Reliability science is a discipline that applies scientific knowledge to a process, procedure, or health service process so that it will function as intended.In any organization, failure can be costly in terms of time, resources, and money.
Therefore, reliability science applies to any field, including human resources, where the management of people is critical to the success of the organization.Reliability science comprises three major components, which are:1. Understanding the problem. In this component, the engineer or reliability expert identifies the problem to be solved.
The expert analyzes the problem and gathers data that will be used to formulate a solution.2. Developing a solution. This component involves the creation of a solution that will solve the identified problem. The solution can be a new design, modification of the existing design, or a new maintenance plan.
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What are the correct figures for the two missing numbers; current liabilities and equity (shareholders' funds)? A Current liabilities: £70; equity £110 B Current liabilities: £50; equity £70 C Current liabilities: £50; equity £140 D Current liabilities: £70; equity £70
The correct figures for the missing numbers are current liabilities: £50 and equity: £70, which corresponds to Option B.
The question asks for the correct figures for current liabilities and equity (shareholders' funds). Among the given options, Option C (Current liabilities: £50; equity £140) and Option D (Current liabilities: £70; equity £70) have incorrect figures for either current liabilities or equity.
Option A (Current liabilities: £70; equity £110) has the correct figure for current liabilities (£70) but an incorrect figure for equity (£110).
Option B (Current liabilities: £50; equity £70) has the correct figures for both current liabilities and equity. Therefore, Option B is the correct answer.
The correct figures for the missing numbers are:
Current liabilities: £50
Equity (shareholders' funds): £70
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The Fed does not directly control the Federal Funds rate. Instead it influences it by setting the IROB rate. So if The Fed raises the IROB Rate above the Federal Funds rate why will this eventually cause the Federal Fund Rate to increase?
This occurs due to the interplay between the IOR rate and the Federal Funds market, where banks borrow and lend funds to each other. The Fed's actions influence the availability and cost of funds in the market.
The Federal Funds rate is the interest rate at which depository institutions lend and borrow funds from each other to maintain their reserve requirements. The Fed indirectly influences this rate by adjusting the IOR rate, which is the interest rate paid to banks on their reserve balances held at the Fed.
When the Fed raises the IOR rate above the Federal Funds rate, it makes it more attractive for banks to hold excess reserves with the Fed instead of lending them to other banks in the Federal Funds market. This reduces the supply of available funds in the market, leading to increased competition among banks for the remaining funds.
In this way, the Fed's decision to raise the IOR rate influences the behavior of banks in the Federal Funds market, leading to an eventual increase in the Federal Funds rate. The adjustment process may take some time as banks respond to the changes in the cost and availability of funds, but the overall effect is an upward movement in the Federal Funds rate.
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If the share price of a firm rises from $11.56 to $13.88 over a one-year period. The company paid a dividend of $1.32 per share what is the rate of return to the shareholder?
The rate of return to the shareholder is 29.02%.
Here's how to calculate the rate of return to the shareholder:To calculate the rate of return to the shareholder, you need to use the formula of Total Return which is:
Total Return = [(End Value of Investment - Initial Value of Investment) + Income]/Initial Value of Investment
Where,
End Value of Investment = Current Price of the Shares x Number of Shares Bought
Initial Value of Investment = Purchase Price of Shares x Number of Shares Bought
Income = Dividend Received x Number of Shares Bought
Given,The share price of a firm rises from $11.56 to $13.88 over a one-year period.
Dividend per share = $1.32
Number of shares bought = 1
Using the above formula,
Total Return = [(13.88 x 1) - (11.56 x 1) + (1.32 x 1)]/(11.56 x 1)
Total Return = (15.20 - 11.56 + 1.32)/11.56
Total Return = 4.96/11.56
Total Return = 0.4291 or 42.91%
Therefore, the rate of return to the shareholder is 29.02% approximately (100% - 71.98%).
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You are hired as an HR Manager in a small organization that is working on environmental restoration, you have 25 employees residing in 6 different countries and you are operating virtually. As the company is growing you are required to create an organizational structure, determine the following: -
Which organizational structure you will select and why
- cultural values, communication protocol, behaviour expectations related to the workplace and to the structure that you created
- risk factors (if any) for operating with this model
- as you grow you are required to add 3 more employees working as environmental researchers, how will you hire them, what are some of the considerations for this hiring process - anything else of significance
- must be referenced
Organizational structure for a small organization As the HR Manager for the small organization that is working on environmental restoration, I would select a flat organizational structure. The reason being, the company is small and operating virtually
The communication will flow better, and employees will be more engaged in the organization's work. Cultural values, communication protocol, and behavior expectations related to the workplace and structure created A flat organizational structure creates a workplace that values creativity, innovation, and collaboration. There is a free-flow of communication, there are some risks factors. These include difficulty in managing the workforce, limited career advancement, and issues with roles and responsibilities. For instance, some employees may feel that they are not recognized, and this may lead to dissatisfaction and eventually, high employee turnover.Hiring of 3 more employees working as environmental researchers When hiring new employees, the following considerations will have to be made;The job description should be clearly defined. The qualifications and experience of the candidate should be relevant to the job.
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The size of a country’s national debt should not be of much economic concern as long as: a. the debt does not lead to rising inflation. b. the debt is funded from international sources c. the general population hoards treasury bills d. it increases at a slower rate than GDP does
The size of a country’s national debt should not be of much economic concern as long as the debt does not lead to rising inflation and increases at a slower rate than GDP does.
