The Net Profit after Tax (NPAT) for Zenith Horizons Inc. at the end of 2019 or beginning of 2020 is P163,800,000.
Here is the projected income statement for Zenith Horizons Inc. at the end of 2019 or beginning of 2020 with the necessary calculations:
Projected Income Statement for Zenith Horizons Inc. at the end of 2019 or beginning of 2020ParticularsSalesRevenue from sales = (4,000,000 liters x P70/liter)P280,000,000Cost of goods sold
Variable cost = (P15/liter x 4,000,000 liters)P60,000,000
Fixed costP12,000,000
Total cost of goods sold P72,000,000
Gross ProfitP208,000,000
Operating Expense Fixed Operating ExpenseP12,000,000Net Profit before Interest and Tax (PBT)P196,000,000Interest ExpenseP14,000,000Profit Before Tax (PBT)P182,000,000Income Tax (10% of PBT)P18,200,000Net Profit After Tax (NPAT)P163,800,000
Calculation:1. Sales: Sales = 4,000,000 liters x P70/liter = P280,000,0002. Variable cost:
Variable cost = P15/liter x 4,000,000 liters = P60,000,0003. Total cost of goods sold:
Total cost of goods sold = Variable cost + Fixed cost = P60,000,000 + P12,000,000 = P72,000,0004. Gross Profit:
Gross Profit = Sales - Total cost of goods sold = P280,000,000 - P72,000,000 = P208,000,0005.
Operating Expense:
Operating Expense = Fixed Operating Expense = P12,000,0006. Net Profit before Interest and Tax (PBT):PBT = Gross Profit - Operating Expense = P208,000,000 - P12,000,000 = P196,000,0007. Interest Expense:Interest Expense = P100,000,000 x 14% = P14,000,0008.
Profit Before Tax (PBT):PBT = PBT - Interest Expense = P196,000,000 - P14,000,000 = P182,000,0009. Income Tax:Income Tax = 10% of PBT = 10% x P182,000,000 = P18,200,00010. Net Profit After Tax (NPAT):NPAT = PBT - Income Tax = P182,000,000 - P18,200,000 = P163,800,000
Therefore, the Net Profit after Tax (NPAT) for Zenith Horizons Inc. at the end of 2019 or beginning of 2020 is P163,800,000.
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Use the following information to calculate net present value:
Upfront cash outflow = $20
Cash inflow in one year = $30
Discount rate = 10%
Select one:
a. -$7. 27
b. $7. 27
c. $18. 18
d. $27. 27
The net present value (NPV) is calculated by subtracting the upfront cash outflow from the present value of the cash inflow, resulting in an NPV of $7.27.
1. Calculate the present value of the cash inflow using the formula:
PV = CF / (1 + r)^n, where CF is the cash inflow, r is the discount rate, and n is the number of periods.
PV = $30 / (1 + 0.10)^1 = $27.27
2. Subtract the upfront cash outflow from the present value of the cash inflow to find the net present value (NPV).
NPV = $27.27 - $20 = $7.27
Therefore, the correct answer is b. $7.27.
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Ashok Leyland, a major manufacturer of Trucks and Buses, has decided to make a foray into small passenger transport vehicles. Their product development team has developed an MUV (Multi Utility Vehicle) with 7 seats and 8 seats configuration. They found that MUVs like Toyota Innova, GM Tavera and many more other models from Mahindra and Tata Motors are doing good business in India. The company outsourced the research to find out the market potential for MUV in India to Market Research Group (MRG). MRG conducted sample market studies in Salem in Tamilnadu and Gorakhpur in Uttar Pradesh. They submitted a market potential report to Ashok Leyland, which suggested that there is good potential in the market for MUV. Based on the research report, the company launched the MUV Stile with technological collaboration with Nissan India Ltd. This product is similar to Nissan Evalia. In May 2015 Ashok Leyland took a decision to withdraw Stile due to weak sales.
Questions:
a) Was the research done by MRG scientific?
b) What were the limitations in the research methodology?
c) What could have been appropriate research method?
The scientific rigor of the research conducted by MRG cannot be determined without more detailed information. However, the research methodology had limitations such as a limited sample size, a narrow geographic focus, and a lack of competitor analysis.
a) It is not possible to determine whether the research conducted by MRG was scientifically based solely on the information provided.
The scientific rigor of a research study depends on several factors, including the research design, data collection methods, sample size, and statistical analysis.
b) The limitations in the research methodology could include:
Limited sample size: The research was conducted in only two locations, Salem and Gorakhpur, which may not be representative of the entire Indian market. A larger and more diverse sample size would have provided a more comprehensive understanding of the market potential.
Geographic focus: The research was limited to specific regions in Tamil Nadu and Uttar Pradesh, which may not accurately reflect the preferences and demands of consumers in other parts of India.
Regional variations in consumer behavior and preferences could have been overlooked.
Lack of competitor analysis: The research report does not mention a comprehensive analysis of competing MUV models in the market. Understanding the strengths and weaknesses of existing products would have been crucial in evaluating the potential success of Ashok Leyland's MUV.
c) An appropriate research method could have been a combination of quantitative and qualitative approaches. A larger-scale survey covering multiple regions in India could have provided a broader understanding of consumer preferences and market potential.
This survey could have included questions about consumers' needs, preferences, and purchasing behavior related to MUVs.
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How far thwey it the hseizen eate? 1. The termieal, or harizon, date is the date when the growth rate becomes cocteant. Fhis sccurs at the end of Yetr 2. 11. The termital, of hoeieon, cate is infisty since commen stocks to not tave a maturity dote. TW. The teminat, oe honeph, cate is the date wher the prowth tate becoites concorstavt. This cccura at trie zero. 1. The terminal, er honteot, date is the date when the growth rate becames contast. This occurs ot the begincing of vear 2 . 3
The terminal date or horizon date is the date when the growth rate becomes constant. The terminal date for Year 2 is the end of Year 2. For common stocks, the terminal date is infinite. At time zero, the growth rate becomes constant.
