what is supply chain management​

Answers

Answer 1

Answer:

the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfilment from point of origin to point of consumption

Explanation:

Answer 2
According to investopedia,

Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a business's supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.

SCM represents an effort by suppliers to develop and implement supply chains that are as efficient and economical as possible. Supply chains cover everything from production to product development to the information systems needed to direct these undertakings

Related Questions

Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $1,567,500. The estimated residual value was $82,500. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows: Year Units 1 70,000 2 67,000 3 50,000 4 73,000 5 40,000 Required: 1. Complete a separate depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance.

Answers

Answer:

See answer below.

Explanation:

The depreciable amount of the machine is computed as follows.

cost - residual value = 1,567,500 - 82,500 = $1,485,000.

Estimated usefule life = 5 years

Question 1

Using  the straight line depreciation method, the asset will be depreciated equally every year by [tex]\frac{Total Depreciation}{UsefulLife} =\frac{1,485,000}{5} =297,000[/tex]

Year 1 Depreciation = $297,000

Year 2 Depreciation = $297,000

Year 3 Depreciation = $297,000

Year 4 Depreciation = $297,000

Year 5 Depreciation = $297,000

Question 2

Using the unit of production method, the machine will be depreciated by the ratio of actual usage to estimated production life, until it is fully depreciated.

Year 1 Depreciation = [tex]\frac{Annual Usage}{Estimated Life} *Total Depreciation=\frac{170,000}{300,000} *1,485,000[/tex] = $841,500

Year 2 Depreciation = [tex]\frac{67,000}{300,000} *1,485,000[/tex] = $331,650

Year 3 Depreciation = [tex]\frac{50,000}{300,000} *1,485,000[/tex] = $247,500

Year 4 Depreciation = [tex]Total Depreciation - Accumulated Depreciation=1,485,000-(841,500+331,650+247,500)[/tex]= $64,350

Year 5 Depreciation = 0.

Year 4 computation arose because the computed depreciation using the unit of production method [tex]\frac{73,000}{300,000} *1,485,000=361,350[/tex] would push the computed accumulated depreciation beyond the total depreciation allowed. As such, the residual balance was adopted in year 4.

Question 3

Using the double declining balance method, the machine would be depreciated at twice the depreciation rate of the straight line balance on the reducing balance of the asset, until this method results in a depreciation figure lower than the straight line method.

Depreciation rate = [tex]2*StraightLineRate=2*(\frac{1}{5} )= 2* 0.20=0.40[/tex] = 40%

Year 1 depreciation = [tex]0.40*1,485,000[/tex] = $594,000

Year 2 depreciation = [tex]0.40*(1,485,000-594,000)[/tex] = $356,400

Year 3 depreciation = [tex]\frac{1,485,000-594,000-356,400}{3}[/tex]= $178,200

Year 4 depreciation = [tex]\frac{1,485,000-594,000-356,400}{3}[/tex]= $178,200

Year 5 depreciation = [tex]\frac{1,485,000-594,000-356,400}{3}[/tex]= $178,200.

Because year 3 depreciation using the usual double declining method [tex]0.40*(1,485,000-594,000-356,400)= 213,840[/tex] would result in a figure lower than the straight line depreciation rate (297,000), we used the straight line formula for the depreciation from years 3 to 5.

1. When will countries trade? Assuming 2 goods, food and clothing, and that both countries’ preferences are homothetic (but not necessarily identical), determine whether two countries will trade in each of the following situations: (a) Countries have identical preferences and identical endowments. (b) Countries have identical preferences, their endowments differ, and their endowments are not in the same ratio of food to clothing. (c) Countries have identical preferences, their endowments differ, but the ratio of food to clothing is the same in both countries. (d) Countries have identical endowments but different preferences. (e) Countries have both different preferences and different endowments.

Answers

Answer:

(a) Countries have identical preferences and identical endowments.

Explanation:

Analyzing the statement, there is information that the preferences of countries are homothetic (but not necessarily identical) with respect to the 2 goods, food and clothing.

That is why it is correct to state that countries will not trade with each other, as countries have identical preferences and identical allocations, which means that the demands for these goods will be related to the prices of the goods and not in relation to income or preferences.

Therefore, there is no need to commercialize these two goods between these countries, except in situations of scarcity.

Show how Cablevision can conduct an ROI analysis. Describe the information that the company should collect and how it should b collected.

