings (net Operating Income)
Asset turnover = sales / net operating assets
0.8 x 7,500,000 = sales
sales = 6,000,000
Profit margin = Net operating income / sales
15% = Net operating income / 6,000,000
Net operating income = 6,000,000 x 15%
Net operating income = 900,000
which of the following choices is an example of an intangible item??
-a book
-an apple
-an online editing service
-a car
Answer:
an online editing service
Explanation:
An example of an intangible item is an online editing service. An intangible item is something that does not have an actual physical presence. Take a look at the following lists to get a better understand of an intangible vs. tangible item.
intangible items:
- insurance
- software
- data
tangible items:
- food
- computers
- phones
Since an online editing service is the only item that you cannot physical touch, this is the intangible item.
Identify the phase (Phillips, stagflation, or recovery) the economy is in, and suggest what change in aggregate demand or aggregate supply might have caused it.
a. "President Nixon expressed satisfaction with last yearâs economic performance. He said that with inflation and unemployment heading down, the nation âis on the right course."
b. "The nationâs inflation rate rose to a record high last month, the government reported yesterday. The consumer price index jumped 0.3% in January. Coupled with the announcement earlier this month that unemployment had risen by 0.5 percentage points, the reports suggested that the first month of President Nixonâs second term had gotten off to a rocky start."
c. "President Carter expressed concern about reports of rising inflation but insisted the economy is on the right course. He pointed to recent reductions in unemployment as evidence that his economic policies are working."
Answer:
a. "President Nixon expressed satisfaction with last year's economic performance. He said that with inflation and unemployment heading down, the nation is on the right course."
⇒ RECOVERY. Economic recovery refers to the economy starting to grow again after a period of recession. A rightward shift in the aggregate supply curve should decrease unemployment and reduce inflation.
b. "The nation's inflation rate rose to a record high last month, the government reported yesterday. The consumer price index jumped 0.3% in January. Coupled with the announcement earlier this month that unemployment had risen by 0.5 percentage points, the reports suggested that the first month of President Nixon's second term had gotten off to a rocky start."
⇒ STAGFLATION. Stagflation refers to a combination of high inflation and high unemployment. A leftward shift in the aggregate supply curve can result in stagflation.
c. "President Carter expressed concern about reports of rising inflation but insisted the economy is on the right course. He pointed to recent reductions in unemployment as evidence that his economic policies are working."
⇒ PHILLIPS. According to the Phillips curve, inflation and unemployment are inversely correlated. if inflation goes up, unemployment should go down. Phillips theory was discredited due to stagflation occurring during Nixon's presidency. Nixon created stagflation for the first time in the US since it isn't normal that inflation rises as unemployment increases. That shows you how good a president he was, he even invented new things for Americans to enjoy.
A summary of the time tickets for the current month follows:
Job No. Amount
100 $ 3,860
101 4,300
104 24,500
108 18,600
Indirect 6,340
111 7,120
115 7,400
117 32,000
Journalize the entry on Dec. 31 to record the factory labor costs.
Answer:
Entry is given below
Explanation:
Entry for factory labor cost
DATE ACCOUNT DEBIT CREDIT
DEC 31 Work in Progress(w) $97,780
Factory overhead $6,340
Wages payable $104,120
Working
Work in progress = 3,860+4,300+24,500+18,600+7120+7400+32,000
Work in progress = 97,780
NOTE: Work in progress is sum of all direct labor cost
Factory Overhead = all indirect labor cost which is only $6,130
Mohan is a first-generation immigrant from India. He works as an engineer in a software company in the United States. He is a good worker and friendly by nature. However, he becomes the target of racial slurs and jokes by his colleagues. Does the law give Mohan the right to protect himself from such behavior by his colleagues? Under what condition is discrimination based on national origin permissible?
Answer:
The law gives him the right to protect himself from this behavior
Explanation:
The Civil Right Acts' prohibition title VII gives protection against discrimination to workers from different ethnic groups in the work place. This kind of discrimination can cause national-origin lawsuit in title VII. But it is necessary that if Mohans job involves speaking to the public that he speaks some English.
