The correct answer is d. All of the above are correct. The French subsidy on wheat farmers will make French wheat cheaper than German wheat.
This will prompt German farmers to invoke the unfair-competition argument as they may feel that they are at a disadvantage. However, German buyers of wheat will benefit from the cheaper French wheat, which will increase their consumer surplus.
Additionally, the increased demand for French wheat may lead to an increase in total surplus of the German people as more affordable wheat will be available to them. However, it is important to note that the long-term effects of subsidies on both countries' economies are complex and may not be entirely positive.
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when we see small changes in the demand for bottled water at several local sheetz convenience stores causing a very large change in demand for bottled water at the regional distribution center that serves those local stores, we are observing . group of answer choices quantity discounts. safety stock. the bullwhip effect.
Bullwhip effect is a common supply chain phenomenon that can cause significant challenges for companies. By understanding the causes of the bullwhip effect, companies can take steps to mitigate its impact and improve their supply chain efficiency.
The phenomenon described in the question is known as the bullwhip effect. It refers to the amplification of small fluctuations in demand as we move upstream in a supply chain.
In other words, small changes in demand at the retail level can result in much larger variations in demand at the wholesale and manufacturing levels. The bullwhip effect can occur due to several factors, including demand forecasting errors, batch ordering, and inventory policies.
In the case of the sheetz convenience stores, the demand for bottled water is likely to be influenced by several local factors such as weather conditions, promotional activities, and consumer preferences. These factors can cause fluctuations in demand that may be difficult to predict accurately. As a result, the local stores may adjust their orders based on their perceptions of future demand, leading to the bullwhip effect.
At the regional distribution center, the impact of these small changes in demand is magnified because the center is responsible for fulfilling orders from multiple local stores. As a result, the center may face difficulty in meeting the fluctuating demand, leading to inventory imbalances and higher costs.
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a firm in the water bottling industry pays a current dividend of $2.19. its earnings per share is $8.36 and an analysis of the financial statements shows a return on equity of 9.32%. the sustainable growth rate is closest to: a. 4.92%. b. 5.81%. c. 5.27%. d. 6.88%.
The sustainable growth rate (SGR) for the water bottling firm is 6.87%, calculated using the formula SGR = ROE x Retention ratio, where ROE is 9.32% and the retention ratio is 0.738. Here option D is the correct answer.
The sustainable growth rate (SGR) is the maximum growth rate a company can achieve without resorting to external financing, assuming that it keeps its dividend payout ratio and capital structure constant. The SGR can be calculated as the product of the return on equity (ROE) and the retention ratio, which is the portion of earnings that is reinvested back into the company.
To determine the retention ratio, we can subtract the dividend payout ratio from 1. The dividend payout ratio is the percentage of earnings that are paid out as dividends, which can be calculated by dividing the dividend per share by the earnings per share. In this case, the dividend payout ratio is:
Dividend payout ratio = Dividend per share / Earnings per share
= $2.19 / $8.36 = 0.262
Therefore, the retention ratio is:
Retention ratio = 1 - Dividend payout ratio
= 1 - 0.262 = 0.738
Next, we can calculate the SGR as:
SGR = ROE x Retention ratio = 0.0932 x 0.738
= 0.0687 or 6.87%
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XYZ stock price and dividend history are as follows: Year Beginning-of-Year Price dividend paid at years end
2007 $330 $5
2008 $340 $5
2009 $320 $5
2010 $325 $5
An investor buys 3 shares of XYZ at the beginning of 2007, buys another 2 shares at the beginning of 2008, sells 1 share at the beginning of 2009, and sells all 4 remaining shares at the beginning of 2010. Requirement 1: What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your answers to 2 decimal places. Omit the "%" sign in your response.) Arithmetic mean Geometric mean % % Requirement 2: (a) What is the dollar-weighted rate of return? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Rate of return %
The arithmetic mean rate of return is 1.00%, the geometric mean rate of return is -2.00%, and the dollar-weighted rate of return is -20.89%
To calculate the time-weighted rates of return, we need to find the ending value of the investment and the holding period return for each period:
Year | Shares | Beginning Value | Dividend | Ending Value | Holding Period Return
2007 | 3 | $990 | $15 | $1,035 | (1,035 - 990 - 15) / 990 = 0.03
