The expected return of the portfolio is 0.0475 or 4.75%. The closest answer to this value is 0.05 or 5%, so the correct answer is 0.05.
The expected return of a portfolio is calculated by multiplying the weights of each asset in the portfolio by their respective expected returns and then summing them up. Therefore, the expected return of the given portfolio can be calculated as follows:
Expected return of portfolio = (0.5 x 0.05) + (0.25 x 0.08) + (0.25 x 0.01) = 0.025 + 0.02 + 0.0025 = 0.0475
Therefore, the expected return of the portfolio is 0.0475 or 4.75%. The closest answer to this value is 0.05 or 5%, so the correct answer is 0.05.
To know more about Portfolio click here:
https://brainly.com/question/17165367#
#SPJ11
20242023Current Assets:Cash$81,900$18,500Accounts Receivable14,90021,700Merchandise Inventory63,60058,800Current Liabilities:Accounts Payable14,90021,700Merchandise Inventory63,60058,800Current Liabilities:Accounts Payable31,60030,100Accrued Liabilities11,20011,700Payment of cash dividends$15,200Depreciation expense$17,100Purchase of equipment with cash55,100Purchase of building with cash104,000Issuance of long-term notes payable to borrow cash44,000Net income62,600Issuance of common stock for cash111,000Requirement 1. Prepare the statement of cash flows ofJohnsonEducational Supply for the year ended December 31,2024.Use the indirect method to report cash flows from operating activities. (Use a minus sign or parentheses for amounts that result in a decrease in cash. If a box is not used in the statement, leave the box empty; do not select a label or enter a zero.)Complete the statement one section at a time, beginning with the cash flows from operating activities.Johnson Educational SupplyStatement of Cash FlowsYear Ended December 31, 2024Cash Flows from Operating Activities:Net IncomeAdjustments to Reconcile Net Income to Net CashProvided by (Used for) Operating Activities:Net Cash Provided by (Used for) Operating ActivitiesPart 2Cash Flows from Investing Activities:Net Cash Provided by (Used for) Investing ActivitiesPart 3Cash Flows from Financing Activities:Net Cash Provided by (Used for) Financing ActivitiesPart 4Net Increase (Decrease) in CashCash Balance, December 31, 2023Cash Balance, December 31, 2024Part 5Requirement 2. EvaluateJohnson'scash flows for the year. Mention all three categories of cash flows, and give the reason for your evaluation.Complete the following statements to evaluateJohnson'scash flows.Operations are▼generatingusing upcash.The company is▼divesting itself ofinvesting in newplant assets.There is more financing by▼borrowingissuing stockthan by▼borrowing.issuing stock.Cash▼decreasedincreasedduring the year.Part 6For the reasons given above,Johnson'scash flows look▼strongweak.Part 7Requirement 3. IfJohnsonplans similar activity for2025,what is its expected free cash flow? (Use a minus sign or parentheses for amounts that result in a decrease in cash. Abbreviations used: Cash pmts for planned invest. = Cash payments for planned investments in long-term assets; NCOA = Net cash provided by operating activities; NCFA = Net cash provided by financing activities.)Select the labels and enter the amounts to calculateJohnson'sexpected free cash flow for2025.
1. Using the indirect method cash flows from operating activities are Net Cash Operating Activities $91,900, Net Cash Investing Activities ($159,100), Net Cash Financing Activities $139,800, Net Increase/Decrease in Cash $72,600, Cash Balance, December 31, 2023 $18,500, and Cash Balance, December 31, 2024 $91,100. 2. Operations are generating cash. The company is investing in new plant assets. There is more financing by issuing stock than by borrowing. Cash increased during the year. 3. Expected free cash flow for 2025 is $72,600.
1. The statement of cash flows for Johnson Educational Supply at year ended December 31, 2024 using indirect method is given as:
Cash Flows from Operating Activities:
Net Income $62,600
Adjustments to Reconcile Net Income to Net Cash Provided by (Used for) Operating Activities:
Depreciation Expense $17,100
Changes in Current Assets and Liabilities:
Accounts Receivable $6,800
Merchandise Inventory ($4,800)
Accounts Payable $9,700
Accrued Liabilities ($500)
Net Cash Provided by (Used for) Operating Activities $91,900
Cash Flows from Investing Activities:
Purchase of Equipment with Cash ($55,100)
Purchase of Building with Cash ($104,000)
Net Cash Provided by (Used for) Investing Activities ($159,100)
Cash Flows from Financing Activities:
Issuance of Long-Term Notes Payable to Borrow Cash $44,000
Issuance of Common Stock for Cash $111,000
Payment of Cash Dividends ($15,200)
Net Cash Provided by (Used for) Financing Activities $139,800
Net Increase (Decrease) in Cash $72,600
Cash Balance, December 31, 2023 $18,500
Cash Balance, December 31, 2024 $91,100
2. Evaluating Johnson's cash flows for the year, the operations are generating cash. The company is investing in new plant assets. There is more financing by issuing stock than by borrowing. Cash increased during the year. For the reasons given above, Johnson's cash flows look strong.
3. If Johnson plans similar activity for 2025, its expected free cash flow is:
Expected Free Cash Flow for 2025:
Net Cash Provided by Operating Activities (NCOA) $91,900
Less: Cash Payments for Planned Investments in Long-Term Assets (Cash pmts for planned invest.) ($159,100)
Less: Net Cash Provided by Financing Activities (NCFA) $139,800
Expected Free Cash Flow for 2025 $72,600
Learn more about Indirect method:
https://brainly.com/question/14127626
#SPJ11
Monica is an employee of abc, inc. , which provides group term life insurance (gtli) to each employee. Monica has coverage in the amount of $160,000. The monthly cost for this gtli coverage is $0. 38 per $1,000. Monica makes annual payments of $200 toward the cost of the insurance. What amount must be reported as income on her w-2 for the cost of her gtli?
The following is how Monica's yearly GTLI cost is determined:$160,000 in coverage times $0.38 per $1,000 in coverage is a $60.80 monthly expense.Cost: $60.80 per month x 12 months life insurance
The beneficiaries of a life insurance policy are protected financially in the case of the policyholder's passing. It assists in making provisions for close family members and guarantees their financial security following the policyholder's demise. Term life, whole life, and universal life insurance are just a few of the several types of life insurance plans available. While whole and universal life insurance offer lifetime coverage, term life insurance only offers coverage for a predetermined amount of time. Age, health, lifestyle, and the quantity of coverage are frequently taken into account when calculating the cost of life insurance premiums. Anybody with dependents or financial commitments should think about purchasing life insurance since it is an essential instrument for ensuring the financial security of loved ones.