An organization characterized by direct two-way lines of responsibility and communication running from the top of the organization to the bottom, with workers reporting to only one supervisor is a
Answer:
Line
Explanation:
The line organization is the organization structure in which the authority and responsibility are communicated from the top to bottom level of management so that the proper coordination could be done at each level of management i.e top, middle and lower.
Moreover, it is a two ways lines of responsibility i.e to be communicated from high to low level of management. Plus it would be reported to one supervisor only
Ideally, you should develop a risk management plan for a specific project because _________
A. Engaging in planning activities demonstrates professionalism
B. Your boss is committed to using project management techniques in every project
C. The scale of a particular project â the size and complexity â require it
D. The Project Management Institute recommends it
Answer: Option B
Explanation:
A risk management plan is a document which is prepared by the project manager to eliminate the risks and chances of any loss or issues related to the project.
Every project has to follow the risk management plan to ensure the safety of the people and capital invested in the project.
It is also contained in the documents of the risk assessment plan which has to be followed by project manager and people.
It is decided during the baseline, the risks and the cures related to the project. As the boss and the project manger is committed to follow the risk management techniques it should be considered on a priority basis.
Arco Corporation declared a cash dividend on June 2 of $6 per common share. The company has 2,000 shares of common stock authorized, 1,000 shares issued, and 200 in the treasury. The entry to record the declaration of the cash dividend increases a(n)
Answer:
The journal entry to record the dividend declaration is:
June 2, 202x, cash dividends are declared
Dr Retained earnings 4,800
Cr Dividends payable 4,800
The journal entry to record the payment of the dividend would be:
Dr Dividends payable 4,800
Cr Cash 4,800
When we calculate dividends, only outstanding stocks are included in the distribution: total outstanding stocks = issued stocks - treasury stocks = 1,000 - 200 = 800
Inventory items received should be compared against: Multiple Choice Sales receipt Purchase order Sales order Supplies inventory
Answer:
Purchase order
Explanation:
To verify existence and accuracy of inventory items received, the receiving division must compare the quantities, amounts and descriptions of the items received against the Purchase order.
Timberline Associates uses the weighted-average method in its process costing system. The following data are for the first processing department for a recent month:
Work in process, beginning:
Units in process ........................................................ 2,400
Percent complete with respect to materials .............. 75%
Percent complete with respect to conversion ........... 50%
Costs in the beginning inventory:
Materials cost ........................................................... $8,400
Conversion cost ........................................................ $7,200
Units started into production during the month ........... 20,800
Units completed and transferred out ........................... 22,200
Costs added to production during the month:
Materials cost ........................................................... $97,400
Conversion cost........................................................ $129,600
Work in process, ending: Units in process ........................................................ 1,000
Percent complete with respect to materials .............. 80%
Percent complete with respect to conversion ........... 60%
1. Determine the equivalent units for June for the first process
2. Compute the costs per equivalent unit for June for the first process.
3. Determine the total cost of ending work in process inventory and the total cost of units transferred to the next processing department in June.
4. Prepare a report that reconciles the total costs assigned to the ending work in process inventory and the units transferred out with the costs in beginning inventory and costs added during the period.
5. Prepare journal entries based upon the production report.
Answer:
1.Equivalent Units Materials 23,000 Conversion 22,800 (A)
2.Total Costs Materials $ 105,800 Conversion $ 136,800 (B)
3. WIP Ending Inventory costs $ 7280
4. Materials Costs $ 105800 Conversion Costs $ 136800 (C)
Explanation:
Timberline Associates
Weighted-Average Method
Equivalent Units
Particulars Units % of Completion Equivalent Units
Materials Conversion Materials Conversion
Completed 22,200 100 100 22,200 22,200
Ending WIP 1000 80 60 800 600
Equivalent Units 23,000 22,800 (A)
2. Total Cost to Account For
Materials Conversion
Beginning WIP 8400 7200
Cost Added During the month 97400 129,600
Total Costs 105,800 136,800 (B)
Equivalent Units 23,000 22,800
Equivalent Cost per unit 105,800/23000 136,800/22800
= $ 4.6 = $ 6
3. WIP Ending Inventory costs $ 7280
Materials = 800 * $ 4.6= $ 3680
Conversion = 600 *$6= $ 3600
Total Cost $ 7280
4. Unit Transferred Out Costs 235320
Materials = 22,200 * $ 4.6= $ 102120
Conversion = 22,200 *$6= $ 133200
Total Cost $ 235320
WIP Ending Inventory costs $ 7280
Materials = 800 * $ 4.6= $ 3680
Conversion = 600 *$6= $ 3600
Total Cost $ 7280
Materials Total Costs= $ 102120+ $ 3680 = $ 105800
Conversion Total Costs = $ 133200 + $ 3600= $ 136800 (C)
We see that the costs for Materials and conversion in B= to the costs for materials and conversion in C.
