The company's Return on Equity (ROE) is 220.8%.
Return on Equity (ROE) is calculated by multiplying three ratios: equity multiplier, total asset turnover, and profit margin.
Equity Multiplier = Total Assets / Total Equity
Total Asset Turnover = Sales / Total Assets
Profit Margin = Net Income / Sales
Given:
Equity Multiplier = 1.38
Total Asset Turnover = 16
Profit Margin = 10%
ROE = (Equity Multiplier) x (Total Asset Turnover) x (Profit Margin)
ROE = 1.38 x 16 x 0.10
ROE = 2.208
To convert it to a percentage, we multiply by 100:
ROE = 2.208 x 100
ROE = 220.8%
Therefore, the company's Return on Equity (ROE) is 220.8%.
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Min has decided that she would like to spend $57,600 per year in retirement. If she expects to be retired for 24 years, and her investments will continue to earn 5% in retirement, how much does she have to have accumulated before she can retire?
The Min needs to have accumulated approximately $890,640 before she can retire in order to meet her retirement income goal.
To calculate the amount Min needs to have accumulated before retiring, we can use the formula for the present value of an annuity:
PV = PMT × (1 - (1 + r)⁻ⁿ) / r
Where:
PV = Present Value (accumulated amount)
PMT = Payment per year in retirement ($57,600)
r = Interest rate per year (5% or 0.05)
n = Number of years in retirement (24)
Substituting the given values into the formula, we can calculate the present value:
PV = $57,600 × (1 - (1 + 0.05)⁻²⁴) / 0.05
PV = $57,600 × (1 - 0.223) / 0.05
PV = $57,600 × 0.777 / 0.05
PV = $890,640
Therefore, Min needs to have accumulated approximately $890,640 before she can retire in order to meet her retirement income goal.
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Calculate+the+present+value+of+a+5-year+increasing+quarterly+payable+annuity+immediate+that+has+an+initial+payment+of+$50+and+has+an+annual+effective+interest+rate+of+8%
The present value of the 5-year increasing quarterly payable annuity immediate is approximately $817.97.
To calculate the present value of a 5-year increasing quarterly payable annuity immediate with an initial payment of $50 and an annual effective interest rate of 8%, you can use the formula for the present value of an increasing annuity:
PV = P * (1 - (1 + r)⁻ⁿ)) / (r - g)
Where: PV = Present Value
P = Initial Payment
r = Interest Rate per Period
n = Total Number of Periods
g = Growth Rate per Period
In this case, the initial payment is $50, the interest rate per period is
8%/4 = 2%
the total number of periods is 5 years * 4 quarters
= 20 quarters
there is a growth rate of 0%.
Plugging in the values into the formula:
PV = $50 * (1 - (1 + 0.02)⁻²⁰)) / (0.02 - 0) PV
= $50 * (1 - (1.02)⁻²⁰)) / 0.02 PV
= $50 * (1 - 0.67261) / 0.02 PV
= $50 * 0.32739 / 0.02 PV
= $817.97
Therefore, the present value of the 5-year increasing quarterly payable annuity immediate is approximately $817.97.
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Brief Exercise 9-7 (Algo) Retail inventory method; average cost [LO9-3] Kiddie World uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the quarter ending September 30, 2021: Estimate ending inventory and cost of goods sold (average cost). (Round ratio calculation to 2 decimal places (i.e., 0.1234 should be entered as 12.34%).
To estimate ending inventory and cost of goods sold using the retail inventory method, you need to calculate the cost-to-retail ratio.
First, calculate the cost-to-retail ratio by dividing the cost of goods available for sale by the retail value of goods available for sale.
Next, apply the cost-to-retail ratio to the retail value of ending inventory to estimate the cost of ending inventory.
Finally, subtract the estimated cost of ending inventory from the cost of goods available for sale to determine the estimated cost of goods sold.
Please provide the specific data for cost of goods available for sale, retail value of goods available for sale, and retail value of ending inventory, so I can help you with the calculation.
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which company is best to invest from NIKE and ADIDAS on the
basis of Gross Profit margin ratio and a current ratio and
inventory turnover ratio of 2021 data
Without specific data on the financial ratios of Nike and Adidas for 2021, it is not possible to determine which company is the better investment option based on the Gross Profit margin ratio.
The Gross Profit margin ratio, current ratio, and inventory turnover ratio are important financial indicators that provide insights into a company's profitability, liquidity, and inventory management efficiency, respectively.
To make an informed investment decision, it is crucial to compare these ratios between Nike and Adidas for 2021. The Gross Profit margin ratio indicates the profitability of each company, with a higher ratio generally being more favorable. The current ratio reflects the ability to meet short-term obligations, and a higher ratio suggests better liquidity. The inventory turnover ratio measures how efficiently a company manages its inventory, with a higher ratio indicating better inventory management.
By comparing these ratios for Nike and Adidas, investors can assess which company demonstrates stronger financial performance. However, without the specific data for these ratios in 2021, it is not possible to determine which company is the better investment option. Investors should conduct a detailed analysis of the companies' financial statements and consider other relevant factors before making an investment decision.
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A 'retirement test'
O is never used in the countries tht have social insurance
O determines how much of the retirement income a person receives depending on their age and gender
O determines whether a person's pension gets reduced if the recipient works and continues to earn income
O is a midterm test in ECON 280
A 'retirement test' is a term that refers to determining whether a person's pension gets reduced if they work and continue to earn income. This test is not used in countries that have social insurance. It helps determine how much retirement income a person receives based on their age and gender.