Answers

Answer:

Explanation:

Cablevision can easily accomplish this by doing the following. First gather the number of sales of premium services and other products that non-trained individuals are accomplishing in a given time period (example, one month). Next, under the same conditions place the newly trained individuals and gather the same data from them (number of sales/subscribers gained, premium products, and other products). Finally, they would simply need to compare the difference in the number of sales to see if the training paid off. They would also need to calculate if the difference in sales surpasses the costs of training.

Suppose that Congress passes legislation making it more difficult for firms to fire workers. One example might be a law requiring severance pay for fired workers. The goal of this legislation is to reduce the rate of job separation without affecting the rate of job finding. Use this information to answer the following three questions. (Assume the size of the labor force remains constant.) If this legislation reduces the rate of job separation (s) without affecting the rate of job finding (f), how would the natural rate of unemployment change

Answers

Answer:

If the new law reduces the rate of job separation without affecting the rate of job finding, then, the natural rate of unemployment will fall.

This is because of the formula

U / L = s / (s + f)

Where U is unemployment, L is labor force, s is rate of separation, and f is rate of job finding.

The reason why the rate of natural unemployment will fall is because if employees are harder to fire, companies will be more careful when hiring workers, since the cost of firing a worker is now higher.

Curtis invests $450,000 in a city of Athens bond that pays 6.50 percent interest. Alternatively, Curtis could have invested the $450,000 in a bond recently issued by Initech, Incorporated that pays 7.75 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. How much explicit tax would Curtis incur on interest earned on the Initech, Incorporated bond

Answers

Answer:

$8,370

Explanation:

Calculation for How much explicit tax would Curtis incur on interest earned on the Initech, Incorporated bond

Using this formula

Explicit tax = (Amount Invested× Interest percentage)×Marginal tax rate

Let plug in the formula

Explicit tax =($450,000×7.75%)×24%

Explicit tax =$34,875×24%

Explicit tax =$8,370

Therefore the amount of explicit tax that Curtis would incur on interest earned on the Initech, Incorporated bond will be $8,370

true or false. a factor that can come between the purchase intention and purchase decision is the attitude of others g

Answers

Answer:

True

Explanation:

Before a consumer makes a decision to buy a product, several factors can affect him. Two distinct factors are the attitude of others and unexpected situational factors. When the customer notices that a lot of people around him have a negative disposition or opinion about a product, they are likely to be discouraged from buying that product.

This is even more likely to happen if the consumer lacks enough motivation to buy that product. So the attitude of others can affect the buyer's intention which is his motivation and the final decision to purchase that product.

A lot of factors can come between purchase intensions. A factor that can come between the purchase intention and purchase decision is the attitude of others is a true statement.

The more positive a person's attitude toward the a product, the greater their purchase intentions.

Another factor consider is perceived playfulness that also affects purchase intention positively.

The factors that affect a consumer's purchase intention can be said to be product perception, shopping experience, customer service etc.

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Lightfoot Company sells its product for $55 per unit and has variable costs of $30 per unit. Total fixed costs are $25,000. Suppose variable costs increase by 10% due to an increase in the cost of direct materials. What will be the effect on the breakeven point in units if variable costs increase by​ $5 due to an increase in the cost of direct​materials?
A. It will increase by 250 units.
B. It will decrease by 167 units.
C. It will decrease by 250 units.
D. It will increase by 167 units.

Answers

Answer:

The Break-even point in units will increase by 250 units.

Explanation:

Giving the following information:

Fixed costs= $25,000

Selling price= $55

Unitary varaible cost= $30

First, we need to calculate the current break-even point in units:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 25,000 / 25

Break-even point in units= 1,000

Now, the new Break-even point in units:

Break-even point in units= 25,000 / (55 - 35)

Break-even point in units= 1,250

The Break-even point in units will increase by 250 units.

At LK Corporation, budgeted sales in units for January, February, and March are 15,000, 20,000, and 18,000 units, respectively. If the selling price per unit is $5, what is expected sales revenue for March

Answers

Answer:

$90,000

Explanation:

The expected sales revenue for March is computed as

Expected sales revenue in March = budgeted sales in March × Selling price per unit

= 18,000 units × $5

= $90,000

Please note that the information given for January and February are not relevant since we are asked to compute expected sales revenue in March.

According to Nohria, Groysberg, and Lee, within an organization, the primary lever to address the drive to ____ is the reward system.

