After 6 years, you will have $5,294.79 in your bank account.
To calculate this, we need to determine the number of quarters in 6 years. Since there are 4 quarters in a year, we multiply 6 by 4 to get 24 quarters.
Next, we need to calculate the interest earned on each deposit. The bank pays interest every 66.5 days, which is approximately 0.1836 years (66.5 days / 365 days). To find the interest rate for each quarter, we divide the annual interest rate of 6% by 4, which gives us 1.5%.
Now, we can calculate the future value of each deposit. Using the formula for compound interest, FV = PV * (1 + r)^n, where FV is the future value, PV is the present value, r is the interest rate, and n is the number of periods, we can plug in the values.
For the initial deposit of $65, we have FV = $65 * (1 + 0.015)^24 = $96.98.
For the subsequent deposits of $100, we have FV = $100 * (1 + 0.015)^23 + $100 * (1 + 0.015)^22 + ... + $100 * (1 + 0.015)^1 = $5,197.81.
Adding up the future values of all the deposits, we get $96.98 + $5,197.81 = $5,294.79.
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A. What is the present value of a $250 perpetuity discounted
back to the present at 16 percent?
B. At a discount rate of 16.50%, find the present value of a
perpetual payment of $5500 per
A. The present value of a $250 perpetuity discounted back to the present at 16% is $1,562.50.
B. The present value of a perpetual payment of $5500 per period at a discount rate of 16.50% is $33,333.33.
A. To calculate the present value of a perpetuity discounted back to the present, we can use the formula:
Present Value = Payment / Discount Rate
In this case, the payment is $250 and the discount rate is 16%.
Present Value = $250 / 0.16 = $1,562.50
Therefore, the present value of a $250 perpetuity discounted back to the present at 16% is $1,562.50.
B. Using the same formula, but with a discount rate of 16.50% and a payment of $5500, we can calculate the present value:
Present Value = $5500 / 0.165 = $33,333.33
Therefore, the present value of a perpetual payment of $5500 per period at a discount rate of 16.50% is $33,333.33.
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Q. Suppose that the attribute fraction is 50%. This means that:
The relative risk is 50%
Among those who are exposed, 1 in 2 outcomes are due to the exposure
Among the population, 1 in 2 outcomes are due to exposure
The prevalence of exposure is 50% in the population
The correct interpretation of the attribute fraction being 50% is:
Among the population, 1 in 2 outcomes are due to the exposure.
This means that in the population being considered, 50% of the outcomes or events can be attributed to the specific exposure being discussed. It represents the proportion of outcomes in the population that can be associated with the exposure of interest.
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) At the end of the month, Donna compares actual sales to the goal that she set during the planning phase. Which of the management functions BEST describes this activity? Why is this important?
5) What can Donna learn by undertaking an organizational analysis?
6) After planning, what is the next step in the management process? Why will Donna need to follow this process?
7) How will the types of goals that Donna will most likely set help her in growing her business?
4. The activity where Donna compares actual sales to the goal she set during the planning phase, is part of the controlling function of management.
5. Undertaking an organizational analysis can provide Donna with valuable insights about her business.
6. After planning, the next step in the management process is organizing. Donna will need to organize her resources to effectively execute her plans.
7. The types of goals Donna will most likely set can provide direction, motivate her and her team and thus, help her in growing her business.
4. The activity where Donna compares actual sales to the goal she set during the planning phase, is part of the controlling function of management. Controlling involves monitoring and measuring performance against set goals or standards. It helps Donna assess whether her business is on track and allows her to take corrective action if necessary.
5. Undertaking an organizational analysis can provide Donna with valuable insights about her business. She can learn about the strengths and weaknesses of her organization, identify areas for improvement, and make informed decisions to optimize performance and achieve goals.
6. After planning, the next step in the management process is organizing. Donna will need to organize her resources, such as employees, materials, and equipment, to effectively execute her plans. This step is important because it ensures that tasks are assigned, responsibilities are clear, and resources are allocated efficiently, leading to smooth operations.
7. The types of goals Donna will most likely set can help her in growing her business. By setting specific, measurable, achievable, relevant, and time-bound (SMART) goals, Donna can focus her efforts, track progress, and hold herself accountable. These goals can provide direction, motivate her and her team, and guide decision-making, ultimately contributing to the growth and success of her business.
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"Heart Limited has one bond in issue expiring in eight years, paying 0 coupon and has a face value of $1000. It is currently traded at $720, Beta =1.2, risk free rate is 2%, historic market risk premium is 5.5%. Assume the ratio of debt to equity is 2:1, and corporate tax rate is 20%." (c) Determine the WACC for Heart Limited.
The Weighted Average Cost of Capital (WACC) for Heart Limited is 5.73%.
1. Calculate the cost of equity (Ke):
Ke = Risk-Free Rate + Beta * Market Risk Premium
Ke = 2% + 1.2 * 5.5% = 8.6%
2. Calculate the cost of debt (Kd):
Since the bond pays no coupon and is currently traded at a discount, the yield to maturity (YTM) can be used as the cost of debt.
Given that the bond has a face value of $1000 and is currently traded at $720, the discount is $1000 - $720 = $280.
The YTM can be calculated using the bond's discount and time to maturity:
YTM = (Discount / Purchase Price) * (1 / Time to Maturity)
YTM = ($280 / $720) * (1 / 8) = 0.0486 or 4.86%
3. Calculate the weights of equity (We) and debt (Wd):
Since the debt-to-equity ratio is 2:1, the weights can be calculated as follows:
We = 2 / (2 + 1) = 0.6667 or 66.67%
Wd = 1 / (2 + 1) = 0.3333 or 33.33%
4. Calculate the WACC:
WACC = (We * Ke) + (Wd * Kd)
WACC = (0.6667 * 8.6%) + (0.3333 * 4.86%)
WACC = 5.73%
Therefore, the WACC for Heart Limited is 5.73%.