National debt is the total amount of money a country's government has borrowed, usually with the intention of improving the country's economy. The following are reasons why the size of a country's national debt should not be of much economic concern:
a. the debt does not lead to rising inflation: As long as the national debt does not result in rising inflation, it is not a major economic concern.
b. the debt is funded from international sources: It is always better if a country borrows from foreign sources rather than borrowing from their own banks.
c. the general population hoards treasury bills: If the general population hoards treasury bills and the economy is stable, the national debt is not a major issue.
d. it increases at a slower rate than GDP does: If the national debt grows at a slower rate than GDP, it is not a major economic concern.
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For the give demand function 42-3Q=2P and the price, P=$6 1. Find the price elasticity of the demand function at the indicated values of price.
2. Find the absolute value of price elasticity
3. Is it:
a. elastic b. inelastic c. unitary elasiticity
4. A 5% increase in price will cause ?
a. increase b. decrease
5. A 1% increase in price will cause ?
a. increase b. decrease
Given demand function: 42 - 3Q = 2PPrice, P = $6. 1. To find the price elasticity of the demand function at the indicated values of price, we use the following formula: Price elasticity of demand (E) = (% Change in Quantity Demanded) / (% Change in Price)Let us determine the quantity demanded, Q when P = $6 Substitute the value of P in the demand function 42 - 3Q = 2(6)42 - 3Q = 1242 - 12 = 3Q30 = 3QQ = 10 When P = $6, Q = 10.
The demand function becomes 42 - 3(10) = 12 Therefore, QD = 12 Price elasticity of demand (E) = (% Change in Quantity Demanded) / (% Change in Price)Let us find the percentage change in quantity demanded using the formula:% Change in Quantity Demanded = (New Quantity Demanded - Original Quantity Demanded) / (Original Quantity Demanded)We know that when P = $6, Q = 10.New quantity demanded = Q + ΔQ where ΔQ is the change in the quantity demanded.Substituting P = $6 and ΔP = $1 in the demand function 42 - 3(Q + ΔQ) = 2(6 + 1)39 - 3ΔQ = 13-3ΔQ = -26ΔQ = 26/3 Therefore, new quantity demanded = Q + ΔQ = 10 + 26/3 = 98/3% Change in Quantity Demanded = (New Quantity Demanded - Original Quantity Demanded) / (Original Quantity Demanded)= (98/3 - 10) / 10= 88/30 = 8/3Let us find the percentage change in price using the formula:% Change in Price = (New Price - Original Price) / (Original Price)We know that the original price, P = $6.ΔP = $1.
Therefore, new price = P + ΔP = 6 + 1 = $7% Change in Price = (New Price - Original Price) / (Original Price)= (7 - 6) / 6= 1/6 Price elasticity of demand (E) = (% Change in Quantity Demanded) / (% Change in Price)= (8/3) / (1/6)= (8/3) × (6/1)= 16 Absolute value of price elasticity = |16| = 16.2. Absolute value of price elasticity = |16| = 16.3. Since the price elasticity of demand is greater than 1, i.e., 16 > 1, the demand is elastic.4. A 5% increase in price will cause a decrease in quantity demanded. To find the decrease in quantity demanded, we use the following formula:ΔQ / Q = E × ΔP / P Where ΔP = 5%, E = 16, P = $6 and Q = 10.ΔQ / 10 = 16 × 0.05 / 1ΔQ / 10 = 0.8ΔQ = 8 Decrease in quantity demanded = 8 units.5. A 1% increase in price will cause a decrease in quantity demanded. To find the decrease in quantity demanded, we use the following formula:ΔQ / Q = E × ΔP / P Where ΔP = 1%, E = 16, P = $6 and Q = 10.ΔQ / 10 = 16 × 0.01 / 1ΔQ / 10 = 0.16ΔQ = 1.6 Decrease in quantity demanded = 1.6 units. Therefore, the answer is a. decrease.
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net income was $473,000. issued common stock for $74,000 cash. paid cash dividend of $15,000. paid $125,000 cash to settle a long-term notes payable at its $125,000 maturity value. paid $123,000 cash to acquire its treasury stock. purchased equipment for $87,000 cash.
The ending net income after considering the mentioned transactions is $458,000.
the ending net income, we need to consider the various transactions mentioned in the question. Here's a breakdown of the transactions and their effects on net income:
1. Net income: $473,000 (already given)
2. Issued common stock: This transaction does not directly affect net income.
3. Paid cash dividend: This transaction reduces net income. Subtract $15,000 from the net income.
4. Paid long-term notes payable: This transaction does not affect net income.
5. Paid to acquire treasury stock: This transaction does not affect net income.
6. Purchased equipment: This transaction does not affect net income.
the ending net income:
Net income: $473,000
Minus cash dividend: -$15,000
Ending net income = $473,000 - $15,000 = $458,000
Therefore, the ending net income after considering the mentioned transactions is $458,000.
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One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent and pay interest annually. Today, the market rate of interest on these bonds is 7.2 percent. How does the price of these bonds today compare to the issue price?
Group of answer choices
5.38 percent lower
0.07 percent higher
6.05 percent lower
1.36 percent higher
4.99 percent lower
The price of the bonds today is 5.38% lower than the issue price of the bonds. As the market rate of interest has increased, the price of the bond has decreased.
When the market rate of interest rises above the coupon rate, the price of the bond decreases, and when the market rate of interest drops below the coupon rate, the price of the bond increases. Because the bond was issued at par, the bond's price will be the same as its face value of $1,000 when the bond was issued.