2008 | 5 | $1,700 | $25 | $1,790 | (1,790 - 1,700 - 25) / 1,700 = 0.03
2009 | 4 | $1,280 | $20 | $1,305 | (1,305 - 1,280 - 20) / 1,280 = 0.02
2010 | 0 | $0 | $0 | $0 | (0 - 1,305 - 20) / (1,305 + 20) = -0.011
Arithmetic mean = (0.03 + 0.03 + 0.02 - 0.011) / 4 = 0.0185 = 1.85%
Geometric mean =
[(1 + 0.03) × (1 + 0.03) × (1 + 0.02) × (1 - 0.011)][tex]^(1/4)[/tex] - 1 = 0.0109 = 1.09%
To calculate the dollar-weighted rate of return, we need to find the initial and ending values of the investment, and the cash flows for each period:
Year | Shares | Beginning Price | Beginning Value | Dividend | Cash Flow | Ending Price | Ending Value | Holding Period Return
[tex]2007 | 3 | $330 | $990 | $15 | -$1,005 | $340 | $1,020 | (1,020 - 990 - 15) / (990 + 1,005)[/tex]= 0.0142
[tex]2008 | 5 | $340 | $1,700 | $25 | -$1,725 | $320 | $1,600 | (1,600 - 1,700 - 25) /[/tex] (1,700 + 1,725) = -0.0739
[tex]2009 | 4 | $320 | $1,280 | $20 | -$20 | $325 | $1,300 | (1,300 - 1,280 - 20) / (1,280 + 20)[/tex] = 0.0169
[tex]2010 | 0 | $325 | $0 | $0 | $1,300 | $0 | $0 |[/tex]
0 = -$450
Initial value = $990 + $1,700 = $2,690
Ending value = $0
Dollar-weighted rate of return = (0 - 2,690 - (-450)) / 2,690 = -0.2089 = -20.89%
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eBook Problem Walk Through Holt Enterprises recently paid a dividend, Do, of $3.50. It expects to have nonconstant growth of 12% for 2 years followed by a constant rate of 6% thereafter . The firm's required return is 10% a. How far away is the horizon date? 1. The terminal, or horizon, date is Year since the value of a common stock is the present value of all future expected dividends at time zero II. The terminal, or horizon, dat is the date when the growth rate becomes nonconstant. This occurs at time zero. 111. The terminal, or hottron, date is the date when the growth rate becomes constant. This occurs at the beginning of Year 2 IV. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of your V. The terminal, or horizon, dat is Infinity since common stocks do not have a maturity date Select . What is the firm's horton, of continuino, value? Do not round Intermediate calculations. Round your answer to the nearest $ What is the he's intrinske volion today. Part round intermediate calculations. Round your wwwer to that comest cent
To determine the horizon date, we need to identify when the growth rate becomes constant. We are told that the company will have nonconstant growth of 12% for two years, followed by constant growth of 6%. Therefore, the horizon date is the end of Year 2, when the growth rate becomes constant.
To calculate the horizon value, we need to calculate the dividends for Year 1, Year 2, and all subsequent years. Since the growth rate is nonconstant for the first two years, we need to use the two-stage dividend growth model.
The formula for the two-stage dividend growth model is:
P0 = (D1 / (1 + r)^1) + (D2 / (1 + r)^2) + (D2 * (1 + g2) / (r - g2)) / (1 + r)^2
Where:
P0 = Intrinsic value of the stock today
D1 = Dividend expected in Year 1
D2 = Dividend expected in Year 2
r = Required rate of return
g1 = Growth rate for the first stage (nonconstant growth)
g2 = Growth rate for the second stage (constant growth)
We are given that the current dividend is $3.50, and the growth rate for the first two years is 12%. Therefore:
D1 = $3.50 * (1 + 0.12) = $3.92
D2 = $3.92 * (1 + 0.12) = $4.38
We are also given that the required return is 10%, the growth rate for the second stage is 6%, and the horizon date is the end of Year 2.
Therefore:
r = 10%
g2 = 6%
n = 2
Using these values, we can calculate the horizon, or continuing, value:
Continuing value = D3 * (1 + g2) / (r - g2) = $4.38 * (1 + 0.06) / (0.10 - 0.06) = $139.56
Now we can use the two-stage dividend growth model to calculate the intrinsic value of the stock today:
P0 = (D1 / (1 + r)^1) + (D2 / (1 + r)^2) + (Continuing value / (1 + r)^2)
P0 = ($3.92 / 1.1) + ($4.38 / 1.1^2) + ($139.56 / 1.1^2) = $124.15 (rounded to the nearest dollar)
Therefore, "the intrinsic value of the stock today is $124.00."
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Restex has a debt-equity ratio of 0.72, an equity cost of capital of 15%, and a debt cost of capital of 8%. Restex's corporate tax rate is 38%, and its market capitalization is $185 million. a. If Restex's free cash flow is expected to be $10 million one year from now and will grow at a constant rate, what expected future growth rate is consistent with Restex's current market value? b. Estimate the value of Restex's interest tax shield. a. If Restex's free cash flow is expected to be $10 million one year from now and will grow at a constant rate, what expected future growth rate is consistent with Restex's current market value? If Restex's free cash flow is expected to be $10 million in one year, the expected future growth rate is ____%. (Round to two decimal places.) b. Estimate the value of Restex's interest tax shield. Interest tax shield value is $____million. (Round to the nearest million.)
9.46% is the predicted growth rate, in line with Restex's current market value.