Answers

Answer:

Civillization

Explanation:

Coca Cola stock has the following probability distribution of expected prices one year from now: State Probability Price 1 25 % $ 50 2 40 % $ 60 3 35 % $ 70 If you buy Coca Cola today for $55 and it will pay a dividend during the year of $4 per share, what is your expected holding-period return on Coca Cola

Answers

Answer:

18.18%

Explanation:

Calculation for the expected holding-period return on Coca Cola

First step is to calculate the Expected Price in one year

Expected Price in one year = 50*25% + 60*40% + 70*35%

Expected Price in one year =12.5+24+24.5

Expected Price in one year = $61

Last step is to get Calculate the Holding period return using this formula

Holding period return = (Price after 1 year + Dividend - Price amount paid)/Price amount paid

Let plug in the formula

Holding period return= (61+4-55)/55

Holding period return=10/55

Holding period return=0.1818*100

Holding period return= 18.18%

Therefore the expected holding-period return on Coca Cola will be 18.18%

Assume that a Parent owns 80 percent of a Subsidiary that has 6 percent preferred stock outstanding with a reported par value of $720,000. Aside from the preferred dividends, no other dividends are paid (i.e., no dividends are paid to the common shareholders). The Parent owns none of the preferred stock. Assume that the Subsidiary reports net income of $117,000. During the year, the Parent company reported $261,000 of (pre-consolidation) income from its own operations (i.e., prior to any equity method adjustments by the Parent company). Compute the amount of consolidated net income attributable to the noncontrolling interest and the amount of net income attributable to the controlling interest.

Answers

Answer:

Consolidated net income attributable to the noncontrolling interest $14,760

Consolidated net income attributable to the controlling interest $320,040

Explanation:

Computation of the amount of consolidated net income attributable to the noncontrolling interest and the amount of net income attributable to the controlling interest.

CONSOLIDATED NET INCOME attributable to the noncontrolling interest

First step is to find the Divide amount

Dividend =6% x $720,000

Dividend= $43,200

Second Step is to find the Net Income from Subsidiary

Net Income from Subsidiary= $117,000-$43,200

Net Income from Subsidiary=$73,800

Last step is to calculate consolidated net income attributable to the noncontrolling interest

Noncontrolling interest =$73,800 x 20%

Noncontrolling interest = $14,760

NET INCOME attributable to the controlling interest

First step is to find the controlling interest amount

Controlling interest=80% x $73,800

Controlling interest= $59,040

Last step is to find the Parent company income

Parent company income= $261,000 + $59,040

Parent company income= $320,040

Therefore Consolidated net income attributable to the noncontrolling interest is $14,760 while the Consolidated net income attributable to the controlling interest is $320,040

Consider a firm with production function F(K, L)=3L+8K. Assume that capital is fixed at K=12. Assume also that the rental rate (price) of capital r=10 and the wage rate (price) of labor w=3. The cost of production is the total expenditure on capital (fixed cost) and labor (variable cost). Then the cost of producing q units is__.
A. C(q)=114+(9q/8).
B. C(q)=24+39.
C. C(q)=88+(q/12).
D. C(q)=24+ q.
E. C(q)=24+q2

Answers

Question attached

Answer and Explanation:

Answer and explanation attached

Roger owns some farmland that he rents to a tenant. The tenant lives in an old farmhouse on the property and raises crops on the land. Roger is concerned about legal liability if the tenant injures someone. Roger requires the tenant to have liability insurance and to add himself to the liability coverage through an endorsement. Under the tenant's liability insurance, Roger is a(n)

Answers

Answer:

additional insured

Explanation:

An additional insured endorsement refers to an amendment clause made to an exiting policy which adds someone else, and therefore, extends the coverage of the policy to include this recently added party.

In this case, Roger was included or added to his tenant's liability insurance policy, therefore, he will be covered by it.

what is acknowledgement​

Answers

Answer: it means to accept something or recognition

deposited pierrs's check for $1000 in the bank what is the general jeneral entry?​

Answers

Answer:

When a cheque received is not deposited on the same day, it is taken in the cash account and when it is deposited in bank, then a contra entry is passed. For example cheque received from Ram on 15th March is deposited on 18th March, following entries will be passed: 15/3 Cash A/c Dr.

Explanation:

Answer the following questions on the basis of the following three sets of data for the country of North Vaudeville: (A) (B) (C) Price Level Real GDP Price Level Real GDP Price Level Real GDP 110 235 110 285 100 210 100 235 100 260 100 235 95 235 95 235 100 260 90 235 90 210 100 285 a. Which set of data illustrates aggregate supply in the immediate short run in North Vaudeville? (Click to select) The short run? (Click to select) The long run? (Click to select) b. Assuming no change in hours of work, if real output per hour of work decreases by 5 percent, what will be the new levels of real GDP in the right column of B?

