Answer:
6%
Explanation:
Computer stocks currently provide an expected rate of return of 12%
A larger company MBI will pay a year end dividend of $3
The stock is selling at $50 per share
Therefore the market expectation of the growth rate can be calculated as follows
g= 12/100 - $3/$50
g= 0.12 - 0.06
g= 0.06 × 100
g= 6 %
A 10-year maturity bond with par value $1,000 makes semiannual coupon payments at a coupon rate of 6%. a. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $940. (Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.)
Answer:
a. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $940.
the yield to maturity of the bond is:
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2] = {60 + [(1,000 - 940)/10]} / [(1,000 + 940)/2] = 66 / 970 = 0.06804 = 6.8%
the bond equivalent yield is:
BEY = 2 x [√(1 + YTM) - 1] = 2 x [(√1 + YTM) - 1] = 2 x [√1.068 - 1] = 2 x [(√1 + YTM) - 1] = 0.06688 = 6.69%
A benefactor leaves an inheritance to four charities, A, B, C, and D. The total inheritance is a series of level payments at the end of each year forever. During the first n years A, B, and C share each payment equally. All payments after n years revert to D. If the present values of the shares of A, B, C, and D are all equal, find (1 i) n .
Answer:
(1+i)ⁿ = 4
Explanation:
there are 3 charities, and each charity receives X per year during n years. Total payment to the 3 charities is 3X per year.
The present value of the payments received by each charity is X · a_n (the same for A, B and C).
D will receive 3X at a deferred date starting at n. The present value of the payments that D receives is 3X · vⁿ · 1/i.
Since the present value of the payments is equal for all of them, then:
X · a_n = 3X · vⁿ · 1/i
a_n = 3/i · vⁿ
i · a_n = 3vⁿ
since i · a_n = 1 - vⁿ
1 - vⁿ = 3vⁿ
1 = 4vⁿ
(1 + i)ⁿ = 4
Lance, a hacker, stole 15,000 credit card numbers and sold them on the black market, making millions. Police caught Lance, and two legal actions followed, one civil and one criminal. Who will be responsible for bringing the civil case
Answer:
The owner of the credit card that were hacked
Explanation:
Civil cases are brought against defendants that carried out an action that results in injury or loss to an individual or private party.
The plaintiffs that bring such allegations to a court of law are not government or law enforcement but rather they make the case in their own interest.
The punishment nos usually repayment for loss incurred and damages.
Criminal cases on the other hand are usually carried out by out by state prosecutors or representative of the government. The punishment is usually jail time.
On April 1st, Bob the Builder entered into a contract of one-month duration to build a barn for Nolan. Bob is guaranteed to receive a base fee of $5,400 for his services in addition to a bonus depending on when the project is completed. Nolan created incentives for Bob to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Nolan offered to pay an additional 20% of the base fee if the project finished 2 weeks early and 15% if the project finished a week early. The probability of finishing 2 weeks early is 20% and the probability of finishing a week early is 65%. What is the expected transaction price with variable consideration estimated as the most likely amount
Answer:
$6,210
Explanation:
The expected transaction price with variable consideration estimated as the expected value:
original cost $5,400 if job is finished in one month (15% probability) bonus price for finishing 2 weeks earlier $5,400 x 1.2 = $6,480 (20% probability) bonus price for finishing 1 week earlier $5,400 x 1.15 = $6,210 (65% probability)expected transaction price = ($5,400 x 15%) + ($6,480 x 20%) + ($6,210 x 65%) = $6,142.50
The expected transaction price with variable consideration as the most likely amount?
$6,210, since it has a 65% probability
he Wet Corp. has an investment project that will reduce expenses by $25,000 per year for 3 years. The project's cost is $15,000. If the asset is part of the 3-year MACRS category (33.33% first year depreciation) and the company's combined tax rate is 38%, what is the cash flow from the project in year 1
Answer:
$17,400
Explanation:
The project cash flow can be derived using the below formula:
project cash flow=after tax cash flow+depreciation
The after-tax cash flow=(reduction in expenses-depreciation)*(1-tax rate)
reduction in expenses=$25,000
depreciation for year 1=$15,000*33.33%
depreciation for year 1=$5,000
tax rate =38%
The after-tax cash flow=($25,000-$5,000)*(1-38%)
The after-tax cash flow=$12,400
The project cash flow in year=$12,400+$5,000=$17,400
The following information refers to Dora Company's defined benefit pension plan for the current year. Service cost: $3,000; interest cost: $2,000; amortization of prior service cost: $700; amortization of net loss: $300; expected return on plan assets: $3,000. Recognition of pension expense will include (Select all that apply.)
