The company's shareholders begin selling their shares as soon as the new information is deemed unfavorable.
c. The value of a share will fall below what is considered appropriate due to decreased demand for the shares, but the price will eventually rise to the appropriate level among the available options.
What takes place when the value of shares drops?The value of the company simply decreases when the price of a share falls. This value change is not redistributed among any parties. The forces of supply and demand determine the direction of the stock market.
When the price of a share drops, what does that imply?If more individuals have any desire to purchase a stock (request) than sell it (supply), then, at that point, the cost climbs. On the other hand, the price would fall if more people wanted to sell a stock than buy it because there would be more supply than demand.
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a 2.95 percent tips has an original reference cpi of 180.2. if the current cpi is 205.1, what is the current interest payment and par value of the tips? (assume semiannual interest payments and $1,000 par value.)
par value of the tips is $1138.18 and the current interest payment is $16.79, while assume semiannual interest payments and $1,000 par value.
Given data,
Original reference CPI = 180.2
Current CPI = 205.1
Interest rate = 2.95%
Par value = $1000
the formula is:
Par value of the TIPS = Par value x (current CPI ÷ original CPI)
= $1000 x (205.1 ÷ 180.2)
= $1000 x 1.13818 = $1138.18
Semi-annual interest payment = Par value of TIPS x interest rate x 6/12
= $1138.18 x 2.95% x 6/12
= $16.79
par value of the tips = $1138.18
The current interest payment = $16.79
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consider an 8-year balloon loan for $160,000 where a monthly payment is equal to that of a 15-year fixed-rate loan with a nominal annual rate of 6.4%. how much will the borrower owe when the balloon payment is due?
consider an 8-year balloon loan for $160,000 where a monthly payment is equal to that of a 15-year fixed-rate loan with a nominal annual rate of 6.4%. The borrower owe 493.31 when the balloon payment is due.
Balloon loan of $160,000 for 8 year is taken,
Now, Find out the monthly payment first,
r = 6·4% = 0.064 / 12
n = 15X12
= 180
i = 12
P = 160,000
160,000 = L (1-(1+ 01084/12)^-180 / (0.064/12)
160000X0.064/12 = L(1-(1+0.064/12)^-180
160000 x0·064/12= L (0·11)^-180
863.33 = 0·11L-180
0.11L = 853.33-180
0.11L = 673.33
6121 the is monthly Payment
now calculate the borrower owe
r = 01064
n= 15
d= 6121
bo= ?
bo = 6121 (1-1+(0:06 4/12) )^-15X12 (0.64/12)
bo = 6121 (1- 1.064/12)^-180
bo = 6121 (0.11)^-180
bo = 6121*0.11 - 180.
bo = 493.31 is the owe amount
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the sandy beach resort, a family resort located in florida, promotes the months of september and october as its vacation value months. during this time, it offers reduced rates on rooms. it does this, in part, because most families don't vacation during this time due to their children being in school. the pricing tactic the sandy beach resort is using to encourage vacationing during these months is most likely
Sandy beach resort, a family resort located in Florida, promotes the months of September and October as its vacation value months encourage most likely with seasonal discounts and odd pricing.
Discount is a noun that describes a sum or a percentage subtracted from a product's usual selling price. Make sure you need all of the items you plan to buy before waiting until after the holiday when you can frequently find them at a significant discount. Discount is a noun that refers to a reduction in the cost of a good or service. a time spent traveling or engaging in leisure activities away from home or work. a predetermined time when activity (as of a court or school) is suspended. had a relaxing vacation at the beach.
Vacation, like so many other words that entered the language during the Middle English period, is derived from Anglo-French, a form of French that was spoken in medieval England, and ultimately from Latin.
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when the demand for electricity peaks during the hottest days of summer, florida power and light company can generate more electricity by using more fuel and increasing the working hours of many of its employees. the company cannot, however, increase electric power production by building additional generating capacity. this means that the company is in the
The company is increasing working hours and the amount of fuel in order to increase the electricity rather than building additional generating capacity showing that the company is in the short run.
The short run is a time period when firms have one factor of production as fixed and cannot be varied. This time period is not defined, it depends on and varies company to company in accordance with the situation of the market. The short run does not give room for the conduction of the operation of the company in order to meet the rising demand. Wages, output, and price cannot be adjusted freely.
In the case of Florida power and light companies, land and rent are fixed while certain inputs like men (employees) and materials (raw materials) are variable which is increased in order to meet up the rising demand for electricity.