Answers

Question attached

Answer and Explanation:

1a. We can see immediate short run aggregate supply in North vaudeville in column A. This is because the price is fixed while output increases

1b. We can see short run aggregate supply in North vaudeville in column c. This is because output increases with price increase.

1c we can see long run aggregate supply in North vaudeville in column B. This is because output is constant with price increase.

Assuming output per hour of work decreases by 25% for column C then for each price, output is:

2A. Given price P= 110, output is 285(1-0.25) = 213.75

2B. Given price P = 100, output is 260(1-0.25) = 195

2C. Given price P = 95, output is 235(1-0.25) = 176.25

2D. Given price P = 90, output is 210(1-0.25) = 157.50

3. The new data from question 2 reflects a decrease in aggregate supply.

ancy operates a business that uses the accrual method of accounting. In December, Nancy asked her brother, Hank, to provide her business with consulting advice. Hank billed Nancy for $8,700 of consulting services in year 0 (a reasonable amount), but Nancy was only able to pay $5,200 of the bill by the end of this year. However, Nancy paid the remainder of the bill in the following year. a. How much of the $8,700 consulting services will Hank include in his income this year if he uses the cash method of accounting

Answers

Answer: $5200

Explanation:

Cash accounting method occurs when transactions are recorded in an accounting book only when payment has been made for the goods sold or the goods received.

Out of the $8,700 consulting services, the amount that'll be included by Hank in his income this year if he uses the cash method of accounting will be $5200. This is because only $5200 was paid out of the $8700.

BE5-12 Keyser beverage company reported the following items in the most recent year

Answers

BE5-12 Keyser Beverage Company reported the following items in the most recent year. Net income $40,000 Dividends paid 5,000 Increase in accounts receivable 10,000 Increase in accounts payable 7,000 Purchase of equipment (capital expenditure) 8,000 Depreciation expense 4,000 Issue of notes payable 20,000 . . Compute net cash provided by operating activities, the net change in cash during the year, and free cash flow.

2. What's a good way to reduce food costs?
A buying items on sale
B making a shopping list and sticking to it
C making sure you go to the store on a full stomach
D all of the above

Answers

The answer is
D) All of the above

If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $6 per direct labor-hour, what is the estimated finished goods inventory balance at the end of July

Answers

Answer:

$247,000

Explanation:

The computation of the estimated finished goods inventory balance at the end of July is shown below:-

Unit product cost = 5 × 2.4 + 14 × 2 + 6 × 2

= 52

Now,

Ending finished goods inventory balance = Budgeted unit sales × Ending finished goods inventory percentage × Unit product cost

= 19,000 × 25% × 52

= $247,000

Therefore we have applied the above formula

eorge and Weezy received $30,200 of Social Security benefits this year ($12,000 for George; $18,200 for Weezy). They also received $5,000 of interest from jointly owned City of Ranburne Bonds and dividend income. What amount of the Social Security benefits must George and Weezy include in their gross income under the following independent situations

Answers

Answer:

$0

Explanation:

George and Weezy will not get any amount as social security benefit if they file married joint. The sum of their modified AGI plus the 50% of their social security benefit is [$5,000 + $8,000 + $15,100]. This equals to $28,100 which is below the minimum amount of social security.

Skipper Company manufactures toy boats and uses an activitybased costing system. The following information is provided for the month of​ May: Activity Estimated Indirect Activity Costs Allocation Base Estimated Quantity of Allocation Base Materials handling Number of parts parts Assembling Number of parts parts Packaging Number of boats boats Each boat consists of four​ parts, and the direct materials cost per boat is . There is no direct labor. What is the total manufacturing cost per​ boat? (Round any intermediate calculations and your final answer to the nearest​ cent.)