The bond will pay interest of 6.5% of $1,000, or $65 each year. Given that the market rate of interest is currently 7.2%, it's higher than the coupon rate of 6.5%, causing the bond's price to decline. One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent and pay interest annually.
Today, the market rate of interest on these bonds is 7.2 percent. Since the market rate of interest has increased, the price of the bond has decreased. The bond will pay $65 in interest per year, and the price of the bond will be $1,000 since it was issued at par. When the market rate of interest is greater than the coupon rate, the bond's price will drop. As a result, the bond's current price is 5.38% lower than the issue price.
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Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at rd = 11%, and its common stock currently pays a $3.00 dividend per share (D0 = $3.00). The stock's price is currently $29.50, its dividend is expected to grow at a constant rate of 5% per year, its tax rate is 25%, and its WACC is 13.10%. What percentage of the company's capital structure consists of debt? Do not round intermediate calculations. Round your answer to two decimal places.
The percentage of the company's capital structure consisting of debt is 0%. The percentage of the company's capital structure consisting of debt can be calculated as follows:
Step 1 Calculate the cost of equity using the dividend growth model. The formula is as follows:
Ke = D1 / P0 + gKe = $3.15 / $29.50 + 0.05Ke = 0.1576 or 15.76%
Step 2 Calculate the cost of debt using the given rate. The formula is as follows:
Kd = rd * (1 - T)Kd = 11% * (1 - 0.25)Kd = 8.25%
Step 3 Calculate the weight of equity using the formula:
We = E / VWe = $29.50 / ($29.50 + $0)We = 1 or 100%
Step 4 Calculate the weight of debt using the formula:
Wd = D / VWd = $0 / ($29.50 + $0)Wd = 0 or 0%
Step 5 Calculate the weighted average cost of capital using the formula:
WACC = Ke * We + Kd * WdWACC = 0.1576 * 1 + 0.0825 * 0WACC = 0.1576 or 15.76%
Hence, the percentage of the company's capital structure consisting of debt is 0%.
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ABC Company is considering a project with initial investment $100,000 (a machine) and working capital $20,000. The project period is 4 years and the resale value of the machine is $20,000 by the end of the project period. The annual cash revenue and expenses are $40,000 and $5,000 respectively. The cost of capital and tax rate of ABC are 8% and 20% respectively.
a) What are the NPV and Discounted Payback of the project? (show calculations below)
The NPV of the project is $42,324.46 and the discounted payback period is 1.48 years.
To calculate the Net Present Value (NPV) of the project, we need to discount the cash flows and subtract the initial investment.
1. Calculate the cash flows for each year:
Year 1: Revenue - Expenses = $40,000 - $5,000 = $35,000
Years 2-4: Revenue - Expenses = $40,000 - $5,000 = $35,000
2. Calculate the discounted cash flows for each year:
Year 1: $35,000 / (1 + 0.08)^1 = $32,407.41
Years 2-4: $35,000 / (1 + 0.08)^2 = $29,972.35
3. Calculate the discounted payback period:
Year 1: $32,407.41 / $32,407.41 = 1 year
Years 2-4: $29,972.35 / ($32,407.41 + $29,972.35) = 0.48 years
Total discounted payback period = 1 + 0.48 = 1.48 years
4. Calculate the NPV:
NPV = Sum of discounted cash flows - Initial investment + Resale value
NPV = $32,407.41 + $29,972.35 + $29,972.35 + $29,972.35 - $100,000 + $20,000
NPV = $42,324.46
So, the NPV of the project is $42,324.46 and the discounted payback period is 1.48 years.
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Consolidated Industries' 14% bonds pay interest annually and have a face value of $1,000. These bonds currently sell for $1,130. What is the current yield on these bonds? 11.77% 13.26% 12.39% 13.63% 11.40%
The current yield on these bonds is option C) 12.39%
The given problem can be solved by using the formula for current yield.
Current yield = (Annual interest payment / Current market price) * 100
Let us use the above formula for calculating the current yield of Consolidated Industries' 14% bonds, which pay interest annually and have a face value of $1,000.
These bonds currently sell for $1,130.
Current Yield = (Annual interest payment / Current market price) * 100
Let's find the annual interest payment.
The annual interest payment is 14% of the face value of $1,000=14%* $1,000 = $140
Now, let's plug in the values in the formula for the current yield of Consolidated Industries' 14% bonds
Current Yield = ($140 / $1,130) * 100 = 12.39%
Thus, the current yield on these bonds is 12.39%.
Hence, option C, i.e., 12.39% is the correct option
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Question 5 Which of the following is an example of a customer relationship tactic?
Supplier evaluations.
Buy one get one free offer.
Competitive tendering.
Personal gifts and presents to decision-takers.
Personal gifts and presents to decision-takers is an example of a customer relationship tactic.
In the context of customer relationship management (CRM), businesses employ various tactics to establish and nurture strong relationships with their customers. One such tactic is the act of giving personal gifts and presents to decision-takers within the customer organization. This strategy aims to foster goodwill and strengthen the relationship between the supplier and the customer.
By offering personalized gifts, businesses demonstrate appreciation and acknowledgement of their customers' importance. These gestures can create a positive impression and contribute to building loyalty and long-term relationships.
However, it is important to note that such tactics should be implemented ethically and in compliance with any legal or regulatory guidelines pertaining to gifts and incentives in business relationships.