5. Finished Goods 235320 Dr
Work In Process 235320 Cr
Cost of Goods Sold Units 22,200 Dr
Finished Goods Units 22,200 Cr
Ending Work In Process $7280 Dr
Materials $ 3680 Cr
Conversion $ 3600 Cr
Insurance companies are rated by several rating agencies. The Fitch 20-point scale is AAA, AA+, AA, AA–, A+, A, A–, BBB+, BBB, BBB–, BB+, BB, BB–, B+, B, B–, CCC+, CCC, CCC–, DD. (a) What level of measurement does this scale use?
Answer:
The ordinal measurement
Explanation:
In this question, we are concerned with knowing the level of measurement used by this scale
The correct answer to this is the ordinal measurement.
What the ordinal scale does is that it places events in order but it does not take into account the fact that the intervals of the scale need to be equal using some sets of rule.
It only places the intervals into groups of subdivisions without having a rule that uses an interval to place members of each subdivision into their class
An important element of just-in-time processing is Group of answer choices dependable suppliers who are willing to deliver on short notice. all of the above. a specialized workforce. less emphasis on a quality control system.
Answer:
dependable suppliers who are willing to deliver on short notice
Explanation:
I will first try to explain what the concept means. just in time processing is an inventory strategy that has to do with the ordering of materials at short notice and receiving these items just in time for the production process. It decreases inventory costs and waste and also raises efficiency since goods are only going to be received as they are needed for production.
Therefore the correct answer is: dependable suppliers who are willing to deliver on short notice.
chandler Communications'CFO has provided the following information: The company's capital budget is expected to be $5,000,000. The company's target capital structure is 70 percent debt and 30 percent equity. The company's net income is $4,500,000. If the company follows a residual dividend policy, what portion of its net income should it pay out as dividends this year
Answer: $3,000,000
Explanation:
From the question, we are informed that a company's capital budget is expected to be $5,000,000 and that the company's target capital structure is 70 percent debt and 30 percent equity.
Equity = 30% × $5,000,000
= 30/100 × $5,000,000
= 0.3 × $5,000,000
= $1,500,000
Debt = 70% × $5,000,000
= 70/100 × $5,000,000
= 0.7 × $5,000,000
= $3,500,000
We are further told that the company's net income is $4,500,000 and since we be calculated the equity that will be needed to finance the capital budget as $1,500,000. Therefore, portion of its net income should it pay out as dividends this year will be:
= $4,500,000 - $1,500,000
= $3,000,000
The portion of its net income should it payout as dividends this year is $3,000,000.
Calculation of the dividend:Before that the following calculations need to be done.
Equity = 30% × $5,000,000
= 30/100 × $5,000,000
= 0.3 × $5,000,000
= $1,500,000
Now
Debt = 70% × $5,000,000
= 70/100 × $5,000,000
= 0.7 × $5,000,000
= $3,500,000
Now finally the dividend is
= $4,500,000 - $1,500,000
= $3,000,000
Learn more about dividend here: https://brainly.com/question/24353661
Many managers have made poor ethical decisions while engaged in international business. Many of these ethical issues are rooted in the variations among nations in their political systems, law, economic development, and culture. What is considered normal practice in one nation may be considered unethical in another.
Answer:
True.