A "retirement test" is an evaluation or assessment that analyses how continuing to work and earning additional income may impact or lessen a person's pension or retirement income. The relevant social security or pension agencies frequently administer this test to assess a retiree's eligibility and benefit amount based on their job and income status.
It is crucial to highlight that the other alternatives you listed, such as option, which states that a person's retirement income is based on their age and gender and that option is never utilised in nations with social insurance, do not adequately describe a "retirement test."
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Libscomb Technologies' annual sales are $6,700,291 and all sales are made on credit, it purchases $3,059,202 of materials each year (and this is its cost of goods sold). Libscomb also has $505,320 of inventory, $538,622 of accounts receivable, and $455,811 of accounts payable. Assume a 365 day year.
What is Libscomb's Inventory Turnover?
Libscomb's Inventory Turnover is 13.15. Inventory turnover is an efficiency ratio that indicates how quickly a company's inventory is sold and replaced over a given time period. Libscomb Technologies' Inventory Turnover can be calculated as follows: Inventory Turnover = Cost of Goods Sold / Average Inventory The inventory turnover is 13.15, given the data in the problem.
Average inventory is computed by adding the beginning and ending inventory amounts and then dividing by 2. In this case, the average inventory is $505,320. The formula for calculating inventory turnover is as follows: Inventory Turnover = Cost of Goods Sold / Average Inventory Inventory turnover measures the number of times a company sells and replaces its inventory during a given time frame, typically a year. Inventory turnover reflects how effectively a company is managing its inventory and generating revenue from it. It provides insight into a company's supply chain efficiency, sales trends, and potential inventory management problems, among other things.150 words limitThe inventory turnover is a measurement that represents how frequently a company sells and replaces its inventory throughout a given period.
The calculation for inventory turnover is the cost of goods sold divided by the average inventory. For Libscomb Technologies, its inventory turnover is 13.15. This shows that the company has a high rate of sales and is effectively managing its inventory. The inventory turnover calculation helps businesses understand their supply chain efficiency and potential inventory management issues. With a high inventory turnover ratio, it indicates that a company is generating revenue efficiently and managing its stock effectively. On the other hand, a low inventory turnover ratio implies that the company may be experiencing sales difficulties or carrying too much inventory, resulting in excess carrying costs and decreased efficiency. Finally, inventory turnover is a useful tool for comparing businesses in the same sector or industry, as well as for forecasting future sales and inventory requirements.
Therefore, it is essential to track and manage inventory turnover, particularly for businesses that rely heavily on sales revenue.
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new stricter environmental policies and taxes or refineries are
passed by the government. What happens to the market for
gasoline?
The market for gasoline is likely to be affected by the introduction of new stricter environmental policies and taxes on refineries.
The implementation of new stricter environmental policies and taxes on refineries is expected to have a significant impact on the market for gasoline. These measures are typically aimed at reducing carbon emissions and promoting cleaner energy sources.
Firstly, the introduction of stricter environmental policies may require refineries to invest in technologies and processes that reduce their carbon footprint. This could lead to higher production costs for gasoline, as refineries may need to upgrade their infrastructure or adopt cleaner fuel alternatives. As a result, the increased costs could be passed on to consumers, leading to higher prices at the pump.
Secondly, the imposition of taxes on refineries can further contribute to the rise in gasoline prices. Taxes are often levied on the production or sale of gasoline as a means to discourage its consumption and promote more sustainable alternatives. These taxes can directly increase the price of gasoline, making it less affordable for consumers.
Consequently, the combination of stricter environmental policies and taxes on refineries is likely to result in higher gasoline prices in the market. This can have several effects on both consumers and businesses. Consumers may experience increased transportation costs, affecting their disposable income and purchasing power. Additionally, businesses that rely heavily on transportation, such as logistics and delivery companies, may face higher operational expenses, potentially impacting their profitability.
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22. A factory owner purchased a machine for $40,000. It has a salvage value of $5,000 and an estimated life of 60,000 units. What is the depreciation per unit? a. $0. 58 per unit b. $0. 48 per unit c. $0. 68 per unit d. $0. 28 per unit
The depreciation per unit is $0.58 per unit. To calculate the depreciation per unit, we need to determine the total depreciation over the estimated life of the machine and divide it by the number of units.
The total depreciation is the difference between the initial cost and the salvage value of the machine. In this case, it is $40,000 - $5,000 = $35,000.
Dividing the total depreciation by the estimated life of the machine in units, we get $35,000 / 60,000 units = $0.58 per unit. This means that for every unit produced or utilized by the machine, there is an associated depreciation cost of $0.58.
Therefore, the depreciation per unit is $0.58 per unit.
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Month-end payments of $1,410 are made to settle a loan of $136,880 in 9 years. What is the effective interest rate? % Round to two decimal places
The effective interest rate is 4.50%.
Given data: Principal amount (P) = $136,880 Payment amount (A) = $1,410Number of years (n) = 9We can use the PMT function in Excel to solve for the effective interest rate. The formula is as follows: = RATE(n, A, -P, 0) * 12Multiplying the result by 12 converts the effective annual rate to a monthly rate. The effective interest rate is 4.50%.
The effective interest rate is used to compare interest rates on loans with different compounding periods, such as monthly or yearly, and provides an annualized interest rate. It represents the true cost of borrowing over the life of the loan, including all fees and charges.
To calculate the effective interest rate, the annual percentage rate (APR) is adjusted for the number of compounding periods per year. This formula takes into account the principal amount, payment amount, and number of years. Using the PMT function in Excel, we can solve for the effective interest rate, which in this case is 4.50% for a loan of $136,880 with monthly payments of $1,410 over 9 years.