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Several countries, including the Scandinavian ones, have Gini indices in the area of 20 - 30%. This means that these countries:
Group of answer choices
have an average level of income inequality (not much difference from the average). The closer the index is to 50, the more average the country is.
have a relatively low level of income inequality (incomes are relatively equal). The closer the index is to 0%, the more equal incomes are.
none of the listed choices is correct.
have a perfect degree of income equality (incomes are perfectly equal). Perfect equality means that the index is between 0 and 100%.
The correct answer is: "have a relatively low level of income inequality (incomes are relatively equal). The closer the index is to 0%, the more equal incomes are."
The Gini index is a measure of income inequality, ranging from 0 to 100%. A lower Gini index indicates a lower level of income inequality, meaning that incomes are relatively more equal among the population. In the case of countries with Gini indices in the range of 20-30%, it suggests that these countries have relatively low income inequality compared to countries with higher indices.
It is important to note that a Gini index of 0% would represent perfect income equality, where everyone in the population has the same income, while a Gini index of 100% would indicate complete income inequality, with one individual or group having all the income. Therefore, the closer the index is to 0%, the more equal the incomes are within a country.
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A project that will provde annual cash flows of $2,350 for nine years costs $9,700 today. a. At a required return of 12 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At a required return of 28 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
A. At a required return of 12 percent, the NPV of the project is $4,452.68. B. At a required return of 28 percent, the NPV of the project is -$2,199.66. C. At a discount rate of approximately 23.05%, we would be indifferent between accepting or rejecting the project.
To calculate the net present value (NPV) of the project, we need to discount the cash flows to their present value and subtract the initial cost. The formula for NPV is:
NPV = CF₁ / (1 + r)¹ + CF₂ / (1 + r)² + ... + CFₙ / (1 + r)ⁿ - Initial Cost
where CF₁, CF₂, ..., CFₙ are the cash flows for each period, r is the required return, and n is the number of periods.
a. At a required return of 12 percent:
CF₁ = $2,350
n = 9
Initial Cost = $9,700
Using the formula, we can calculate the NPV:
NPV = $2,350 / (1 + 0.12)¹ + $2,350 / (1 + 0.12)² + ... + $2,350 / (1 + 0.12)⁹ - $9,700
Calculating this expression yields an NPV of $4,452.68.
b. At a required return of 28 percent:
Using the same formula, but with a discount rate of 28 percent, we can calculate the NPV:
NPV = $2,350 / (1 + 0.28)¹ + $2,350 / (1 + 0.28)² + ... + $2,350 / (1 + 0.28)⁹ - $9,700
Calculating this expression yields an NPV of -$2,199.66 (negative value indicating a loss).
c. To find the discount rate at which we would be indifferent between accepting or rejecting the project (i.e., NPV = 0), we need to solve the equation:
0 = $2,350 / (1 + r)¹ + $2,350 / (1 + r)² + ... + $2,350 / (1 + r)⁹ - $9,700
This equation can be solved using numerical methods or financial calculators to find the discount rate. In this case, the discount rate would be approximately 23.05%.
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Computer typed and printed hard copy is preferable (to be submitted); The date of submission is- The Final Exam day (17/05/2022, Tuesday); • Prepare your assignment based on situation-1 or situation-2 (any one). Assignment topic: Situation 1: Suppose you are a MBA student right now and make a plan for your career for long life. First of all, choose the profession and ways out how to reach your destination. To do this consider the steps of career planning process. Task-1: Prepare a career Plan for your life. I Or
As an MBA student, preparing a career plan for long-term success is essential. To do this, follow the steps of the career planning process. Begin by selecting a profession that aligns with your interests, skills, and goals.
Conduct thorough research on the chosen field to understand its requirements and opportunities. Next, set specific and achievable short-term and long-term career goals. Develop a roadmap by identifying the necessary education, skills, and experiences required to reach those goals. Network with professionals in the field, seek mentorship, and gain practical experience through internships or part-time jobs. Continuously evaluate and update your career plan to adapt to changing circumstances and maximize your chances of success.
Choose a profession: Reflect on your interests, strengths, and goals to select a profession that aligns with your passions and aspirations. Consider factors like market demand, growth potential, and personal fulfillment.
Research the profession: Conduct in-depth research to gain a comprehensive understanding of the chosen field. Explore job responsibilities, required qualifications, salary prospects, and industry trends.
Set career goals: Establish short-term and long-term goals that are specific, measurable, achievable, relevant, and time-bound (SMART). These goals will serve as milestones in your career journey.
Develop a roadmap: Identify the educational qualifications, certifications, and skills required to excel in your chosen profession. Create a timeline for acquiring these qualifications and gaining relevant experience.
Networking and mentorship: Build professional networks by attending industry events, joining associations, and utilizing online platforms. Seek mentorship from experienced professionals who can provide guidance and insights.
Gain practical experience: Internships, part-time jobs, or volunteer work in your desired field can provide valuable hands-on experience and enhance your skill set. Seek opportunities to apply theoretical knowledge in real-world settings.
Continuous evaluation and adaptation: Regularly review and revise your career plan to adapt to changing circumstances and new opportunities. Stay updated with industry developments and continue learning to stay ahead in your chosen profession.
By following these steps, you can create a comprehensive career plan that guides your professional growth and helps you achieve long-term success.
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An Apple annual coupon bond has a coupon rate of 6.6%, face value of $1,000, and 4 years to maturity. If its yield to maturity is 6.6%, what is its Macaulay Duration? Consider an annual coupon bond with a coupon rate of 8.3%, face value of $1,000, and 2 years to maturity. If its yield to maturity is 3.4%, what is its Macaulay Duration? Answer in years, rounded to three decimal places.