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mark determined the project he had been working on for two months was ready to close since all of the contracts were completed. based on the current situation of mark's project, select the next two steps below that he will perform in the closing process. a.) refer to governance to determine the documentation left to complete, then meet with the project sponsor to gain project approval. b.) obtain feedback to compile lessons learned, then meet with the person responsible for taking ownership. c.) refer to governance to determine the documentation left to complete, then obtain feedback to compile lessons learned. d.) meet with the project sponsor to gain project approval, then meet with the person responsible for taking ownership.
Refer to governance to determine the documentation left to complete, then obtain feedback to compile lessons learned.
What is basic documentation?
Documents that serve as evidence, proof, or a record of something are considered to be documentation.
What serves as documentation's primary objective?
There are numerous explicit reasons to write a scientific or technical document, but there are four main categories: to enlighten the reader, to give instructions, to persuade the reader, and to enact (or forbid) something.
Which 4 forms of documentation are there?
learning-oriented tutorials.goal-oriented how-to guides.understanding-oriented discussions.information-oriented reference material.Learn more about documentation
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nton is a project manager at a large, multinational insurance company in the u.s. his team members are located in ireland, bangladesh, and australia, and they work remotely via the use of electronic communication. this is an example of a(n) blank team.
Anton works as a project manager for a large global insurance firm in the United States. His team members are based in Ireland, Bangladesh, and Australia. This is an example of a virtual team.
A project manager is a project management specialist. Project managers are in charge of the planning, procurement, and execution of a project in any undertaking that has a specified scope, defined start, and defined completion; regardless of industry. As project representative, project managers are the initial point of contact for any difficulties or disagreements that arise among the leaders of several departments within a business before the matter escalates to higher authorities.
A project manager is responsible for project management. This individual rarely participates directly in the actions that produce the outcome, but rather attempts to maintain the progress, mutual interaction, and tasks of multiple parties in such a way that decreases the chance of overall failure and optimizes advantages.
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If you are buying a home, it is usually best to choose a fixed mortgage __________________.
A: If you plan to rent it out
B: If you plan to stay there a short time before moving again
C: If you plan to stay there many years
D: If you plan to have a large family
finance managers spend the majority of their time managing multiple choice equity financing. long-term financial needs. cash flow. short-term financial needs.
Finance managers spend the majority of their time handling long-term financial needs.
Financial management is the business function dealing with profitability, expenses, cash, and credit in order for the "organization to have the resources to carry out its aim as satisfactorily as feasible," with the latter commonly described as maximizing the firm's value for stockholders.
Financial managers (FM) are specialist experts who report directly to senior management, typically the financial director (FD); the function is viewed as 'Staff' rather than 'Line.' Financial management is primarily focused with short-term working capital management, with an emphasis on current assets and current obligations, as well as managing variations in foreign currency and product cycles, which is often accomplished through hedging. The function also includes the efficient and effective handling of funds on a daily basis.
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in 2013, a big mac cost $4.37 in the u.s. in spain, a big mac cost 6.73 euros the same year. if the actual exchange rate of euros to dollars is 1.24, does ppp hold based on the big mac? multiple choice question. yes. the exchange rate predicted by ppp is 1.24 yes. the exchange rate predicted by ppp is 1.54 no. the exchange rate predicted by ppp is 0.65 no. the exchange rate predicted by ppp is 1.54
Purchasing power parity (PPP) states that a good's price in one country is the same as its price in another country after taking into account the difference in exchange rates.
Since 1986, The Economist has tracked the price of McDonald's Big Mac burgers in numerous nations as a lighthearted annual PPP test. Let's look at this one-of-a-kind indicator, which is called the Big Mac PPP, and see what we can learn about a country's wealth from the price of the ubiquitous Big Mac.
How Purchasing Power Parity (PPP) Works
To show how PPP works, let's say the exchange rate between the US dollar and the Mexican peso is 1/15 pesos. Assuming that the two nations have purchasing power parity, the cost of a Big Mac in Mexico would be approximately 55 pesos if it cost $3 in the United States.
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net company had net credit sales during the year of $1,350,000 and cost of goods sold of $810,000. the balance in accounts receivable at the beginning of the year was $180,000, and the end of the year balance was $120,000. what was the accounts receivable turnover?