Learn more about life insurance here:
https://brainly.com/question/1158820
#SPJ4
To illustrate how DV01 changes with maturity, we consider a bond with yield y = 3.5% for different maturities, including perpetuity and different values of coupons:a) zero coupon bondsb) discount bonds with coupon rate c = 0.75%c) par bondsd) premium bonds with coupon rate c = 6.2%DV01 – is the change in the Dollar Value of a security for a 1 basis point change in rates. Example 1: 20 year 5% (semi-annual) coupon bond issued at par. What is its yield? Change y by one b.p (up or down) . and determine the change in the price. Formally DV01 is defined asDV01=− 1 ∂P 10000 ∂ywhere ∂P is the slope of the curve, yield-price, which can be ∂yestimated through usual finite difference:∂P ≈ ∆P ∂y ∆y
DV01 is a measure of how much the price of a bond changes for a 1 basis point change in yield. It is used to estimate the change in the value of a bond portfolio for a given change in interest rates. For the example we can estimate the change in price for a 1 basis point change in yield and calculate the DV01
The DV01 for different types of bonds will vary depending on the maturity, coupon rate, and other factors.
For a zero coupon bond, the DV01 will be smaller for shorter maturities and larger for longer maturities. This is because the price of a zero coupon bond is more sensitive to changes in interest rates for longer maturities.
For a discount bond with a coupon rate of 0.75%, the DV01 will be larger for shorter maturities and smaller for longer maturities. This is because the price of a discount bond is less sensitive to changes in interest rates for longer maturities.
For a par bond, the DV01 will be smaller for shorter maturities and larger for longer maturities. This is because the price of a par bond is more sensitive to changes in interest rates for longer maturities.
For a premium bond with a coupon rate of 6.2%, the DV01 will be larger for shorter maturities and smaller for longer maturities. This is because the price of a premium bond is less sensitive to changes in interest rates for longer maturities.
In the example given, the yield of the 20 year 5% coupon bond issued at par is 5%. To determine the DV01, we can change the yield by one basis point and calculate the change in price. Using the formula DV01 = -(1/10000) * (∆P/∆y), we can estimate the change in price for a 1 basis point change in yield and calculate the DV01.
For such more question on interest rates:
https://brainly.com/question/30844137
#SPJ11
If I created a cool new app, pricing model which I would like to use is dynamic pricing strategies and why I use the dynamic pricing strategies?One page answer required please answer according to the question
Dynamic pricing strategies are an effective way to price a new app because they allow for flexibility in response to changing market conditions. This can help maximize profits while also ensuring that the app remains competitive in the market.
One of the key benefits of dynamic pricing strategies is that they allow for price changes based on real-time demand. For example, if there is a surge in demand for the app, the price can be increased to take advantage of this demand. Conversely, if demand decreases, the price can be lowered to attract more customers.
Another benefit of dynamic pricing strategies is that they can be used to offer discounts and promotions to specific groups of customers. For example, the app could offer a discount to students or to users who are willing to make a long-term commitment.
Finally, dynamic pricing strategies can be used to experiment with different pricing levels to find the optimal price for the app. This can help ensure that the app is priced at a level that maximizes profits while also being competitive in the market.
Overall, dynamic pricing strategies are an effective way to price a new app because they allow for flexibility in response to changing market conditions, the ability to offer discounts and promotions, and the ability to experiment with different pricing levels.
For such more question on pricing:
https://brainly.com/question/25811981
#SPJ11
You have $32,000 and observe the following exchange rates:
Exchange rate Bid Ask
Value of yen in U.S. dollars $0.0098 $0.0099
Value of Canadian dollar in U.S. dollars $0.72 $0.73
Value of yen in Canadian dollars C$0.0142 C$0.0144
What is your profit from exploiting the opportunity once (in $)?
The profit from exploiting the opportunity once is $19,833.76.
To determine the profit from exploiting the opportunity once, we need to first calculate the value of our $32,000 in each currency using the exchange rates provided.
Then, we need to compare the values and determine the difference, which will be our profit.
Step 1: Calculate the value of $32,000 in yen using the exchange rate for the value of yen in U.S. dollars:
$32,000 x $0.0098 = 313,600 yen
Step 2: Calculate the value of $32,000 in Canadian dollars using the exchange rate for the value of Canadian dollar in U.S. dollars:
$32,000 x $0.72 = $23,040
Step 3: Calculate the value of 313,600 yen in Canadian dollars using the exchange rate for the value of yen in Canadian dollars:
313,600 yen x C$0.0142 = C$4,453.12
Step 4: Convert the value of 313,600 yen in Canadian dollars to U.S. dollars using the exchange rate for the value of Canadian dollar in U.S. dollars:
C$4,453.12 x $0.72 = $3,206.24
Step 5: Determine the difference between the value of $32,000 in Canadian dollars and the value of 313,600 yen in U.S. dollars:
$23,040 - $3,206.24 = $19,833.76
Therefore, the profit from exploiting the opportunity once is $19,833.76.
To know more about profit, refer here:
https://brainly.com/question/29442717#
#SPJ11
Fraud is one of the most critical issues that auditors face. Please answer the following questions regarding fraud.
a. Identify and explain the two fundamental categories of fraud discussed in class. Which type of fraud is the primary concern of the auditor and why? (8)
b. If the auditor concludes that a high risk of fraud exists for an audit client, explain how the auditor should respond to this risk. (10)
c. If fraud is discovered during an audit, what steps should the auditor take? (7)
A. There are two fundamental categories of fraud discussed in class: fraudulent financial reporting and misappropriation of assets. Fraudulent financial reporting is the primary concern of the auditor because it could involve the deliberate misstatement of financial statements for the purpose of misrepresenting a company’s financial performance or condition. Misappropriation of assets involves the intentional misuse of assets for the purpose of personal gain.
B. If the auditor concludes that a high risk of fraud exists for an audit client, the auditor should adjust the risk assessment of the audit and respond with increased audit procedures and tests. This may include changing the nature, timing, or extent of audit tests, and additional measures such as vouching and re-performance of tests.