The interest tax shield for Restex is worth $8 million (rounded to the nearest million).
a. To determine the expected future growth rate, we can use the Gordon growth model:
Market value = Free cash flow / (Cost of equity - Growth rate)
Rearranging the equation, we get:
Growth rate = Cost of equity - Free cash flow / Market value
Substituting the given values, we get:
Growth rate = 15% - $10 million / $185 million
Growth rate = 9.46%
Therefore, the expected future growth rate consistent with Restex's current market value is 9.46%.
b. The value of Restex's interest tax shield can be calculated using the formula:
Value of interest tax shield = Debt * Cost of debt * (1 - Tax rate)
Substituting the given values, we get:
Value of interest tax shield = 0.72 * $185 million * 8% * (1 - 38%)
Value of interest tax shield = $8.16 million
Therefore, the value of Restex's interest tax shield is $8 million (rounded to the nearest million).
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a portfolio has a standard deviation of 15.1%, a beta of 1.12, and a treynor ratio of .085. the risk-free rate is 2.2%. what is the portfolio's expected rate of return? multiple choice 10.83% 11.38% 11.72% 12.41% 12.56%
The portfolio's expected rate of return is 11.38%.
The formula for calculating the expected rate of return of a portfolio is:
xpected return = risk-free rate + beta * (market return - risk-free rate)
To use this formula, we need to know the market return. Unfortunately, it's not provided in the question. However, we can use the Treynor ratio to estimate it:
Treynor ratio = (portfolio return - risk-free rate)beta.
0.085 = (portfolio return - 2.2%) / 1.12
Portfolio return - 2.2% = 0.085 * 1.12 = 0.0952
Portfolio return = 2.2% + 0.0952 = 11.52%
Therefore, the closest answer choice is 11.38%.
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the involvement of the united states in the international monetary fund and world bank was designed to .
The involvement of the United States in the International Monetary Fund (IMF) and the World Bank was designed to: promote global economic stability, facilitate international trade, and encourage sustainable economic growth in developing countries.
To begin with, the United States played a pivotal role in establishing both institutions during the Bretton Woods Conference in 1944. The primary aim was to ensure global economic stability and prevent the economic crises that contributed to the Great Depression and World War II.
The IMF was created to monitor exchange rates, provide short-term financial assistance to countries facing balance of payment problems, and promote international monetary cooperation. The World Bank, on the other hand, was set up to finance long-term development projects and reduce poverty in developing nations.
Moreover, the United States' involvement in these organizations helps in maintaining an open and rules-based international trade system, which is crucial for its own economy and global economic growth.
The IMF and the World Bank promote trade liberalization and provide technical assistance to countries in need, thus facilitating international trade.
Lastly, the US participation in the IMF and the World Bank aims at fostering sustainable economic growth in developing countries.
The World Bank provides funding for essential infrastructure projects, such as roads, schools, and hospitals, while the IMF offers policy advice and capacity building assistance to help countries implement sound economic policies.
In conclusion, the involvement of the United States in the International Monetary Fund and the World Bank is designed to promote global economic stability, facilitate international trade, and encourage sustainable economic growth in developing countries.
This engagement benefits not only the global community but also supports the US's interests in maintaining a stable and prosperous world.
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question content areathomlin company forecasts that total factory overhead for the current year will be $15,500,000 with 250,000 total machine hours. year to date, the actual factory overhead is $16,000,000 and the actual machine hours are 330,000 hours. the predetermined factory overhead rate based on machine hours isa.$62 per machine hourb.$50 per machine hourc.$48 per machine hourd.$45 per machine hour
To calculate the predetermined factory overhead rate based on machine hours, we divide the forecasted total factory overhead by the forecasted total machine hours: The correct answer is (a) $62 per machine hour.
$15,500,000 ÷ 250,000 machine hours = $62 per machine hour
This means that for every machine hour used in production, $62 of overhead costs are allocated.
Given the actual factory overhead of $16,000,000 and actual machine hours of 330,000, we can calculate the actual overhead rate per machine hour:
$16,000,000 ÷ 330,000 machine hours = $48.48 per machine hour
This means that the actual overhead costs per machine hour were lower than the predetermined rate, possibly indicating that the company was able to control its overhead costs better than expected.
Therefore the correct answer is a. $62 per machine hour.
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assume a company is considering adding a new product. the expected cost and revenue data for this product are as follows: annual sales 5,000 units unit selling price $ 60 unit variable costs: production $ 29.90 selling $ 6 incremental fixed costs per year: production $ 35,000 selling $ 45,000 if the company adds this new product, it expects the contribution margin of other product lines to drop by $18,500 per year. what is the lowest price the company could charge and still break-even on the new product? multiple choice $39.60 $51.90 $40.60 $55.60
The lowest price the company could charge and still break-even on the new product is C. 40.60$.
Hence, option c. is the right choice.
Which firm were you referring to?A group of people can get together to create a corporation, which is a legal body used to conduct business and run industrial or commercial enterprises. According to the corporate legislation of its jurisdiction, a corporation may be set up in a variety of ways for tax and financial liability reasons.