The accounts receivable turnover is 9, at $1,350,000 net credit sales, $810,000 cost of goods sold, $180,000 balance in accounts receivable and $120,000 end of the year balance.
given data,
net credit sales = $1,350,000
cost of goods sold = $810,000
balance in accounts receivable = $180,000
end of the year balance = $120,000
let Average account receivable= ( balance in accounts receivable + end of the year balance)/2
Average account receivable = ($180,000+ $120,000)/2
= $150,000
Account receivable turnover = Net credit sales/ Average account receivable
Account receivable turnover = $1,350,000/$150,000
= 9
The accounts receivable turnover is 9
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chapman machine shop is considering a 4-year project to improve its production efficiency. buying a new machine press for $576,000 is estimated to result in $192,000 in annual pre-tax cost savings. the press falls in the macrs 5-year class, and it will have a salvage value at the end of the project of $84,000. the press also requires an initial investment in spare parts inventory of $24,000, along with an additional $3,600 in inventory for each succeeding year of the project. the inventory will return to its original level when the project ends. the shop's tax rate is 35 percent and its discount rate is 11 percent. what are the values of the free cash flow for year 0, year 1, year 2, year 3, and year 4?
The machine should not be purchased because the net present value (NPV) is negative (-$7,489)
The current value of a stream of payments from a business, project, or investment is determined using net present value (NPV). You must predict the timing and size of future cash flows in order to determine NPV, and you must choose a discount rate that is equal to the least allowable rate of return.
Deprec1 = $576,000 ´ 0.20 = $115,200
Deprec2 = $576,000 ´ 0.32 = $184,320
Deprec3 = $576,000 ´ 0.1920 = $110,592
Deprec4 = $576,000 ´ 0.1152 = $66,355.20
Book value4 = $576,000 - $115,200 - $184,320 - $110,592 - $66,355.20 = $99,532.80
Aftertax salvage value = $84,000 + ($99,532.80 - $84,000)(0.35) = $89,436.48
OCF1 = $192,000(1 - 0.35) + $115,200(0.35) = $165,120
OCF2 = $192,000(1 - 0.35) + $184,320(0.35) = $189,312
OCF3 = $192,000(1 - 0.35) + $110,592(0.35) = $163,507.20
OCF4 = $192,000(1 - 0.35) + $66,355.20(0.35) = $148,024.32
NPV = -576, 000-24, 000 +165, 120-3600 /(1 0.11) +
189, 312-3600 /(1+0.11) + 163, 507.20-3600/(1+0.11) + 148, 024.32+34, 800 +89, 436.48
NPV = -$7, 489
Due to the machine's negative (-$7,489) net present value, it is not advisable to buy it.
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costs of legal services, state fees, and accounting services that relate to creating a business entity and are incurred prior to starting the business are referred to as
Costs of legal services, state fees, and accounting services that relate to creating a business entity and are incurred prior to starting the business are referred to as Organizational expenditure.
An organizational cost or expense is the initial cost incurred to create a company. Organizational costs usually include legal and promotional fees to establish the company with the state and federal government. In other words, organizational expenses are the costs of organizing or incorporating a company.
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a flexible budget shows what budgeted amounts should have been at the actual level of activity. as a result of this change in activity, the flexible budget will show a change in total blank . multiple select question. fixed cost variable cost revenue
The flexible budget will show a change in total variable cost and revenue
The sum of what fixed expenses, variable costs, and revenues should have been at the actual level of activity will change as a result of flexible budgeting. In contrast to static budgeting, flexible budgeting allows for some room for leeway in the firm's budgets in response to output or sales within a specific time period.
This kind of budget is created after the conclusion of the accounting period. It is utilised for organisational management since it accounts for unforeseen events that might happen in a small or large scale environment. Flexible budgeting is thus employed as a control mechanism that considers costs as variables based on various established projections.
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the inventory methods that result in the most current costs in the income statement and balance sheet are income statement balance sheet question 43 options: a) fifo fifo b) lifo fifo c) lifo lifo d) fifo lifo
The inventory methods that result in the most current costs in the income statement and balance sheet are income statement balance sheet is the LIFO
The income statement will reflect the most recent costs as a result of LIFO. The cost of products sold will reflect current costs because this method implies that the most recent inventory expenses are sold to customers first.
It uses the last in, first out (LIFO) method of inventory accounting. In accordance with LIFO, expenses are subtracted beginning with those for the most recent purchases of items (or produced). Only in the United States is LIFO practiced, and it is governed by generally accepted accounting rules (GAAP) For nonperishable items, LIFO (last in, first out) inventory management is preferable as it determines the cost of goods sold using the current pricing.