C. If fraud is discovered during an audit, the auditor should immediately inform the client and the appropriate management personnel. The auditor should document all findings and recommendations in detail. The auditor should also follow up to ensure that the client has taken appropriate corrective action.
Know more about fraud here:
https://brainly.com/question/30328433
#SPJ11
The value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering.a): True b): FalseThere are _______ measurement techniques to monitor satisfaction. a): 2 b): 3 c): 4 d): None of the aboveHofstede identifies five cultural dimensions that differentiate countries. a): Yes b): NoA common way to estimate total market potential is to multiply the potential number of buyers by the average quantity each purchase and then by the price.a): True b): FalseThere are _________marketing activities that improve loyalty and retention. a): 3 b): 4 c): 6 d): 8
a) True - The value delivery system does indeed include all the experiences the customer will have on the way to obtaining and using the offering.b) 4 - There are four main measurement techniques. c) Yes - Hofstede does identify five cultural dimensions that differentiate countries.d) True - A common way to estimate total market potential is indeed to multiply the potential number of buyers.There are four main marketing activities that improve loyalty and retention
delivery system includes the entire process from researching the product or service, making the purchase, and using it.b) 4 - There are four main measurement techniques to monitor satisfaction: customer surveys, focus groups, customer feedback, and observation.
c) Yes - Hofstede does identify five cultural dimensions that differentiate countries. These dimensions are power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, and long-term vs. short-term orientation.
d) True - A common way to estimate total market potential is indeed to multiply the potential number of buyers by the average quantity each purchase and then by the price. This is known as the market demand equation.
e) 4 - There are four main marketing activities that improve loyalty and retention: customer relationship management (CRM), loyalty programs, personalized marketing, and customer service.
For such more questions on measurement techniques :
brainly.com/question/30010739
#SPJ11
At the beginning of the year, a firm has current assets of $329 and current liabilities of $233. At the end of the year, the current assets are $495 and the current liabilities are $273. What is the change in net working capital? Multiple Choice $206 $126 $166
The change in net working capital is $126.
The change in net working capital can be calculated by subtracting the initial net working capital from the final net working capital. Net working capital is the difference between current assets and current liabilities.
Initial net working capital = Current assets at the beginning of the year - Current liabilities at the beginning of the year
= $329 - $233
= $96
Final net working capital = Current assets at the end of the year - Current liabilities at the end of the year
= $495 - $273
= $222
Change in net working capital = Final net working capital - Initial net working capital
= $222 - $96
= $126
To know more about Current liabilities click on below link:
https://brainly.com/question/14287268#
#SPJ11
Please use the following information for this question.
Exchange Rate
Interest Rate Annual %
is
S($/€)
F360($/€)
$1.25/€
$1.20/€
2%
5%
(a) Does covered interest rate parity hold? (Just state your answer – no explanation required.)
(b) To earn profits via covered interest arbitrage, would you borrow in euros and lend in US$, or borrow in US$ and lend in euros? (Just state your answer – no explanation required.)
(c) Suppose you are a German investor who cares about profits measured in euros. You can either borrow €1,000,000 or $1,250,000 for one year, what is the profit you can earn via covered interest arbitrage?
(d) In response to investors carrying out covered interest arbitrage, will i$ increase or decrease? (Just state your answer – no explanation required.)
(a) Covered interest rate parity does not hold
(b) To earn profits via covered interest arbitrage, you would borrow in euros and lend in US$.
(c) If you are a German investor who cares about profits measured in euros, you can earn a profit of €25,000 via covered interest arbitrage
(d) In response to investors carrying out covered interest arbitrage, i$ will decrease.
(a) Covered interest rate parity does not hold because the forward exchange rate is not equal to the spot exchange rate multiplied by the ratio of interest rates. Specifically, F360($/€) ≠ S($/€) × (1 + i$)/(1 + i€).
(b) To earn profits via covered interest arbitrage, you would borrow in euros and lend in US$. This is because the interest rate in euros is lower than the interest rate in US$, so you can borrow at a lower cost and earn a higher return on your investment.
(c) If you are a German investor who cares about profits measured in euros, you can earn a profit of €25,000 via covered interest arbitrage. Here's how:
1. Borrow €1,000,000 at an interest rate of 2%.
2. Convert the borrowed euros to US$ at the spot exchange rate of $1.25/€. This gives you $1,250,000.
3. Lend the US$ at an interest rate of 5% for one year. After one year, you will have $1,312,500.
4. Convert the US$ back to euros at the forward exchange rate of $1.20/€. This gives you €1,093,750.
5. Repay the borrowed euros plus interest, which is €1,000,000 × (1 + 0.02) = €1,020,000.
6. Your profit is €1,093,750 - €1,020,000 = €73,750.
(d) In response to investors carrying out covered interest arbitrage, i$ will decrease. This is because the demand for US$ will decrease as investors borrow in euros and convert to US$ to carry out the arbitrage. As the demand for US$ decreases, the interest rate on US$ will also decrease.
To know more about covered interest arbitrage click here:
https://brainly.com/question/16178885
#SPJ11
Brains Inc., and Zombies Inc., are in direct competition selling attenuators. Given the following assumptions for next year, which of the two companies’ after-tax operating cash flows are forecast to be most sensitive to unit sales?
Forecast for next year Brains Zombies
Unit Sales (000) 10,428 4,296 Price per Unit $1.50 $1.50 Variable Cost per Unit $.55 $.60 Fixed Costs (exc. Depn) ($'000) $4,618 $1,
Depreciation ($'000) $784 685 $551 Tax Rate 19% 20%
Brains Inc.'s after-tax operating cash flows are forecast to be most sensitive to unit sales.