Based on the information provided, about the "terminal date" or "horizon date" in relation to growth rates is given below:
1. The terminal date, or horizon date, is the date when the growth rate becomes constant. This occurs at the end of Year 2.
2. The terminal date, or horizon date, is infinite since common stocks do not have a maturity date.
3. The terminal date, or horizon date, is the date when the growth rate becomes constant. This occurs at time zero.
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1.The Liability Exposures Of A Business Firm Are More Complex Than Those Of An Individual. What Characteristics Of The Business Firm Make This So2. What Conditions Led To The Introduction Of The Claims Made Form To The General Liability Field?3. Briefly Distinguish Between An Insurance Contract And A Surety Bond.
The liability exposures of a business firm are more complex than those of an individual due to the following characteristics: Business firms typically have multiple stakeholders, suppliers, and shareholders, which increases the potential for liability claims.
Business firms may have larger financial resources and assets, making them more attractive targets for lawsuits. The complex liability exposures of a business firm arise from its organizational structure, activities, and stakeholder relationships. These factors amplify the potential risks and increase the likelihood of encountering various liability claims. Escalating costs and uncertainty associated with long-tail claims, such as those related to asbestos and pollution, which made it difficult for insurers to accurately predict and reserve for future liabilities. The desire for insurers to limit their exposure to potential future claims by defining a clear retroactive date and imposing a time limit for reporting claims. A surety bond, on the other hand, is a three-party agreement that guarantees the performance of a specific obligation by one party (principal) to another party (obligee), backed by a third party (surety) that promises to fulfill the obligation if the principal fails to do so.
While both involve risk transfer, an insurance contract primarily covers losses due to unforeseen events, while a surety bond ensures the fulfillment of a specific obligation and provides financial protection in case of non-performance or default.
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Suppose your company has an equity beta of 0.5 and the current risk-free rate is 3.0%. If the expected market risk premium is 8.6%, what is your cost of equity capital? 7.3% 8.6% 11.1% 10.3%.
The cost of equity capital for your company is 7.3%.
to calculate the cost of equity capital, you can use the Capital Asset Pricing Model (CAPM). The formula for CAPM is:
Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium
In this case, the risk-free rate is given as 3.0% and the equity beta is given as 0.5. The expected market risk premium is given as 8.6%.
Substituting the values into the formula:
Cost of Equity = 3.0% + 0.5 * 8.6%
Cost of Equity = 3.0% + 4.3%
Cost of Equity = 7.3%
Therefore, the cost of equity capital for your company is 7.3%.
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Employee values are defined as those things that a person sees as __________________ to his or her welfare.
A. conducive
B. coherent
C. classy
D. correlation
A. conducive.Employee values are an integral part of an individual's mindset and play a crucial role in shaping their attitudes, behaviors, and overall job satisfaction.
These values are defined as the principles, beliefs, and ideals that employees hold dear and consider important for their personal well-being within the workplace.
When we say that employee values are conducive to their welfare, we mean that these values contribute positively to their overall job satisfaction, engagement, and overall sense of fulfillment in their work environment. Employee values act as guiding principles that align with their personal needs, desires, and aspirations, ensuring that their welfare is taken into consideration.
Conducive values canand priorities. For example, some employees may highly vary from person to person, as each employee has unique preferences value work-life balance and prioritize flexible working hours, while others may prioritize career growth and development opportunities. Some common examples of conducive employee values include autonomy, fairness, respect, teamwork, open communication, work-life balance, ethical practices, and opportunities for personal and professional growth.
When employees feel that their values are aligned with the organizational culture and practices, they are more likely to experience higher job satisfaction, increased motivation, and a greater sense of commitment towards their work. On the other hand, if there is a misalignment between employee values and the organizational environment, it can lead to dissatisfaction, disengagement, and higher turnover rates.
Understanding and acknowledging employee values is essential for organizations to create a positive work environment that promotes employee well-being and fosters a sense of belonging. It requires organizations to be attentive to the needs and preferences of their employees, and to create policies, practices, and programs that support and align with their values.
In conclusion, employee values are the beliefs and principles that individuals consider important for their personal welfare in the workplace. These values play a significant role in shaping employees' attitudes, behaviors, and overall job satisfaction. When organizations recognize and respect these values, they can create a work environment that supports employees' well-being and fosters a positive and productive workforce.
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Sharon wants to buy a house for $300,000. She can make a down payment of $20,000. Her financial institution is quoting her a five-year rate of 7% compounded semi-annually. She wants to make monthly payments and amortize the loan over 25 years. What are her monthly payments?
Please answer the question in the box provided.
The monthly payment of Sharon would be $1,804.24.
Let us first find the loan amount of Sharon. Since Sharon wants to buy a house for $300,000, she will borrow $300,000 - $20,000 = $280,000.
Let us use the formula to calculate the monthly payment.M = P[r(1 + r)n/((1 + r)n – 1)]whereM = monthly paymentP = the amount borrowedr = rate (divide the annual rate by 12) - This rate should be the periodic rate.n = number of payments.
Using
the given data in the formula:Since Sharon wants to amortize the loan over 25 years, the number of payments is 25 × 12 = 300.r = (7/100) ÷ 2 = 0.035 (compounded semiannually)Substituting the given values in the formula, we get:M = $280,000[0.035(1 + 0.035)300]/[(1 + 0.035)300 – 1]M = $1,804.24
Hence, Sharon’s monthly payment would be $1,804.24.