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The President of the United States semiconductor corporation made this statement in the companies annual report: "United's primary goal is to increase the value of the common stockholders equity overtime". Later in the report the following announcements were made:
A: The company contributed $1.5 million to the symphony orchestra in San Francisco, it’s headquarters city.
B: United is pending $5 million to open a new plant in Mexico. no revenues will be produced by the plant for four years, so earnings will be depressed during this period versus what they would have been had the company not open the new plant.
C: The company is increasing its relative use of debt. Assets were formally financed with 35% debt and 65% equity; henceforth, the financing mix will be 50-50
D. The company uses a great deal of electricity and its manufacturing operations, and it generates most of this power itself. United plans to utilize nuclear fuel rather than coal to produce electricity in the future.
E: The company has been paying out half of its earnings as dividends and retaining the other half. Henceforth, it will pay only 30% as dividends.
These measures were indicative of the company’s commitment not just to the shareholders but also to a broader set of social and environmental responsibilities.
The President of the United States semiconductor corporation's statement in the annual report that “United's primary goal is to increase the value of the common stockholders equity overtime” displayed the focus on the stock price and shareholder value.
To achieve this, the company made a few key announcements that enabled it to not just increase equity value long-term, but also meet its potential socially and environmentally. The first announcement that it contributed $1.5 million to the symphony orchestra in its headquarters city, San Francisco, showed its commitment to meet social and environmental responsibilities and integrate cultural and artistic aspects into its corporate life. This showed that it was aware of its role in the larger community and gave it a public image boost.
The second announcement that it was pending $5 million to open a new plant in Mexico was indicative of its commitment to increase its geographical presence and in turn its market share. Even though the plant will not produce any revenues for a period of four years, this commitment was necessary for the company’s long-term prospects.
The third announcement that the company was increasing its relative use of debt and converting its financing mix from 35/65 debt/equity to a 50/50 ratio reflected an update in its financial strategy. The company was taking on more risk in an effort to increase long-term returns for its stockholders equity. The fourth announcement that United planned to switch from coal to nuclear fuel to produce electricity was in line with its environmental commitments. The company was aware of the energy it was using and was making a conscious decision to switch to an emission-free fuel source.
Finally, the fifth announcement that the company will pay out only 30% of its earnings as dividends rather than 50% showed its focus on financial mobilization for the company’s long-term rewards. This indicated that United was being more strategic with its finances and planning for the future. In conclusion, all of these announcements were aimed at increasing the value of the common stockholders equity for the company in the long run.
Hence, these measures were indicative of the company’s commitment not just to the shareholders but also to a broader set of social and environmental responsibilities.
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Question 12 Which of the following is a specific, measurable, attainable, relevant, and timely (SMART) goal? Start saving early in life to save enough to reach the goal. Begin saving today to reach future goals. Retire at age 67 in Florida with an annual income of $80,000. Have a retirement income from personal savings, Social Security, and retirement plan assets.
The goal to retire at age 67 in Florida with an annual income of $80,000, supported by personal savings, Social Security, and retirement plan assets, meets the criteria of a SMART goal.
The goal "Retire at age 67 in Florida with an annual income of $80,000, having a retirement income from personal savings, Social Security, and retirement plan assets" is a specific, measurable, attainable, relevant, and timely (SMART) goal.
Specific: The goal clearly states the desired outcome of retiring at a specific age (67) in a specific location (Florida) with a specific annual income ($80,000).
Measurable: The goal includes a specific financial target ($80,000 annual income) that can be objectively measured and tracked.
Attainable: The goal is achievable as it aligns with a common retirement age (67) and specifies the desired income based on personal savings, Social Security, and retirement plan assets.
Relevant: The goal is relevant to the individual's retirement planning, as it focuses on securing a comfortable retirement income to support their lifestyle.
Timely: The goal sets a specific timeframe for achieving retirement at age 67, indicating the importance of starting the planning and saving process early to ensure sufficient funds are accumulated.
In conclusion, the goal to retire at age 67 in Florida with an annual income of $80,000, supported by personal savings, Social Security, and retirement plan assets, meets the criteria of a SMART goal.
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Radovilsky Manufacturing Company, in Hayward, Califomia, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 11,500 flashing lights per year and has the capability of producing 95 per day. Setting up the light production costs $48. The cost of each light is $1.05. The holding cost is $0.15 per light per year. a) What is the optimal size of the production run? units (round your response to the nearest whole number).
Find the following:
A. Optimal Size of Production
B. Average Inventory
C.Average set up cost per year
D. Annual purchase cost of lights
The optimal size of the production run is 121 units, the average inventory is 60.5 units, the average setup cost per year is $4,528.10, and the annual purchase cost of lights is $12,075.
To calculate the optimal production run size, we can use the economic order quantity (EOQ) formula. The EOQ formula is given by:
EOQ = sqrt((2DS) / H)
Where:
D = Annual demand (11,500 units)
S = Setup cost per production run ($48)
H = Holding cost per unit per year ($0.15)
Plugging in the values, we get:
EOQ = sqrt((2 * 11,500 * 48) / 0.15) = 120.83
Rounding this to the nearest whole number, the optimal size of the production run is 121 units.
To find the average inventory, we can use the EOQ formula:
Average Inventory = EOQ / 2 = 121 / 2 = 60.5 units
The average setup cost per year can be calculated by multiplying the number of production runs per year by the setup cost:
Average Setup Cost per Year = Number of Production Runs * Setup Cost = 11,500 / 121 * 48 = $4,528.10
The annual purchase cost of lights can be calculated by multiplying the annual demand by the cost per light:
Annual Purchase Cost of Lights = Annual Demand * Cost per Light = 11,500 * $1.05 = $12,075
Therefore, the optimal size of the production run is 121 units, the average inventory is 60.5 units, the average setup cost per year is $4,528.10, and the annual purchase cost of lights is $12,075.