The after-tax operating cash flows for both Brains Inc. and Zombies Inc. can be calculated as follows:
Brains Inc.:
Gross Profit = (Unit Sales x Price per Unit) - (Unit Sales x Variable Cost per Unit)
= (10,428 x $1.50) - (10,428 x $.55)
= $15,642 - $5,735.40
= $9,906.60
Operating Profit = Gross Profit - Fixed Costs - Depreciation
= $9,906.60 - $4,618 - $784
= $4,504.60
After-Tax Operating Cash Flow = Operating Profit x (1 - Tax Rate)
= $4,504.60 x (1 - 0.19)
= $3,648.73
Zombies Inc.:
Gross Profit = (Unit Sales x Price per Unit) - (Unit Sales x Variable Cost per Unit)
= (4,296 x $1.50) - (4,296 x $.60)
= $6,444 - $2,577.60
= $3,866.40
Operating Profit = Gross Profit - Fixed Costs - Depreciation
= $3,866.40 - $1,685 - $551
= $1,630.40
After-Tax Operating Cash Flow = Operating Profit x (1 - Tax Rate)
= $1,630.40 x (1 - 0.20)
= $1,304.32
Based on the calculations, Brains Inc.'s after-tax operating cash flow is more sensitive to unit sales as it has a higher gross profit and operating profit, and therefore a higher after-tax operating cash flow. Any changes in unit sales will have a greater impact on Brains Inc.'s after-tax operating cash flow compared to Zombies Inc.
Learn more about Operating cash flows:
https://brainly.com/question/25716101
#SPJ11
Suppose that an investor believes that a large stock price movement may soon occur, but does not confidently know the direction. Discuss the possible profitable alternatives in option spreads and combinations
One profitable alternative in option spreads and combinations for an investor who believes that a large stock price movement may soon occur but does not confidently know the direction is to use a straddle.
Another profitable alternative is to use a strangle, which is similar to a straddle but involves buying a call option and a put option with different strike prices.
This strategy can also allow the investor to profit from a large price movement in either direction, but it typically requires a larger price movement to be profitable than a straddle.
A third profitable alternative is to use a butterfly spread, which involves buying a call option and a put option with different strike prices and selling two options with a strike price in between.
This strategy can allow the investor to profit from a moderate price investment in either direction.
To know more about strike prices click on below link:
https://brainly.com/question/15682316#
#SPJ11
A company computes its accounts receivable turnover to be 20. Based on this information, find the average collection period. If the company has a credit collection period of 30 days, explain the relationship between the credit collection period and the average collection period.
A company computes its accounts receivable turnover to be 20. Based on this information the average collection period is 18.25 days. If the company has a credit collection period of 30 days , the average collection period is shorter than the credit collection period, which means that the company is collecting its accounts receivable faster than the maximum amount of time allowed.
The average collection period is calculated by dividing the number of days in a year (365) by the accounts receivable turnover. In this case, the average collection period would be:
Average collection period = 365 / accounts receivable turnover
Average collection period = 365 / 20
Average collection period = 18.25 days
This means that on average, the company collects its accounts receivable in 18.25 days.
The credit collection period is the number of days that the company allows its customers to pay for their purchases on credit. In this case, the credit collection period is 30 days.
The relationship between the credit collection period and the average collection period is that the credit collection period is the maximum amount of time that the company allows its customers to pay, while the average collection period is the actual amount of time that it takes for the company to collect its accounts receivable. In this case, the average collection period is shorter than the credit collection period, which means that the company is collecting its accounts receivable faster than the maximum amount of time allowed. This is a good sign for the company's cash flow and liquidity.
For more such questions on turnover, click on:
https://brainly.com/question/18914383
#SPJ11
Ann found an apartment that costs $800,000 to buy. She will make a $100,000 down payment and will get a mortgage for $700,000. The mortgage will be a fully amortizing 30-year fixed rate mortgage at 4.25% with monthly payments and monthly compounding.
If Ann's house price grows 4.5% per year (compounded annually) and Ann continues making her mortgage payments, what will Ann's home equity be in 10 years (after her 120th payment)?
(round answer 2 decimal places, do not include commas or dollar signs in response)
Ann's home equity after 10 years if Ann's house price grows 4.5% per year is 684162.56.
Ann's home equity in 10 years can be calculated by finding the future value of the house price and subtracting the remaining mortgage balance.
First, we will calculate the future value of the house price using the formula FV = PV(1+r)^n, where FV is the future value, PV is the present value, r is the annual interest rate, and n is the number of years.
FV = [tex]800,000(1+0.045)^{10}[/tex]
FV = $1,234,397.84
Next, we will calculate the remaining mortgage balance after 10 years. We will use the formula B = P[(1+r)^n - (1+r)^p]/[(1+r)^n - 1], where B is the remaining balance, P is the principal, r is the monthly interest rate, n is the total number of payments, and p is the number of payments made.
B = [tex]700,000[(\frac{1+0.0425}{12})^{360} - (\frac{1+0.0425}{12})^{120}]/[(\frac{1+0.0425}{12})^{360} - 1][/tex]
B = $550,235.28
Finally, we will subtract the remaining mortgage balance from the future value of the house price to find Ann's home equity.
Home Equity = $1,234,397.84 - $550,235.28
Home Equity = $684,162.56
Therefore, Ann's home equity in 10 years will be $684,162.56.
Learn more about future value here:
brainly.com/question/24703884
#SPJ11
A company is projected to anticipate a free cash flow of $20 million next year and the company anticipates the cash flow to decrease at a rate of 10% per year in perpetuity. The equity cost of capital is 9%, the cost of debt is 4%, and the corporate tax rate is 40%. With a DTE ratio of 0.4, what is the value of the company close to?
The value of the company is close to $62.25 million.
The value of the company can be calculated using the following formula:
Value = Free Cash Flow / (Equity Cost of Capital - Growth Rate)
In this case, the free cash flow is $20 million,
the equity cost of capital is 9%,
and the growth rate is -10%.
Plugging these values into the formula gives us:
Value = $20 million / (0.09 - (-0.10))
Value = $20 million / 0.19
Value = $105.26 million
However, we also need to take into account the cost of debt and the corporate tax rate.
To do this, we can use the following formula:
Value = (1 - Corporate Tax Rate) * (Free Cash Flow - Cost of Debt * DTE Ratio) / (Equity Cost of Capital - Growth Rate)
Plugging in the values from the question gives us:
Value = (1 - 0.40) * ($20 million - 0.04 * 0.4 * $20 million) / (0.09 - (-0.10))
Value = 0.60 * ($20 million - $0.32 million) / 0.19
Value = $62.25 million
Therefore, the value of the company is close to $62.25 million.
Learn more about Cash Flow at https://brainly.com/question/30066211
#SPJ11
Explain the approaches with example for each :- the straw dog approach- the intensive discussion approach
The straw dog approach and the intensive discussion approach are both methods used in decision making and problem solving. Each approach has its own unique features and advantages.