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at the world economic forum in davos, there were discussions regarding the value of the u.s. dollar. what determines the value of the dollar? multiple choice
At the world economic forum in davos, there were discussions regarding the value of the u.s. dollar. The value of the dollar is determined by the market forces of supply and demand.
A global non-governmental and lobbying organisation, the World Economic Forum (WEF) is headquartered in Cologny, in the canton of Geneva, Switzerland.
German engineer and economist Klaus Schwab founded it on January 24, 1971. The foundation sees its own mission as "improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas." The foundation is primarily funded by its 1,000 member companies, which are typically global enterprises with more than five billion US dollars in annual revenue. It also receives public subsidies.
The WEF is most known for its yearly gathering at the end of January in Davos, a ski resort in the eastern Swiss Alps. Around 3,000 paying attendees and invited guests are present during the meeting.
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a year ago, you invested $2,500 in a savings account that pays an annual interest rate of 5.7%. what is your approximate annual real rate of return if the rate of inflation was 1.6% over the year?
Your approximate annual real rate of return will be 4.1%.
What is the annual real rate of return?The annual percentage of profit on an investment that has been prorated for inflation is known as the real rate of return. As a result, the real rate of return provides an accurate representation of the real purchasing power of a particular sum of money over time.The investor can calculate how much of a nominal return is real return by adjusting the nominal return to account for inflation.Investors must account for the effects of additional factors, such as taxes and investing fees, in addition to correcting for inflation, in order to assess real returns on their investments or to make investment decisions.Therefore,
5.7% - 1.6%
= 4.1%.
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in the context of fixed-quantity systems, is defined as the on-hand quantity (oh) plus any orders placed but which have not arrived minus any backorders (bo). question 4 options: inventory position the reorder point a stock-keeping unit work-in-process inventory
Inventory Position is defined as the on-hand quantity (oh) including any orders placed but which didn't come minus any backorders (bo), in the context of fixed-quantity systems.
Inventory positioning alludes to the particular area of different things in the product offering in the plant, local, or field stockrooms. Stock situating has a course on office area choice, and accordingly, must be considered in the coordination system. In the context of fixed quantity systems, inventory positioning is defined as the hands on the quantity plus any order which is placed but that does not arrive minus any backorders.
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You need $24,056 at the end of 6 years, and your only investment outlet is an 8 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year. Use Appendix B and Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
a.
What single payment could be made at the beginning of the first year to achieve this objective? (Do not round intermediate calculations. Round your final answer to 2 decimal places. )
Single payment made $
b.
What amount could you pay at the end of each year annually for 6 years to achieve this same objective?(Do not round intermediate calculations. Round your final answer to 2 decimal places. )
A. The single payment that would be made is given as $15160.07
B. The amount that would be paid annually at the end of the year is $3279.2
How to solve for the single paymentWe have the following data to solve the problem with
future value = 24056
The number of years n = 6 years
The rate is r = 8 percent
The present value is the single payment that would be made
This is given by
[tex]fv(1 + r)^n[/tex]
[tex]24056(1 + 0.08)^6[/tex]
= 24,056 / 1.5868
= $15160.07
b. We are to find the future value of annuity
The future value of annuity has been solved through the use of the excel statistical tool
= $3279.2
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which doctrine would be relevant if a change in government regulation that neither contracting party contemplated forbids the import or export of a particular item the parties had agreed would be shipped?
Commercial impracticability occurs when a change in government regulation that neither contractual party anticipated prevents the import or export of a specific item that the parties agreed would be transported. Thus, the right doctrine is Commercial impracticability.
What is Commercial impracticability?The theory of commercial impracticability applies when a party is unable to execute its contractual commitments owing to an unpredictable circumstance that makes performance exceedingly difficult (but not impossible).
Commercial Impossibility Elements of Law
An unexpected incident happened.You are unable to fulfill your contractual responsibilities due to an unanticipated incident.The parties could not have properly forecast the unforeseeable incident.The defendant's acts or omissions did not contribute to the event's occurrence.To learn more about contractual commitments, click
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If student loans are such a problem, why do you think so many students borrow money?.
Students borrow money although student loans are such a problem because college tuition has grown a lot faster than income.
A student loan is a loan a student took to pay for higher education expenses, such as tuition, supplies, books, and living expenses. In the U.S., student loans are becoming a problem. College costs (and all its related expenses) are getting very expensive at a much faster rate than income. Most people who took student loans for their higher education are having difficulties in saving, which result in them hardly being able to afford a house. They are also less likely to take out car loans.