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Question 6.Which of the following statements related to Canadian taxation is correct:A Interest income received by a corporation is tax-free.B Dividend income received by a Canadian corporation from another Canadian company is taxable.C Dividend paid out by a corporation is treated as tax deductible expense.D Interest paid by a corporation is treated as before-tax expense, so it is 100% tax deductible.Question 7. Which of the following items will show a cash inflow (cash flow increase) to the firm:A increase of inventory B. decrease of marketable securities C. increase in accounts receivablesD decrease of borrowings from banksE. increase of fixed assets
The correct option is B. Dividend income received by a Canadian corporation from another Canadian company is taxable.
The option that shows a cash inflow (cash flow increase) to the firm is C. increase in accounts receivables.Explanation for option 6:B. Dividend income received by a Canadian corporation from another Canadian company is taxable.In Canada, dividends received by Canadian corporations from other Canadian companies are subject to taxation. The dividend is taxed at a reduced rate because of the dividend tax credit (DTC). The DTC is a non-refundable tax credit that provides a tax break to Canadian taxpayers who receive dividends from Canadian corporations.
Increase in accounts receivables - An increase in accounts receivable would result in a cash inflow. Accounts receivable (AR) is the money owed to a company for goods or services that have already been delivered. When customers pay their bills, the company receives cash, which is reflected as a cash inflow in the cash flow statement.
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sarah U=100x0.5 y0.5
Jani U=50x0.4 y0.6
Px= 10
Py= 20
Current output
x= 58
y=36
sarah income I=600
Jani income I=700
1. Calculate MRS for sarah and jani.
2. calculate the quantities of x and y used by
MRS for Sarah is higher than Jani, indicating she is willing to give up more y for an additional unit of x. Sarah uses 34.55x and 26.54y, while Jani uses 23.37x and 28.44y.
1. To calculate the Marginal Rate of Substitution (MRS) for Sarah and Jani, we can use the formula:
MRS = (MUx / MUy)
where MUx is the marginal utility of x and MUy is the marginal utility of y.
For Sarah, we have:
MUx = (dU/dx) = 50x^(-0.5)y^(0.5) = 50(58)^(-0.5)(36)^(0.5) ≈ 8.21\
MUy = (dU/dy) = 50x^(0.5)y^(-0.5) = 50(58)^(0.5)(36)^(-0.5) ≈ 2.74
MRS of Sarah = MUx / MUy = 8.21 / 2.74 = 2.99
For Jani, we have:
MUx = (dU/dx) = 40x^(-0.6)y^(0.4) = 40(58)^(-0.6)(36)^(0.4) ≈ 6.04\
MUy = (dU/dy) = 40x^(0.4)y^(-0.6) = 40(58)^(0.4)(36)^(-0.6) ≈ 5.07
MRS of Jani = MUx / MUy = 6.04 / 5.07 = 1.19
Therefore, Sarah has a higher MRS than Jani, indicating that she is willing to give up more y for an additional unit of x than Jani.
2. To calculate the quantities of x and y used by Sarah and Jani, we can use the formula:
MRS = Px / Py
For Sarah, we have:
MRS = Px / Py = 10 / 20 = 0.5
Substituting the value of MRS and the given income, we get:
Px / Py = MUx / MUy\
10 / 20 = 50x^(-0.5)y^(0.5) / 50x^(0.5)y^(-0.5)\
y / x = (10 / 20) \* (58)^(0.5) / (36)^(0.5)\
y / x ≈ 0.77
Substituting the value of y / x in the budget equation, we get:
Px \* x + Py \* y = I\
10 \* x + 20 \* (0.77x) = 600\
x ≈ 34.55\
y ≈ 26.54
Therefore, Sarah uses approximately 34.55 units of x and 26.54 units of y.
For Jani, we have:
MRS = Px / Py = 10 / 20 = 0.5
Substituting the value of MRS and the given income, we get:
Px / Py = MUx / MUy\
10 / 20 = 40x^(-0.6)y^(0.4) / 40x^(0.4)y^(-0.6)\
y / x = (10 / 20) \* (58)^(0.4) / (36)^(0.6)\
y / x ≈ 1.22
Substituting the value of y / x in the budget equation, we get:
Px \* x + Py \* y = I\
10 \* x + 20 \* (1.22x) = 700\
x ≈ 23.37\
y ≈ 28.44
Therefore, Jani uses approximately 23.37 units of x and 28.44 units of y.
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Making Business Decisions I
The Broadway Cafe needs to take advantage of e-business strategies if it wants to remain competitive. Create a document that discusses the many e-business strategies that The Broadway Cafe could use to increase revenue. Be sure to focus on the different areas of business such as marketing, finance, accounting, sales, customer service, and human resources.
PROJECT FOCUS:
Explain how understanding e-business can help you achieve success in each of these areas. A few questions you might want to address include:
What type of e-business would you deploy at The Broadway Cafe?
How can an e-business strategy help The Broadway Cafe attract customers and increase sales?
What types of metrics would you want to track on your e-business Web site?
How could you use an e-business strategy to partner with suppliers?
How could a portal help your employees?
Would you use Kiosks in the cafe?
An e-business strategy is a kind of business strategy that employs web-based technologies to complete various activities such as online sales, marketing, and customer service. The Broadway Cafe can use a variety of e-business techniques to increase revenue by being competitive.
An e-business approach should focus on various business areas such as finance, sales, customer service, marketing, and human resources.How understanding e-business can help you achieve success in each of these areas?Finance: An e-business approach will assist the company's finance department in lowering costs and maximizing revenue. It will enable the cafe to easily handle accounting procedures, inventory management, and financial planning.
Customer Service: An e-business approach will allow the cafe to provide better customer service, such as 24-hour customer support, online chat support, and a user-friendly ordering system, which will improve customer satisfaction and help the cafe attract more customers.Marketing: The Broadway Cafe could use an e-business strategy to market its brand through various online channels, such as social media, email marketing, SEO optimization, and so on.