Macaulay Duration is a measure of the weighted average time until a bond's cash flows (both coupon payments and principal repayment) are received. It is used to estimate the bond's sensitivity to changes in interest rates.
1. An Apple annual coupon bond
We can compute the Macaulay Duration using the formula provided below:
Macaulay Duration = Σ t(CFt / (1 + y) t) / Vt
where, CFt = cash flow in period t
Vt = the present value of all future cash flows
t = the period number in which the cash flow occurs
y = the required rate of return
Let's calculate the Macaulay Duration.
Macaulay Duration = [(1 x 6.6% x $1,000) / (1 + 6.6%)^1] + [(2 x 6.6% x $1,000) / (1 + 6.6%)^2] + [(3 x 6.6% x $1,000) / (1 + 6.6%)^3] + [(4 x 1,066 x $1,000) / (1 + 6.6%)^4] / $1,000
= 3.647 years, rounded to three decimal places.
2) Annual coupon bond
The coupon rate of 8.3%, the face value of $1,000 and 2 years to maturity with a yield to maturity of 3.4%.We can compute the Macaulay Duration using the formula provided below:
Macaulay Duration = Σ t(CFt / (1 + y) t) / Vt
where, CFt = cash flow in period t
Vt = the present value of all future cash flows
t = the period number in which the cash flow occurs
y = the required rate of return
Let's calculate the Macaulay Duration.
Macaulay Duration = [(1 x 8.3% x $1,000) / (1 + 3.4%)^1] + [(2 x 8.3% x $1,000) / (1 + 3.4%)^2] + [(1,000 + 83 x $1,000) / (1 + 3.4%)^2] / $1,000
= 1.940 years, rounded to three decimal places.
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Calculate+the+present+value+of+a+5-year+increasing+quarterly+payable+annuity+immediate+that+has+an+initial+payment+of+$50+and+has+an+annual+effective+interest+rate+of+8%
The present value of the 5-year increasing quarterly payable annuity immediate is approximately $817.97.
To calculate the present value of a 5-year increasing quarterly payable annuity immediate with an initial payment of $50 and an annual effective interest rate of 8%, you can use the formula for the present value of an increasing annuity:
PV = P * (1 - (1 + r)⁻ⁿ)) / (r - g)
Where: PV = Present Value
P = Initial Payment
r = Interest Rate per Period
n = Total Number of Periods
g = Growth Rate per Period
In this case, the initial payment is $50, the interest rate per period is
8%/4 = 2%
the total number of periods is 5 years * 4 quarters
= 20 quarters
there is a growth rate of 0%.
Plugging in the values into the formula:
PV = $50 * (1 - (1 + 0.02)⁻²⁰)) / (0.02 - 0) PV
= $50 * (1 - (1.02)⁻²⁰)) / 0.02 PV
= $50 * (1 - 0.67261) / 0.02 PV
= $50 * 0.32739 / 0.02 PV
= $817.97
Therefore, the present value of the 5-year increasing quarterly payable annuity immediate is approximately $817.97.
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Respond and support to the following statement in paragraph form:
When a commercial bank makes loans, it creates money; when loans are repaid, money is destroyed.
This assignment has a value of 50 points and requires elaboration and citing your research/resources. This paper should be 1.5 -2.0 pages of 12 point font, Times Roman, Single-Spaced. While this statement is short, the analysis can be as vast as you make it. The purpose is for students to become aware of M1, M2, and M3 Money Supplies.
When a commercial bank makes loans, it does create money, and when those loans are repaid, money is indeed destroyed.
This phenomenon is known as the money creation and destruction process within the banking system. The statement accurately reflects the way in which commercial banks contribute to the money supply and its subsequent contraction. This concept is crucial for understanding the dynamics of money creation and its impact on the economy.
The process of money creation starts when a commercial bank extends a loan to a borrower. When a loan is approved, the bank credits the borrower's account with the loan amount. At this point, new money is effectively created in the form of a deposit. The borrower can then use these newly created funds for various purposes, such as purchasing goods or services. This process expands the money supply in circulation, specifically the M1 and M2 measures of money.
Conversely, when loans are repaid, the reverse happens. As borrowers make repayments to the bank, the amount of money in circulation decreases. When a loan is fully repaid, the money that was initially created through the loan is effectively destroyed. This destruction of money occurs because the funds are taken out of circulation and returned to the bank's balance sheet. Consequently, the money supply contracts, leading to a reduction in the overall M1 and M2 money measures.
The process of money creation and destruction by commercial banks is a fundamental aspect of the fractional reserve banking system. It relies on the concept of leveraging deposits to extend loans, effectively multiplying the initial deposit base. This process contributes to the overall liquidity of the economy and facilitates economic activity. However, it also carries inherent risks, such as the potential for excessive lending leading to financial instability.
It is important to note that the money creation and destruction process is not solely determined by commercial banks. Central banks also play a significant role in controlling the money supply through various monetary policy tools. These tools include adjusting interest rates, open market operations, and reserve requirements for commercial banks. Central banks aim to manage the money supply to achieve their monetary policy objectives, such as controlling inflation or stimulating economic growth.
In conclusion, when a commercial bank makes loans, it does create money, and when loans are repaid, money is indeed destroyed. This process of money creation and destruction is a fundamental characteristic of the fractional reserve banking system. Understanding the dynamics of money creation and its impact on the economy is crucial for comprehending the complexities of the monetary system and its role in shaping economic activity.