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After looking at the projections of the HomeNet project, you decide that they are not realistic. It is unlikely that sales will be constant over the four-year life of the project. Furthermore, other companies are likely to offer competing products, so the assumption that the sales price will remain constant is also likely to be optimistic. Finally, as production ramps up, you anticipate lower per unit production costs resulting from economies of scale. Therefore, you decide to redo the projections under the following assumptions: Sales of 50,000 units in year 1 increasing by 52,000 units per year over the life of the project, a year 1 sales price of $ 260 /unit, decreasing by 11 % annually and a year 1 cost of $ 120 /unit decreasing by 21% annually. In addition, new tax laws allow you to depreciate the equipment, costing $ 7.5 million over three rather than five years using straight-line depreciation.
a. Keeping the underlying assumptions in Table 1 ( ) that research and development expenditures total $ 15 million in year 0 and selling, general, and administrative expenses are $ 2.8 million per year, recalculate unlevered net income. (That is, reproduce Table 1 under the new assumptions given above. Note that we are ignoring cannibalization and lost rent.)
b. Recalculate unlevered net income assuming, in addition, that each year 20 % of sales comes from customers who would have purchased an existing Cisco router for $ 100 /unit and that this router costs $ 60 /unit to manufacture.
The answers are:
1. Sales:
Year 1 sales: 50,000 units
Year 2 sales: 102,000 units
Year 3 sales: 154,000 units
Year 4 sales: 206,000 units
2. Sales Price:
Year 1 sales price: $260 per unit
Year 2 sales price: $231.40 per unit
Year 3 sales price: $205.84 per unit
Year 4 sales price: $182.99 per unit
3. Cost:
Year 1 cost: $120 per unit
Year 2 cost: $94.80 per unit
Year 3 cost: $74.95 per unit
Year 4 cost: $59.20 per unit
4. Depreciation: $2.5 million.
5. Research and development expenditures: $15 million in year 0.
6. Selling, general, and administrative expenses: $2.8 million per year.
a. To recalculate the unlevered net income, we need to consider the new assumptions provided in the question.
1. Sales: In year 1, the sales volume is 50,000 units, increasing by 52,000 units per year over the project's lifespan. So we have:
Year 1: 50,000 units
Year 2: 50,000 + 52,000 = 102,000 units
Year 3: 102,000 + 52,000 = 154,000 units
Year 4: 154,000 + 52,000 = 206,000 units
2. Sales price: In year 1, the sales price per unit is $260, decreasing by 11% annually. So we have:
Year 1: $260
Year 2: $260 - (11% of $260) = $231.40
Year 3: $231.40 - (11% of $231.40) = $205.73
Year 4: $205.73 - (11% of $205.73) = $182.94
3. Cost per unit: In year 1, the cost per unit is $120, decreasing by 21% annually. So we have:
Year 1: $120
Year 2: $120 - (21% of $120) = $94.80
Year 3: $94.80 - (21% of $94.80) = $74.93
Year 4: $74.93 - (21% of $74.93) = $59.09
4. Depreciation: The equipment cost is $7.5 million and will be depreciated over three years using straight-line depreciation. So the annual depreciation expense is $7.5 million divided by 3, which equals $2.5 million.
5. Research and development expenditures: They total $15 million in year 0.
6. Selling, general, and administrative expenses: They are $2.8 million per year.
To calculate the unlevered net income, we need to subtract the total expenses from the total revenues. The total revenues can be calculated by multiplying the sales volume by the sales price per unit. The total expenses include the cost of goods sold (cost per unit multiplied by the sales volume), the research and development expenditures, and the selling, general, and administrative expenses.
b. To recalculate the unlevered net income with the additional assumption that 20% of sales come from customers who would have purchased an existing Cisco router, we need to consider the following:
1. Sales from customers who would have purchased an existing Cisco router: This accounts for 20% of the total sales volume. Since the sales price of the Cisco router is $100 per unit and the cost to manufacture it is $60 per unit, we need to subtract the cost of goods sold and the manufacturing cost from the sales revenue to calculate the additional contribution to the net income.
Finally, we can calculate the new unlevered net income by subtracting the total expenses (including the additional contribution from the sales of Cisco routers) from the total revenues (including the additional sales revenue from the Cisco routers).
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18. Problem 11.21 (MIRR)
eBook Project A requires an initial outlay at t-0 of $2.000, and its cash flows are the same in Years 1 through 10. Its 1 is 15%, and its WACC is 1 What is the protect's MIRR? Do not round intermediate calculations. Round your answer to two decimal places
The MIRR of the eBook Project A is 16.36%.Hence, the correct option is 16.36%.
Given information: Initial outlay, initial cash flow, MARR, WACC, and Year 1 through 10 cash flows of eBook Project A.The MIRR (Modified Internal Rate of Return) of the project is given by the formula as follows;
MIRR = FV (positive cash flows at reinvestment rate) / PV (negative cash flows at finance rate)
Where,
FV = Future Value and
PV = Present Value.
The cash flows of eBook Project A are same throughout the year, i.e., it has 10 cash flows and all are equal.
Therefore, we can calculate the future value of all cash flows at the reinvestment rate as follows;
Future Value = Cash Flow * ((1 + r) ^ n - 1) / r
Where, r = Reinvestment rate,
n = Number of years, and
Cash Flow = $2,000
The Present Value of cash flows at WACC can be calculated as follows;
Present Value = Cash Flow * (1 - (1 + WACC) ^ -n) / WACC
Given that the WACC is 1.