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Nina is able to select her weekly work hours. When a new bridge opened, it cut one hour off Nina’s total daily commute to work. Show on a graph the impact of this change on the budget constraint. Suppose that Nina did not change her weekly hours. Does Nina's labor supply curve slope upward, bend backward, or is it vertical? Show on a graph
When the new bridge opened, Nina's budget constraint shifted to the right in a parallel fashion, indicating an increase in the amount of available time for either work or leisure (excluding commuting time).
The graph the impact of this change on the budget constraint.This shift in her constraint created an income effect, allowing her to have the option to work more and consume more leisure. Since both income and leisure are considered normal goods, an increase in income leads to an increase in the quantity demanded for both.
In this scenario, the only way for Nina's income to increase is by working more hours. Therefore, we can conclude that her extra hour per day, gained from the shorter commute, is divided between allocating more time to work and enjoying more leisure. Consequently, Nina chooses to work more hours in response to the increased availability of time.
Based on this analysis, the labor supply curve for Nina would be upward sloping, indicating that as her wage rate increases, she would be willing to supply more labor by working additional hours.
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If you invest $10,000 today and another $10,000 a year from today, what will be the total value of your investments at the end of 10 years from today? Assume that your investments earn a 6% return.
Group of answer choices
$35,816.95
$34,803.27
$17,908.48
$16,894.79
The total value of the investment in 10 years from now, if you invest $10,000 today and another $10,000 a year from today, will be $216,097.12.
In the present case, let us assume that the annual compounding of the investment is done over 10 years, with a 6% return per annum.
In the first year, the investment will grow by 6% of $10,000 = $600. So the total investment at the end of the first year = $10,000 + $600 = $10,600
In the second year, there will be two investments - one of $10,000 and another of $10,600. Both will grow by 6%. Thus the investment at the end of the second year will be: $10,000 x 1.06 + $10,600 x 1.06 = $11,236
This way, we can calculate the investment at the end of every year up to the 10th year. At the end of the 10th year, the total investment will be $216,097.12.
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5. Explain how this statement can be true: "A long call position offers potentially ited gains if the underlying asset's price rises but a fixed, maximum loss if the bo ing asset's price drops to zero
The statement is true because a long call position gives the holder the right, but not the obligation, to buy the underlying asset at a predetermined price (strike price) within a specific time period (expiration date).
When the price of the underlying asset rises, the long call position allows the holder to benefit from the price increase. The potential gains are unlimited because the underlying asset's price can continue to rise, and the holder can exercise the call option to buy the asset at the lower strike price and then sell it at the higher market price.
On the other hand, the maximum loss for a long call position is limited to the premium paid for the option. If the price of the underlying asset drops to zero or remains below the strike price at expiration, the holder can simply choose not to exercise the option, allowing it to expire worthless. In this case, the loss is limited to the premium paid for the call option.
Therefore, a long call position offers potentially unlimited gains if the underlying asset's price rises, but a fixed, maximum loss if the underlying asset's price drops to zero.
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Explain how an appreciation of the US$ can be expected to impact economic growth, interest rates and the stock market in the US.
An appreciation of the US dollar can be expected to impact economic growth, interest rates, and the stock market in the US as follows:
Economic Growth: When the US dollar appreciates, exports become more expensive, making them less competitive on the international market. As a result, foreign demand for US goods and services decreases, which might slow down economic growth.
Interest Rates: An appreciation of the US dollar can lead to lower interest rates. When foreign investors buy US dollars, they are also acquiring US Treasuries, which lowers bond yields and leads to lower interest rates in the US.
Stock Market: An appreciation of the US dollar can have a negative impact on the US stock market. When the dollar appreciates, US firms with international operations, such as those that rely on exports, may experience lower revenues and earnings, leading to lower stock prices. Furthermore, when the dollar appreciates, foreign investors find US investments less appealing, causing a drop in foreign investment.
An appreciation of the US dollar is a situation in which the US dollar's value rises relative to that of other currencies. As the US dollar appreciates, the economy's effects can be seen in several areas. Economic growth may be slowed due to less foreign demand for US products, interest rates may be lowered as more people buy US Treasuries, and the stock market may be negatively impacted by reduced revenues and foreign investment.
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CC Rainger is a business to business distributor of MRO (maintain, repair and operate) products. They have more than 300 retail stores that they serve from a central warehouse. The company uses a 98% service level calculated on the proportion that can be satisfied directly from stock (demand fill rate). The cost for placing an order is $100 and the annual holding cost is 20%. They work 365 days/year.
Item propertyData valueLead time from supplier14 daysLead time to Retailer3 daysInternal price$25Daily demand75 unitsσ, Standard deviation during lead time103 unitsInventory carrying cost20 %
Tables that might be useful for answering the questions (click to open):
Normal Distribution function table
Service loss function table
1a. What is the Economic Order Quantity (EOQ)?
Enter the correct value in the input field. Round off to the closest 10 units.
units incorrect
1b. What Safety Stock level does the company need to reach the desired service level?
Enter the correct value in the input field. Round off to the closest 10 units.
units incorrect
1c. What Re-Order Point (ROP) level does the company need to reach the desired service level?
Enter the correct value in the input field. Round off to the closest 10 units, if needed.
The economic order quantity (eoq) is approximately 2,340 units.1b.
1a. the economic order quantity (eoq) can be calculated using the following formula:
eoq = √[(2 * annual demand * ordering cost) / holding cost]
given:
- annual demand: 75 units/day * 365 days = 27,375 units
- ordering cost: $100
- holding cost: 20%
plugging these values into the formula:
eoq = √[(2 * 27,375 * 100) / 0.2] = √(5,475,000) ≈ 2,340 units to determine the safety stock level, we need to calculate the standard deviation during the lead time (σl) using the formula:
σl = σ * √(lead time)
given:
- standard deviation during lead time (σl): 103 units
- lead time from supplier: 14 days
plugging these values into the formula:
σl = 103 * √(14) ≈ 435 units
next, we can use the service loss function table to find the corresponding value for a 98% service level, which is 2% service loss. from the table, we find that the value closest to 2% service loss is 2.05.
safety stock = σl * service loss factor
safety stock = 435 * 2.05 ≈ 892 units
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1. In a market, a company that manufactures cars would be
reffered to as a business - True or False?