Answers

Answer:

$ 22.97

Explanation:

Calculation for the total manufacturing cost per boat

First step is to Calculate the Activity rates

Activity Cost Pool Activity driver Overhead Cost (A) Expected Activity (B) Activity rate (A/B)

Materials handling Number of Part

$ 3,300÷ 3000 =$ 1.10 Per Part

Assembling Number of Part

$ 4,800÷3000 =$ 1.60 Per Part

Packaging Number of Boat

$ 6,000÷ 1300 =$ 4.62 Per Boat

Second step is to Calculate the Cost assigned to Boat

Activity name Activity Rates Activity ABC Cost

(A) (B) (A x B)

Materials handling

$ 1.10 × 4.00=$ 4.40

Assembling

$ 1.60 × 4.00 =$ 6.40

Packaging

$ 4.62 × 1.00 = $ 4.62

Total Overheads assigned per boat $ 15.42

($4.40+$6.40+$4.62)

Last step is to Calculate for the total manufacturing cost per boat

Boat

Direct material $ 7.55

Direct labor $0

Overheads $15.42

Total Cost per unit $ 22.97

($7.55+$15.42)

Therefore the total manufacturing cost per boat is $ 22.97

A contractor builds two types of homes. The Carolina requires one lot, $160,000 capital, and 160 worker-days of labor, whereas the Savannah requires one lot, $240,000 capital, and 160 worker-days of labor. The contractor owns 300 lots and has $48,000,000 available capital and 43,200 worker-days of labor. The profit on the Carolina is $80,000 and the profit on the Savannah is $90,000. Find how many of each type of home should be built to maximize profit.

Answers

Answer:

the contractor should build 210 Carolina type homes and 60 Savannah type homes

Explanation:

you have to maximize the following equation: 80000C + 90000S

Where:

C = Carolina type homes

S = Savannah type homes

the constraints are:

160000C + 240000S ≤ 48000000

160C + 160S ≤ 43,200

C ≥ 0

S ≥ 0

using solver, the optimal solution is 210C + 60S = $22,200,000

Which type of educational worker will most likely help students find books outside the classroom to help them write research papers? administrator librarian designer principal

Answers

Answer:

Librarian

Explanation: Enjoy (っ^▿^)۶٩(˘◡˘ )

The  type of educational worker  that will most likely help students find books outside the classroom to help them write research papers is  librarian.

Who is a librarian?

A librarian can be defined as the person that works in the library whose soles reponsibility is to find, sort and arrange bookes.

A  librarian is the right position to help a student find books because that is the duty or work of a librarian.

Therefore the type of educational worker  that will most likely help students find books is  librarian.

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Researchers at Ohio State and Michigan put leader behavior into two broad categories; __________ and __________.

a. Task , Power
b. People , Task
c. Task , Organizational

Answers

Answer:

b. People , Task

Explanation:

Based on the Michigan Leadership Studies that was carried out around 1950s and 1960s which centered on behavioral approaches and identification of leader relationships and group processes. The outcome of the research showed that there are three significant traits of productive leaders which are mainly:

1. Task-oriented behavior

2. Relationship-oriented behavior: this focused on people interaction in and out of the work place.

3. Participative leadership.

Hence, in this case, it can be concluded that "Researchers at Ohio State and Michigan put leader behavior into two broad categories; PEOPLE and TASK.

Assume that if Ivanhoe Water accepts Clifton’s offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 80,410 of the new lights each year at a price of $13. Variable costs of the lights are expected to be $10 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer.

Answers

Question Completion:

Question 2 Ivanhoe Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based on an annual production of 40,330 timers, the company has calculated the following unit costs Direct fixed costs include supervisory and clerical salaries and equipment depreciation. Direct materials Direct labor Variable manufacturing overhead Direct fixed manufacturing overhead Allocated fixed manufacturing overhead $12 10 (30% salaries, 70% depreciation) 10 Total unit cost $42 Clifton Clocks has offered to provide the timer units to Sandhill at a price of $34 per unit. If Sandhill accepts the offer, the current timer unit supervisory and clerical staff will be laid off (a1) Your answer is correct. Calculate the total relevant cost to make or buy the timer units. (Round answers to O decimal places, eg, S250.) Make Buy 100825 1371220

Answer:

Ivanhoe Water

1. Total relevant cost to make the timer units:

If Ivanhoe does not accept the Clifton's offer, its total cost = $35 * 40,330 = $1,411,5500

If it accepts Clifton's offer, the total cost = $34 * 40,330 = $1,371,220

2. Net cost = $40,330

Explanation:

a) Data and Calculations:

Cost of producing 40,330 timers

Direct materials                                         $12

Direct labor                                                   7

Variable manufacturing overhead              3

Direct fixed manufacturing overhead       10

Allocated fixed manufacturing overhead 10 (30% salaries, 70% depreciation)

Total unit cost                                         $42

Clifton's offer = $34 per unit

Total relevant cost to make the timer units:

If Ivanhoe does not accept the Clifton's offer, its total cost = $35 * 40,330 = $1,411,5500

If it accepts Clifton's offer, the total cost = $34 * 40,330 = $1,371,220

Net cost = $40,330

Out of the total cost of $42, $7 for the depreciation is not considered relevant.  This leaves the relevant cost at $35 per unit.  Any cost that cannot be eliminated by a decision is not relevant, it is a sunk cost.  The salaries of the supervisory and clerical staff can be eliminated, so it is relevant here.