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20. growing annuities annuities are a series of constant cash flows that have been received over a certain period of time. however, not all annuities are created equal. some annuities adjust the payments based on certain macroeconomic factors. growing annuities are a series of payments that grow at avariable rate. you invested in an aggressive growth fund and expect to earn 19.08% annually over the next five years. however, due to strong growth, inflation is expected to be 9.45%. what should be your expected real rate of return? 8.80% 10.56% 6.60% 9.68%
The number Real Rate of Return is 9.68%.
The inflation rate provokes the opposite effect than the interest rate. It decreases the value of money through time, reducing the purchasing price of the nominal value of money. Real rate of return means the annual rate of return taken into consideration after taxes and inflation.
You invested in an aggressive growth fund and expect to earn 19.08% annually over the next five years. However, due to strong growth, inflation is expected to be 9.45%.
To calculate the real interest rate, we can use this formula:
Real interest rate= nominal interest rate - inflation rate
Real interest rate= 0.1908 - 0.0945
Real interest rate= 0.0963 = 9.68%
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When asked about a recent failure during an interview, a good response would involve?.
When asked about a recent failure during an interview, a good response would involve not blaming others for the failure; accept responsibility.
What do you say if someone is rejected from an interview?You can use the following words and phrases: I'm sorry to hear that; I know you put a lot of effort into the application. "I realize that's upsetting, but if you want to message, I'm here." It's difficult to pass up a job you really wanted, but you're incredibly talented, so I'm sure there will be other possibilities for you in the future.
Therefore, Briefly and clearly describe what happened. Don't blame others for the failure; accept responsibility. Demonstrate what you took away from the event. Discuss how you've used the experience to improve your work and avert similar errors.
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apple computer, inc., is a multinational corporation that creates consumer electronics, personal computers, computer software, and commercial servers. apple's core product lines are the iphone smart phone, ipad tablet computer, ipod portable media players, and macintosh computer line. apples success is largely attributed to .
Apple's marketing strategy has remained consistent, keeping the language and visuals simple. The majority of the marketing does not include items like feature lists, prices, or pricy special effects.
A worldwide company called Apple Computer, Inc. distributes digital media content as well as produces consumer products, personal computers, servers, and computer software. On April 1, 1976, Steve Jobs, Steve Wozniak, and Ronald Wayne founded Apple Computer Co. Apple Computer, which produced the Apple II, Macintosh, and Power Mac brands of personal computers for more than three decades, struggled with sluggish sales and a small market share in the 1990s. Apple became a market leader in consumer electronics and media sales with the launch of the popular iPod music player in 2001 and the iTunes Music Store in 2003. By market capitalization as of June 30, 2015, Apple was the biggest publicly traded company in the entire globe.
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a 20 year mortgage set up for uniform monthly payments with 6 percent interest compounded monthly is taken over by a new owner after 8 years. at that time $12,000 is still owed on the principal. what was the amount of the original loan?
The Original loan for the following amount will be Original loan = $16,344.91
The worked solution is :No of monthly payments remaining at the end of 8 years = 12* 12 = 144
Monthly rate= 6%/12 = 0.5% = 0.005
Loan balance at the end of year 8 = Present value of remaining 144 monthly payments
Present value of annuity = Annuity amount {1-(1+r)^-n}/r
* [tex]{1-(1+r)^-n}/r[/tex]
$12,000 = Monthly payment * (1-1.005-144)/0.005
$12,000 = Monthly payment * 102.47474
Monthly payments = $12,000/102.47474
Monthly payments = $117.10
Original loan = Present value of 240(20 years *12) monthly payments
Original loan = $117.10*(1-1.005^-240)/0.005
Original loan = $16,344.91
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you are in the process of purchasing a new automobile that will cost you $35,000. the dealership is offering you either a $5,000 rebate (applied toward the purchase price) or 4.5% financing for 60 months (with payments made at the end of the month). you have been pre-approved for an auto loan through your local credit union at an interest rate of 8.0% for 60 months. should you take the $5,000 rebate and finance through your credit union or forgo the rebate and finance through the dealership at the lower 4.5% apr?
Instead of $5,000 rebate and finance through your credit union or forgo the rebate ,we should finance through the dealership at the rate 4.5% apr.
1).If we take rebate of $ 5000, we will get the loan at 8% from bank for 5 year
$ 35000 - $ 5000 = $30000
Interest on $30000 at 8% for 5 years
= (1.08)^5
= 1.587
Total amount to be paid
= (30000* 1.587)
= 47610
2.) if we doesn't take the rebate, we will get the loan at 4.5% for 5 years
$35000
Interest on $ 35000 at 4.5% for 5 years
= (1.04)^5
= 1.22
Total amount to be paid
= (35000*1.22)
= 42700
Clearly taking rebate is not beneficial to us.