The straw dog approach involves creating a preliminary or rough draft of a solution or decision, which is then reviewed and revised by a group of people. An example of the straw dog approach is when a company creates a preliminary business plan and then presents it to a group of stakeholders for review and feedback.
The intensive discussion approach, on the other hand, involves a group of people working together to come up with a solution or decision. This approach is characterized by in-depth discussion and debate, with the goal of reaching a consensus. An example of the intensive discussion approach is when a team of employees is tasked with coming up with a new marketing strategy. The team members discuss and debate various ideas, and work together.
For such more questions on decision making:
brainly.com/question/27004710
#SPJ11
Q7. Consider a project with free cash flow in one year of $130,357 or $198,216, with either outcome being equally likely. The initial investment required for the project is $105,000, and the project's cost of capital is 17%. The risk-free interest rate is 12%.
(Assume no taxes or distress costs.)
a. What is the NPV of this project?
b. Suppose that to raise the funds for the initial investment, the project is sold to investors as an all-equity firm. The equity holders will receive the cash flows of the project in one year. How much money can be raised in this way—that is, what is the initial market value of the unlevered equity? c. Suppose the initial $105,000 is instead raised by borrowing at the risk-free interest rate. What are the cash flows of the levered equity, and what is its initial value according to M&M?
A. The NPV of this project can be calculated:
Calculate the expected cash flow by taking the average of the two possible outcomes:
= ($130,357 + $198,216) / 2 = $164,286.50
Discount the expected cash flow by the project's cost of capital:
= $164,286.50 / (1 + 0.17) = $140,414.10
Subtract the initial investment from the discounted cash flow to get the NPV:
= $140,414.10 - $105,000 = $35,414.10
B. The initial market value of the unlevered equity can be calculated by simply taking the NPV of the project, since the equity holders will receive the entire cash flow of the project. Therefore, the initial market value of the unlevered equity is $35,414.10.
C. If the initial investment is raised by borrowing at the risk-free interest rate, the cash flows of the levered equity will be the expected cash flow minus the amount that needs to be repaid on the loan.
The amount that needs to be repaid on the loan is the initial investment plus the interest on the loan:
= $105,000 + ($105,000 x 0.12) = $117,600.
Therefore, the cash flows of the levered equity are $164,286.50 - $117,600 = $46,686.50. The initial value of the levered equity according to M&M is the present value of these cash flows, discounted by the cost of capital: $46,686.50 / (1 + 0.17) = $39,907.26.
Net present value (NPV) is a financial metric used to evaluate the profitability of an investment project. It is the difference between the present value of cash inflows generated by the project and the present value of cash outflows associated with the project.
The calculation of NPV involves discounting future cash flows to their present value using a discount rate. The discount rate is typically the company's cost of capital, which represents the minimum rate of return required by the company's investors to invest in the project.
Here to learn more about the net present value (NPV) at the link
brainly.com/question/18848923
#SPJ11
A company has the following cash flow:
Period C0= -1000
Period C1= +500
Period C2= -100
Period C3= +600
Should the company invest in the
project if cost of capital is 5%?
Yes, if the cost of capital is 5% and NPV the company is greater than 0, so the company should invest in the project. This is because the return on investment is positive.
To determine whether a company should invest in a project, it needs to calculate the net present value (NPV) of the project. NPV is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.
You can calculate NPV using the following formula:
Current value = C0 + (C1 / (1+r)^1) + (C2 / (1+r)^2) + (C3 / (1+r)^3)where:
C0 = initial investmentC1, C2, C3 = cash flows for periods 1, 2, and 3r = cost of capitalInsert the question value:
Present value = -1000 + (500 / (1+0.05)^1) + (-100 / (1+0.05)^2) + (600 / (1+0.05)^3)Present Value = -1000 + 476.19 + (-90.70) + 518.71NPV = -95.80.
Here to learn more about the net present value (NPV) at the link
https://brainly.com/question/18848923
#SPJ11
A. Set up accounts for the following: cash, accounts receivable, office equipment, accounts payable, notes payable, common stock, advertising revenue, want ad revenue, printing expense, advertising expense, utilities expense, salaries expense, rent expense, and delivery expense. Prepare journal entries in a general journal and record the foregoing transactions in the accounts
To set up the accounts for the following transactions, we would need to create the following accounts in the general ledger.
Cash
Accounts Receivable
Office Equipment
Accounts Payable
Notes Payable
Common Stock
Advertising Revenue
Want Ad Revenue
Printing Expense
Advertising Expense
Utilities Expense
Salaries Expense
Rent Expense
Delivery Expense
The following transactions are recorded in the general journal:
Issued common stock for $50,000 cash
Debit Cash $50,000
Credit Common Stock $50,000
Purchased office equipment on account for $10,000
Debit Office Equipment $10,000
Credit Accounts Payable $10,000
Received $5,000 cash from a customer on account
Debit Cash $5,000
Credit Accounts Receivable $5,000
Paid $2,000 cash for printing expenses
Debit Printing Expense $2,000
Credit Cash $2,000
Sold advertising for $3,000 cash
Debit Cash $3,000
Credit Advertising Revenue $3,000
Received $2,000 cash for want ad revenue
Debit Cash $2,000
Credit Want Ad Revenue $2,000
Incurred $1,500 in advertising expenses on account
Debit Advertising Expense $1,500
Credit Accounts Payable $1,500
Paid $1,000 cash for utilities expense
Debit Utilities Expense $1,000
Credit Cash $1,000
Paid $4,000 cash for salaries expense
Debit Salaries Expense $4,000
Credit Cash $4,000
Paid $3,000 cash for rent expense
Debit Rent Expense $3,000
Credit Cash $3,000
Borrowed $15,000 cash by signing a note payable
Debit Cash $15,000
Credit Notes Payable $15,000
Purchased office supplies on account for $500
Debit Office Supplies $500
Credit Accounts Payable $500
Delivered goods to a customer on account for $2,500
Debit Accounts Receivable $2,500
Credit Delivery Expense $2,500
The above journal entries are recorded in the respective accounts to keep track of the transactions.
learn more about general ledger here
https://brainly.com/question/1436327
#SPJ4
The supplies account balance on June 30 is $5,800. The supplies
on hand on June 30 are $4,200.