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Many mergers are the result of a friendly and collaborative agreement between the participating companies. Some combinations, however, are unfriendly or even hostile in nature. Firms facing unwanted and hostile takeovers will often take actions to forestall the acquisition. In general, the broad category of antitakeover strategies are called Consider the following technique: This type of financial security will have value only if an unfriendly takeover occurs. It gives the firm's bondholders the right to reem their bonds at their par value prior to maturity if a unfriendly bidder obtains control of a specified percentage of the target firm common shares. This technique, which is called __ a poison put option _ −, is designed to: Make it difficult for an acquiring firm to elect its own directors to the board Encourage executives to act in the best interests of their firm's common shareholders by providing the executives with financial security if they don't oppose a takeover but then lose their jobs Make the takeover target a less attractive takeover candidate by restructuring its debt and reducing its available cash balances once an undesired takeover bid has started. Descriptions of two possible strategies follow. Indicate which best describes the litigation defense: Strategy 1: This strategy requires initiating a takeover of the unfriendly bidder. Strategy 2: This strategy involves the use of lawsuits and appeals in state and federal courts to slow the process and increase the cost of a takeover transaction. Strategy provides the best description of the litigation defense.
Firms facing hostile takeovers may use antitakeover strategies such as poison put options or litigation defense to prevent acquisition.
In the case of unfriendly takeovers, firms may use antitakeover strategies to prevent acquisition. One such strategy is the poison put option, which allows bondholders to redeem their bonds at par value prior to maturity if an unfriendly bidder obtains control of a specified percentage of the target firm's common shares. This strategy is designed to make the takeover target a less attractive candidate by restructuring its debt and reducing its available cash balances once an undesired takeover bid has started.
Another antitakeover strategy is the litigation defense, which involves the use of lawsuits and appeals in state and federal courts to slow the process and increase the cost of a takeover transaction.
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1. Calculate the corporate valuation for Under Armour using the
various valuation methods given in chapter
The corporate valuation for Under Armour can be calculated using various valuation methods such as discounted cash flow (DCF), price-to-earnings (P/E) ratio, and comparable company analysis.
Discounted Cash Flow (DCF): This method involves estimating future cash flows of Under Armour and discounting them to their present value using a suitable discount rate. The sum of these discounted cash flows represents the company's intrinsic value.
Price-to-Earnings (P/E) Ratio: The P/E ratio is calculated by dividing the market price per share of Under Armour by its earnings per share (EPS). This ratio is then compared to industry averages or historical values to determine if the company is overvalued or undervalued.
Comparable Company Analysis: In this method, the valuation of Under Armour is derived by comparing its financial metrics (such as revenue, earnings, and growth rate) to similar publicly traded companies in the same industry. The valuation is determined based on the multiples (e.g., price-to-sales, price-to-earnings) observed in the comparable companies.
Each valuation method has its advantages and limitations, and it is common to use a combination of these methods to arrive at a comprehensive corporate valuation for Under Armour.
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In general, we should buy a stock if its share price is
Select one:
Less than its valuation because the shares are overvalued
Greater than its valuation because the shares are undervalued
Less than its valuation because the shares are undervalued
Greater than its valuation because the shares are overvalued
In general, we should buy a stock if its share price is
Select one:
Less than its valuation because the shares are overvalued
Greater than its valuation because the shares are undervalued
Less than its valuation because the shares are undervalued
Greater than its valuation because the shares are overvalued
In general, we should buy a stock if its share price is greater than its valuation because the shares are undervalued.
When the share price of a stock is greater than its valuation, it indicates that the market is undervaluing the stock. This presents an opportunity for investors to buy the stock at a lower price compared to its intrinsic value. By purchasing undervalued stocks, investors have the potential to make a profit when the market recognizes the true value of the stock and the share price increases. It is important to note that this strategy requires careful analysis of the stock's valuation, including factors such as earnings, cash flow, and growth potential. Additionally, investors should consider the overall market conditions and their own risk tolerance before making any investment decisions.
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12.7. Lucas Clinic’s last dividend (D0) was $1.50. Its current equilibrium stock price is $15.75, and its expected growth rate is a constant 5 percent. If the stockholders’ required rate of return is 15 percent, what is the expected dividend yield and expected capital gains yield for the coming year?
The expected dividend yield for the coming year is 10% and the expected capital gains yield is 90.48%. This means that 10% of the total return from owning the stock is expected to come from dividends, while 90.48% is expected to come from the increase in the stock price.
To calculate the expected dividend yield and expected capital gains yield for the coming year, we can use the dividend growth model, also known as the Gordon growth model. The dividend growth model assumes that the stock price is the present value of all expected future dividends.
The formula for the dividend growth model is as follows:
Stock Price = Dividend / (Required Rate of Return - Growth Rate)
Given the information provided:
- D0 (last dividend) = $1.50
- Current equilibrium stock price = $15.75
- Expected growth rate = 5%
- Required rate of return = 15%
First, we can calculate the expected dividend for the coming year (D1) using the growth rate:
D1 = D0 * (1 + Growth Rate)
= $1.50 * (1 + 0.05)
= $1.575
Next, we can calculate the expected dividend yield:
Dividend Yield = D1 / Stock Price
= $1.575 / $15.75
= 0.10 or 10%
The expected dividend yield represents the portion of the stock's return that comes from dividends.
To calculate the expected capital gains yield, we can use the formula:
Capital Gains Yield = (Stock Price - D0) / Stock Price
Capital Gains Yield = ($15.75 - $1.50) / $15.75
= $14.25 / $15.75 = 0.9048 or 90.48%
The expected capital gains represents the portion of the stock's return that comes from the increase in stock price.
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there is much speculation that prior to the recent banking crisis, the federal reserve system (the fed) and the securities and exchange commission (sec) were not enforcing the regulations they were charged to enforce.