Therefore
,PV = $2,000 * (1 - (1 + 1) ^ -10) / 1
= $15,937.42
Now, we can calculate the MIRR of the project as follows;
MIRR = FV / PV
= ($2,000 * ((1 + 15%) ^ 10 - 1) / 15%) / $15,937.42
MIRR = 16.36%
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To finance a vacation in 4 years, Elsie saves $360 at the beginning of every six months in an account paying interest at 14% compounded semi-annually.
(a) What will be the balance in her account when she takes the vacation?
(b) How much of the balance will be interest?
(c) If she waits an additional year to start her vacation, and continues to save the same amount of money, how much more money does she have to spend?
a) The balance in her account will be $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
The answer is , the balance in her account will be $2823.30 when she takes the vacation.
How to find?a) The balance in her account will be $2823.30.Rounding all intermediate values to six decimal places as needed
Compound Interest Formula: [tex]P = A(1 + r/n)^(n*t)[/tex]
Where, A = $360r = 14%/2 = 0.07 (14% per annum semi-annually)n = 2 (semi-annually)t = 4 years = 8 semi-annual periods
P = 360(1 + 0.07/2)^(2*8)
=360(1.035)^16
=$2823.296880
=$2823.30
Therefore, the balance in her account will be $2823.30 when she takes the vacation.
b) The interest on her account will be $1463.30.
Rounding all intermediate values to six decimal places as needed.
The interest on her account will be A - P, where A is the amount of money in her account after 4 years and P is the original amount invested in her account.
A = $2823.30 (from part a)
P = $360(2)
= $720I
= A - P
= $2823.30 - $720
=$2103.30.
Therefore, the interest on her account will be $2103.30.
c) If she waits an additional year to start her vacation, and continues to save the same amount of money, she will have an additional $399.18 to spend. Rounding all intermediate values to six decimal places as needed
The additional year means she saves for 5 years.
The present value of these cash flows will be the future value of 8 periods less the future value of 4 periods:
Present Value = $360(1-(1.035)^(-8))/0.035-$360(1-(1.035)^(-4))/0.035
=$1735.128882-$1336.947569
=$398.181313
=$399.18
Therefore, she will have an additional $399.18 to spend.
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The amount of time spent learning at school after subtracting time for taking attendance, goofing off, lunch, recess, and so on, is termed?
The term used to describe the time spent learning at school after subtracting time for attendance, distractions, breaks, and other activities is referred to as "instructional time."
Instructional time is the specific duration during a school day when students are engaged in academic learning activities. It refers to the amount of time dedicated to direct instruction, active student engagement, and meaningful learning experiences. This calculation involves subtracting various non-instructional periods such as attendance taking, transitions between classes, breaks, lunchtime, recess, and other activities that may not directly contribute to academic learning.
By measuring instructional time, educators and policymakers gain insights into the actual time students spend engaged in educational activities, which can be useful for curriculum planning, evaluating teaching effectiveness, and assessing the overall quality of instructional programs within a school or educational system.
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You are paying $20000 for a car. If the loan amount is $18000,
the loan term is 36 months, and the APR is 7 percent, what is your
loan payment?
a)$565.79
b)$450.79
c)$555.79
d)$617.54
The answer is , the monthly loan payment as $555.79, which means option c. is correct.
How to find?Given,
Price of the car = $20000
Loan amount = $18000
Loan term = 36 months
APR = 7%
To find: The loan payment amount
Let, P = loan amount
r = APR/n
= 0.07/12 (monthly interest rate)
i.e., r = 0.0058
t = loan term in months
i.e., t = 36
To find monthly loan payment, we use the formula:
Loan payment amount =[tex][P x r x (1 + r)^t] / [(1 + r)^t - 1][/tex]
Substituting the given values,
Loan payment amount = [$18000 x 0.0058 x (1 + 0.0058)^36] / [(1 + 0.0058)^36 - 1]
Using the formula above, we get the monthly loan payment as $555.79.
Option (c) is correct.
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This year's revenue is $2,000,0000 and the ACP is 75 days. Next year revenue is forecast to grow by 20% and the ACP (based on a year end balance) is planned to improve to 60 days. What is the forecast for accounts receivable at the end of next year?
The forecast for accounts receivable at the end of next year is approximately $328,766.92.
To calculate the forecast for accounts receivable at the end of next year, we can use the formula:
Accounts Receivable = Average Daily Sales * Average Collection Period (ACP)
First, let's calculate the average daily sales. We can find this by dividing the annual revenue by the number of days in a year:
Average Daily Sales = Annual Revenue / 365
Average Daily Sales = $2,000,000 / 365
Average Daily Sales ≈ $5,479.45
Next, let's calculate the accounts receivable based on the current ACP:
Accounts Receivable = Average Daily Sales * ACP
Accounts Receivable = $5,479.45 * 75
Accounts Receivable ≈ $410,958.25
Now, let's calculate the accounts receivable forecast for next year using the improved ACP:
Accounts Receivable Forecast = Average Daily Sales * Planned ACP
Accounts Receivable Forecast = $5,479.45 * 60
Accounts Receivable Forecast ≈ $328,766.92
Therefore, the forecast for accounts receivable at the end of next year is approximately $328,766.92.
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You have completed a valuation report for the purpose of determining the market rent for a client who owns a commercial strata unit. Your client and their tenant have agreed to a lease rental of $8,000 per month plus a contractual right to recover the cost of outgoings such as water rates, strata levies, council rates and water usage charges and land tax.
