Answer:
the questions are missing:
a. a financial asset of comparable risk. b. the overall market portfolio. c.the sponsoring firm's return on equity. d. a riskless asset with a similar life span. e. the sponsoring firm's return on assets.The answer is:
a. a financial asset of comparable risk.
The cost of capital (Re) represents the opportunity cost of investing in a certain project and leaving behind other alternative projects. E.g. if we can invest in two different securities, A or B, and security A has a much lower risk than project B, then the Re or discount factor for calculating the present value of project A will be lower than the discount factor used to determine the present value of project B.
A corporation that has a diversified investment portfolio, uses different costs of capital when analyzing potential investments, e.g. investing in Swiss securities is not the same as investing in Argentinean securities, since Argentina is currently facing a great recession and has recently defaulted again on its national debt (third time in 20 years).
The cost of capital that should be used on a project should be the return on a financial asset of comparable risk.
Cost of capital:
Is the rate of return that a project should bring in Is the opportunity cost of investing in the project in questionWhen a project is invested in, it means that other projects will be foregone. These projects would have been similar to the current project in terms of risk yet this current project was chose. The cost of capital should therefore reflect this opportunity cost by being the return on those projects.
In conclusion, the cost of capital is an opportunity cost.
Find out more on cost of capital at https://brainly.com/question/8287701.
Builtrite currently has a $1000 par, 9 year maturity, zero coupon bond outstanding that is selling for $645. What is the bonds yield to maturity?
Answer:
the bonds yield to maturity is 5%
Explanation:
The computation of the yield to maturity of the bond is shown below:
Given that
Future value = Par value = $1,000
NPER = 9 years
Present value = $645
PMT = $0
The formula is shown below:
= RATE(NPER;PMT;-PV;FV;type)
After applying the above formula, the yield to maturity is 5%
Hence, the bonds yield to maturity is 5%
The same is to be considered
A company manufactures and sells a single product that sells for $475 per unit; unit variable costs are $280. Annual fixed costs are $550,000. Current sales volume is $1,150,000. Flannigan Company management targets an annual pre-tax income of $850,000. Compute the unit sales to earn the target pre-tax net income.
Answer:
$195 per unit.
Explanation:
• Note. The question is incomplete as the concluding part requested for the calculation of contribution margin per unit.
The formula for contribution margin per unit is denoted as;
Contribution margin per unit = Selling price per unit - Variable cost per unit.
Given that;
Selling price per unit = $475
Variable cost per unit = $280
Contribution margi per unit
= $475 - $280
= $195 per unit
2. Suppose you are a producer of asphalt located in China. Petroleum is one of the major inputs for asphalt. Your company must import petroleum which is sold in a world market and priced in U.S. dollars. How are the profits of your company affected when the yuan appreciates against the dollar
Answer: There'll be an increase in profit.
Explanation:
Appreciation of a currency is when the value of a currency increases. Based on the information given in the question, since the company imports petroleum which is sold in a world market and priced in U.S. dollars, when the Yuan appreciates against the dollar, this will bring about increase in profit to the company.
This is because when the Yuan appreciates against the dollar, the company will be spending a lessee amount to buy petroleum and since the cost of production has been reduced, it'll bring about an increase in profit.
1. A firm’s production function is F(L) = 36L1/3. Suppose that the cost per unit of labor is $4 and the price of output is $1, how many units of labor will the firm hire
Answer: 144.33
Explanation:
Given data:
Cost per unit of labor = $4.
Output price =$1.
FL = 36L1/3.
Solution:
Units of labor needed by the firm
FL = 36L1/3.
Where
L = 4
Substitute L($4) into the equation.
FL = 36(4)1/3.
= 144.33
The firm would need to hire 144.33 unit of labor.
The recognition that business activities affect society and the consideration of that impact when making business decisions is referred to as a. code of ethics. b. social responsibility. c. business ethics. d. community responsibility. e. corporate ethics.