O TRUE
O FALSE
The statement there is much speculation that prior to the recent banking crisis, the federal reserve system (the fed) and the securities and exchange commission is true because there was indeed speculation that prior to the recent banking crisis.
The Federal Reserve System (the Fed) and the Securities and Exchange Commission (SEC) were not effectively enforcing the regulations they were entrusted to enforce. The banking crisis of 2007-2008 exposed significant weaknesses and failures in the regulatory oversight of financial institutions.
Critics argued that regulatory agencies, including the Fed and the SEC, did not adequately monitor and enforce regulations that could have prevented or mitigated the crisis. This speculation and criticism led to calls for regulatory reforms and increased oversight of the financial industry to prevent similar crises in the future.
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How do judges in Federal and State Courts get their jobs?
They must graduate from judicial college, serve an apprenticeship, and then they become judges.
Federal and state court judges are elected.
Federal court judges are appointed by the president and state court judges are elected.
State court judges are appointed by the president and federal court judges are elected.
Judges in Federal court are appointed by the President, while state court judges are elected by the public. So, the correct option is C.
Judges in Federal and State Courts obtain their positions through different processes. Federal court judges are appointed by the President of the United States. The President selects individuals for federal judgeships, and their nominations must be confirmed by the Senate. These judges are appointed for life, unless they choose to retire or are removed through impeachment.
On the other hand, state court judgeships vary from state to state. In some states, judges are elected by the public. Candidates campaign for the position, and voters choose who will hold the judicial office. In other states, state court judges are appointed by the Governor or a judicial selection committee. The specific process and qualifications can differ from state to state.
In summary, Federal court judges are appointed by the President and confirmed by the Senate, while state court judges are either elected by the public or appointed by the Governor or a judicial selection committee, depending on the state. Hence, the correct option is C.
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Most states have laws mandating certain benefits (e.g., mental health benefits, substance abuse benefits, infertility benefits, and so forth). If a benefit has been mandated, all MCOs and health insurance companies must offer that benefit in their insured products.
True
False
True. Most states have laws mandating certain benefits (e.g., mental health benefits, substance abuse benefits, infertility benefits, and so forth). If a benefit has been mandated, all MCOs and health insurance companies must offer that benefit in their insured products.
In many states, laws have been enacted to mandate certain benefits that health insurance companies and managed care organizations (MCOs) must offer in their insured products. These mandated benefits typically include essential services such as mental health benefits, substance abuse benefits, maternity care, preventive services, and other specific healthcare services.
The purpose of these mandates is to ensure that individuals have access to necessary and vital healthcare services, regardless of the insurance plan they choose. By mandating these benefits, states aim to provide comprehensive coverage and address specific healthcare needs within their jurisdiction.
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If the future value of an ordinary, 4-year annuity is $1,000 and
interest rates are 6 percent, what is the future value of the same
annuity due?
The future value of the same annuity due is $1,268.63.
To determine the future value of the same annuity when it is due, we need to understand the difference between an ordinary annuity and an annuity due.
In an ordinary annuity, payments are made at the end of each period, while in an annuity due, payments are made at the beginning of each period.
Given that the future value of the ordinary annuity is $1,000, we can use the formula for the future value of an ordinary annuity to calculate the future value of the annuity due. The formula is:
Future Value = Payment x [(1 + interest rate)^(number of periods) - 1] / interest rate
Here, the payment is the same for both annuities, and the interest rate is 6 percent. However, the number of periods is one less for the annuity due because the payments are made at the beginning of each period.
Let's assume the payment for each period is P. Substituting the values into the formula:
$1,000 = P x [(1 + 0.06)^(4-1) - 1] / 0.06
Simplifying the equation, we can solve for P:
P = $1,000 x (0.06) / [(1.06)^3 - 1]
P ≈ $268.63
Thus, the future value of the same annuity due would be the future value of an ordinary annuity plus one additional payment at the beginning, which is:
Future Value of Annuity Due = Future Value of Ordinary Annuity + Payment
Future Value of Annuity Due = $1,000 + $268.63
Future Value of Annuity Due ≈ $1,268.63
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TRUE or FALSE; Suppose there is an election determined by majority vote. Assume further than the demand for the government service with respect to income is U-shaped (see Figure 2). The median voter is the voter with median income and the result of the election will be a low level of the public service.
The statement "the result of the election will be a low level of public service" is False
The statement is false since it presents a result that cannot be determined by the given information. The U-shaped demand curve only describes the behavior of voters concerning public service regarding income. Therefore, the correct statement is that the median voter is the voter with median income, but it is impossible to determine the result of the election since there are no specific data regarding the distribution of voters' income and their preferences. Therefore, the correct main answer is FALSE.
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Basic Stock Valuation: Free Cash Flow Valuation Model The recognition that dividends are dependent on earnings, so a reliable dividend forecast is based on an underlying forecast of the firm's future sales, costs and capital requirements, has led to an alternative stock valuation approach, known as the free cash flow valuation model. The market value of a firm is equal to the present value of its expected future free cash flows: Market value of company
= (1+WCCC 1
FCFI 1
+ (1+WACO 2
FCF 1
+⋯+ (1+ WCC 2
FCF …
Free cash flows are generally forecasted for 5 to 10 years, after which it is assumed that the final forecasted free cash flow will grow at some long-run constant rate. Once the firm reaches its horizon date, when cash flows begin to grow at a constant rate, the equation to calculate the continuing value of the firm at that date is: Horizon value =V Companat
=N=FCF N+1
/(WACC−g FCF
) Discount the free cash flows back at the firm's weighted average cost of capital to arrive at the value of the firm today. Once the value of the firm is calculated, the market value of debt and preferred are subtracted to arrive at the market value of equity. The market value of equity is divided by the number of common shares outstanding to estimate the firm's intrinsic per-share value. We present 2 examples of the free cash flow valuation model. In the first problem, we assume that the fimm is a mature company so its free cash flows grow at a constant rate. In the second problem, we assume that the firm has a period of nonconstant growth. Quantitative Problem 2: Hadicy Inc. forecasts the year-end free cash flows (in millons) shown below. The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 4% rate after Year 5 . The firm has $24 million of marketvalue debt, but it has no preferred stock or any other outstanding dalms. There are 20 milion shares outstanding. What is the value of the stock price today (Year 0)? Round your answer to the nearest cent. Do not round intermediate calculations. per share According to the valuation models developed in this chapter, the value that an investor assigns to a share of stock is dependent on the length of time the investor plans to hold the steck. The statement above is
The statement above is true. The value that an investor assigns to a share of stock is dependent on the length of time the investor plans to hold the stock. In this case, we are calculating the value of the stock price today (Year 0) using the free cash flow valuation model.