Answer:
Debit to plan assets for $3,000 and Credit to PBO of $5,000
Explanation:
Based on the information given we were told that the return on plan assets is the amount of $3,000 while the pension plan for the current year include Service cost of the amount of $3,000 and interest cost of the amount of $2,000 which means that the Recognition of pension expense will include :
Debit to plan assets for $3,000
Credit to PBO of $5,000
(Service cost $3,000+ interest cost: $2,000)
A European put option on ENRON stock has a strike price $55.0 and matures in 9.0 months. The continuously compounded risk-free rate is 7.0 percent per year. If the price of ENRON stock goes to zero, what is the value of the put option
Answer:
the value of the put option is $52.18
Explanation:
The computation of the value of the put option is shown below:
Given that
Strike price = $55
Maturity (t) = 9 months or 0.75 per year
Risk free rate (r) = 7.0% or 0.07
Based on the above information
Value of the put option = Strike price × e^-(r)(t)
= $55 × e^-(0.07)(0.75)
= $55 × e^-0.0525
= $52.18
Hence, the value of the put option is $52.18
A production function expresses the relationship between inputs, such as capital (K) and labor (L), and output (Y). The following equation represents the functional form for a production function: q=f(K, L). If a production function exhibits constant returns to scale, this means that if you double the amount of capital and labor used, output is twice its original amount. Suppose the production function is as follows: f(K, L)=4K+9L. Prove that this production function exhibits constant returns to scale by completing the following algebraic equations. Assume that z is a positive number. f(zK, zL) = = = = zq Which of the following production functions exhibit constant returns to scale? Check all that apply. f(K, L)=3K0.4L0.2 f(K, L)=KL f(K, L)=7K0.4L0.6 Continue without saving
Answer:
f (K, L) = 7K0.4 L0.6
f (K, L) = 3K0.4 L0.2
Explanation:
The production function demonstrates the relationship between the input of capital and labor and the output. The simplest relation between labor and capital is the linear relation which is shown with K and L functions. The labor and capital input determines the level of output.
) As part of its initiative to implement just-in-time (JIT) manufacturing at the plant, Harley has reduced the number of engines loaded on each truck to 100. If each truck trip still costs $1000, how does this decision impact annual total inventory costs at Harley
Answer:
The decision will increase annual total inventory costs at Harley.
Explanation:
The JIT manufacturing system has the key function of reducing production and delivery time. It aims to serve customers of the product (usually vehicle parts) better.
To implement just-in-time manufacturing, Harley reduces the number of engines loaded on each truck to 100.
Harley does this, to save time in the process of supply!
Obviously, the truck can take more than 100 engines at a time but it would take longer for it to be dispatched.
Now, the cost for a truck trip remains the same at $1,000 while the truck carries less load. This whole decision will cause more engines to be retained in the company's inventory. This will increase inventory costs.
As for profits, they may increase, since products are supplied faster and purchased faster from the suppliers. So in general, it may not be a bad idea to introduce JIT manufacturing.
Kohler Company owns the following investments: Trading securities (fair value) $120,000 Available-for-sale securities (fair value) 90,000 Held-to-maturity securities (amortized cost) 94,000 Kohler will report securities in its long-term investments section of
Answer:
$184,000 or an amount that is lower than $184,000
Explanation:
Calculation for what Kohler will report as securities in its long-term investments section
Available-for-sale securities (fair value) $90,000
Add Held-to-maturity securities (amortized cost) $94,000
Securities in its long-term investments section $184,000
Therefore Kohler will report securities in its long-term investments section of the amount of $184,000 or an amount that is lower than the amount of $184,000 .
Under what conditions might a company prefer to negotiate rather than use competitive bidding to select a supplier
Answer: See explanation
Explanation:
Competitive bidding is when's public bid is issued and companies compete for that particular project. This is usually common with government agency as it gives room for fairness.
A negotiated bid is when negotiation takes place between the project and the contractor that they want.