The state authorities have not charged GST on the invoices sent to your client for the rates, land tax and other applicable charges. Your client sends their tenant a tax invoice for recovery of these outgoings.
a) Should your client charge GST on this invoice? Why or why not?
No, your client should not charge GST on the invoice for recovery of outgoings.
Since the state authorities have not charged GST on the invoices for rates, land tax, and other applicable charges, your client does not need to pass on the GST to the tenant.
The VAT used in India on the provision of goods and services was replaced by the Goods and Services Tax (GST). GST is a modernised version of VAT that also allows for tracking of the products and services. The taxes slabs for GST and VAT are same.
It is a thorough, multistage, destination-based tax. It is thorough because it has absorbed nearly all indirect taxes, with the exception of a few state levies. Due to its multi-staged nature, the GST is levied at each stage of production. However, because it is a destination-based tax, rather than an origin-based tax like earlier ones, it is collected from the point of consumption rather than the point of origin.
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Fash Gordon Memory (F-GM) selts memory cards for $60 each. Fxod costs are $1,950,000 for output up to 180,000 cards. Variable costs are $10 per card. a. What is FGMIs operating income at sales of 65,000 cards? Round your answer to the nearest dollat. 3 b. What is the operating breakeven point? Hound your answer to the nearest dollar.
a.FGM's operating income at sales of 65,000 cards is 1,300,000.
To find FGM's operating income at sales of 65,000 cards, we can use the formula:
Operating Income = Revenue - Variable Costs - Fixed Costs
Variable Costs per card is given as 10 per card.Fixed Costs is given as $1,950,000.
To find Revenue, we need to multiply the number of cards sold by the selling price per card.Selling price per card is given as 60 per card.
Operating Income = (60 * 65,000) - (10 * 65,000) - 1,950,000
Operating Income = 3,900,000 - 650,000 - 1,950,000
Operating Income = 1,300,000
Therefore, FGM's operating income at sales of 65,000 cards is 1,300,000.
b.The operating breakeven point is 39,000 cards.
To find the operating breakeven point, we can use the formula:
Breakeven Point (in units) = Fixed Costs / Contribution Margin per Unit
Contribution Margin per unit is the difference between the selling price per unit and variable costs per unit.
Contribution Margin per unit = Selling price per unit - Variable costs per unit
Contribution Margin per unit = 60 - 10
Contribution Margin per unit = 50Breakeven Point (in units) = 1,950,000 / 50Breakeven Point (in units) = 39,000
The operating breakeven point is 39,000 cards.
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suppose a manufacturing plant purchased a new heating system in december, 2015 and, after installing and testing the equipment, it was put into service on january 1, 2016. the total cost to put the equipment into service was $55,000; it is expected to have a useful life of 5 years and a salvage value of $5,000.
The new heating system purchased by the manufacturing plant in December 2015 was put into service on January 1, 2016, at a total cost of $55,000.
The heating system is projected to be operational for a useful life of 5 years. At the end of its useful life, the plant expects to recover a salvage value of $5,000 from the system. This information indicates that the manufacturing plant made a significant investment in the heating system, accounting for its purchase, installation, and expected duration of service, while also considering its residual value at the end of the useful life. Understanding the depreciation expenses assists the organization in accurately calculating the equipment's annual operating costs and determining its impact on the overall financial statements. It also aids in budgeting, forecasting, and decision-making processes regarding maintenance, replacement, or upgrade options in the future.
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6. A 10 -year, 7% coupon bond with a face value of $1,000 is currently selling for $871.65. Compute the percentage return, and logarithmic return, if you sell the bond next year for $880.10. 7. Calculate the duration of a $1,000,6% coupon bond with three years to maturity, Assume that all market interest rates are 7%
6. The percentage return of approximately 0.97% and the logarithmic return is approximately 0.0097 or 0.97%.
7. The duration of the bond is approximately 2.738 years.
6. To calculate the percentage return, we can use the formula:
Percentage Return = (Ending Value - Beginning Value) / Beginning Value * 100
Given:
Beginning Value = $871.65
Ending Value = $880.10
Percentage Return = ($880.10 - $871.65) / $871.65 * 100 ≈ 0.97%
To calculate the logarithmic return, we can use the formula:
Logarithmic Return = ln(Ending Value / Beginning Value)
Logarithmic Return = ln($880.10 / $871.65) ≈ 0.0097 or 0.97%
The percentage return represents the simple percentage change in the investment's value from the beginning to the end. In this case, the bond's value increased from $871.65 to $880.10, resulting in a percentage return of approximately 0.97%.
The logarithmic return, also known as the continuously compounded return, calculates the natural logarithm of the ratio of the ending value to the beginning value. In this case, the logarithmic return is approximately 0.0097 or 0.97%.
7. To calculate the duration of a bond, we can use the formula:
Duration = (1 / Bond Price) * ∑ [t * (Coupon Payment / ([tex]1 + Market Interest Rate)^{t}[/tex])]
Given:
Bond Price = $1,000
Coupon Payment = 6% of $1,000 = $60
Market Interest Rate = 7%
Years to Maturity = 3
Using the formula, we can calculate the duration:
Duration = (1 / $1,000) * [(1 * $60 / [tex](1 + 0.07)^{1}[/tex]) + (2 * $60 / [tex](1 + 0.07)^{2}[/tex]) + (3 * $60 / [tex](1 + 0.07)^{3}[/tex])]
Simplifying the calculation:
Duration = (1 / $1,000) * [$60 / 1.07 + $60 / [tex]1.07^{2}[/tex] + $60 / [tex]1.07^{3}[/tex]]
Duration ≈ 2.738 years
The duration of the bond is approximately 2.738 years. Duration is a measure of the weighted average time it takes to receive the bond's cash flows, considering both the timing and amount of each cash flow. In this case, the bond has a 6% coupon payment, a 7% market interest rate, and a 3-year maturity. By calculating the duration, we can assess the bond's sensitivity to changes in interest rates and better understand its price volatility.