Explanation:
This statement is correct, due to the fact that the practice of international business can generate some embarrassing situations and behaviors that can be considered ethical or unethical according to a particular country.
Therefore, in order to avoid bad ethical decisions in international business, it is necessary that a manager develops the ability of cultural intelligence, which corresponds to the ability to adapt behaviors and decisions in such a way that there is multicultural correspondence and respect and adaptation to the values and principles of individuals of other cultures with whom you need to relate professionally, so that there is appropriate, respectful and ethical behavior
A factor favoring the success of disruptive innovation is that:________.
A) incumbent firms are slow to change.
B) new entrants have highly formal organizational structures and processes.
C) the low end of the market is highly guarded.
D) incumbent firms focus on radical innovation rather than incremental innovation.
Answer:
A) incumbent firms are slow to change.
Explanation:
This business model type is said to be low cost and also can be seen and tested to be highly accessible to buyers and others goods in the market. Disruptive innovation is a business model that deals with the introduction of a new product or service into a market, at a lower cost and affordable that other products or its competitors, hereby luring prospective or buyers to buying the new product; displacing the leaders or top performers in the market. Disruptive innovation is highly favoured because the incumbent firms are slow to change.
Accounts Receivable has a balance of $ 5 comma 000, and the Allowance for Bad Debts has a credit balance of $ 420. The allowance method is used. What is the net realizable value of Accounts Receivable after a $ 140 account receivable is written off?
Answer:
$4,580
Explanation:
since we are using the allowance method, the journal entry to record the write off is:
Dr Allowance for bad debts 140
Cr Accounts receivable 140
So the accounts receivable balance = $5,000 - $140 = $4,860
the allowance for bad debts balance = $280
accounts receivable net balance = $4,860 - $280 = $4,580
Allowance for bad debts accounts is a contra asset account that reduces the balance of accounts receivable.
Trey has two dependents, his daughters, ages 14 and 17, at year-end (2018). Trey files a joint return with his wife.What amount of child credit will Trey be able to claim for his daughters under each of the following alternative situations?(a) His AGI is $103,300.(b) His AGI is $426,200.(c) His AGI is $428,900, and his daughters are ages 10 and 12.
Answer:
(a) His AGI is $103,300.
$2,000 since only one of your daughters qualifies for the child tax credit (must be under 17 at year end).
(b) His AGI is $426,200.
$2,000 - (27 x $50) = $2,000 - $1,350 = $650
For 2018, the income threshold to qualify for the child tax credit increased to $400,000, and it starts to fade away up to $440,000. It phases out $50 per each $1,000 of additional AGI.
(c) His AGI is $428,900, and his daughters are ages 10 and 12.
($2,000 x 2 children) - (29 x $50 x 2 children) = $4,000 - $2,900 = $1,100
Novak Company had the following two transactions related to its delivery truck. 1. Paid $150 for an oil change. 2. Paid $700 to install a special gear unit, which increases the operating efficiency of the truck.Prepare Novak's journal entries to record these two transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No Account Titles and Explanation Debit Credit 1. 2.
Answer and Explanation:
The Journal entries are shown below:-
1. Maintenance and Repairs Expense Dr, $150
To Cash $150
(Being cash paid is recorded)
For recording this we debited the maintenance and Repairs Expense as there is increased in expenses and credited the cash as assets are decreased
2) Equipment $700
To Cash $700
(Being cash paid is recorded)
For recording this we debited the equipment as it increased the assets and credited the cash as assets are decreased
Requirement 1. How much cash did the company receive upon issuance of the bonds payable? (Use the factor tables provided with factors rounded to three decimal places. Round all currency amounts to the nearest whole dollar.) Upon issuance of the bonds payable, the company received $ nothing.
Missing information:
A lot of information is missing, but I found several examples with very similar requirements.
For example:
Company, Inc. issued $500,000 of 14%, 10-year bonds payable on January 1, 2018. The market interest rate at the date of issuance was 12%, and the bonds pay interest semiannually.