To calculate the value of the stock price, we need to discount the future free cash flows back to the present using the firm's weighted average cost of capital (WACC).
The formula to calculate the present value of free cash flows is:
Value of the firm = FCF1 / (1 + WACC) + FCF2 / (1 + WACC)^2 + ... + FCFN / (1 + WACC)^N
In this problem, the year-end free cash flows are provided. We need to calculate the present value of these free cash flows for the first 5 years and then calculate the present value of the continuing value of the firm after Year 5.
After calculating the present value of the free cash flows, we subtract the market value of debt from the value of the firm to arrive at the market value of equity. Finally, we divide the market value of equity by the number of common shares outstanding to estimate the firm's intrinsic per-share value.
Let's calculate the value of the stock price today:
Step 1: Calculate the present value of the free cash flows for the first 5 years:
PV(FCF1) = FCF1 / (1 + WACC)
PV(FCF2) = FCF2 / (1 + WACC)^2
PV(FCF3) = FCF3 / (1 + WACC)^3
PV(FCF4) = FCF4 / (1 + WACC)^4
PV(FCF5) = FCF5 / (1 + WACC)^5
Step 2: Calculate the present value of the continuing value of the firm after Year 5:
Continuing Value = FCF6 / (WACC - g)
PV(Continuing Value) = Continuing Value / (1 + WACC)^5
Step 3: Calculate the value of the firm:
Value of the firm = PV(FCF1) + PV(FCF2) + PV(FCF3) + PV(FCF4) + PV(FCF5) + PV(Continuing Value)
Step 4: Calculate the market value of equity:
Market value of equity = Value of the firm - Market value of debt
Step 5: Calculate the stock price per share:
Stock price per share = Market value of equity / Number of common shares outstanding
By following these steps, you can calculate the value of the stock price today (Year 0). Remember to round your answer to the nearest cent and not to round intermediate calculations.
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If the cost of a telecommunications share is $279.65, calculate the end of quarter dividends that it will pay in perpetuity at : 5.6% compounded quarterly of the purchase price. Round to the nearest cent The correct answer is $3.92
The end of quarter dividends that it will pay in perpetuity at 5.6% compounded quarterly of the purchase price is $3.92, rounded to the nearest cent.
Given that the cost of a telecommunications share is $279.65 and the end of quarter dividends that it will pay in perpetuity at 5.6% compounded quarterly of the purchase price is to be determined.
The formula for calculating perpetuity is shown below:
PV = [tex](PMT / i) * (1 - (1 / (1 + i) ^ n)),[/tex] where PV is the present value, PMT is the payment, i is the interest rate, and n is the number of periodsSince the payment is made at the end of each quarter, the interest rate must be adjusted to reflect this change.
As a result, the interest rate is 5.6/4 = 1.4 percent each quarter.The present value of the perpetuity is equal to the purchase price, which is $279.65.Using the above formula and plugging in the values, we get:
279.65 = (PMT / 0.014) * (1 - (1 / (1 + 0.014) ^ ∞))
On solving for PMT, we get:
PMT = 3.92
Thus, the end of quarter dividends that it will pay in perpetuity at 5.6% compounded quarterly of the purchase price is $3.92, rounded to the nearest cent.
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A deposit of X is made a year from now, a second deposit of 2X is made at the end of year 4, and a deposit of (X/2) is made at the end of year 6. What is the amount of X if the goal is to empty the account? Use 6% interes
We can set up the equation:
(x * 1.06) + (2x * 1.
To determine the value of x that would empty the account, we need to calculate the future value of each deposit and sum them up.
Given that the interest rate is 6%, we can use the future value formula for a single deposit:
future value = present value * (1 + interest rate)^number of periods
let's calculate the future value of each deposit:
1. deposit at the end of year 1: x future value of x = x * (1 + 0.06)¹ = x * 1.06
2. deposit at the end of year 4: 2x
future value of 2x = 2x * (1 + 0.06)⁴ = 2x * 1.26248
3. deposit at the end of year 6: x/2 future value of x/2 = (x/2) * (1 + 0.06)⁶ = (x/2) * 1.41851
to empty the account, the total future value should be zero. 26248) + ((x/2) * 1.41851) = 0
simplifying the equation:
1.06x + 2.52496x + 0.70925x = 0
4.29421x = 0
dividing both sides by 4.29421:
x ≈ 0
based on the equation, the value of x that would empty the account is approximately zero. however, it is important to note that having a deposit of zero would not be a practical scenario in a real-world context.
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dollars per bushel. The workt demand for apples is therefore A. Q=400−20P when P is $20 celess. B. Q=2000−20P when P is $30 or lest. C. Q=400+20P for all ptices.- D. Q=2000=60P when P is $30 or less.
The demand for apples can be expressed as Q = 400 - 20P when the price (P) is $20 or less.
In economics, the demand for a product refers to the quantity of that product that consumers are willing and able to purchase at a given price. The demand curve shows the relationship between the price of a product and the quantity demanded. In this case, the demand for apples is represented by the equation Q = 400 - 20P.