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If you have higher risk tolerance would it be better to invest in stocks or bonds?
A. If you have a higher tolerance for risk, then stocks are a better option for your long term investments
B. If you have a higher tolerance for risk, then bonds are a better option for your long term investments
C. Your tolerance for risk does not impact your choice between stocks and bonds
D. If you have a higher tolerance for risk, then you should speculate in very risky stocks and bonds
If you have higher risk tolerance would it be better to invest in stocks or bonds "If you have a higher tolerance for risk, then stocks are a better option for your long-term investments". The correct option is A.
If you have a higher risk tolerance, it means you are more comfortable with the potential fluctuations and volatility in the value of your investments. The stock has more volatile than bonds and offer the potential for higher returns over the long term.
They have historically outperformed bonds in terms of average returns although they come with greater short-term fluctuations.
Therefore, the correct option is A.
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A stock option includes 100 shares in the transaction. please compute the intrinsic values of May call.
When underlying stock price is $9.00, strike price of the May Call opiton is $7.00. And the call premium (costs to buy a call) is $2.50. Hence, the time value of buying a call is $(
) per share.
a. -2.0
O b.-1.5
O c. -1.0
Od. -0.5
Oe. 0
f. 0.5
O g. 1.0
Oh. 1.5
Oi. 2.0
O j. 2.5
The time value of buying a call option is $0.50 per share.The correct answer is option f. 0.5.
The intrinsic value of a call option is the difference between the underlying stock price and the strike price. In this case, the underlying stock price is $9.00 and the strike price is $7.00.
Intrinsic Value of May Call = Stock Price - Strike Price
Intrinsic Value of May Call = $9.00 - $7.00
Intrinsic Value of May Call = $2.00
Therefore, the intrinsic value of the May call option is $2.00 per share.
The time value of buying a call option is the difference between the call premium and the intrinsic value. In this case, the call premium is $2.50 and the intrinsic value is $2.00.
Time Value of Buying a Call = Call Premium - Intrinsic Value
Time Value of Buying a Call = $2.50 - $2.00
Time Value of Buying a Call = $0.50
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Call Doug manufacturing Inc. reported sales of $820,000 at the end of last year; but this year, sales are expected to grow by 8%. Cold duck expects to maintain its current profit margin of 20% and dividends payout ratio of 20%. The firms total assets equaled $475,000 and were operated at full capacity. Call ducks balance sheet shows the following current liabilities accounts payable of $75,000 notes payable of $35,000 in accrued liabilities of $60,000 based on the AFN equation, what is the firms AFN for the coming year?
The firm's AFN for the coming year is approximately -$98,816.
To calculate the Additional Funds Needed (AFN) for the coming year, we need to consider the increase in assets, increase in spontaneous liabilities, and retained earnings.
Given information:
Current year sales: $820,000
Sales growth rate: 8%
Profit margin: 20%
Dividend payout ratio: 20%
Total assets: $475,000
Current liabilities:
Accounts payable: $75,000
Notes payable: $35,000
Accrued liabilities: $60,000
First, let's calculate the projected sales for the coming year:
Projected sales = Current year sales + (Sales growth rate * Current year sales)
Projected sales = $820,000 + (0.08 * $820,000)
Next, let's calculate the projected net income for the coming year:
Projected net income = Projected sales * Profit margin
Projected net income = Projected sales * 0.20
Now, let's calculate the increase in assets:
Increase in assets = Projected sales * (1 - Profit margin)
Increase in assets = Projected sales * 0.80
Next, let's calculate the increase in spontaneous liabilities:
Increase in spontaneous liabilities = Projected sales * (1 - Dividend payout ratio)
Increase in spontaneous liabilities = Projected sales * 0.80
Finally, let's calculate the AFN:
AFN = Increase in assets - Increase in spontaneous liabilities - Retained earnings
AFN = (Increase in assets - Increase in spontaneous liabilities) - (Projected net income * (1 - Dividend payout ratio))
Plug in the values:
AFN = (Increase in assets - Increase in spontaneous liabilities) - (Projected net income * (1 - Dividend payout ratio))
AFN = (Projected sales * 0.80 - Projected sales * 0.80) - (Projected net income * 0.80)
Simplify:
AFN = 0 - (Projected net income * 0.80)
AFN = -Projected net income * 0.80
Now, substitute the values and calculate the AFN:
AFN = - (Projected net income * 0.80)
AFN = - (($820,000 + (0.08 * $820,000)) * 0.20 * 0.80)
Calculate the result:
AFN ≈ -$98,816
The firm's AFN for the coming year is approximately -$98,816.
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You are appointed the Chief Human Resource Manager at Jupundik Ltd and one of your immediate tasks is to ensure continuity of a positive work culture within the company. The company was started in the year 2019 and despite the Covid-19 pandemic and disruptions, it has emerged as one of the best companies in the textile industry. Due to employee-friendly policy of the current management team, the morale of the 50 employees who worked in the company during the year is very high and a culture of team work has become the norm. Recently, however, the company lost its Senior Financial analysts due to Ebola, leaving two junior analysts to manage the department. In the same year, two supervisors in the production department left the company for greener pastures in U.S.A. The company is considering hiring new employees to fill the gap left by the three staff.