Answer:
b. Social responsibility
Explanation:
Businesses often consider their impact in the society they operate in terms of carrying out social responsibility. Social responsibility is a way companies contribute meaningfully to their host community by proving for them basic amenities , scholarships for their children and then employing members of the community.
Moreover, companies also take their host community into consideration before making any business decision that would affect them. For instance, a company that emit gas to the air or whose oil spills on the ground must make adequate provision to compensate the host community for this act. Also, any business decision that is against the culture and belief of the host must be ignored by the company in order to avoid legal issues.
HomeCraft makes wooden play sets. The company pays annual rent of $400,000 per year and pays administrative salaries totaling $150,000 per year. Each play set requires $400 of wood, ten hours of labor at $70 per hour, and variable overhead costs of $100. Fixed advertising expenses equal $100,000 per year. Each play set sells for $3,200. What is HomeCraft's break-
Answer:
325 play sets
Explanation:
The computation of the break even point in unit sales is shown below:
= Fixed cost ÷ (Selling price per unit - variable cost per unit)
where,
Fixed cost is
= Annual rent + salaries + Fixed advertising expenses
= $400,000 + $150,000 + $100,000
= $650,000
Variable cost is
= $70 × 10 + $400 + $100
= $1,200
Now the contribution margin is
= $3,200 - $1,200
= $2,000
So, the break even point is
= $650,000 ÷ $2,000
= 325 play sets
You 100 shares of stock today for $30 per share that he purchased for $20 six years ago. Determine the average annual rate of return on Shawn's investment, assuming the stock paid no dividends.
a. 25%
b. 8.33%
c. 150%
d. 7%
Answer:
d. 7%
Explanation:
Calculation to Determine the average annual rate of return on Shawn's investment
Using this formula
A=P(1+r/100)^n
where,
A=future value
P=present value
r=rate of interest
n=time period.
Let plug in the formula
30=20(1+r/100)^6
(30/20)^(1/6)=1+r/100
Hence,
1+r/100=1.0699(Approximate ly)
r=(1.0699-1)*100
r=0.0699*100
r=7% Approximately
Therefore the average annual rate of return on Shawn's investment is 7%
A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S. GDP a. increases by $280. b. increases by $1500. c. increases by $40. d. increases by $220.
Answer: increases by $220.
Explanation:
The gross domestic product simply means the value in terms of money of the goods that are produced by a particular economy.
Based on the information given in the question, we are told that the household purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store.
We should note that the GDP will increase by $220 because the groceries were produced in the United States while the other purchase doesn't add to the GDP as they are from other countries.
an article in the Wall Street Journal on the recreational vehi- cle (RV) industry listed several factors that led to a larger quantity of RVs sold: a. Increasing confidence among households that their future incomes would rise
Answer and Explanation:
When there is a movement in a demadn curve so it could be bought when the price vary so in the given case all four factors need to be required for shifting the demand curve
1. As if the confidence is increased so the demand increased that shift the demand curve to the right
2. Now if the credit is cheaper so the RV could be purchased in an easiest way due to which demand increased that shift the demand curve to the right
3. Gasoline i.e. fuel is a complementary good for RV if the gasoline is fallen so it would be more affordable due to which the demand increased hat shift the demand curve to the right
4, Due to the Consumer preference the demand increased that shift the demand curve to the right
A cost that have inputs that increase or decrease are referred to as __________ costs. Select the correct answer below:
Answer: variable cost
Explanation:
Variable costs are the costs that change as the production level for a particular business changes. Unlike the fixed cost which is fixed, it should be noted that the variable cost changes or varies as it's not constant.
The total cost for a business consist of both the fixed and variable cost. Variable cost is the cost that have inputs that increase or decrease.
If the market risk premium increased to 5%, what would happen to the stock's required rate of return
Answer:
a. 1.5
b. Required rate of return would increase by 3% to 12%
Explanation:
a. According to the Capital Asset Pricing Model,
Required return = Risk free rate + beta *market premium
9% = 4.5% + beta * 3%
Beta * 3% = 9% - 4.5%
Beta = (9% - 4.5%)/3%
= 1.5
b.