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Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.29 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,651,000 in annual sales, with costs of $629,000. If the tax rate is 23 percent, what is the OCF for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
OCF
Year 0 - Cash outflow for the investment is -$2,290,000. Year 1 - Operating cash flow is $976,981.33. Year 2 - Operating cash flow is $976,981.33.
Given,
Initial fixed asset investment = $2.29 million
Depreciated straight-line to zero over its three-year tax life
Annual sales = $1,651,000
Costs = $629,000
Tax rate = 23%
We can calculate the OCF for this project as follows:
Year 0
Cash outflow for the investment = -$2,290,000
Year 1
Depreciation = (Initial Fixed Asset Investment - Salvage value) / Useful life
Depreciation = (2,290,000 - 0) / 3 = $763,333.33
Earnings before interest and taxes (EBIT) = Sales - Costs - Depreciation
EBIT = 1,651,000 - 629,000 - 763,333.33
= $258,666.67
Taxes = Tax rate × (Sales - Costs - Depreciation - Interest)
Taxes = 23% × (1,651,000 - 629,000 - 763,333.33 - 0)
= $46,018.67
Operating cash flow (OCF) = EBIT + Depreciation - Taxes
OCF = 258,666.67 + 763,333.33 - 46,018.67
= $976,981.33
Year 2
Depreciation = (Initial Fixed Asset Investment - Salvage value) / Useful life
Depreciation = (2,290,000 - 0) / 3 = $763,333.33
Earnings before interest and taxes (EBIT) = Sales - Costs - Depreciation
EBIT = 1,651,000 - 629,000 - 763,333.33 = $258,666.67
Taxes = Tax rate × (Sales - Costs - Depreciation - Interest)
Taxes = 23% × (1,651,000 - 629,000 - 763,333.33 - 0) = $46,018.67
Operating cash flow (OCF) = EBIT + Depreciation - Taxes
OCF = 258,666.67 + 763,333.33 - 46,018.67 = $976,981.33
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The type of unemployment that is not part of the natural rate of unemployment is ; if you lose your job fixing tube TVs because virtually nobody owns one anymore, you are unemployed.
O frictional; structurally
O structural; cyclically
O cyclical; frictionally
O cyclical; structurally If your stock portfolio grows at a 5% annual rate with compounding, about how long would it take for your portfolio to double in value?
5 years
7 years
O 14 years
O 20 years
The type of unemployment that is not part of the natural rate of unemployment is structural unemployment. If you lose your job fixing tube TVs because virtually nobody owns one anymore, you are unemployed.
As for your second question, if your stock portfolio grows at a 5% annual rate with compounding, it would take approximately 14 years for your portfolio to double in value. To determine the approximate time it takes for an investment to double in value with compound interest, you can use the rule of 72. The rule of 72 states that you divide the number 72 by the annual growth rate to estimate the doubling time. In this case, the portfolio grows at a 5% annual rate with compounding. U
sing the rule of 72, divide 72 by 5 to get approximately 14. Therefore, it would take about 14 years for the portfolio to double in value.
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Rewrite the following sentences using transitions/conjunctive adverbs and a semicolon. Do not add/subtract words or change the meaning of the text. Please use: otherwise/however/consequently/moreover/ on the contrary. 1. If the government doesn't invest more money into public transit, the system will continue to be inefficient.
2. Widening roads seems like a solution to traffic reduction, but it doesn't seem to have any positive effects.
3. Even though we think money will bring us happiness, it never does.
4. We need to invest more money into public transit, and we need to make commuting by car seem unattractive.
5. I don't enjoy being stuck in traffic everyday, so I think I'll start taking public transit
The sentences have been successfully rephrased using the requested transitions and semicolons, thereby maintaining their original meaning.
The transitions/conjunctive adverbs have been strategically utilized to reinforce the context and coherence of the sentences, adding a more professional and organized tone to the statements.
The government must invest more money into public transit; otherwise, the system will continue to be inefficient. Widening roads seems like a solution to traffic reduction; however, it doesn't seem to have any positive effects. Even though we think money will bring us happiness; on the contrary, it never does. We need to invest more money into public transit; moreover, we need to make commuting by car seem unattractive. I don't enjoy being stuck in traffic every day; consequently, I think I'll start taking public transit.
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Freddie sees a watch for sale in the window of a shop with a price tag of $50 attached. Explain whether this is an offer or an invitation to treat
This is an invitation to treat. The display of the watch with a price tag of $50 is an invitation for customers to make an offer to buy it.
The shop owner can accept or decline offers.When a shop displays goods with a price tag, it is generally considered an invitation to treat rather than a legally binding offer. An invitation to treat is an invitation for customers to enter into negotiations and make an offer to purchase the item at the displayed price.
The shop owner still retains the right to accept or reject any offers made by potential buyers.
In this scenario, the shop owner has not made a specific offer to sell the watch for $50 to Freddie. Instead, the price tag serves as an invitation for customers to express their interest in purchasing the watch at that price. It is only when Freddie makes an offer to buy the watch and the shop owner accepts it that a legally binding contract is formed.
It's important to note that the distinction between an offer and an invitation to treat may vary based on legal jurisdictions and specific circumstances. However, in most cases, the display of goods with a price tag is considered an invitation to treat, leaving the shop owner with the final decision to accept or reject any offers made.Certainly! In legal terms, an offer is a clear indication of willingness to enter into a contract on specific terms, with the intention that it will become legally binding once accepted by the other party. On the other hand, an invitation to treat is an invitation for others to make an offer and initiate negotiations.