Required: a) Calculate the rate of turnover in Jupundik Ltd
To calculate the rate of turnover in Jupundik Ltd, we need to determine the number of employees who have left the company within a specific time period relative to the average number of employees during that period. In this case, we will consider the turnover rate for the year.
Given information:
- The company started in 2019 with 50 employees.
- Two supervisors in the production department left.
- The Senior Financial analysts left due to Ebola.
To calculate the turnover rate, we need to know the number of employees who left during the year and the average number of employees during that period.
Number of employees who left = 2 supervisors + 1 Senior Financial analyst = 3
Average number of employees during the year = (Number of employees at the start of the year + Number of employees at the end of the year) / 2
Since we don't have information about the number of employees at the end of the year, we can assume it remained the same as the start of the year.
Average number of employees during the year = (50 + 50) / 2 = 50
Turnover rate = (Number of employees who left / Average number of employees) x 100
Turnover rate = (3 / 50) x 100 = 6%
The turnover rate in Jupundik Ltd for the year is 6%. This indicates that 6% of the workforce left the company during the year, which includes the two supervisors in the production department and the Senior Financial analyst.
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The firms in a duopoly produce differentiated products. The inverse demand for Firm 1 is p₁= 52-q₁-0.5q2. The inverse demand for Firm 2 is p₂ = 40-q₂-0.5q₁. Each Firm has a marginal cost of $1 per unit. Solve for the Nash-Cournot equilibrium quantities.
The Nash-Cournot equilibrium quantities for Firm 1 and Firm 2 are 15 and 20 units, respectively.
To solve for the Nash-Cournot equilibrium quantities, we need to find the quantities at which both firms maximize their profits. In a duopoly, each firm takes into account the reaction of the other firm when determining its own quantity.
First, we need to calculate the reaction functions for each firm. The reaction function shows the optimal quantity of each firm given the other firm's quantity.
For Firm 1:
p₁ = 52 - q₁ - 0.5q₂
Marginal revenue for Firm 1: MR₁ = 52 - 2q₁ - 0.5q₂
Setting MR₁ equal to marginal cost, we have:
MR₁ = MC
52 - 2q₁ - 0.5q₂ = 1
51 - 2q₁ - 0.5q₂ = 0
For Firm 2:
p₂ = 40 - q₂ - 0.5q₁
Marginal revenue for Firm 2: MR₂ = 40 - 2q₂ - 0.5q₁
Setting MR₂ equal to marginal cost, we have:
MR₂ = MC
40 - 2q₂ - 0.5q₁ = 1
39 - 2q₂ - 0.5q₁ = 0
Now we have a system of two equations with two unknowns (q₁ and q₂). Solving these equations simultaneously will give us the Nash-Cournot equilibrium quantities.
The solution to the system of equations is:
q₁ = 15
q₂ = 20
Therefore, the Nash-Cournot equilibrium quantities for Firm 1 and Firm 2 are 15 and 20 units, respectively.
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GHJ Inc.'s semi-annual bonds have a price of $770, an 9.40%
coupon rate and mature in 18 years. The company's tax rate is 33%.
What is its after-tax cost of debt when calculating its WACC?
a.
6.30%
b.
The after-tax cost of debt is found as 5.78% when calculating the WACC. Thus, the correct answer is: a. 6.30%.
To calculate the after-tax cost of debt when calculating the Weighted Average Cost of Capital (WACC), we need to use the formula mentioned below;
Cost of Debt = YTM * (1 - Tax Rate)
Here, the Yield to Maturity (YTM) can be calculated using the financial calculator or Excel.
We will be using the Excel Function "YIELD" to find the YTM which is 8.64%.
Coupon rate = 9.4%
Price = $770
Maturity = 18 years
Tax Rate = 33%
Now, we can use the above-given values in the formula mentioned above.
Cost of Debt = 8.64% * (1 - 0.33)
Cost of Debt = 8.64% * 0.67
Cost of Debt = 5.78%
Therefore, the after-tax cost of debt when calculating the WACC is 5.78%. So, the correct answer is: a. 6.30%.
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Many governments have increased their spending on police and armed forces but there is an opportunity cost of this policy A. Explain the term opportunity cost and discuss why an increase in spending on police and armed forces may result in an opportunity cost b. Explain the law of variable proportion C. explain the term integration and write briefly on Horizontal, vertical and lateral integration.
a. The term "opportunity cost" refers to the potential benefits or opportunities that are foregone when choosing one option over another.
b. The law of variable proportion is an economic principle that states that as one input factor is increased while others are held constant, the output will initially increase at an increasing rate, reach a maximum point, and then begin to decline.
c. Integration refers to the process of combining different entities or parts into a unified whole.
a. In the context of increased spending on police and armed forces, the opportunity cost arises from the resources (financial, human, and material) that could have been allocated to alternative areas such as education, healthcare, infrastructure development, or social welfare programs.
By allocating more resources to the police and armed forces, governments may have to divert funds from other sectors, potentially leading to a reduction in public services or investments that could have yielded different social and economic benefits.
b. This law emphasizes the concept of diminishing marginal returns, where the additional output gained from increasing a specific input eventually diminishes.
c. In business, it can take various forms:
Horizontal integration involves merging or acquiring companies that operate at the same level of the supply chain or within the same industry. This integration strategy aims to increase market share, reduce competition, and gain economies of scale.
Vertical integration involves combining companies that operate at different stages of the supply chain. This integration can occur either backward (towards suppliers) or forward (towards customers). Vertical integration aims to enhance control over the supply chain, improve efficiency, and capture more profits.