1. Credit?
2. Debit?
3. For?
The difference between the supplies account balance and the supplies on hand is $1,600 ($5,800 - $4,200). This means that $1,600 worth of supplies have been used during the month of June.
To record this transaction, you will need to make the following journal entry:
1. Credit the Supplies account for $1,600 to reduce the balance to the correct amount of supplies on hand.
2. Debit the Supplies Expense account for $1,600 to record the expense of the supplies that were used during the month.
3. This journal entry is made for the purpose of accurately reflecting the amount of supplies on hand and the expense of the supplies that were used during the month of June.
The journal entry will look like this:
Account Debit Credit Supplies Expense$1,600Supplies$1,600
For more question on balance click on
https://brainly.com/question/1113933
#SPJ11
SCENARIO: Grass Cutter Inc. is a company involved in producing and distributing a variety of grass for industrial and residential use. The company has been facing declining sales over the past three (3) years and shareholders have made their displeasure known at the last company annual general meeting in October. The Chairman fired the CEO two (2) months ago.The Research & Development Team has come up with a new variety of grass that will grow in three (3) days. All you do is add water. The findings have been encouraging and their experiments show that this will be a game-changer in the market. The plan is to launch marketing activities for the new variety of grass with a Press Conference, to which the Minister of Agriculture and Fisheries will be invited to make remarks.The Chairman – Bradley Greening, is also poised to announce the appointment of a new CEO – Mrs. Zinnia Russell, who has a master’s degree in Agricultural Science and seven (7) years’ experience in selling agricultural products to farmers and consumers of a Home & Garden Centre. She joined the company on February 1, 2022.RequiredWrite a 3-minute speech that the new CEO – Zinna Russell will make at the Press Conference on February 24, 2022, to announce the new variety of grass being introduced in the market and her plans for the company’s success.You are free to embellish the background information with material from your own thoughts.
Good morning ladies and gentlemen,
I am Zinnia Russell, the newly appointed CEO of Grass Cutter Inc. I am delighted to be here today to present our company’s new and innovative variety of grass. As you know, the company has been facing a difficult period due to declining sales, and this is something we are committed to reversing. With the help of our Research & Development team, we have come up with a groundbreaking new product which will revolutionise the market.
This new variety of grass will grow in three days with only water added. Our experiments have proven that this grass will be much easier to grow and maintain than the current varieties on the market. We believe it will be a real game-changer and it will be available to both industrial and residential customers. We are confident that it will bring us success and turn around the fortunes of the company.
With the help of our experienced and passionate staff, I will strive to achieve the best results for Grass Cutter Inc. Our commitment to providing high quality products and services to our customers will never waiver, and our research team will continue to push the boundaries to produce new and exciting innovations. I also plan to reach out to farmers and garden centres to further expand our customer base.
I hope that today marks the beginning of a bright new chapter for Grass Cutter Inc., and I look forward to helping the company continue to grow and succeed.
Thank you for your time.
For such more questions on Press Conference :
brainly.com/question/6703340
#SPJ11
I invested on January 1st 2013 10.000€ in a financial product that is giving a compounded interest with payments on a quarterly basis.
On January 1st 2024 I will get back my investment together with the interests, and I know that I will receive 37.411€.
It was a good investment, but I can´t remember the rate.
Could you tell me?
A company has the following cash flow:
Period C0= -1000
Period C1= +600
Period C2= -200
Period C3= +600
Should the company invest in the project if cost of capital is 4%?
January 1, 2013, in compound interest and quarterly financial instruments. On 01/01/2024, you will receive €37,411, including your original investment and earned interest. Since the NPV is negative, the company should not invest in the project.
To calculate the interest rate, you can use the following compound interest formula:
A = P(1 + r/n)^(nt)where A is the final amount, P is the principal amount, r is the annual interest rate, n is his number of interest payments per year, and t is the number of years. In this case A = 37,411, P = 10,000, n = 4 (because interest is compounded quarterly), t = 11 (investment made on 01/01/2013 and 01/01/2024 (because it will be refunded).
Plugging in these values and solving for r yields:
37,411 = 10,000 (1 + r/4)^(4*11)3.7411 = (1 + r/4)^44
Take the 44th root of both sides:
1.0277 = 1 + r/4r/4 = 0.0277
r = 0.1108
The annual interest rate is therefore 0.1108 or 11.08%. In the second question, the company's cash flow is -1000 in period C0, +600 in period C1, -200 in period C2, and +600 in period C3. The cost of capital is 4%. To determine if your company should invest in a project.
Calculate the net present value (NPV) of cash flows using the following formula:
NPV = C0 + C1/(1 + r)^1 + C2/(1 + r)^2 + C3/(1 + r)^3Where C0, C1, C2, and C3 are the cash flows for each period and r is the cost of capital. After plugging in the question values, it looks like this:
NPV = -1000 + 600/(1 + 0.04)^1 + -200/(1 + 0.04)^2 + 600/(1 + 0.04)^3Present Value = -1000 + 576.92 + -185.29 + 528.88
NPV = -79.49
Here to learn more about the net present value (NPV) at the link
brainly.com/question/18848923
#SPJ11
A company running a fleet of delivery trucks depreciates them on the basis of how many thousands of miles they actually cover each year, compared to how many miles they are expected to cover during their useful life. Which method of depreciation is the company using? a. Declining salvage value method b. Straight-line method c. Accelerated method d. Units of production method Bookmark for review
The company is using the units of production method of depreciation. This method calculates depreciation based on the actual usage of the asset, in this case, the number of miles covered by the delivery trucks.
The depreciation expense is calculated by dividing the cost of the asset minus its salvage value by the total number of units it is expected to produce during its useful life, and then multiplying that by the number of units produced in the current period. This method is commonly used for assets that are expected to have a varying level of usage throughout their useful life, such as delivery trucks or machinery. For example, the depreciation expense for a truck that is expected to cover 100,000 miles over its useful life would be based on how many miles the truck actually covers over the course of a year.
Here you can learn more about depreciation https://brainly.com/question/30531944
#SPJ11
Choose an organisation and describe 3 ways in which its been affected by covid 19. if you were a manager, in that organisation how would you have handled those issues?
The COVID-19 pandemic has had a big effect on the organization such as airline industry. There has been less demand for travel, costs have gone up because of safety measures, and there have been layoffs and furloughs.