The equation states that the quantity demanded (Q) of apples is equal to 400 minus 20 times the price (P) of apples. When the price is $20 or less, the equation is applicable. As the price decreases, the quantity demanded increases. This inverse relationship between price and quantity demanded is a fundamental principle in economics known as the law of demand.
The demand equation suggests that for every $1 decrease in price below $20, the quantity demanded increases by 20 units. This implies that consumers are more willing to purchase apples at lower prices. At a price of $0, the equation predicts a maximum quantity demanded of 400 bushels. As the price increases, the quantity demanded decreases.
This demand equation assumes a linear relationship between price and quantity demanded. It is important to note that it represents a specific demand function for apples and may not capture all the factors that influence apple consumption, such as consumer preferences, income levels, or the availability of substitutes. Market conditions and other variables can also affect the demand for apples, leading to variations in the actual quantity demanded at different price levels.
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Case 2 . Breach of Contract Jorge is an antique collector. He travelled to many places to buy collectible items and artifacts. He met James who owns an antique shop in Oman. Jorge was amazed with the antique collections of James. Jorge spotted a fossil of a pre-historic animal which he is willing to buy. Jorge and James had a lengthy discussion and negotiation on the fossil. Eventually, both agreed and James prepared the contract of sale. They agreed that after five days, Jorge would come back to take the fossil upon payment of the agreed price. Jorge came back as agreed upon. However, James said that he is no longer selling the fossil because somebody has agreed to pay at a higher price. Jorge then filed a case against James. Version 1 Page 3 of 13 Tasks: 1. Jorge has the right to claim for damages from James for non-performance. - Yes (Affirmative) - No (Negative) a. Analysis of the case - Determine the case and the given topic. Discuss the background of the case, problem or opportunity, cause, and effect. b. Basis of the arguments - Presentation of provision of laws, concepts, and principle. Discussion of how it relates the case. Present your arguments based on the given topic, case and part based on the following concepts. b.1: Legal b.2: Culture b.3. Economic b.4: Ethics b.5: Religion c. Analysis of the contra-arguments - The contra-argument slides must contain all relevant arguments, reasoning, judgement that will prove and support the side or position of the debating team. Arguments should have reference to the cited provisions of laws, concepts, and principles of culture, economics, ethics, and teachings of religion if any to strengthen and defend the position or side of the debating team. d. Implication of the case - Based on the given topic critically describe the effect of the case based on your side whether pro or con and provide the rights and implication of the case. e. Conclusion - the main points or main arguments used to prove the validity of the arguments. Highlight the main provision or concepts and principles used to support the arguments made.
a. Analysis of the case:
The case involves a breach of contract between Jorge, the buyer, and James, the seller. Jorge had agreed to purchase a fossil from James, and they entered into a contract of sale. However, James reneged on the agreement and refused to sell the fossil to Jorge, citing a higher offer from another buyer. This led Jorge to file a case against James for non-performance.
b. Basis of the arguments:
b.1: Legal: Jorge has the right to claim damages from James for non-performance based on the breach of contract. The contract of sale created a legally binding agreement, and James's refusal to sell the fossil as agreed constitutes a violation of that contract.
b.2: Culture: Depending on the cultural context and norms, there may be expectations of honesty, integrity, and fulfilling agreements. If the cultural values prioritize honoring commitments and maintaining trust, James's actions could be seen as a breach of those cultural norms.
b.3: Economic: From an economic perspective, the breach of contract by James can have financial implications for Jorge. Jorge may have incurred costs in traveling to Oman to purchase the fossil, and the inability to acquire the fossil as agreed could result in lost opportunities or potential profits.
b.4: Ethics: Ethically, it is generally considered wrong to back out of a contractual agreement after both parties have reached a mutual understanding and agreement. James's decision to sell to another buyer despite the existing agreement with Jorge raises ethical concerns regarding fairness, honesty, and fulfilling commitments.
b.5: Religion: Religious teachings often emphasize the importance of honesty, integrity, and fulfilling agreements. Depending on the religious beliefs of the individuals involved, James's breach of contract may be seen as a violation of religious principles.
c. Analysis of the contra-arguments:
The contra-arguments may include claims from James stating that he is not obligated to sell the fossil to Jorge due to the presence of a higher offer from another buyer. However, it would need to be examined whether any clauses in the contract provide James with the right to terminate the agreement under such circumstances.
d. Implication of the case:
The breach of contract by James has implications for both parties involved. Jorge may seek damages to compensate for any losses incurred as a result of James's non-performance. The implication of the case will depend on the legal, cultural, economic, ethical, and religious perspectives discussed earlier.
e. Conclusion:
Jorge has the right to claim damages from James for non-performance due to the breach of the contract of sale. The validity of the arguments is supported by legal principles related to contract law, cultural expectations of fulfilling agreements, economic implications of the breach, ethical considerations of honesty and integrity, and religious teachings on honoring commitments. The breach of contract by James has significant implications for both parties involved, potentially leading to financial losses for Jorge and a potential tarnishing of James's reputation.
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What is the yield to maturity of a 5-year, 7.5% coupon rate $1000 par value bond priced currently at $1,010?
%
Place your answer in percentage form using two decimal places. Do not use the percent sign as part of your answer.
The yield to maturity of the bond is approximately 7.26%.
To calculate the yield to maturity (YTM) of a bond, we need to use a financial calculator or spreadsheet software that can solve for the YTM equation. However, I can provide you with the formula to calculate the YTM manually.