2. Merchandising business include retail companies and
manufacturing companies - True or False?
1. True. A company that manufactures cars would indeed be referred to as a business in the market.
Businesses encompass various entities involved in the production, distribution, and sale of goods or services, and a car manufacturing company falls under this category. As a business, the company engages in activities such as designing, assembling, and marketing cars to meet consumer demands and generate profits.
2. True. Merchandising businesses do include both retail companies and manufacturing companies. Retail companies primarily focus on the sale of goods directly to consumers, while manufacturing companies are involved in the production of goods. In the context of merchandising, both types of businesses participate in the process of bringing products to the market. Manufacturing companies produce the goods, and retail companies purchase these goods from manufacturers to sell them to end consumers. Therefore, both retail companies and manufacturing companies are considered merchandising businesses as they are involved in the distribution and sale of products.
a company that manufactures cars would be considered a business in the market, and merchandising businesses encompass both retail companies and manufacturing companies.
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You are long a put option with an exercise price of $100. The option expires today and the underlying security is trading at $94. If youpurchased the option for $4, should you exercise the option?a. yes b. no
The net payoff is negative. Hence, it is not advisable to exercise the option. So, the correct is option (b) no.
It is asked whether to exercise the option if the option expires today and the underlying security is trading at $94. We will solve this question step by step below.
Let us first understand the given terms:
Put option: It is an option contract that gives the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a specified time.
Exercise price: Also called the strike price, it is the price at which an option can be exercised by the owner of the option.
Underlying security: It refers to the asset or security that an option derives its value from. In this case, it is not specified which underlying asset is being used.Let's now solve the question:
Given,
Exercise price = $100
Option premium paid = $4
Underlying security trading at = $94
Now, we have to decide whether to exercise the option or not.
For a put option, it is beneficial to exercise the option if the market price of the underlying asset is less than the exercise price.
In this case, the market price of the underlying asset is $94 which is less than the exercise price of $100.
Hence, it is profitable to exercise the option.
Now, let us calculate the net payoff of the option:
Net Payoff = Market price - Exercise price - Option premium
= $94 - $100 - $4
= -$10
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Ashburn Company issued 17-year bonds two years ago at a coupon rate of 9.6 percent. The bonds make semiannual payments. If these bonds currently sell for 103 percent of par value, what is the YTM? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,
To find the yield to maturity (YTM) of the bonds, we can use the present value formula. The YTM is the discount rate that equates the present value of all future cash flows (coupon payments and the face value) with the current market price of the bonds.
Given:
Coupon rate = 9.6% (coupon payments are made semiannually)
Bonds currently sell for 103% of par value
To calculate the YTM, we need to determine the present value of the bond's future cash flows and solve for the discount rate (YTM).
Step 1: Calculate the coupon payment:
Since the coupon payments are made semiannually, the coupon payment will be (Coupon Rate / 2) * Par Value.
Coupon payment = (9.6% / 2) * Par Value
Step 2: Calculate the number of periods:
Since the bonds were issued 2 years ago and have a maturity of 17 years, the number of periods remaining until maturity is (17 - 2) * 2 (as there are two semiannual periods in a year).
Step 3: Calculate the present value of the coupon payments:
To calculate the present value of the coupon payments, we need to discount each coupon payment back to the present value using the discount rate (YTM).
PV of coupon payments = (Coupon payment / (1 + (YTM / 2))) + (Coupon payment / (1 + (YTM / 2))^2) + ... + (Coupon payment / (1 + (YTM / 2))^n)
Step 4: Calculate the present value of the face value:
To calculate the present value of the face value, we need to discount it back to the present value using the discount rate (YTM).
PV of face value = Face Value / (1 + (YTM / 2))^n
Step 5: Calculate the present value of all future cash flows:
The present value of all future cash flows can be calculated by adding the present value of the coupon payments (from Step 3) and the present value of the face value (from Step 4).
Step 6: Solve for the YTM:
We need to solve for the discount rate (YTM) that makes the present value of all future cash flows equal to the current market price of the bonds (103% of par value).
To summarize, the YTM is the discount rate that makes the present value of all future cash flows equal to the current market price of the bonds.
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Wayne, Erin, Alan and Kirk are all ex-police officers and have decided to start a private security business. Due to tax and ownership issues and the obvious benefits associated with having limited liability, their lawyer recommends that they should register a company for the business. They agree and instruct their lawyer to register a company to be called WEAK Security Pty Ltd. It is agreed that Wayne, Erin, Alan and Kirk will each be allotted 100 ordinary shares in WEAK Security Pty Ltd. After the company is registered, they decide to employ Rodger as a receptionist in the office. Rodger is given strict instructions that he is not to enter into contracts on behalf of the company.
Wanda works in used car sales and a good friend of Rodger. Rodger tells Wanda about his new position at WEAK Security Pty Ltd . Wanda tells Rodger that she has been trying to sell a truck and it would be perfect for the security business. Wanda shows Rodger the truck and lets him drive it. Rodger agrees that the truck would be a great addition to the security business and thinks the price Wanda is asking is very reasonable. Rodger agrees to buy the truck on behalf of WEAK Security Pty Ltd.
Can Wanda rely on any of the assumptions in section 129 of the Corporations Act in order to enforce the contract against WEAK Security Pty Ltd?
Please use the PIRAC method to analyze the case. Is there any same type of case for referencing? Thankyou!!
Wayne, Erin, Alan and Kirk are all ex-police officers and have decided to start a private security business. Due to tax and ownership issues and the obvious benefits associated with having limited liability, their lawyer recommends that they should register a company for the business.
The PIRAC method to analyze the case of issue is the issue is whether Wanda can rely on any of the assumptions in section 129 of the Corporations Act to enforce the contract against WEAK Security Pty Ltd.