An organisation type is what?The sole proprietorship, partnership, corporation, and S corporation are the four types of businesses that are most prevalent. According to state law, businesses may be organised as Limited Liability Companies (LLCs). The decision of a corporate structure is influenced by legal and tax factors.
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true or false: the cost of land purchased 5 years ago should be included in the cost of a project involving the land.
The given statement "the cost of land purchased 5 years ago should be included in the cost of a project involving the land." is true because if the land is being used for the project, then the cost of the land purchased 5 years ago should be included in the cost of the project
Including the cost of land purchased 5 years ago in the cost of a project involving the land is appropriate because the cost of the land is a sunk cost that has already been incurred and cannot be recovered. The cost of the land is considered a part of the overall investment made in the project, and its inclusion will give a more accurate picture of the total cost of the project. By including the cost of land in the project, the company can make informed decisions about the profitability of the project and determine whether it will yield a desirable return on investment.
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the _____ approach examines a lifetime stream of additional earnings and cost savings for an investment and discounts the value of those investments by a specified interest rate.
The Net Present Value (NPV) approach examines a lifetime stream of additional earnings and cost savings for an investment and discounts the value of those investments by a specified interest rate.
This method takes into consideration the time value of money, recognizing that a dollar received today is worth more than a dollar received in the future.
The NPV approach allows investors to evaluate an investment based on its potential future cash flows, providing insight into the project's profitability and financial viability. By discounting future cash flows to present value, investors can compare different investment options on a consistent basis, helping them make informed decisions.
To calculate the NPV, investors identify the expected cash inflows and outflows over the lifetime of the investment, discount them using the specified interest rate, and then subtract the initial investment cost.
If the resulting NPV is positive, it suggests that the investment is likely to generate a return greater than the specified discount rate, making it an attractive option. Conversely, a negative NPV indicates that the investment may not yield returns as high as the specified discount rate and might be less appealing.
In summary, the NPV approach is a valuable tool for analyzing an investment's potential earnings and cost savings. By accounting for the time value of money and discounting future cash flows, this method enables investors to effectively compare and evaluate investment options based on their financial potential and risk profiles.
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when k-mart paid martha stewart (famous for her business related to lifestyle and the home) a fee in return for permission to introduce a line of towels and other housewares bearing stewart's name, it was an example of
A licensing agreement is a legal contract between two parties in which the owner of a product or intellectual property (IP) grants permission to another party to use that product or IP in exchange for compensation, such as royalties or a fee.
In this case, Martha Stewart owned the rights to her name and brand, and she granted K-Mart permission to use her name on their line of towels and housewares in exchange for a fee.
Licensing agreements are common in many industries, particularly in the entertainment and consumer goods sectors. They allow companies to leverage the popularity and recognition of a well-known brand or personality to promote their products and increase sales. At the same time, the owner of the product or IP can earn income without the need to manufacture or distribute the product themselves
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under what circumstances may it make sense not to prepare a business forecast? group of answer choices the forecast horizon is 40 years. no data is readily available. the future will be no different from the past. there is no consensus among informed individuals. the industry to forecast is undergoing dramatic change.
There are several circumstances where it may make sense not to prepare a business forecast, including long forecast horizons, lack of available data, consistency in the past and present, lack of consensus among informed individuals, and rapid industry change. In such cases, it may be more beneficial for companies to focus on more immediate and concrete factors and adjust their strategies and plans as circumstances evolve.
Preparing a business forecast can be a useful tool in planning and decision-making for a company, but there are certain circumstances where it may not make sense to prepare one. One such circumstance is if the forecast horizon is very long, such as 40 years, as it can be difficult to accurately predict changes and developments that far into the future. Additionally, if no data is readily available, it may not be feasible to create a reliable forecast.
If there is no reason to believe that the future will be any different from the past, then there may be little value in preparing a forecast as well.Another circumstance where it may not make sense to prepare a business forecast is if there is no consensus among informed individuals, such as experts in the industry or market analysts.
In such cases, the lack of agreement may suggest that the future is too uncertain or volatile to make an accurate forecast. Finally, if the industry that is being forecasted is undergoing dramatic change, then it may be challenging to create a forecast that accurately reflects the likely developments and outcomes.
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there is only one way to measure success in advertising and integrated brand promotion. select one: true false
False. There is not only one way to measure success in advertising and integrated brand promotion. The success of an advertising or integrated brand promotion campaign can be measured in various ways, depending on the objectives and goals of the campaign.
One common way to measure success is by analyzing the return on investment (ROI) of the campaign. This can be done by comparing the amount of money spent on the campaign with the revenue generated as a result of the campaign. Other ways to measure success can include measuring brand awareness, customer engagement, social media mentions, and website traffic.
Moreover, it is essential to have clear and specific objectives and goals when measuring the success of an advertising or integrated brand promotion campaign. The metrics used to measure success should align with the objectives and goals of the campaign. For instance, if the goal is to increase brand awareness, then metrics such as website traffic, social media mentions, and engagement rate can be used to measure success.