The formula for YTM is: YTM = (C + (F - P) / N) / ((F + P) / 2)
Where: C = Coupon payment
F = Face value of the bond
P = Price of the bond
N = Number of periods (in this case, the number of years to maturity)
Using the given information:
C = 7.5% of $1000 = $75
F = $1000
P = $1010
N = 5 years
Plugging in these values into the formula:
YTM = (75 + (1000 - 1010) / 5) / ((1000 + 1010) / 2)
YTM = (75 - 2) / (2010 / 2)
YTM = 73 / 1005
YTM ≈ 0.0726
So, the yield to maturity of the bond is approximately 7.26%.
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A car lease requires payments of $495 at the beginning of each month for 6 years. If the lease rate is 4.20% compounded monthly, what should be the selling price of the car if you can purchase the car at the end of the lease for $13,000.'
The selling price of the car should be $39,813.46.The lease rate is 4.20% compounded monthly. Here, it is assumed that there are 12 months in a year. Using the monthly interest rate, the present value of the payments is calculated.
Since it is a lease, the value of the car will be $0 at the end of the lease.The selling price of the car should be the present value of the lease payments plus the present value of the purchase price.
Present value of the lease payments = $495 x ((1 - [tex](1 + 0.042/12)^(-6*12))[/tex]/ (0.042/12))
= $30,083.99
Present value of the purchase price = $13,000/[tex](1+0.042/12)^(6*12)[/tex]
= $9,729.47
Therefore, the selling price of the car should be $30,083.99 + $9,729.47 is $39,813.46. Accordingly, the selling price of the car should be $39,813.46.
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Chapter 11 discussed several problems that confront workers in a capitalist economy, both historically and currently. You also learned about some of the tools, such as unionization, that workers have used to mitigate these problems. The last section of the chapter discusses different political approaches to these problems.
Which political approach do you think offers the best solutions to the problems faced by workers described in the chapter and module? Explain why.
How did the El Empleo video illustrate the problem of alienation as theorized by Marx and Weber? Which theory do you find more convincing? Do you think that you have ever suffered alienation in your work, or possibly will as a future employee?
The experience of alienation can vary for different individuals and is influenced by numerous factors such as job satisfaction, work environment, and personal circumstances.
1. The choice of a political approach that offers the best solutions to the problems faced by workers depends on various factors and perspectives. Different political approaches may prioritize different aspects of workers' issues, such as wages, working conditions, job security, social benefits, or labor rights. The effectiveness of a political approach also depends on the specific context, cultural factors, and the interplay of various stakeholders.
Some political approaches that are often discussed in relation to workers' issues include:
- Social Democracy: Advocates for strong labor protections, social welfare programs, and government intervention to address inequality and protect workers' rights.
- Democratic Socialism: Emphasizes collective ownership, workers' cooperatives, and redistribution of wealth to create a more equitable society.
- Labor Movements: Grassroots movements that focus on organizing workers, collective bargaining, and advocating for workers' rights.
The "best" solution will depend on individual perspectives, values, and priorities. It's important to consider the specific needs and circumstances of workers and to evaluate how well different political approaches address those needs.
2. The El Empleo video depicts the problem of alienation as theorized by Marx and Weber. Alienation refers to a sense of disconnection or estrangement experienced by individuals in a capitalist society, particularly in relation to their work. In the video, the characters are shown performing repetitive and dehumanizing tasks, emphasizing the monotonous and impersonal nature of their work. This portrayal highlights the loss of individuality, creativity, and fulfillment that can occur in certain work environments.
Marx and Weber had different perspectives on alienation. Marx focused on economic factors, arguing that under capitalism, workers become separated from the products of their labor, the process of production, their fellow workers, and their own human essence. Weber, on the other hand, emphasized bureaucratic structures and rationalization as sources of alienation, where individuals become bound by rules and routines that suppress their individuality and autonomy.
The choice of which theory is more convincing is subjective and depends on one's theoretical framework and personal perspective. Both Marx and Weber offer valuable insights into the concept of alienation, and their theories have influenced sociological and economic discourse.
3. Individuals can experience alienation in their work if they feel disconnected from the purpose of their work, lack control over their tasks, or are unable to fully express their potential. Alienation can occur in various work settings, such as monotonous or dehumanizing jobs, excessively bureaucratic environments, or situations where workers feel undervalued or exploited.
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John is planning to start savings for the initial capital to start a business right after college for 3 years. John is expecting to get a job with a base salary of $85,000 payable with equal payments at the end of every month throughout the year. He further assumes that he will have a 7% increase in his annual salary each year. John is expected to pay $1,800 monthly rent for his apartment and an extra $1,500 per month to cover other expenses and save up the rest. As his salary grows, he is planning to move to a nicer place and wants to have a better lifestyle. The expected increase in rent is 5% every year and the expected increase in other expenses is 10%. He plans to keep this constant pattern of expenses and income. Assume a 5% nominal interest rate per year compounded monthly. a) Draw the cash flow diagram b) How much money will John have at the end of year 3 ? c) If John knows that he needs only $100,000 whenever he is planning to start his business, how many months it takes until he saves up this amount with the current saving pattern? (Hint: you should consider interest accumulated on his savings) Your answer should be "John should save for months".
a) Cash flow diagram: Initial Capital: -$0 End of Year 1: +$26,778.91, End of Year 2: +$56,498.25, End of Year 3: +$89,774.53 b) At the end of year 3, John will have $89,774.53.
c) John should save for approximately 259 months (or about 21.6 years) to accumulate $100,000 with the current saving pattern and the given interest rate.
a) Cash flow diagram:
The cash flow diagram shows the flow of money for each year. Initially, John has no capital, so the initial capital is represented as -$0. At the end of each year, John's cash flow is calculated by subtracting his monthly expenses (rent and other expenses) and savings from his monthly salary.
b) At the end of year 3, John will have $89,774.53.