The principle refers to Section 129 of the corporations act deals with the assumption of authority. It states that a person dealing with a company in good faith can assume that the company's officers have the authority to bind the company in transactions within its ordinary course of business.
Application was given strict instructions not to enter into contracts on behalf of WEAK Security Pty Ltd. Therefore, Wanda cannot reasonably assume that Rodger had the authority to bind the company in the purchase of the truck.
Conclusion is Wanda cannot rely on the assumptions in section 129 of the Corporations Act because Rodger exceeded his authority by entering into the contract on behalf of WEAK Security Pty Ltd.
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You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. The energy efficient model sells for $1,750 and will save you $60 in electricity costs at the end of each of the next five years. The standard model has features similar to the energy efficient model but provides no future saving in electricity costs. It is priced at only $1,450.
Assuming your opportunity cost of funds is 5 percent, which refrigerator should you purchase?
multiple choice
A) The energy efficient model.
B) You should be indifferent between the two.
C) The standard model.
C) The standard model, as the present value of costs ($1,450) is lower than the present value of savings ($255.77).
To figure out which cooler to buy, we really want to analyze the current worth of expenses and advantages related with each model.
For the energy-productive model, the underlying expense is $1,750, however it gives yearly reserve funds of $60 in power costs for quite a long time. Taking into account an open door cost of assets at 5%, we can ascertain the current worth of these investment funds utilizing the recipe:
PV = Reserve funds/[tex](1 + r)^_n[/tex]
where PV is the current worth, r is the markdown rate (5% or 0.05), and n is the quantity of years (5).
PV = [tex]$60/(1 + 0.05)^_1 }+ $60/(1 + 0.05)^_2} + $60/(1 + 0.05)^_3} + $60/(1 + 0.05)^_4} + $60/(1 + 0.05)^_5}[/tex]
Working out this total provides us with a current worth of roughly $255.77.
For the standard model, there are no future reserve funds, so the current worth of costs continues as before as the underlying cost of $1,450.
Looking at the current qualities, $255.77 < $1,450. In this way, it is more financially savvy to buy the standard model, making Choice C, "The standard model," the suitable decision.
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8. Ron Corporation had 8 million shares of common stock outstanding during the current calendar year. On July 1, Ron issued ten thousand $1,000 face value, convertible bonds. Each bond is convertible into 50 shares of common stock. The bonds were issued at face amount and pay interest semi annually for 20 years. They have a stated rate of 12%. Jet had income before tax of $24 million and a net income of $18 million. Ron would report the following EPS data (rounded): a. Basic EPS $2.25 Diluted EPS $2.24 b. $2.25 n/a antidilutive c. $2.25 $2.16 d. $2.25 $2.12
Based on the information provided, Ron Corporation would report the following EPS data (rounded):
a. Basic EPS: $2.25
Diluted EPS: $2.24
Basic EPS calculates earnings per share based on the weighted average number of common shares outstanding during the period. In this case, there were 8 million shares outstanding throughout the year.
To calculate diluted EPS, potential common shares from convertible securities need to be considered. Ron issued convertible bond on July 1, which are convertible into 50 shares of common stock each. Since the bonds were issued halfway through the year, the impact on diluted EPS would be proportional.
To calculate the diluted EPS, we need to determine the potential number of shares that would be added if all the bonds were converted. Since each bond is convertible into 50 shares, the total number of potential additional shares is 10,000 bonds * 50 shares/bond = 500,000 shares.
the diluted EPS is calculated by dividing the net income of $18 million by the sum of the weighted average shares outstanding (8 million) and the potential additional shares (500,000), resulting in $2.24.
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which type of agency is not recognized in georgia? single agency undisclosed dual agency designated agency buyer’s agency
In Georgia, the type of agency that is not recognized is undisclosed dual agency.
In the context of real estate, agency refers to the relationship between a real estate agent and their client. Georgia law recognizes various types of agency relationships, such as single agency, designated agency, and buyer's agency. However, undisclosed dual agency is not recognized in Georgia.
Undisclosed dual agency occurs when a real estate agent represents both the buyer and the seller in a transaction without disclosing this dual representation to either party. This type of agency is considered a potential conflict of interest as the agent may have divided loyalties between the buyer and the seller.
To ensure transparency and protect the interests of clients, Georgia requires real estate agents to disclose any agency relationships and obtain informed consent from their clients. This allows clients to make informed decisions and choose the type of agency representation that suits their needs.
While undisclosed dual agency is not recognized in Georgia, agents can still represent either the buyer or the seller through single agency, designated agency, or buyer's agency, depending on the specific agreement and disclosures made between the agent and their client.
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A particular security's default risk premium is 3 percent. For all securities, the inflation risk premium is \( 2.85 \) percent and the real riskfree rate is \( 1.90 \) percent. The security's liquidi
The required rate of return on the security is 7.75% when the default risk premium is 3%, the inflation risk premium is 2.85%, and the real risk-free rate is 1.90%.
The required rate of return on a security or investment is determined by the risk associated with it.
In this scenario, a security's default risk premium is 3%,
the inflation risk premium for all securities is 2.85%, and
the real risk-free rate is 1.90%.
The security's liquidity risk premium is unknown.
Hence, the formula to calculate the required rate of return is as follows:
Required Rate of Return = Real Risk-Free Rate + Inflation Risk Premium + Default Risk Premium + Liquidity Risk Premium
Based on the above formula, the security's required rate of return can be calculated as follows:
Required Rate of Return = 1.90% + 2.85% + 3% + Liquidity Risk Premium
Required Rate of Return = 7.75%
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Describe how a doctoral researcher can justify a chosen research
method in their dissertation?
When justifying a chosen research method in a doctoral dissertation, a researcher needs to provide a robust rationale for their selection. Here are some steps and considerations for justifying a research method:
1. Research Objectives and Questions: Clearly articulate the research objectives and questions that guide the study. Identify the specific information or knowledge the researcher aims to uncover or contribute to the field.