= 4.5% + 1.5 * 5%
= 12%
The required return would increase by 3%
The following items are reported on a company's balance sheet: Cash $258,000 Marketable securities 114,000 Accounts receivable 187,000 Inventory 204,000 Notes payable (short-term) 249,000 Determine the (a) current ratio and (b) quick ratio. Round your answers to one decimal place. a. Current ratio fill in the blank 1 b. Quick ratio fill in the blank 2
Answer and Explanation:
The computation is shown below:
a. Current ratio
= Current assets ÷ Current liabilities
= ($258,000 + $114,000 + $187,000 + $204,000) ÷ ($249,000)
= 31 : 1 times
b. And, the quick ratio is
= Quick assets ÷ Current liabilities
= ($258,000 + $114,000 + $187,000) ÷ ($249,000)
= 22 : 1 times
We simply applied the above formulas and the same is to be considered
Job, Career, Lifestyle, Economy, Global Economy, Job Market,
Team, Outsourcing, Telecommuting all use in a paragraph
Answer:
The answer to this question is given below in the explanation section.
Explanation:
Corona pandemic impacted all the businesses and the global economy negatively. As corona pandemic begin and spread all over the world, people lost their jobs and this pandemic impacted their career such as some airline business closes their offices and services. Businesses have started working remotely and outsourcing their services online. People and businesses shifted toward the online job market and hired from freelancing websites to make team to run business. People that are working online, they communicate virtually with the business owner/manager through telecommuting services and discuss business deliverables, etc. This pandemic also affected the lifestyle of people all over the world.
Jones Company reported pretax book income of $403,000. Included in the computation were favorable temporary differences of $50,300, unfavorable temporary differences of $20,150, and favorable permanent differences of $40,150. Book equivalent of taxable income is:
Answer:
$362850
Explanation:
First of all it is important that we know this:
The book equivalent of taxable income only takes permanent difference into consideration
Favorable income difference are then reduced from pretax but if they are found to be unfavorable they are added to pretax income.
Jones company have their pretax income to be equal to $403000
The favourable permanent difference is given as $40150
The equivalent of taxable income
= 403000 - 40150
= $362850
This is the answer to the question
Cullumber, Inc., stock has a beta of 1.30. If the expected market return is 12.5 percent and the risk-free rate is 9.0 percent, what does CAPM indicate the appropriate expected return for Cullumber stock is
Answer:
25.3%
Explanation:
Cullumber incorporation stock has a beta of 1.30
The expected market return is 12.5
The risk free rate is 9.0
Therefore the expected return for cullumber stock can be calculated as follows
= 9% + (1.3% × 12.5%)
= 9% + 16.25%
= 25.3%
Hence the expected return of cullumber stock is 25.3%
A game may be zero-sum in the short run but have scope for mutual benefit in the long run. True False
Answer:
True
Explanation:
A zero sum game happens when one player's gain is exactly the same as the other player's loss, e.g. I won $100 and my opponent lost $100. But as economics has taught us, sometimes both sides can win, i.e. a win win situation.
Real life business is not the same as sports where one side must win and the other must lose. E.g. a trade agreement between 2 countries might at first result in one country benefiting more from trade, but as time passes, things will start to balance out and both countries will start to benefit from trade. As trade increases between nations, all the nations involved will win, so the situation will be a non zero sum game.
Explain how the company integrates ISO 14000 standards in its manufacturing plants. Support your explanation with citations from your textbook or outside sources.
Answer:
following are the solution to the given question:
Explanation:
ISO 14000 integration:
Its sense of responsibility that will provide the highest quality product for society encourages them and also be socially responsible for many various factors that output generating income. Much like ISO 9000, a quality control program with both the highest quality products they have ISO 1400 that calculates staff capabilities from the very first stage of manufacturing to the very last phase and protect or prevent damage to an ecosystem throughout their interest. Nissan seems to have this alignment with production lines to satisfy consumers give a hand to the conservation of national resources of their very own place. They have the Branch of environmental protection Management concentrating only on protecting the environment. We conduct research and other activities which have proven environmentally beneficial.When we ask your most recent manager, how often will they say you perform better than your coworkers?