So it is recommendary to not go for the rebate, rather take the loan at 4.5%
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zoogle has the following selected data ($ in millions): (round your answers to 2 decimal place. enter your answers in millions (i.e., $10,110,000 should be entered as 10.11).) net sales $ 22,751 net income 6,430 operating cash flows 9,307 total assets, beginning 22,768 total assets, ending 31,497 required: 1. calculate the return on assets.
If zoogle has the following selected data. The company return on assets is 0.24.
How to find the return on assets?Using this formula to find the return on assets
Return on assets = Net income / Average total assets
Let plug in the formula
Return on assets = $6,430/ ($22,768 + $31,497)/2
Return on assets = $6,430/ ($54,265/2)
Return on assets = $6,430/$27,132.5
Return on assets = 0.24
Therefore the return on assets is 0.24.
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a construction contractor finished a bridge across a river 12 months early and received more than $5 million for the early completion. this is an example of reducing project duration caused by
The reduced project duration is caused by incentive contracts.
Because in project management a contract is said to be incentive based when the owner has committed to making additional compensation to the contract price. This happens when during the contractor's execution, events trigger a higher compensation, which could be a result of cost and time thus, incentive contracts offer a method for adjusting the contractor's profit and establishing the final contract price based on the relationship of the final negotiated total cost to total target cost.
The example in the question shows an incentive contract because a building contractor completed a bridge over a river 12 months earlier than expected and was compensated with more than $5 million. As the project was completed earlier than the due date, thus incentive will be born by the contractor.
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which of the following statements does not accurately reflect the relationship between securities and synthetic forward contracts?
The link between stocks and synthesized forward contracts is not correctly reflected by the formula prepaid ahead = forward - zero coupon bond.
Defining "bond,"A bond is a borrower's guarantee to pay a borrower their principal amount plus, typically, interest on a loan .Businesses, regional and community governments, and governments all issue bonds.
How do bonds function?I bonds start earning interest on the first of the month after you purchase them. Every six months, we add the bond's interest earnings to its principal value, which is done twice a year. The bond now has an added features (old value plus interest received).
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which of the followings is not correct about the optimal risky portfolio on an investment opportunity set? group of answer choices it is not affected by the risk preference of investors its capital allocation line (cal) has the highest slope it offers the highest sharpe ratio its capital allocation line (cal) meets the investment opportunity set more than once
The investment opportunity set more than once is not correct about the optimal risky portfolio on an investment opportunity set. Any tangible or intangible thing offered, offered for sale, sold, or traded on the basis of express.
Implied representations about past, present, or future income, profit, or appreciation is considered an investment opportunity portfolio. Lending money is a form of investment. Bonds and even savings accounts are loans that produce interest for the investor over time. The identification of possible investment opportunities is the first step in the capital budgeting process. Typically, the planning body makes forecasts of future sales, which serve as the foundation for determining production targets.
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an arm loan with a teaser rate of 1.0% for the first loan year, an index of the one-year u.s. treasury, a margin of 2.5%, a periodic interest rate increase cap of 2.0% and a lifetime interest rate increase cap of 5.5% with annual adjustments, would have a maximum interest rate of what for the fourth loan year if the one-year u.s. treasury rate is 4.75% at the interest rate reset date just before the beginning of the fourth loan year?
The cost a company pays a lender (creditor) for a loan is called interest. Although many other arrangements are available, interest payments are typically based on the remaining balance of a loan and paid on a monthly basis.
What is Periodic interest ?
Usually, a daily periodic interest rate is multiplied by the balance owed at the end of each day to calculate interest. The amount of interest is compounded daily since it is added to the balance from the previous day. At a predetermined interest rate, interest is often computed as a percentage of the loan balance.
The cost of borrowing money is called interest, and it is typically stated as a percentage, such as an annual percent rate (APR). For utilizing their money, borrowers may pay interest to lenders, or lenders may charge interest to borrowers. Simple interest calculated on the principal or compound interest calculated on the principal plus any prior interest is how interest is frequently defined.
Credit cards, mortgages, auto loans, personal loans, savings accounts, and penalty assessments are all frequently linked with interest. The macroeconomic policy set by the Federal Reserve's funds rate has a significant impact on interest rates.
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