Answer:
In order to determine the market price of the bonds we must add the present value of the bonds' face value + present value of the coupon payments:
PV of face value = $500,000 / (1 + 6%)²⁰ = $155,902.36
PV of coupon payments = $35,000 x 11.470 (PV annuity factor, 6%, 20 periods) = $401,450
market value of the bonds = $557,352.36
The journal entry to record the issuance of the bonds:
January 1, 2018, bonds are issued at a premium
Dr Cash 557,352.36
Cr Bonds payable 500,000
Cr Premium on bonds payable 57,352.36
Selected transactions from the journal of Giambi Inc. during its first month of operations, August 2022, are presented here.
Date Account Titles and Explanation Debit Credit
Aug. 1 Cash 10,000
Common Stock 10,000
10 Cash 1,700
Service Revenue 1,700
12 Equipment 12,200
Cash 1,200
Notes Payable 11,000
25 Accounts Receivable 2,500
Service Revenue 2,500
31 Cash 600
Accounts Receivable 600
Required:
Post the transactions to T-accounts.
Answer:
Giambi Inc.
T-Accounts for August 2022:
Cash Account
Aug. 1 Common Stock 10,000 Aug. 12 Equipment 1,200
Aug. 10 Service Revenue 1,700
Aug. 31 Accounts Receivable 600
Common Stock
Aug. 1 Cash Account 10,000
Service Revenue
Aug. 10 Cash Account 1,700
Aug. 25 Accounts Receivable 2,500
Equipment
Aug. 12 Cash 1,200
Aug. 12 Notes Payable 11,000
Notes Payable
Aug. 12 Equipment 11,000
Accounts Receivable
Aug. 25 Service Revenue 2,500 Aug. 31 Cash 600
Explanation:
T-accounts are general ledger accounts in T-form. They are mainly used for accounts adjustments at the end of the accounting period. The debit side is on the left hand side while the credit side is on the right hand side. At the end of the period, the accounts are balanced by making the two sides to agree in total with the difference being called the balancing figure.
Waterway, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 200 pressure gauges were produced, and overhead costs of $87,550 were estimated. An analysis of estimated overhead costs reveals the following activities.
Activities Cost Drivers Total Cost
1. Materials handling Number of requisitions $40,800
2. Machine setups Number of setups 25,750
3. Quality inspections Number of inspections 21,000
$87,550
The cost driver volume for each product was as follows.
Cost Drivers Instruments Gauges Total
Number of requisitions 420 630 1,050
Number of setups 225 260 485
Number of inspections 265 225 490
Air United, Inc. manufactures two products: missil
Air United, Inc. manufactures two products: missil
Determine the overhead rate for each activity.
Overhead Rate
Materials handling $
Machine setups $
Quality inspections $
Answer:
Results are below.
Explanation:
Giving the following information:
Activities Cost Drivers Total Cost
Materials handling Number of requisitions $40,800
Machine setups Number of setups 25,750
Quality inspections Number of inspections 21,000
Cost Drivers Instruments Gauges Total
Number of requisitions= 1,050
Number of setups= 485
Number of inspections= 490
We need to use the following formula for each activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Materials handling= 40,800/1,050= $38.86 per requisition
Machine setups= 25,750/485= $53.1 per setup
Quality inspections= 21,000/490= $42.86 per inspection
Watson Company purchased assets of Holmes Ltd. at auction for $1,390,000. An independent appraisal of the fair value of the assets acquired is listed below:
Land $ 304,000
Building 380,000
Equipment 608,000
Inventories 228,000
Prepare the journal entry to record the purchase of the assets.
Answer:
Dr land $278,000
Dr building $347,500
Dr equipment $556,000
Dr inventories $208,500
Cr cash $1,390,000
Explanation:
The total amount spent in acquiring the assets is $1,390,000 which needs to be shared between the assets acquired on the basis of individual values of the assets
Total of individual assets' values=$304000+$380000+ $608000+$228000=$ 1,520,000.00
Cost attributable to land:$304000/$1520000*$1,390,000=$ 278,000.00
Cost attributable to Building:$380000/$1520000*$1390000=$ 347,500.00
cost attributable to equipment=$608000/$1520000*$1390000=$556,000.00
cost attributable to inventories=$228000/$1520000*$1390000 =$208,500.00
Trahan Lumber Company hired you to help estimate its cost of common equity. You obtained the following data: D1 = $1.25; P0 = $27.50; g = 5.00% (constant); and F = 6.00%. What is the cost of equity raised by selling new common stock?