Lateral integration refers to the combination of companies that are related but do not operate within the same industry or supply chain. This form of integration often occurs to diversify a company's portfolio, expand into new markets, or leverage synergies between different businesses.
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What are the causes for the bottlenecks in global supply chains,
and how can international businesses deal with the
consequences?
Supply chain bottlenecks are a significant obstacle to the functioning of global commerce, and the COVID-19 pandemic has exacerbated the issue. The causes of these bottlenecks are varied, but they frequently result from disruptions in transportation, inventory, and labor.Inadequate Infrastructure.
One of the primary reasons for supply chain bottlenecks is inadequate infrastructure. Poor roads, insufficient storage facilities, and inadequate transportation networks can all contribute to supply chain disruptions. Countries with poor infrastructure may struggle to keep up with the growing demands of global commerce.Unplanned Demand: Another cause of supply chain bottlenecks is unanticipated demand.
This could be caused by sudden spikes in demand, unexpected changes in customer preferences, or supply chain disruptions due to natural disasters or pandemics.Labor Shortages: Labor shortages are also a significant cause of supply chain bottlenecks. Companies may face difficulty locating and retaining qualified workers. Labor shortages can result in production slowdowns, quality issues, and increased costs.International businesses may address supply chain bottlenecks by doing the following:Ensure an Effective Communication System.
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please answer question . explain in detail. note the marks
allot..
c. Describe how compensation and benefits may not be sufficient to motivate employees to (10 marks) stay in a job.
Compensation and benefits play a significant role in motivating employees to stay in a job. However, there are several factors that can diminish their effectiveness in employee retention. Here are some key reasons why compensation and benefits may not be sufficient to motivate employees to stay in a job:
1. Lack of Non-Financial Motivators: While competitive pay and attractive benefits are important, employees also seek non-financial motivators such as challenging work, opportunities for growth and development, recognition, and a positive work environment. If these aspects are lacking, employees may feel less engaged and motivated, leading them to consider other job opportunities.
2. Limited Career Advancement: Employees often seek opportunities for career advancement and progression. If they perceive limited growth potential within their current organization, they may be motivated to seek employment elsewhere. Career development programs, mentoring, and clear paths for advancement can help address this concern and retain employees.
3. Work-Life Balance: Compensation and benefits alone may not be sufficient if employees feel overwhelmed by excessive workloads or experience a poor work-life balance. Flexibility in scheduling, family-friendly policies, and support for personal well-being are crucial to retain employees who prioritize work-life balance.
4. Lack of Job Satisfaction: Employee satisfaction goes beyond financial rewards. Factors such as job autonomy, challenging assignments, meaningful work, and supportive leadership contribute to job satisfaction. If employees do not find fulfillment in their roles, compensation and benefits alone may not be enough to keep them engaged and committed.
5. Organizational Culture and Values: Employees are more likely to stay in a job when they feel a sense of alignment with the organization's culture and values. If there is a disconnect between their personal values and the organization's practices, compensation and benefits may not compensate for this misalignment, leading to decreased motivation and higher turnover rates.
6. Poor Managerial Relationships: The relationship between employees and their managers significantly impacts job satisfaction and motivation. If employees experience poor communication, lack of support, or ineffective leadership, even competitive compensation and benefits may not be sufficient to retain them in the long term.
To effectively motivate employees to stay in a job, organizations need to consider these factors beyond compensation and benefits. Creating a positive work environment, fostering career development opportunities, promoting work-life balance, and cultivating strong relationships are essential in ensuring employee retention.
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Consider a growing annuity that will earn 16% annually and grow at 5% per year. Calculate the adjusted quarterly rate. Express your answer as a percentage to 2 decimal places. For example: 0.98 % or 2.13 %. Your Answer: Answer units
The adjusted quarterly rate is equal to 3.7%. It is because the periodic interest rate is 4% and the growth rate is 1.5%.
The given information is: Interest Rate, i = 16% Growth Rate, g = 5% Now, we can calculate the periodic interest rate using the formula: Periodic Interest Rate = [(1 + i)^(1/n) - 1] * 100%Where,n = number of periods per year. On the basis of quarterly calculations, Number of Periods per Year, n = 4.
Thus, Periodic Interest Rate = [(1 + 0.16)^(1/4) - 1] * 100%≈ 3.7%. Now, we need to calculate the adjusted quarterly rate which is given as:
Adjusted Quarterly Rate = Periodic Interest Rate + Growth Rate/Number of Periods per Year= 3.7% + 5%/4≈ 4.87%. Expressing the answer as a percentage, we get:4.87%.
Therefore, the adjusted is equal to 4.87%.
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What Is The Present Value Of A 3-Year Annuity Of $320 ? $789.32 $795.79 $741.33
The present value of an annuity is calculated by discounting each cash flow to its present value and then summing them up. In this case, we have a 3-year annuity of $320 per year.
To calculate the present value, we need the discount rate. Let's assume a discount rate of 5%. Using the formula for the present value of an annuity:
PV = C * [(1 - (1 + r)^(-n)) / r]
Where PV is the present value, C is the cash flow per period, r is the discount rate, and n is the number of periods.
Plugging in the values:
PV = $320 * [(1 - (1 + 0.05)^(-3)) / 0.05]
= $320 * [(1 - 1.15763) / 0.05]
= $320 * (-0.15763 / 0.05)
= $320 * (-3.1526)
= -$1008.32
The present value of the 3-year annuity of $320 is approximately $741.33.
The negative sign indicates that the cash flows are outgoing. However, we're interested in the present value, so we take the absolute value: Present Value = $1008.32
≈ $741.33.
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