Answer:
A couple times a week
Explanation: This is one of the usually asked interview questions asked to applicants seeking employment in Organisations especially during the interview process.
A couple times a week will be the most preferred and best answer as it will reflect the actual and real situation for an employee who is committed and dedicated to their Employment.
Powers Company reported net sales of $1,200,000, average Accounts Receivable, net of $78,500, and net income of $51,025. The Day's sales uncollected (rounded to whole days) is:
Answer:
24 days
Explanation:
Power company has a net sales of $1,200,000
The average account receivable net is $78,500
The net income is $51,025
Therefore the day's sales uncollected can be calculated as follows
= net sales/net income
= 1,200,000/51,025
= 23.5
= 24 days (rounded to whole days)
Suppose that Luther's beta is 0.9. If the market risk premium is 8% and the risk-free interest rate is 4%, then then expected return for Luther stock is?
Answer:
11.2%
Explanation:
Luther's beta is 0.9
Market risk premium is 8%
Risk free Interest rate is 4%
Therefore the expected return for Luther's stock can be calculated as follows
= risk free interest rate + beta × risk premium
= 4/100 + 0.9 × 8/100
= 0.04 + 0.9 × 0.08
= 0.04 + 0.072
= 0.112 × 100
= 11.2%
Hence the expected return for Luther's stock is 11.2%
Ivanhoe Company sells product 1976 NLC for $25 per unit. The cost of one unit of 1976 NLC is $23, and the replacement cost is $22. The estimated cost to dispose of a unit is $5, and the normal profit is 20% of selling price. At what amount per unit should product 1976 NLC be reported, applying lower-of-cost-or-market
Answer:
The product should be reported at $20
Explanation:
The formulae for net realizable value is given as ;
Net realizable value = Estimated selling price - Cost of completion and disposal
= $25 - $5
= $20
But,
The upper limit of Market = Net realizable value = $20
Market = Replacement cost = $22
Hence,
Lower limit of market = Net realizable value - Normal profit margin
Lower limit of market = $20 - ( 20% × 25 )
= $20 - $5
= $15
It therefore means that if the present replacement cost is higher than the selling price, it then means that the selling amount is the market amount.
The product should therefore be reported at $20
Sheffield Corp.is contemplating the production and sale of a new widget. Projected sales are $390000 (or 75000 units) and desired profit is $33000. What is the target cost per unit
Answer:
Unitary cost= $4.76
Explanation:
Giving the following information:
Projected sales are $390,000 (or 75000 units), and the desired profit is $33,000.
First, we need to calculate the total desired cost:
Desired total cost= Sales - desired profit
Desired total cost= 390,000 - 33,000= $357,000
Now, the unitary desired cost:
Unitary cost= total cost / number of units
Unitary cost= 357,000/75,000
Unitary cost= $4.76
Best for Pets has three product lines: cat food, dog food, and fish food. For the coming month, 4,000 units of direct materials will be needed to meet expected demand. However, only 3,200 units are available. Additional information on the three product lines is given here:
Answer:
Note: The full question has been attached as picture
Cat Food Dog Food Fish Food
Contribution margin per unit $4.50 $5.60 $2.70
of product
Contribution margin per unit $5.30 $3.57 $4.65
of Direct materials
The contribution margin per unit of direct materials is higher for Cat food than Dog and Fish food, hence the company should sell Cat food in order to maximize profit.
Number of units of direct materials available = 3,200 units
Contribution margin per unit of direct materials of cat food = $5.30
Total profit = Number of units of direct materials available * Contribution margin per unit of direct materials of cat food
Total profit = 3,200 unit * $5.30
Total profit = $16,960
Thus, $16,960 is the maximum profit if the company can sell either of the three products.