The conditions that might a company prefer to negotiate rather than use competitive bidding to select a supplier when the variable that matters isn't only price. In this case, the company may negotiate with a supplier who's being paid premium.
Also, when there's a chance that specifications may be changed, this can lead to negotiated bidding being preferred. Furthermore, limitation of time can also make negotiated bidding being preferable.
Lastly, when a significant amount of money is involved, and new technologies are required, a company may prefer to negotiate.
You own a bond portfolio worth $187,000. You estimate that your portfolio has an average YTM of 7.5% and a Modified Duration of 20.5 years. If your portfolio's average YTM were to increase by 17 basis points overnight, what would be the approximate new value of your portfolio
Answer:
$193,516.95
Explanation:
If the YTM decreases, the bond prices will increase, and the value of the bond portfolio will increase.
Change in value of bonds = change in YTM * duration * current value of bonds
Change in value of bonds = 0.17% * 20.5 * $187,000 = $6516.95
New value of bond portfolio = $187,000 + $6516.95 = $193,516.95
n March 5, 2013, the Dow Jones Industrial Average set a new high. The index closed at 17,164.53, which was up 127.20 that day. What was the return (in percent) of the stock market that day? (Round your answer to 2 decimal places.)
Answer:
The return (in percent) of the stock market that day is 0.75%
Explanation:
The computation of the return is shown below:
Interest rate is
= (Future value ÷ Present value) - 1
= ($17,164.53 ÷ ($17,164.53 - $127.20) - 1
= ($17,164.53 ÷ $17,037.33) - 1
= 0.75%
Hence, the return (in percent) of the stock market that day is 0.75%
We simply applied the above formula and the same is to be considered
The establishment of a wholly new operation in a foreign country is referred to as a(n) .
Answer:
greenfield investment
Explanation:
greenfield investment is usually used as another means when "Foreign portfolio investment" is not used. It is regarded as a foreign direct investment whereby a firm set up her own operation in another country. It is a way company device to get control on activities in foreign countries, whereby the develop subsidiary in foreign countries from the start.
It should be noted that greenfield investment involves the establishment of a wholly new operation in a foreign country.
Nonvalue-Added Costs Lemmons Inc. has the following two activities: (1) Retesting reworked products, cost: $504,000. The retesting cost of the most efficient competitor is $225,000. (2) Welding subassemblies, cost: $1,147,500 (67,500 welding hours). A benchmarking study reveals that the most efficient level for Lemmons would use 54,000 welding hours and entail a cost of $918,000. Required: Determine the nonvalue-added cost of each activity.
Answer:
the nonvalue added cost of each activity is $229,500
Explanation:
The computation of the nonvalue added cost of each activity is shown below:
Non-value added cost is
= (Actual quantity - value added quantity) ×cost per purchase order
= (67,500 - 54,000) × $918,000 ÷ 54,000
= 13,500 × $17
= $229,500
Hence, the nonvalue added cost of each activity is $229,500
We simply applied the above formula
And, the same is to be considered
Explain the symbiotic relationship between the U.S. economy and American business. Be specific in identifying how one influences the other. 2. Briefly describe the benefit to a company of giving something of value back to the community in which it is located.
Answer:
There will be better brand recognition for social responsibility.
The employees will be motivated as they will be part of business who are considering the community benefits.
There will be increase in sales as the business reputation will increase.
Explanation:
The businesses that operate in U.S. economy have great impact on the prosperity of the American market. The supply and demand of good will impact the overall economic value of the country as a whole. The business that operate in high efficiency will be able to produce goods at lower prices and therefore there will be lesser price rise in the market.