In conclusion, there is no single way to measure success in advertising and integrated brand promotion. The key is to establish clear objectives and goals, choose the appropriate metrics to measure success, and continually evaluate and adjust the campaign strategy to achieve the desired outcomes.
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Megan borrows money at an annual effective interest rate of 5%. She will repay this loan by making payments of $1,700 at the end of each year for 15 years, using the amortization method. Calculate the amount of interest paid in the 4th payment. Solve by hand without the use of a spreadsheet or finance calculator.
The amount of interest paid in the 4th payment is approximately $605.76.
1: Calculate the present value of the loan
We can use the annuity formula to find the present value (PV) of the loan:
PV = PMT * [(1 - (1 + i)^(-n)) / i],
where PMT is the annual payment ($1,700), i is the interest rate (0.05), and n is the number of years (15).
PV = 1700 * [(1 - (1 + 0.05)^(-15)) / 0.05]
PV ≈ $14,781.33
Step 2: Calculate the outstanding balance (OB) after the 3rd payment
To find the outstanding balance after the 3rd payment, we will apply the annuity formula again, but this time for 12 years (since 3 years have already passed):
OB = PMT * [(1 - (1 + i)^(-12)) / i]
OB = 1700 * [(1 - (1 + 0.05)^(-12)) / 0.05]
OB ≈ $12,115.27
Step 3: Calculate the interest portion of the 4th payment
The interest portion of the 4th payment is equal to the outstanding balance after the 3rd payment multiplied by the interest rate:
Interest = OB * i
Interest = $12,115.27 * 0.05
Interest ≈ $605.76
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jessica's boutique has cash of $218, accounts receivable of $457, accounts payable of $398, and inventory of $647. what is the value of the quick ratio? group of answer choices 1.05 1.32 .55 1.52 1.70
Jessica's boutique has cash of $218, accounts receivable of $457, accounts payable of $398, and inventory of $647. In this case, the inventory is not included in the quick ratio calculation. The quick ratio for Jessica's Boutique is approximately 1.70
Step 1: Add the cash and accounts receivable amounts.
Cash = $218,
Accounts Receivable = $457
Cash + Accounts Receivable =
$218 + $457 = $675
Step 2: Divide the sum by the accounts payable amount.
Accounts Payable = $398
Quick Ratio =
$675 / $398 ≈ 1.70
So, the quick ratio for Jessica's Boutique is approximately 1.70. Your answer is 1.70.
How well a business can pay off its present debts is determined by the fast ratio, calculation, and financial statistics. This ratio is frequently used by accountants and other finance experts to swiftly and easily assess the financial health of a company.
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suppose as a hypothetical scenario that you deposit $400 today into a savings account with a variable interest rate and will collect a payment in one year. true or false: if over the course of the year the interest rate rises, this increases the future value of your investment.
True, If you deposit $400 into a savings account with a variable interest rate and collect a payment in one year, the future value of your investment will be affected by changes in the interest rate.
If the interest rate increases throughout the year, you will earn more interest on your initial deposit, increasing the value of investment. The future value of your investment will be reduced, though, if the interest rate falls since you will receive less interest on your initial investment. As a result, changes in interest rates have an immediate effect on the value of your investment in the future.
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united states v. stein addressed the question of whether the constitutional rights of the defending accountants were violated when the government pressured their former employer into ending its policy of paying attorney fees. how did the court rule?
In Joined Together States v. Stein, the court did not address the address of whether the protected rights of the protecting bookkeepers were abused when the government forced their previous boss into finishing its approach of paying lawyer expenses.
the case centered on the address of whether the mail and wire extortion statutes may be utilized to arraign the bookkeeping firm for its part in advancing false charge covers. The court eventually ruled that the bookkeeping firm might be indicted beneath these statutes, dismissing the contention that the firm's activities did not constitute extortion since they included complex and novel legitimate speculations.
By and large, Joined Together States v. Stein was a vital case within the domain of white-collar criminal law because it clarified the scope of the mail and wire extortion statutes and set up that people who advance false charge covers can be held criminally obligated for their activities.
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a company with a blank vision statement tends to be more flexible and more likely to succeed. multiple choice question. resources-oriented product-oriented marketing-oriented customer-oriented
A company with a customer-oriented vision statement tends to be more flexible and more likely to succeed.
Customer-oriented businesses prioritize understanding the needs, preferences, and expectations of their target audience, and they align their products, services, and strategies to meet those needs effectively. By focusing on customer satisfaction and fostering strong relationships, these companies can adapt quickly to changing market conditions and evolving customer preferences.
Being customer-oriented enables businesses to differentiate themselves from competitors by providing superior value and exceptional experiences. This approach allows companies to identify new market opportunities and capitalize on them, leading to growth and long-term success. Additionally, a customer-centric vision fosters a culture of continuous improvement and innovation, as companies are always looking for ways to better serve their customers and exceed their expectations.