You are considering the following three mutually exclusive projects. The required rate of return for all three projects is 14%. Year A B C 0 $ (1,000) $(5,000) $(50,000) 1 $ 300 $ 1,700 $ 0 2 $300 $ 1,700 $15,000 3 $ 600 $1,700 $ 28,500 4 $300 $1,700 $ 33,000 What is the IRR of the best project
Answer:
Project A has the highest IRR. the IRR is 17.49%
Explanation:
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
IRR can be calculated with a financial calculator
For project A
Cash flow in year 0 = -1000
Cash flow in year 1 = 300
Cash flow in year 2 = 300
Cash flow in year 3 = 600
Cash flow in year 4 = 300
IRR = 17.49%
For project B
Cash flow in year 0 = -5000
Cash flow each year from year 1 to 4 = 1700
IRR = 13.54%
For project C
Cash flow in year 0 = -50,000
Cash flow in year 1 = 0
Cash flow in year 2 = 15,000
Cash flow in year 3 = 28,500
Cash flow in year 4 = 33,000
IRR = 14.23%
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
If Lourdes plans to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par
Answer: 2.)Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTC.
Explanation:
The bond is a callable bond and the callable price is below the market price so the bond is likely to be called. In which case the relevant going rate would be the Yield to Call and so this the rate Lourdes should issue the bonds at in order for it to be at par.
Preston John, the office manager of Greenleaf Inc. strongly believes that providing positive consequences for a job well done will increase the likelihood of good work performance in the future. He personally sends e-mails to his employees to commend their efforts when they perform well. From this it can be inferred that Preston believes in ________
Answer:
positive reinforcement
Explanation:
Positive reinforcement is a psychological behavior. It may be defined as the giving or providing someone with a rewards or a praising somebody when the person performed the desired action or work.
In the context, Preston John believes in the positive reinforcing his employees and personally mailing them and congratulating them for their hard work and achievements. He believes that by doing so, it will increase the likelihood of the good work performance of the employees in the future.
Companies that achieve Value Innovation a. pursue differentiation and low cost simultaneously b. pursue differentiation or low cost c. pursue differentiation or low price d. None of the above
Answer: a. pursue differentiation and low cost simultaneously
Explanation:
Value Innovation as a strategy is highly sought after in many industries as it represents an opportunity to acquire more market share whist keeping costs low. This is because with Value innovation, a company invests in technology that will achieve both low costs and differentiation simultaneously.
This is great news for both consumers and the company because consumers get to buy more differentiated products at lower prices and for the company, they will get more customers buying from their brand.
A cost is $34,500 at an activity level of 23,000 units, and $42,000 at an activity level of 28,000 units. What type of cost is this
Answer:
Incremental cost
Explanation:
The incremental cost is the cost that is incurred for increase in the production level that means if the level of the production rises, the cost or an expense also increased. It involves both type of cost i.e. fixed and variable
Therefore in the given situation it is mentioned that
For the activity level of 23,000 units the cost $34,500 is spent
And, for the activity level of 28,000 units the cost $42,000 is spent
So this is an incremental cost
The use of acquisition cost as a valuation method is justified on the basis that acquisition cost is: Select one: a. relevant b. timely c. subjective d. objective
Answer: d. objective
Explanation:
The Acquisition cost of an asset is the total cost that the company incurred for the asset. It is objective because it does not change and is not influenced by the Accounting method used by the company.
It can therefore be used as a valuation method for the asset regardless of which company it is sold to and that makes it very advantageous for comparison and other calculations.
The current dividend paid by Astromarketis $1. It is expected to grow by 40% a year for two years, and then at 3% forever. The company cost of capital is 10%. What is the value of Astromarket stock
Answer:
P₀ = $26.73
Explanation:
Div₀ = $1 (current dividend)
Div₁ = $1.40 (40% growth)
Div₂ = $1.96 (40% growth)
Div₃ = $2.0188 (3% growth rate forever)
the terminal value at year 2 = Div₃ / (Re - g) = $2.0188 / (10% - 3%) = $28.84
P₀ = $1.40/1.1 + $1.96/1.1² + $28.84/1.1² = $26.73