Marigold Corp.'s accounting records reflect the following inventories: Dec. 31, 2019Dec. 31, 2020 Raw materials inventory$ 85000 $ 72000 Work in process inventory107000 119000 Finished goods inventory100000 92000 During 2020, Marigold purchased $1450000 of raw materials, incurred direct labor costs of $250000, and incurred manufacturing overhead totaling $160000. How much raw materials were transferred to production during 2020 for Marigold
Answer:
Direct material used= $1,463,000
Explanation:
Giving the following information:
Marigold purchased $1,450,000 of raw materials
Raw materials inventory:
Beginning= $85,000
Ending= $72,000
To calculate the direct material used, we need to use the following formula:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 85,000 + 1,450,000 - 72,000
Direct material used= $1,463,000
If the total annual expense for this car is deposited at the end of each year into an IRA paying % compounded yearly, how much will be saved at the end of years? Use the formula
Answer:
Explanation:
Find the table attached below:
a) According to the table, total average cost = $0.96/mile
If 20,000miles was driven in a year, the total annual expense for the car will be:
20,000×0.96 = $19,200
b) In order to know how much will be saved for 5 years at IRA of 8.2% compounded annually, we will use the formula
A = [P(1+r/n)^nt - 1]/r/n
P = $19200
r = 8.2%
n = 1 (annual compounding)
t = 5
Substitute
A = [19200((1+0.082/1)^1(5)- 1)/0.082
A = [19200{(1.082)^5 - 1}]/0.082
A = 19200(1.4829-1)/0.082
A = 19200(0.4829)/0.082
A = 9273.28/0.082
A = 113,088.8
Hence the amount after 5 years compounded annually is $113,088.8
While in office, President Obama discussed raising income taxes for individuals earning over $250,000 in income. Explain how these higher income taxes would affect the aggregate demand curve.
Answer:
It will reduce, or push inwards, the aggregate demand curve.
Explanation:
While in office, the president considered a government revenue incremental policy of raising taxes (for a specific fraction of the population - those who earn above $250,000 income).
What is the ripple effect of these higher taxes on the country's aggregate demand curve?
- When tax rate is raised for high income earners, they have less disposable income (where disposable income = income left for the earner after tax has been deducted).
- With a lesser amount of disposable income, their purchasing power is reduced. Their demand/consumption falls.
- When viewed in the macro economy, the drop in the demand for goods and services by this fraction of the population, will pull down the aggregate demand (total demand) curve. The curve will shift inward or leftward; showing a fall in aggregate demand which is not due to increase in prices.
what might prince do to gain distribution and sales in (a) mass merchandisers like target and walmart and (b) specialty tennis shops ?
Answer:
In order to achieve distribution and sales in retail merchandisers and specialist tennis stores, Prince Sports should:
Develop very creative commercials and ads to sell items in its brochures, supermarket catalogs, or even sports newspapers and magazines, such as offering 10 percent-15 percent discount coupons. Prince Sports can look out for tennis tournaments to sponsor them. Companies such as RedBull have effectively used this form of tactic to improve brand equity and, as a consequence, increase revenue and market share. For any organization today, social media marketing is a very relevant business technique. Today, using search analytics, it is easier to segment audiences with a strong interest in tennis as a sport. The brand equity of Prince Sports goods can be improved by developing online and offline programs to help users better understand the qualities and advantages of the product. More focus is paid to items of strong market equity by mass merchandisers. High brand equity means ease of sales and less time spent on the shelves.Cheers
Which is traded in a currency exchange market?
Which is traded in a currency exchange market?
A) foreign money
B) unprocessed foods
C) shares in corporation
D) treasuries
McConnell Corporation has bonds on the market with 13.5 years to maturity, a YTM of 7.4 percent, a par value of $1,000, and a current price of $1,059. The bonds make semiannual payments. What must the coupon rate be on these bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
Coupon rate = 8.10% stated in annual terms
Explanation:
To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Let the semi annual coupon payment be x
Coupon Payment (C) = x
Total periods (n) = 13.5 * 2 = 27
r or YTM = 0.074 * 6/12 = 0.037 or 3.7%
The formula to calculate the price of the bonds today is attached.
Plugging in the available values, we can calculate the coupon payment to be,
1059 = x * [( 1 - (1+0.037)^-27) / 0.037] + 1000 / (1+0.037)^27
1059 = x * 16.89323812 + 374.9501896
1059 - 374.9501896 = x * 16.89323812
(1059 - 374.9501896) / 16.89323812 = x
x = $40.49252166 rounded off to $40.49
As the semi annual coupon payment is 40.49, the annual payment will be = 40.49252166 * 2 = $80.98504332
As coupon payment is a percentage of the face value of the bond, the annual coupon rate on bond will be = 80.98504332 / 1000 = 8.0985% rounded off to 8.10%
Assess Sothern’s ECM system on the four dimensions of project success. How successful do you think this project is?