In contrast, resources-oriented, product-oriented, and marketing-oriented businesses may not be as adaptable, as their focus may be limited to their internal capabilities, product features, or marketing tactics. This could make them less responsive to customer feedback and changing market dynamics. Therefore, a customer-oriented vision statement is more likely to lead to flexibility and success in today's competitive business environment.
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. Buskirk Construction buys on terms of 2/10, net 50 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to $420,000 per year. On average, how much "free" trade credit does the firm receive during the year? (Assume a 365-day year, and note that purchases are net of discounts.) a. $11,507 b. $12,329 c. $13,389 d. $14,408 e. $15,479
The firm receives free trade credit of $12,329 during the year.
This amount is determined by calculating the effective annual interest rate. The formula for effective annual interest rate is (1 + period rate)^number of periods - 1.
Trade credit terms of 2/10, net 50 is equal to a period rate of 0.2/50 = 0.004. The effective annual interest rate is (1 + 0.004)^365 - 1 = 0.1232 or 12.32%.
Therefore, the amount of free trade credit is $420,000*12.32% = $51,744. This amount is divided by 365 days in the year to get the amount of free trade credit each day, which is $141.81. Multiplying this amount by the number of days the company pays, which is 60 days, gives us the total free trade credit for the year of $12,329.
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which of the following statements are true of pure competition? choose one or more: a. firms act as price takers. b. the market demand curve and the demand curve facing a firm may be one and the same, at least at certain prices. c. the demand curve facing a competitive firm consists of a horizontal line at any price equal to or below the market price. d. there must be a very large number of sellers. e. the demand curve facing a competitive firm consists of a horizontal line at any price equal to or above the market price.
All of the statements are true of pure competition.
Pure competition is a market structure in which there are a large number of firms producing identical products and there is perfect information about prices and products.
Firms in a pure competitive market act as price takers, meaning that they must accept the market price and cannot influence it. The demand curve facing a competitive firm consists of a horizontal line at any price equal to or below the market price.
This means that the market demand curve and the demand curve facing a firm may be one and the same, at least at certain prices. Additionally, there must be a very large number of sellers in a pure competitive market in order for it to be an effective market structure.
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A company just paid a dividend of $2.89 per share. Dividends are expected to grow at a rate of 2% per year into the foreseeable future. An investor believes that given the riskiness of this investment that the appropriate rate of return is 12%. What is the most this investor should be willing to spend (intrinsic value) for a share of this common stock?
The most this investor should be willing to spend (intrinsic value) for a share of this common stock is $29.478.
To calculate the intrinsic value of a share of this common stock, we will use the Gordon Growth Model (Dividend Discount Model). The terms included in this calculation are dividend, growth rate, and required rate of return. Here is the step-by-step explanation:
1. Dividend (D0): The company just paid a dividend of $2.89 per share.
2. Growth Rate (g): Dividends are expected to grow at a rate of 2% per year.
3. Required Rate of Return (k): The investor believes that the appropriate rate of return is 12%.
Now, we can calculate the intrinsic value using the Gordon Growth Model formula: Intrinsic Value = (D0 * (1 + g)) / (k - g)
Plugging in the values, we have,
Intrinsic Value = (2.89 * (1 + 0.02)) / (0.12 - 0.02)
Intrinsic Value = (2.89 * 1.02) / 0.1
Intrinsic Value = 2.9478 / 0.1
Intrinsic Value = $29.478
So, the most this investor should be willing to spend for a share of this common stock is $29.478.
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The investor should be willing to spend up to $32.11 for a share of this common stock.
To determine the intrinsic value of the stock, we can use the dividend discount model, which calculates the present value of future dividends. The formula for this model is:
D / (r - g) equals intrinsic value
Where:
D is the current share dividend.
r is the required rate of return for the investor.
g is the anticipated yearly dividend growth rate.
Plugging in the given values, we get:
Intrinsic value = 2.89 / (0.12 - 0.02) = $32.11
Therefore, the investor should be willing to spend up to $32.11 for a share of this common stock.
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redmont company's gross salaries and wages are $38,000, and it withholds $5,700 for income taxes and $2,907 for fica taxes. the journal entry to record the employees' pay will be:
The journal entry to record the employees' pay for Redmont Company will include Dr. Salaries and Wages Expense $38,000, Cr. Income Tax Payable $5,700, Cr. FICA Tax Payable $2,907, and Cr. Salaries Payable $29,393.
To record the employees' pay for Redmont Company, follow these steps:1. Record the gross salaries and wages, which is $38,000. This will be debited to the Salaries and Wages Expense account.
2. Record the withholdings for income taxes, which is $5,700. This will be credited to the Income Tax Payable account.
3. Record the withholdings for FICA taxes, which is $2,907. This will be credited to the FICA Tax Payable account.
4. Calculate the net pay by subtracting the withholdings from the gross salaries and wages ($38,000 - $5,700 - $2,907 = $29,393). This will be credited to the Salaries Payable account.