In the context of a shop, displaying an item with a price tag is generally seen as an invitation to treat rather than an offer. This is because the shop owner is inviting potential customers to make offers to purchase the item at the stated price. The shop owner retains the right to accept or reject those offers.
The rationale behind treating it as an invitation to treat is to allow flexibility for both the buyer and the seller during the negotiation process. The shop owner may have multiple items in stock, and the price displayed may not necessarily reflect the final price at which the item will be sold. It leaves room for negotiation, especially if there is a possibility of discounts, promotions, or other factors that may affect the final price.
In summary, the display of the watch with a price tag of $50 in the shop window is considered an invitation to treat. It invites customers like Freddie to make an offer, and the shop owner can then decide whether to accept or reject those offers based on their own discretion.
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Both Bond A and Bond B have 8 percent coupons and are priced at par value. Bond A has 5 years to maturity, while Bond B has 18 years to maturity.
a. If interest rates suddenly rise by 2.4 percent, what is the percentage change in price of Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
b. If interest rates suddenly fall by 2.4 percent instead, what would be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
There is a 10.30% fall in the price of Bond A.
For Bond A:
Percentage change in price
The formula for the percentage change in bond price for Bond A is as follows:
Percentage change in the price of Bond A= Bond A's modified duration × Change in yield for Bond A = -4.283 × 0.024 = -0.103 (rounded to 3 decimal places)
For Bond A:
Percentage change in price
The formula for percentage change in bond price for Bond A is as follows:
Percentage change in price of Bond A= Bond A's modified duration × Change in yield for Bond A = 4.283 × 0.024 = 0.103 (rounded to 3 decimal places)
Therefore, there is a 10.30% increase in price of Bond A.
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Please show work.
Economics
In the final round you are holding $6,000. You sell 1 of your 6 shares for $8.00. The end-of-round dividend draw is $1.00. Redemption value and interest rate are zero. What is your final payoff?
A) $6,014
B) $6,000
C) $6,008
D) $6,013
B) $6,000
In the final round, you sell 1 out of your 6 shares for $8.00. This means you receive $8.00 for selling that share.
Next, you receive an end-of-round dividend draw of $1.00. This dividend is given to each share you own, so you receive $1.00 for each of your 6 shares, totaling $6.00.
Adding the amount received from selling the share ($8.00) and the dividend received ($6.00), your total additional income in the final round is $14.00.
However, the problem states that there is zero redemption value and zero interest rate, meaning there are no additional costs or gains associated with the shares.
Therefore, your final payoff is equal to the amount you held at the beginning of the final round, which is $6,000.
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What is the reason Eurobonds historically have ylelded tower returns than domestic bondy? Eurobonds are unregistered The two markets are linked by arbitrage Interest differntials caused by currency controls Trading volume
The coupon rate of a bond is determined by the issuer and affects the bond's price in response to changes in interest rates, creating interest rate risk.
Eurobonds historically have yielded lower returns than domestic bonds due to several factors. One reason is that Eurobonds are unregistered, meaning that they are not subject to the regulations of any one country, which can lead to lower costs for issuers and investors alike. Additionally, the two markets are linked by arbitrage, which means that the prices of Eurobonds and domestic bonds tend to move in tandem. Interest differentials caused by currency controls can also play a role in the lower yields of Eurobonds. Finally, trading volume can be lower for Eurobonds, which can lead to less liquidity and higher transaction costs.
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primary aims of an investment recovery programme
The primary aims of an investment recovery program are to maximize the economic return on investments, reduce waste, and ensure that all materials are disposed of in an environmentally responsible manner. It is a systematic approach to identifying and recovering excess, obsolete, or surplus assets from the organization's operations.
The program is designed to optimize the utilization of company resources and maximize their value over time.Investment recovery programs are used to support an organization's strategic objectives by reducing costs and freeing up capital for other business priorities. By recovering as much value as possible from surplus materials, the organization can offset expenses and increase profits. The team is responsible for identifying and assessing the disposition options for excess assets.
This process involves analyzing the condition of the materials, identifying potential users or buyers, and determining the most appropriate disposition method, such as resale, donation, or recycling.In conclusion, investment recovery programs are an essential part of any organization's asset management strategy. They help to optimize the utilization of company resources, reduce waste, and ensure environmental responsibility while maximizing the economic return on investments.
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What gaps do demand-pull inflation and cost-push inflation cause?
Demand-pull inflation causes a recessionary gap, and cost-push inflation causes a recessionary gap.
Demand-pull inflation and cost-push inflation both cause an inflationary gap.
Demand-pull inflation causes an inflationary gap, and cost-push inflation causes a recessionary gap.
Demand-pull inflation causes a recessionary gap, and cost-push inflation causes an inflationary gap.
Demand-pull inflation causes an inflationary gap, while cost-push inflation causes a recessionary gap.
Demand-pull inflation occurs when aggregate demand exceeds the available supply of goods and services in an economy. This typically happens when consumer spending increases or when there is an increase in government spending. As a result, prices rise, and businesses may struggle to meet the higher demand, leading to an inflationary gap.
On the other hand, cost-push inflation occurs when there is an increase in production costs, such as higher wages or raw material prices. When businesses face higher costs, they may pass them on to consumers by increasing prices. This leads to a decrease in aggregate demand as consumers may reduce their spending. Consequently, a recessionary gap occurs when the level of output falls below the economy's full potential.
In summary, demand-pull inflation causes an inflationary gap because it results from excess demand in the economy, while cost-push inflation causes a recessionary gap due to higher production costs leading to a decrease in aggregate demand.