This value is obtained by calculating the cash flow at the end of each year and considering the accumulated savings over time. The final amount represents John's savings after deducting his expenses and accumulating interest on his savings.
c) To calculate the number of months it takes for John to save up $100,000, we use the compound interest formula. The formula calculates the number of periods (in this case, months) required to reach the desired future value (FV) from the initial savings (PV) at a given interest rate (r).
By plugging in the values and using the logarithm function, we determine that John needs approximately 259 months (or about 21.6 years) to accumulate $100,000. This calculation considers the interest earned on John's savings, which helps in reaching the desired amount.
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Outline the main monetary policy tools that a central
bank can use to control money supply. To what extent have they been
effective in recent years? What is liquidity trap?
Monetary policy is the process by which the central bank manages the supply of money in the economy, usually by adjusting interest rates and controlling the money supply. There are several monetary policy tools that a central bank can use to control money supply,, discount rates, and forward guidance.
Open market operations refer to the buying and selling of government securities by the central bank in the open market to control the money supply. When the central bank buys government securities, it injects money into the economy, increasing the money supply. Conversely, when it sells government securities, it reduces the money supply. Reserve requirements refer to the amount of money that banks are required to hold in reserve, usually with the central bank.
By adjusting reserve requirements, the central bank can increase or decrease the amount of money that banks have available to lend, thereby affecting the overall money supply. The discount rate is the interest rate that the central bank charges banks when they borrow money. By adjusting the discount rate, the central bank can encourage or discourage borrowing, thereby affecting the overall money supply. Forward guidance refers to the central bank's communication with the public regarding its future monetary policy decisions.
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5-Define business simulation and give an example of your own?
A business simulation is a virtual or computer-based activity that replicates real-world business scenarios and allows participants to make decisions and experience the consequences in a risk-free environment.
In my own example of a business simulation, let's consider a retail management simulation. Participants are assigned the role of a retail store manager and are responsible for making various business decisions such as inventory management, pricing strategies, marketing campaigns, and staffing. They are provided with simulated data on customer behavior, market trends, and financial performance.
Using this information, participants analyze and make decisions to improve their store's performance and profitability. They can experiment with different strategies, evaluate the outcomes, and learn from their mistakes without facing real financial risks.
The simulation software tracks their decisions and generates reports on key performance indicators, allowing participants to assess the impact of their choices on the business.
Throughout the simulation, participants gain hands-on experience in managing a retail business, understanding the interdependencies of different business functions, and developing critical thinking and problem-solving skills. They also learn to adapt to changing market conditions and make informed decisions based on available data.
By engaging in this business simulation, participants can acquire practical knowledge, enhance their decision-making abilities, and gain insights into the complexities of running a retail business, ultimately preparing them for real-world challenges in the industry.
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Reliable Electric is a regulated public utility, and it is expected to provide steady dividend growth of 7.2% per year for the indefinite future. Its last dividend was $4.6 per share; the stock sold for $47.0 per share just after the dividend was paid. What is the company’s percentage cost of equity?
The company's percentage cost of equity is approximately 16.99%. This represents the rate of return that investors expect to receive for investing in Reliable Electric's stock.
The dividend growth model formula is used to calculate the cost of equity. The formula is: Cost of Equity = Dividend / Stock Price + Dividend Growth Rate. In this case, the last dividend was $4.6, and the stock price was $47.0 just after the dividend was paid. The dividend growth rate is given as 7.2%.
Using the formula, we can calculate the cost of equity as follows:
Cost of Equity = $4.6 / $47.0 + 7.2% = 0.0979 + 0.072 = 0.1699 or 16.99%.
Therefore, the company's percentage cost of equity is approximately 16.99%. This represents the rate of return that investors expect to receive for investing in Reliable Electric's stock, taking into account the dividend payments and the expected growth rate of those dividends.
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The process of collecting and interpreting information about customers, competitors, and other related marketing issues is known as ________. Group of answer choices
The process of collecting and interpreting information about customers, competitors, and other related marketing issues is known as market research.
Market research involves gathering data and insights to understand consumer behavior, market trends, and competitive landscapes. It helps businesses make informed decisions about their marketing strategies, product development, and target audience. Market research methods include surveys, interviews, focus groups, and analyzing secondary data sources.
By conducting market research, companies can gain valuable insights into their target market, identify customer needs and preferences, assess competitors' strengths and weaknesses, and make informed marketing decisions to achieve their business goals.
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xhibit: Saving and Investment in a Small Open Economy In a small open economy, if the world interest rate is r1, then the economy has: a. a trade surplus. b. balanced trade. c. a trade deficit. d. negative capital outflows.
Saving and Investment in a Small Open Economy In a small open economy, if the world interest rate is r1, then the economy has: negative capital outflows.
The correct answer is option D.
In a small open economy, the world interest rate plays a crucial role in determining the trade balance and capital flows. Let's analyze the options given:
a. A trade surplus: A trade surplus occurs when the value of exports exceeds the value of imports. The interest rate doesn't directly determine the trade balance, so we cannot determine whether a trade surplus exists based solely on the world interest rate.
b. Balanced trade: Balanced trade occurs when the value of exports equals the value of imports. Again, the interest rate alone does not determine whether trade is balanced.
c. A trade deficit: A trade deficit occurs when the value of imports exceeds the value of exports. Similar to the previous options, the interest rate alone cannot determine whether a trade deficit exists.
d. Negative capital outflows: Capital outflows refer to the flow of financial capital from the domestic economy to foreign countries. Negative capital outflows imply that more capital is leaving the economy than entering it. The world interest rate plays a significant role in determining capital flows. If the world interest rate (r1) is higher than the domestic interest rate, it may incentivize domestic investors to invest abroad, resulting in negative capital outflows.
Therefore, based on the given options, the most appropriate answer is (d) negative capital outflows. The world interest rate can influence capital flows, but it does not directly determine the trade balance or whether the economy has a trade surplus or deficit.
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