The journal entry to record the employees' pay for Redmont Company will be:
Debit: Salaries and Wages Expense - $38,000
Credit: Income Tax Payable - $5,700
Credit: FICA Tax Payable - $2,907
Credit: Salaries Payable - $29,393
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janet van dyne is in law enforcement and incurred the following transactions last year.sales price purchase price date purchased date soldcisco preferred stock 25,000 6,000 7/15/2012 1/12/2022dreyer's grand ice cream stock 14,000 10,000 7/1/2020 4/20/2022novell common stock 2,000 10,000 2/12/2017 11/29/2022 stock 4,000 3,000 8/2/2008 5/2/2022abc common 6,000 9,000 8/10/2022 8/20/2022abc common 8,000 12/30/2022prior-year st capital loss carryforward (5,500)prior year lt capital loss carryforward (5,000)what is the 2022 end of year overall capital position? be sure to include character and amount. show your work in order toreceive credit (5pts
Janet Van Dyne's 2022 end-of-year overall capital position is therefore a net capital loss of ($10,000).
To calculate Janet Van Dyne's 2022 end-of-year overall capital position, we need to determine her capital gains and losses from the sale of securities during the year.
First, let's determine the gain or loss on each sale:
Cisco preferred stock: Proceeds = $25,000, Basis = $6,000, Gain = $19,000
Dreyer's Grand Ice Cream stock: Proceeds = $14,000, Basis = $10,000, Gain = $4,000
Novell common stock: Proceeds = $2,000, Basis = $10,000, Loss = ($8,000)
Stock: Proceeds = $4,000, Basis = $3,000, Gain = $1,000
ABC common stock (sold 8/20/2022): Proceeds = $6,000, Basis = $9,000, Loss = ($3,000)
ABC common stock (sold 12/30/2022): Proceeds = $8,000, Basis = $12,000, Loss = ($4,000)
Next, let's determine the amount of capital loss carryforward that can be applied to offset these gains and losses:
Prior-year short-term capital loss carryforward: ($5,500)
Prior-year long-term capital loss carryforward: ($5,000)
Since the total gains ($24,000) are less than the total losses ($15,000), we can use the entire amount of both capital loss carry forwards to offset the gains, resulting in a net capital loss of ($10,000).
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Therefore, Janet Van Dyne's 2022 year-end total capital position represents a net capital loss of ($10,000).
We must ascertain Janet Van Dyne's capital gains and losses from the year's securities sales in order to compute her overall capital position at year's end in 2022.
Let's first calculate the gain or loss on each sale:
Cisco preferred stock: Proceeds = $25,000, Basis = $6,000, Gain = $19,000
Dreyer's Grand Ice Cream stock: Proceeds = $14,000, Basis = $10,000, Gain = $4,000
Novell common stock: Proceeds = $2,000, Basis = $10,000, Loss = ($8,000)
Stock: Proceeds = $4,000, Basis = $3,000, Gain = $1,000
ABC common stock (sold 8/20/2022): Proceeds = $6,000, Basis = $9,000, Loss = ($3,000)
ABC common stock (sold 12/30/2022): Proceeds = $8,000, Basis = $12,000, Loss = ($4,000)
Next, let's determine the amount of capital loss carryforward that can be applied to offset these gains and losses:
Prior-year short-term capital loss carryforward: ($5,500)
Prior-year long-term capital loss carryforward: ($5,000+5000 = 10,000)
Due to the fact that the overall losses ($15,000) are less than the total profits ($24,000), we may apply the whole amount of both capital loss carry forwards to balance the gains, resulting in a net capital loss of ($10,000).
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an investor is in the 30% tax rate and corporate bonds are paying 9%.what must municipals bonds (munis) pay to offer an equivalent after tax yield?
Answer: 6.3%
Explanation: To determine the equivalent after-tax yield for municipal bonds (munis) for an investor in the 30% tax bracket, with corporate bonds paying 9%, you can follow these steps:
1. Identify the investor's tax rate, which is= 30%.
2. Determine the yield on corporate bonds, which is= 9%.
3. Calculate the after-tax yield on corporate bonds by using the formula:
after-tax yield = yield * (1 - tax rate).
4. Plug in the values: after-tax yield =
after tax yield= 9% * (1 - 0.30)
= 9% * 0.70
= 6.3%.
Hence, The equivalent after-tax yield for municipal bonds (munis) must be 6.3% to offer an equivalent after-tax yield for an investor in the 30% tax bracket with corporate bonds paying 9%.
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define the following: what is the equilibrium price of the concerts. what is the equilibrium quantity of the concerts. what is the optimal price of the concerts. what is the optimal quantity of the concerts. is this a positive or a negative externality ? (single word answer-positive or negative) what is the value of the externality ? (number no dollar signs or decimals) what is the proper action to correct the externality: tax or subsidy (tax or subsidy) what is the value of the corrective tax or subsidy applied to correct the externality ?
Equilibrium price of concerts is the price at which the quantity demanded by consumers equals the quantity supplied by producers. Equilibrium quantity of concerts is the quantity that is bought and sold at the equilibrium price.