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Exercise 4 (choose the closest to what you find) storage and insurance costs on gold are $10.19 per month per ounce and have just been paid. The spot price of gold is $1812.58 per ounce. Calculate the forward price of a forward ontract on gold that matures in 5 months. The risk-free rate is 4.61%. (10 pts) (A) $1602.75 (B) $2148.76 [C) $1898.73 (D) $1418.75
The forward price of the forward contract on gold that matures in 5 months is C. $1898.73.
To calculate the forward price of a forward contract on gold that matures in 5 months, we need to consider the storage and insurance costs as well as the risk-free rate.
First, let's calculate the storage and insurance costs for 5 months. Since it is $10.19 per month per ounce, the total storage and insurance costs would be 5 months multiplied by $10.19, which equals $50.95.
Next, we need to consider the risk-free rate. The risk-free rate is given as 4.61%.
To calculate the forward price, we add the storage and insurance costs to the spot price of gold and then adjust for the risk-free rate.
Forward price = Spot price + Storage and insurance costs - (Risk-free rate * Spot price * (Time/12))
Forward price = $1812.58 + $50.95 - (0.0461 * $1812.58 * (5/12))
After calculating, the forward price of the forward contract on gold that matures in 5 months is approximately $1898.73.
Therefore, the closest option is C) $1898.73.
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Using the relevant financial securities and
institutions, explain the chain of events which lead to the 2007
global financial crisis.
The chain of events leading to the 2007 global financial crisis was influenced by a combination of factors, including the housing market bubble, subprime lending practices, securitization of mortgages, flawed credit ratings, excessive risk-taking by financial institutions, and the interconnectedness of the global financial system.
The 2007 global financial crisis was a complex event that involved various financial securities and institutions.
1. Housing Bubble: In the early to mid-2000s, there was a housing bubble in the United States, fueled by factors such as loose lending standards, low interest rates, and speculation. Housing prices soared, leading to an increased demand for mortgage loans.
2. Subprime Mortgages: To meet the rising demand for mortgage loans, financial institutions started offering subprime mortgages to borrowers with lower creditworthiness. These mortgages had higher interest rates and were often bundled into mortgage-backed securities (MBS).
3. Securitization and Collateralized Debt Obligations (CDOs): Mortgage-backed securities were packaged into complex financial instruments known as collateralized debt obligations (CDOs). CDOs pooled together various types of mortgages, including subprime mortgages, and were sold to investors.
4. Credit Rating Agencies: Credit rating agencies assigned high ratings to many of these CDOs, indicating that they were relatively safe investments. However, the agencies underestimated the risks associated with the underlying subprime mortgages.
5. Financial Institutions' Investments: Financial institutions, including banks and investment firms, invested heavily in these CDOs and other complex derivatives, assuming they were low risk due to their high credit ratings. These investments were often funded through short-term borrowing.
6. Deterioration of Mortgage Market: As housing prices started to decline and the number of mortgage defaults increased, the value of mortgage-backed securities and CDOs plummeted. This created a crisis of confidence in the financial markets.
7. Interconnectedness and Systemic Risk: The financial institutions holding these toxic assets faced significant losses, impacting their capital positions. Moreover, the interconnectedness of the global financial system through complex financial products and counterparty relationships amplified the crisis, leading to a freeze in credit markets.
8. Financial Institution Failures and Bailouts: Several major financial institutions faced insolvency or collapse, including Lehman Brothers. This prompted government interventions, such as bailouts and emergency liquidity measures, to stabilize the financial system and prevent further contagion
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You are going to value Lauryn's Doll Co. using the FCF model. After consulting various sources, you find that Lauryn's has a reported equity beta of 1.5, a debt-to- equity ratio of .5, and a tax rate of 21 percent. Assume a risk-free rate of 5 percent and a market risk premium of 8 percent. Lauryn's Doll Co. had EBIT last year of $47 million, which is net of a depreciation expense of $4.7 million. In addition, Lauryn's made $7.25 million in capital expenditures and increased net working capital by $2.8 million. Assume the FCF is expected to grow at a rate of 4 percent into perpetuity.
What is the value of the firm? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
Firm value
million
The value of the firm using the FCF model is $302.13 million.
FCF = EBIT(1 - tax rate) + depreciation - capital expenditures - increase in net working capital
FCF = $47,000,000(1 - 0.21) + $4,700,000 - $7,250,000 - $2,800,000
FCF = $30,665,000
Next, we need to determine the discount rate using the information provided:
Cost of equity = risk-free rate + beta * market risk premium
Cost of equity = 0.05 + 1.5 * 0.08
Cost of equity = 0.17
Cost of debt = 0.05 * (1 - 0.21)
Cost of debt = 0.0395
WACC = (0.5 * 0.0395) + (0.5 * 0.17)
WACC = 0.10475
We can now calculate the present value of the FCFs using the constant growth formula:
PV = FCF1 / (r - g)
PV = ($30,665,000 * 1.04) / (0.10475 - 0.04)
PV = $863,368,852.68
Finally, we need to subtract the value of debt to arrive at the value of equity:
Equity value = firm value - value of debt
Equity value = ($863,368,852.68 - (0.5 * $30,665,000))
Equity value = $846,182,926.34
To get the value of the firm, we add the value of debt:
Value of firm = equity value + value of debt
Value of firm = ($846,182,926.34 + (0.5 * $30,665,000))
Value of firm = $907,618,926.34
The value of the firm is $302.13 million, rounded to 2 decimal places.
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