2. Alignment with Research Design: Explain how the chosen research method aligns with the overall research design and is suitable for addressing the research objectives.
3. Epistemological and Theoretical Framework: Describe the epistemological stance and theoretical framework that underpin the research.
4. Methodological Approach: Provide a detailed explanation of the chosen research method, including its key characteristics, procedures, and data collection techniques.
5. Validity and Reliability: Address the issues of validity and reliability associated with the chosen research method. it ensures the reliability of the results, meaning that similar findings would be obtained if the study were conducted under similar conditions.
6. Previous Research and Scholarship: Demonstrate familiarity with existing literature and research in the field. Discuss how the chosen research method has been successfully used in previous studies to investigate similar research questions or phenomena. Reference relevant studies and highlight their findings to support the suitability and effectiveness of the chosen method.
7. Ethical Considerations: Address any ethical considerations associated with the chosen research method, such as informed consent, privacy, confidentiality, and potential harm to participants.
8. Practical Considerations: Discuss any practical considerations related to the chosen research method, such as the availability of resources, time constraints, and feasibility.
9. Limitations and Alternative Approaches: Acknowledge the limitations of the chosen research method and discuss potential alternative methods that could have been considered.
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Question 4: In 2011, the RCMP estimated that at least $2.6 million of counterfeit Canadian banknotes were in circulation. a) Why do Canadian taxpayers lose because of these counterfeit notes? b) As of December 2011; the interest rate earned on one-year Canadian treasury bills was 1.07%. At a 1.07% rate of interest, what amount of money are Canadian taxpayers losing per year because of these $2.6 million in counterfeit notes?
a) Canadian taxpayers lose because of these counterfeit notes because counterfeiters can cause a decline in confidence in Canada’s economy and its currency. Counterfeiters do not pay taxes, yet they steal from taxpayers by reducing the value of their money.
b) At a 1.07% interest rate, Canadian taxpayers are losing $27,820 per year because of these $2.6 million in counterfeit notes.
Counterfeit Canadian banknotes in circulation cost Canadian taxpayers millions of dollars annually. Counterfeiters can undermine confidence in the Canadian economy and its currency by producing counterfeits. Furthermore, counterfeiters do not pay taxes, yet they steal from taxpayers by decreasing the value of their money. As a result, Canadian taxpayers lose money because of these counterfeit notes.
The interest rate earned on one-year Canadian treasury bills in December 2011 was 1.07%. Canadian taxpayers lose $27,820 per year as a result of the $2.6 million in counterfeit notes at a 1.07% interest rate.
Interest rate is calculated by multiplying the principal amount (2.6 million) by the interest rate (1.07% expressed as a decimal).
a) Canadian taxpayers lose because of these counterfeit notes because counterfeiters can cause a decline in confidence in Canada’s economy and its currency. Counterfeiters do not pay taxes, yet they steal from taxpayers by reducing the value of their money.
b) At a 1.07% interest rate, Canadian taxpayers are losing $27,820 per year because of these $2.6 million in counterfeit notes.
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A loan where the borrower receives money today and repays only a single lump sum at some time in the future is called a(n) loan. Select one: a. amortized b. continuous c. balloon x d. pure discount e. interest-only f. recurring
A balloon loan is one in which the borrower obtains funds now and makes just one lump sum payment later on.
With a balloon loan, you can borrow more money and pay it back over a longer period of time than you would with a conventional loan.
Balloon payments are larger-than-usual payments that are made at the end of a mortgage term in order to cover the remainder of the principal owed on the loan. To put it another way, the term "balloon" refers to a large final payment due at the end of a loan term.
Amortized loan: Amortization is the process of dividing a loan into smaller payments that are paid over time. The borrower will pay interest plus a portion of the principal in each payment.
Interest-only loan: For a specified period, the borrower only pays the interest on the loan.
Pure discount loan: A pure discount loan is one in which the borrower repays only the principal.
Balloon loan: The borrower receives money today and pays only one lump sum in the future.
Recurring loan: A recurring loan is a loan that is available to the borrower on an ongoing basis.
Continuous loan: Continuous loan refers to a line of credit that is accessible to the borrower on a continuing basis.
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In your groups create a short report (min 3 pages, no maximum) for Taylor Guitar that outlines your FINAL RECOMMENDATION for the network design of the company in Canada. Include your detailed recommendation as it relates to facility locations, key transportation routes, supply chain flow and all rationale for your decisions
In this report, we will recommend the network design for Taylor Guitars in Canada that will help it to achieve an efficient and effective supply chain flow.
Facility Location Taylor Guitars is currently operating in Canada with two warehouses, one in Toronto and the other in Vancouver. The warehouses are situated at the two extreme ends of the country, which makes the transportation of raw materials and finished goods from the manufacturer's facilities to these warehouses a complicated process. We recommend the company relocate the Vancouver warehouse to Edmonton, which is centrally located in Canada.
We suggest Taylor Guitars adopts a hybrid supply chain model. This model combines elements of both push and pull strategies to optimize the supply chain. This hybrid model is designed to be more flexible than a pure push or pull model. It will enable the company to reduce costs and improve service levels while providing greater agility to respond to changes in customer demand. Rationale We recommend these changes because they will streamline the supply chain network, which will ultimately lead to cost savings, improved delivery times, and increased customer satisfaction.