8.Kline and Salomon form the KS Partnership as 50/50 partners. Kline contributes equipment that has a fair market value of $60,000 and an adjusted basis of $45,000. In addition, the equipment is subject to a $10,000 loan that KS Partnership is assuming. What amount represents Kline's initial basis in the partnership

Answers

Answer: $40,000

Explanation:

Kline brings in equipment that is worth $60,000 but has a basis of $45,000.

The equipment however is subject to a loan of $10,000.

This loan will have to be deducted from the basis. The partnership however is assuming the loan and Kline is only 50% liable in the partnership so Kline's basis will only be affected by half of the loan.

Basis = 45,000 - 5,000

= $40,000

A business buys $5000 worth of resources to produce a good. The business makes 100 units of the good and each of them sells for $65. The value added by the business to these products is:

a. $5,000
b. $6,500
c. $1,500
d. $1,000

Answers

Answer:

$1,500

Explanation:

A business buys $5000 worth of resources resources to produce a good

The business makes 100 unit of of the good and sell each for $65

Therefore the value added by the business to the product can be calculated as follows

= $65×100

= $6500

$6,500-$5,000

= $1,500

Hence the value added by the business to the product is $1,500

Lincoln’s landlord has included a clause in the rental contract that makes it possible for him to increase Lincoln’s monthly rent if taxes on the property go up. Which clause was included in the contract?
a. tariffs clause.
b. variable costs clause.
c. escalator clause.
d. elastic demand clause.
e. elevator clause.

Answers

Answer:

The appropriate answer is Option c (Escalator clause).

Explanation:

The landlord of Lincoln also put a disclaimer throughout the rental lease which allows him to raise the mortgage payment of Lincoln if property wages increase. The deal had an escalator clause.An Escalator clause would be a clause inside a leasing contract as well as rent disclosure that ensures the improvement in rent sum regardless of the reasons which were not under influence of all the participants. Throughout this situation the taxation on land is raised by that of the government therefore adjustment in taxes wasn't in the jurisdiction of all entities.

The other options given aren't connected to just the given case. In such a way that the response above is right.

A company forecasts growth of 6 percent for the next five years and 3 percent thereafter. Given last year's free cash flow was $100, what is its horizon value (PV looking forward from year 4) if the company cost of capital is 8 percent?

a. $0
b. $1,672
c. $2,000
d. $2,676

Answers

Answer:

d. $2,676

Explanation:

The computation of the horizontal value is shown below:

FCF1 = (100 × 1.06) = 106

FCF2  = (106 × 1.06) = 112.36

FCF3 = (112.36 × 1.06) = 119.1016

FCF4  = (119.1016 × 1.06) = 126.247696

FCF5  = (126.247696 × 1.06) = 133.8225578

Now

Horizon value is

= FCF5 ÷ (Cost of capital  - Growth rate)

= 133.8225578 ÷ (0.08  - 0.03)

= $2,676

Hence, the correct option is d.

The horizon value will be "$2,676".

According to the question,

The computation of the horizontal value will be:

→ [tex]FCF_1 = 100\times 1.06[/tex]

             [tex]= 106[/tex]

→ [tex]FCF_2 = 106\times 1.06[/tex]

             [tex]= 112.36[/tex]

→ [tex]FCF_3 = 112.36\times 1.06[/tex]

             [tex]= 119.1016[/tex]

→ [tex]FCF_4 = 119.1016\times 1.06[/tex]

             [tex]= 126.25[/tex]

→ [tex]FCF_5 = 126.25\times 1.06[/tex]

             [tex]= 133.8226[/tex]

hence,

The horizon value will be:

= [tex]\frac{FCF_5}{Cost \ of \ capital - Growth \ rate}[/tex]

By putting the values, we get

= [tex]\frac{133.8226}{0.08-0.03}[/tex]

= [tex]2,676[/tex] ($)

Thus the above approach i.e., "option d" is right.

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