As a manager in the field, I would take these 3 action to deal with problems.
I would offer promotions and discounts to get more people to travel.
To deal with rising costs, I would look into ways to save money, like renegotiating contracts with suppliers.
To avoid layoffs and unpaid time off, I would think about cutting pay or reducing the number of hours I work.
Overall, it is important for industry managers to take steps to lessen the effects of COVID-19 and make sure that their organizations will be successful in the long run.
Read more about positive and negative effects of COVID-19.
https://brainly.com/question/29829957
#SPJ11
What is the default risk premium on Aaa corporate bond, if the interest rate on that bond is 3.54 percent and the interest rate on a Treasury security is 1.78 percent?
The default risk premium on the Aaa corporate bond is 1.76%.
The default risk premium on a corporate bond is the difference between the interest rate on the corporate bond and the interest rate on a Treasury security.
This is because the Treasury security is considered to be risk-free, so any additional interest earned on the corporate bond is a reflection of the additional risk taken on by the investor.
The default risk premium on the Aaa corporate bond is 3.54% - 1.78% = 1.76%. This means that investors are earning an additional 1.76% in interest to compensate for the additional risk of investing in the corporate bond.
Answer: 1.76%
To learn more about risk premium:
https://brainly.com/question/28235630#
#SPJ11
All of the following are specifically identifiable intangibles except:
Trademarks
Goodwill
Patents
Copyrights.
Intangible assets that have a finite life are amortized over a period not to exceed:
Their useful life.
Their legal life.
20 years.
40 years.
Goodwill is not a specifically identifiable intangible asset and intangible assets with a finite life are amortized over their useful life.
The correct answers to the questions are:
1) Goodwill: Goodwill is not a specifically identifiable intangible asset. It is an intangible asset that arises from the acquisition of one company by another company and is not specifically identifiable. Goodwill represents the value of a company's brand name, customer relationships, and other intangible assets that are not specifically identifiable.
2) Their useful life: Intangible assets that have a finite life are amortized over their useful life. The useful life of an intangible asset is the period of time over which the asset is expected to contribute to the future cash flows of the company. The useful life of an intangible asset may be shorter than its legal life, and it is the useful life that should be used for amortization purposes.
For more about intangibles:
https://brainly.com/question/29916481
#SPJ11
Jordan Company's annual accounting year ends on December 31. It is now December 31, 2018, and all of the 2018 entries have been made except for the following: a. The company owes interest of $700 on a bank loan. The interest will be paid when the loan is repaid on September 30, 2019. No interest has been recorded b. On September 1, 2018, Jordan collected six months' rent of $4,800 on storage space. At that date, Jordan debited Cash and credited Deferred Revenue for $4,800. C. The company earned service revenue of $3,300 on a special job that was completed December 29, 2018. Collection will be made during January 2019. No entry has been recorded. D. On November 1, 2018, Jordan paid a one-year premium for property insurance of $4,200, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount. E. At December 31, 2018, wages earned by employees but not yet paid totaled $1,100. The employees will be paid on the next payroll date, January 15, 2019. F. Depreciation of $1,000 must be recognized on a service truck purchased this year. G. The income after all adjustments other than income taxes was $30,000. The company's income tax rate is 30%. Compute and record income tax expense. Required: 1. Give the adjusting journal entry required for each transaction at December 31, 2018. 2. If adjustments were not made each period, the financial results could be materially misstated. Determine the amount by which Jordan Company's net income would have been understated, or overstated, had the adjustments in requirement 1 not been made
The net income of Jordan Corporation would have been inflated by $3,550 (700+2,400+350+1,100) if the modifications in requirement 1 had not been implemented.
Journal Entry Corrections as of December 31, 2018:
a. $700 in interest expenses
Interest Due: $750
Rent Revenue $2,400 (4,800/2) Delayed Revenue $2,400
c. $3,300 in accounts receivable
$3,300 in service revenue
d. $350 in insurance costs (4,200/12*2)
$350 for Prepaid Insurance
e. $1,100 in wages expenses
$1,100 in Payable Wages
f. $1,000 in depreciation costs
Service truck accumulated depreciation of $1,000
The financial results could be materially misstated if adjustments weren't made every period.
The net income of Jordan Corporation would have been inflated by $3,550 (700+2,400+350+1,100) if the modifications in requirement 1 had not been implemented. The understatement of income tax expense by $900 (30% of $3,000) would have resulted in an overstatement of net income after taxes by $2,650.
Learn more about "adjusting journal entries" here:
https://brainly.com/question/17439126
#SPJ4
Problem 1: Littlewoods Rule (10 points) A newly created AirRarotonga flight from Rarotonga to Aitutaki has 20 seats. The high fare on the flight is $800 and the restricted/low fare is $300. There is ample demand for the low fare class, but high fare demand is random. Further, the customers who buy low fares buy their tickets well in advance before high fare customers. Assume the demand d for the high fare is distributed according to the following discrete probability distribution: 16 demand al 0 21 31 Probid 0.005 0.005 0.01 0.05 51 0.11 61 02 011 71 81 91 10 11 12131 14 151 0.2 0.15 0.05 0.04 0.03 0.02 0.015 0,015 0.01 When answering the following questions, show your calculations. a. Mr. Wright is in charge of the flight booking operations and decides to set a protection level for the high fare. What is the optimal protection level for the high fare? (2 points) b. Suppose a protection level of 8 is chosen. How many high fare passengers does the airline expect to turn away due to a lack of capacity? (2 points) c. Suppose a protection level of 8 is chosen. How many seats are expectedly empty at departure? (2 points) d. Assuming a protection level of 8, what is the total expected revenue for low and high fare passengers? Write down your analytical calculation. (2 points) e. Suggest two reasonable extensions to the optimization model that is underlying Littlewood's rule and motivate your suggestion. What challenges do you expect with these extensions? (2 points)
a.) The rule states that the protection level should be the maximum demand for the high fare class minus one.
b.) The airline can expect to turn away 8 high fare passengers due to lack of capacity.
c.) The airline can expect 12 seats to be empty at departure
d.) The total expected revenue for low and high fare passengers
e.) Additional factors such as seasonality, weather and additional variables.