Answer:
The four dimensions of project success are :
Impact on Customers
Impact on business meetings
Approvals for the change requests
Impact on the Brand Name and cost vs benefit report
Explanation:
Southern Company should consider few dimensions before implementing the ECM system. The new manager Traynor is implementing change management but before he implements the change he should have considered the response from its employees. He should have considered the impacts that its customers might experience after the change management and the impact on the brand name of the business. The cost of ECM is also very high and a cost benefit report should be formed to analyze the benefits that the change will bring to the company.
A reactive approach to maintenance is _____________ maintenance. Multiple Choice proactive predictive preventive breakdown planned
Answer:
breakdown
Explanation:
Reactive approach is a type of problem-solving technique that is typically used when a problem arises such as when an equipment or machine develops a fault.
Hence, a reactive approach to maintenance is breakdown maintenance because the user waits until when an issue arises before reacting to proffer a solution or repair.
An investor purchases one municipal and one corporate bond that pay rates of return of 7.2% and 9.1%, respectively. If the investor is in the 15% marginal tax bracket, his or her after-tax rates of return on the municipal and corporate bonds would be ________ and ______, respectively. Group of answer choices 6.12%; 7.735% 7.2%; 9.1% 8.471%; 9.1% 7.2%; 7.735%
Answer:
7.2%; 7.735%
Explanation:
The computation is shown below:
For municipal bonds
= Rate of return
= 7.2%
For corporate bonds
= Rate of return × (1 - marginal tax rate)
= 9.1% × (1 - 0.15)
= 9.1% × 0.85
= 7.735%
Hence, the last option is correct
And, the same is to be considered
We simply applied the above formulas so that the correct percentage could come
The Jameson Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.00% per year in the future. The company's beta is 1.9, the market risk premium is 5.00%, and the risk-free rate is 4.00%. What is Jameson's current stock price, P0
Answer:
$9.26
Explanation:
The computation of the current stock price is shown below:
But before that first determine the required rate of return which is
Required rate of return = Risk free rate + Beta × Market risk premium.
= 4% + 1.9 × 5%
= 4% + 9.5%
= 13.5%
Now the current stock price is
Current stock price (P0) = Expected dividend per share ÷ (Required rate of return - Growth rate)
= ($0.75 + 5.00% of $0.75) ÷ (13.5% - 5%)
= $0.7875 ÷ 8.5%
= $9.26
A company with no debt in its capital structure would have a weighted average cost of capital equal to its _______.
Answer:
Cost of equity.
Explanation:
In Financial accounting, Paid-in capital is one of the most essential components of the equity of a business and can be defined as the payments received in full (cash or assets) from shareholders (creditors or investors) in exchange for a company's stock. It comprises of common stock and preferred stock.
Hence, a company with no debt in its capital structure would have a weighted average cost of capital equal to its cost of equity because it doesn't have any liabilities.
The cost of equity is simply the rate of return being paid to shareholders for the risk of their investment.
Gina has $39,000 total taxable income, which includes $6,000 of taxable income from Argentina. She paid $1,200 in foreign income taxes and her U.S. tax liability is $3,610. Gina's foreign tax credit is: (Do not round interim calculations)
Answer:
the foreign tax credit is $1,200
Explanation:
Given that
Total taxable income = $39,000 that involves $6,000 income generated from
Argentina
Other than this she paid $1,200 for the income tax occurs in foreign state
And, her U.S tax liability is $3,610
Based on the above information, her foreign tax credit should be equivalent to the amount of the foreign income taxes
Therefore the foreign tax credit is $1,200
Which of the following is an example of an experiential training method? Katy uses an online persona to make decisions in game simulations involving job-related situations.
Answer: B) John and his colleagues take part in a rafting course sponsored by their company.
Explanation:
Experiential training methods involve training employees or prospects by teaching them through experience in a relevant activity.
By sponsoring John and his colleagues in a rafting course, the company wants them to learn rafting by gaining experience in it which would make this an experiential training method.
Nike employs a __________ strategy at its website, nikeid, which allows customers to design a sneaker to their own personal specifications. Multiple Choice product sampling product clustering mass customization psychographic segmentation usage segmentation
Answer:
mass customization
Explanation:
mass customization is a technique that is been device in marketing as well as manufacturing which allows the use of flexibility as well as personization techniques in the production of custom product, which is a computer aided process as a result of low unit cost that comes with mass production.It should be noted that mass customization allows customers to design a sneaker to their own personal specifications.
Therefore, in the case described above,Nike employs a mass customization strategy at its website