Answer:
The cost of equity raised by selling new common stock = 9.84%
Explanation:
Given values, the Trahan Company has D1 = $1.25 , P0 = $27.50, g = 5%, F = 6%
Now, the company wants to calculate the cost of equity that will be arising due to the selling of new common stocks.
Below is the calculation.
Cost of equity = [tex]D1/(Po-F*P0) + g[/tex]
Cost of equity = [tex]1.25/(27.50-6%*27.50) + 5%[/tex]
Cost of equity =[tex]9.84%[/tex]
You own a fixed-income asset with a duration of four years. If the level of interest rates, which is currently 8.1%, goes down by 20 basis points, how much do you expect the price of the asset to go up (in percentage terms)
Answer: 0.74%
Explanation:
Change in price of a fixed-income asset is inversely related to a change in it's interest rates.
The price change is therefore formulated by;
Δ Price of Asset = -Δ * Δy
Δ = 4 years / ( 1 + i)
= 4 / ( 1 + 8.1%)
= 3.7
A basis points refers to 0.01%. So 20 basis points 0.2%.
Δ Price of Asset = -3.7 * -0.2%
= 0.0074
= 0.74%
Price of Asset increases by 0.75%
Solving for dominant strategies and the Nash equilibrium Suppose Gilberto and Juanita are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Gilberto chooses Right and Juanita chooses Right, Gilberto will receive a payoff of 3, and Juanita will receive a payoff of 7.
Juanita
Left Right
Gilberto
Left 4, 6 6, 8
Right 7, 5 3, 7
The only dominant strategy in this game is for _____ to choose _____ . The outcome reflecting the unique Nash equilibrium in this game is as follows: Gilberto chooses _____ and Juanita chooses ____ .
Answer:
The only dominant strategy in this game is for Juanita to choose left since it is the best response of Juniata irrespective of what Gilberto does.
Gilberto chooses left and Juanita chooses left.
Explanation:
Gilberto appears to know Juniata's left to choose. So Gilberto opts for Left to maximize its return on investment. The technique is superior if the approach gives a participant a greater payout than just about any other player, no matter what any player does.
Therefore, the effect is.
When Juanita chooses his winning approach, it is the safest option for Gilberto to left.
Robertson, while a minor, contracted to borrow money from his father for a college education. his father mortgaged his home and took out loans against his life insurance policies to get some of the money he lent to Robertson, who ultimately graduated from dental school. Two years after Robertson's graduation, his father asked him to begin paying back the amount of $30,000 at $400 per month. Robertson agreed to pay $24,000 at $100 per month. He did this for three years before stopping the payments. His father sued for the balance of the debt. Could Robertson disaffirm the contract?
Answer:
Generally a minor cannot be held responsible for any contracts that they sign unless they involve basic necessities, e.g. food, clothes, shelter. But in this case, Robertson ratified the contract when he was already an adult (I guess he was an adult when he graduated as a dentist or during the next three years). Once Robertson ratified the contract, he cannot disaffirm it anymore.
If the producers’ surplus is $50, and the consumers’ surplus is $40, then what is the minimum selling price of the good?
Answer:
There is not enough information in this question, but I can explain the concept using an example. Good A sells for $150. Producer surplus = $50 and consumer surplus = $40.
The minimum selling price in this example would be $100, where producer surplus = $0.
Explanation:
Producer surplus refers to the difference between the minimum price that a supplier is willing to sell its goods or services versus the actual selling price of the goods or services. E.g. a producer could be willing to sell its goods at $100, but the selling price is $150, so producer surplus = $50
Consumer surplus refers to the difference between the maximum price a consumer is willing to pay for a good or service and the actual price of the good or service. E.g. a consumer is willing to pay $190 for a good but its selling price is $150, so consumer surplus = $40.