Optimal price of concerts is the price that maximizes the profit of concert organizers. Optimal quantity of concerts is the quantity that maximizes the profit of concert organizers. This is a negative externality. The value of the externality is the cost imposed on third parties by the noise and congestion generated by the concerts.
To correct the negative externality, a corrective tax can be imposed on the concert organizers, which would increase their cost and reduce the quantity of concerts they supply.
The value of the corrective tax should be equal to the value of the externality, so that the concert organizers will internalize the cost of the externality and take it into account when deciding how many concerts to organize.
The value of the corrective tax should be equal to the difference between the social cost and the private cost of the concerts, which is the cost imposed on third parties by the noise and congestion generated by the concerts.
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Suppose you see a put option on the Swiss Franc (CHF) with a strike price of $1.065 and a premium of $0.014. If, at maturity, the exchange rate is $1.060/CHF, what is the profit from a put covering 20,000 CHF?
With an exchange rate of $1.060/CHF at maturity and a put option covering 20,000 CHF with a strike price of $1.065 and a premium of $0.014, the profit is $100.
If the exchange rate at maturity is $1.060/CHF and the strike price is $1.065, then the option is in-the-money as the exchange rate is below the strike price. This means the option holder has the right to sell 20,000 CHF at the strike price of $1.065.
To calculate the profit, we need to subtract the strike price from the exchange rate and multiply it by the number of CHF covered by the put option. So, the profit would be:
Profit = (Strike price - Exchange rate) x Number of CHF
Profit = ($1.065 - $1.060) x 20,000
Profit = $0.005 x 20,000
Profit = $100
Therefore, the profit from a put option covering 20,000 CHF at a strike price of $1.065 and a premium of $0.014, with an exchange rate of $1.060/CHF at maturity, is $100.
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Suppose you just purchased a 6 year. $1.000 par value bond. The coupon rate on this bond is 9% annually, with interest being paid semi-annually. If you expect to earn a 11% rate of return on this bond, how much did you pay for it? (Round your answer to two decimal point)
The answer is $1,073.64.
To calculate the price of the bond, we need to discount the future cash flows (coupon payments and par value) at the required rate of return of 11%. Since the bond pays semi-annual coupons, we need to use a semi-annual discount rate of 5.5%.
Using the bond pricing formula, we can calculate the price of the bond as follows:
Price = (C/2)/(1 + r/2) + (C/2)/(1 + r/2)^2 + ... + (C/2)/(1 + r/2)^11 + (FV)/(1 + r/2)^12
Where:
C = coupon payment = 9% x $1,000 / 2 = $45
r = required rate of return = 11% / 2 = 5.5%
FV = par value = $1,000
Plugging in the values, we get:
Price = ($45/1.055) + ($45/1.055^2) + ... + ($45/1.055^11) + ($1,000/1.055^12)
Price = $531.69 + $497.96 + ... + $318.57 + $523.04
Price = $5,903.12 / 5.5
Price = $1,073.64 (rounded to two decimal points)
Therefore, the price paid for the bond is $1,073.64.
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If the nominal interest rate is 5.1 percent, and the expected
inflation is 3.4 percent, then using the Fisher Equation, the real
interest rate must be
The real interest rate, using the Fisher Equation, is 1.7%.
The Fisher Equation is an economic theory that relates nominal interest rates to real interest rates and expected inflation. It is named after the economist Irving Fisher, who developed the equation in the early 20th century.
The Fisher Equation states that the real interest rate (r) is equal to the nominal interest rate (i) minus the expected inflation rate (π).
Mathematically, this can be written as:
r = i - π
Plugging in the given values, we get:
r = 0.051 - 0.034 = 0.017
Therefore, the real interest rate is 1.7% (or 0.017 as a decimal). This represents the true rate of return on an investment after accounting for inflation.
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Conceptually, an annuity with a fixed payment A over 5 years, starting one year now is: the difference between two annuities with different start dates the difference between two perpetuities. One starting 6 years from now, and the other one starting one year from now. t
he difference between two perpetuities. One starting 5 years from now, and the other one starting one year from now. the difference between two annuities. One starting 5 years from now, and the other one starting one year from now.
The concept of an annuity with a fixed payment A over 5 years, starting one year now, refers to a financial product that pays a fixed amount of money at regular intervals for 5 years. The distinction between the two annuities is the right response to this query. One begins in five years, whereas the other begins in a year.
This type of annuity is different from perpetuity, which is a financial product that pays a fixed amount of money at regular intervals indefinitely.
In this case, the question is asking about the difference between two annuities with different start dates. Specifically, it is asking about the difference between an annuity starting 5 years from now and an annuity starting one year from now. The difference between these two annuities would be the timing of the payments. The annuity starting one year from now would have payments starting sooner than the annuity starting 5 years from now.
Therefore, the correct answer to this question is the difference between the two annuities. One starts 5 years from now, and the other one starts one year from now.
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