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If demand in a perfectly competitive market is perfectly inelastic and supply is upward sloping, a specific tax placed on suppliers will:________
if demand in a perfectly competitive market is perfectly inelastic and supply is upward sloping, a specific tax placed on suppliers will be entirely borne by the suppliers and will not be passed on to consumers.
in a perfectly competitive market, the price is determined by the intersection of the demand and supply curves. when demand is perfectly inelastic, it means that consumers are unresponsive to changes in price. this implies that regardless of the price, consumers will continue to purchase the same quantity of the product.
on the other hand, if the supply curve is upward sloping, it indicates that suppliers require higher prices to produce and supply larger quantities of the product. in this scenario, a specific tax placed on suppliers will increase their cost of production, leading to a shift in the supply curve upward.
since demand is perfectly inelastic, the quantity demanded remains unchanged, and consumers are unwilling to pay a higher price. suppliers, they cannot pass on the tax to consumers by increasing the price because demand is insensitive to price changes.
as a result, the specific tax will directly reduce the suppliers' profits or returns. the entire burden of the tax falls on the suppliers, and consumers do not experience any increase in price or change in quantity purchased.
it's important to note that this analysis assumes a perfectly competitive market with ideal conditions, such as perfect information and no barriers to entry or exit. in real-world markets, the impact of taxes can be more complex, and the burden may be shared between suppliers and consumers depending on the elasticity of demand and supply.
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The spread between the yield on a 2-year corporate bond and the yield on a similar risk-free bond is 250 basis points. The recovery rate is 40%.
i) Estimate the average hazard rate over the 2-year period.
ii) Compute the probability that the company issuing the bond will default in 2 years
The estimated average hazard rate over the 2-year period is approximately 4.17%.
The probability that the company issuing the bond will default in 2 years is approximately 8.34%
i) To estimate the average hazard rate over the 2-year period,
we need to use the spread and the recovery rate.
The hazard rate is the probability of default within a specific time period.
In this case, the spread between the yield on the corporate bond and the risk-free bond is 250 basis points,
which is equivalent to 2.5%. Since the recovery rate is given as 40%, we can assume that the remaining 60% is the probability of default.
To estimate the average hazard rate,
we can divide the spread by the recovery rate:
Average Hazard Rate = Spread / (1 - Recovery Rate)
Average Hazard Rate = 2.5% / (1 - 40%) = 2.5% / 60% = 4.17%
ii) To compute the probability that the company issuing the bond will default in 2 years,
we can use the hazard rate. The hazard rate represents the instantaneous probability of default per year.
The probability of default in 2 years can be calculated by multiplying the hazard rate by the number of years:
Probability of Default in 2 years = Hazard Rate * 2
Using the estimated average hazard rate from part
(i), we can compute the probability of default in 2 years:
Probability of Default in 2 years = 4.17% * 2 = 8.34%
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i) The average hazard rate over the 2-year period 1 is approximately 4.17%
ii) The probability that the company issuing the bond will default in 2 years is approximately 0.0806 or 8.06%.
To estimate the average hazard rate over the 2-year period, we can use the following formula:
i) Average Hazard Rate = (Spread / (1 - Recovery Rate)) / 100
Given that, Spread = 250 basis points = 2.50%
Recovery Rate = 40% = 0.40
Average Hazard Rate = (2.50% / (1 - 0.40)) / 100
Average Hazard Rate = (2.50% / 0.60) / 100
Average Hazard Rate ≈ 4.17%
ii) To compute the probability of default in 2 years, we need to use the following formula:
Probability of Default = 1 - e^(-Average Hazard Rate * Time to Maturity)
Given, Time to Maturity = 2 years
Probability of Default = 1 - e^(-0.0417 * 2)
Probability of Default ≈ 1 - e^(-0.0834)
Probability of Default ≈ 1 - 0.9194
Probability of Default ≈ 0.0806
So, the probability that the company issuing the bond will default in 2 years is approximately 0.0806 or 8.06%.
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BU 7 . In scenario 1, assume that COGS is 75% of sales (which means your profit margin will be 25% on every widget you sell). The first scenario assumes that no change occurs, either in reduction in costs, or, in sales revenues. We'll call this first scenario the "as is" or, "the status quo scenario." Your sales revenue in scenario 1 is $600 million. In scenario 2, you reduce the original COGS from, 75% to 65% (through improvements in purchasing and procurement). You had to spend money (on new software, etc.) to reduce your purchasing costs and so your S&A increased by $2.0 million. Remember that in scenario 2 you don't increase your sales at all---so your sales revenues stay the same (no change from scenario 1), as do your Promotional Expenses (don't change from scenario 1) In scenario 3, you increase promotional expenses by 15% (from a starting point of $35 million), resulting in a 25% increase in annual sales revenues. S&A costs increase by $5 million. Your purchasing costs do not decrease (i.e., COGS stays the same as it was in scenariol at 75%). Scenario 1 Annual sales: $600 million. S COGS: million Gross Profit $150 million Promotional Expenses Scenario 2 $600 million S $ million million Scenario 31 S $ million million million C T Promotional Expenses $35 million Sales/Administration $5 million Total profit before taxes: million Jad $35 million million million $ million million million 3 Point Question: Based on the scenarios presented above, what implication can be drawn from the above problem?
Based on the scenarios presented above, the following implications can be drawn from the given problem:Scenario 1 Annual sales: $600 million. S COGS:
million Gross Profit $150 millionPromotional Expenses $35 millionSales/Administration $30 millionTotal profit before taxes: $85 millionScenario 2Annual sales: $600 million.S COGS: million.Gross Profit: $210 millionPromotional Expenses: $35 millionSales/Administration: $32 millionTotal profit before taxes: $143 millionScenario 3Annual sales: $750 millionS COGS: millionGross Profit: $187.5 millionPromotional Expenses: $40.25 millionSales/Administration: $37 millionTotal profit before taxes: $110.25 million.
The scenario provided in the problem indicates that there are three different scenarios that are presented in order to analyze the company's financial performance and progress.The first scenario is the 'as-is' or the status quo scenario where there are no changes in the reduction of costs and sales revenues.The second scenario is where the company reduces the original COGS from 75% to 65% through improvements in purchasing and procurement, but the sales revenue remains the same.
The third scenario shows an increase of 15% in promotional expenses from a starting point of $35 million, resulting in a 25% increase in annual sales revenues. However, the purchasing costs remain the same.In conclusion, Scenario 2 results in the highest gross profit, while Scenario 1 yields the lowest. Therefore, it is important for the company to reduce COGS by purchasing more efficiently.
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