a. Mr. Wright is in charge of the flight booking operations and decides to set a protection level for the high fare. What is the optimal protection level for the high fare? (2 points)
The optimal protection level for the high fare can be determined by using Littlewood's rule. This rule states that the protection level should be the maximum demand for the high fare class minus one. In this case, the maximum demand for the high fare is 16, therefore the optimal protection level for the high fare is 15.
b. Suppose a protection level of 8 is chosen. How many high fare passengers does the airline expect to turn away due to a lack of capacity? (2 points)
Given a protection level of 8, the airline can expect to turn away 8 high fare passengers due to lack of capacity.
c. Suppose a protection level of 8 is chosen. How many seats are expectedly empty at departure? (2 points)
Given a protection level of 8, the airline can expect 12 seats to be empty at departure (20 total seats - 8 protection level = 12 empty seats).
d. Assuming a protection level of 8, what is the total expected revenue for low and high fare passengers? Write down your analytical calculation. (2 points)
Assuming a protection level of 8, the total expected revenue for low and high fare passengers can be calculated using the following formula:
Expected Revenue = (Low Fare Demand * Low Fare Price) + (High Fare Demand * High Fare Price)
Therefore, the total expected revenue is:
(16 * $300) + (8 * $800) = $7,200
e. Suggest two reasonable extensions to the optimization model that is underlying Littlewood's rule and motivate your suggestion. What challenges do you expect with these extensions? (2 points)
Two reasonable extensions to the optimization model underlying Littlewood's rule are:
1. Taking into account additional factors such as seasonality, weather, or availability of competitors' flights. This would provide more comprehensive insights into the demand for high fare class and would enable the airline to make better decisions about the protection level.
2. Introducing additional variables such as the cost of each additional seat sold beyond the protection level, or the expected lost revenue for each additional seat turned away due to the lack of capacity. This would allow the airline to make more informed decisions when setting the protection level.
The main challenge with these extensions would be obtaining accurate data on all the additional factors, as well as ensuring the accuracy of the calculations.
For such more question on passengers:
https://brainly.com/question/29763581
#SPJ11
Scarlett owns a cottage in Northern Ontario that she purchased for $ 1 5 0 , 0 0 0 in 1 9 9 5 . She wants to pass the cottage on to her three daughters through her Will . She is concerned , however , about the capital gains taxes on the cottage when she dies . It has already grown in value since she bought it , to about $ 2 0 5 , 0 0 0 today ( an average increase of about 4 % a year ) . She believes that rate of increase will continue into the future . You have recommended that Scarlett cover her future tax liability by purchasing a universal life insurance policy . Which death benefit option would you recommend ?
a.Indexed death benefit
b.Increasing death benefit
c.Increasing death benefit plus deposits
d.Level death benefit
The best death benefit option for Scarlett in order to cover her future tax liability would be an indexed death benefit. Therefore, the correct option is a.
An indexed death benefit is a life insurance policy that pays out an amount equal to the increase in the value of an asset, such as the cottage, at the time of the insured's death. This allows Scarlett to pass the cottage on to her daughters with the assurance that the taxes on its increase in value will be taken care of by the life insurance policy.
Hence, the indexed death benefit option is recommendable for Scarlett's universal life insurance policy. This option will allow the death benefit to increase at the same rate as the value of the cottage, ensuring that her daughters will have enough money to cover the capital gains taxes when she passes away. The indexed death benefit option is designed to keep pace with inflation and the increasing value of assets, so it is the best option for Scarlett's situation. Hence, the recommended option is a.
The other options, such as the increasing death benefit and increasing death benefit plus deposits, may not provide enough coverage for the future value of the cottage. The level death benefit option would also not be suitable, as it would not account for the increasing value of the cottage. Therefore, the indexed death benefit option is the best choice for Scarlett to ensure that her daughters are able to inherit the cottage without having to worry about the capital gains taxes.
Learn more about Life insurance:
https://brainly.com/question/1373572
#SPJ11
a.What is the current situation of the public pension plan systems in the U.S.?
b. Why does the media claim that the public pension plan is in crisis? What is your opinion? Explain your position in detail.
The current situation of the public pension plan systems in the U.S. is that they are facing financial challenges due to the aging population, low investment returns, and inadequate funding.
Many public pension plans are underfunded, meaning that they do not have enough assets to meet their future obligations to retirees
The Answer for Question BThe media claims that the public pension plan is in crisis because of the financial challenges mentioned above. Many experts believe that if these challenges are not addressed, the public pension plans may not be able to meet their obligations to retirees in the future. This could result in reduced benefits for retirees or an increased burden on taxpayers to fund the plans.
My opinion is that it is important for policymakers to address the financial challenges facing public pension plans in order to ensure that retirees receive the benefits they have been promised and that taxpayers are not overly burdened. This may require difficult decisions, such as increasing contributions to the plans or reducing benefits, but it is necessary to ensure the long-term sustainability of the public pension system.
Learn more about pension plan https://brainly.com/question/28008155
#SPJ11
To illustrate how Macaulay duration changes with maturity, we consider a bond with yield y = 7% for different maturities, including perpetuity and different values of coupons:
a) zero coupon bonds
b) discount bonds with coupon rate c = 1.5%
c) par bonds
d) premium bonds with coupon rate c = 12.5%
a.) The Macaulay duration for a zero coupon bond is equal to its maturity.
b.) The Macaulay duration for a discount bond with coupon rate c = 1.5% is lower than its maturity
c.) The Macaulay duration for a par bond is equal to its maturity
d.) The Macaulay duration for a premium bond with coupon rate c = 12.5% is higher than its maturity.
a) The Macaulay duration for a zero coupon bond is equal to its maturity, since the present value of its cash flow is received only at the maturity date.
b) The Macaulay duration for a discount bond with coupon rate c = 1.5% is lower than its maturity, since it pays coupons and its present value of cash flow is spread over a longer period.
c) The Macaulay duration for a par bond is equal to its maturity, since the present value of its cash flow is equal to the price of the bond and is received at the maturity date.
d) The Macaulay duration for a premium bond with coupon rate c = 12.5% is higher than its maturity, since it receives more than its par value at maturity and its present value of cash flow is spread over a longer period.
Macaulay duration is a measure of a bond's sensitivity to interest rate changes, taking into account the timing and size of the bond's cash flows.
For such more question on bond:
https://brainly.com/question/25965295
#SPJ11
