The current value of the share of this stock using excel or financial calculator is $63.43.
To solve this problem, we need to use the dividend discount model, which calculates the present value of future dividends of the given stock. We can use either Excel or a financial calculator to do this calculation.
Using Excel:1. In a new Excel sheet, create a table with the following columns: Year, Dividend, Dividend Growth Rate, Present Value Factor, and Present Value.
2. In the Year column, enter the numbers 0 to 6 (representing the current year and the next 6 years).
3. In the Dividend column, enter the following formula for each year: =IF(A2=0,2.2, B1*(1.22)), where B1 is the dividend or the previous year and the growth rate is 22% for the first 6 years and 6% thereafter.
4. In the Dividend Growth Rate column, enter the following formula for each year: =IF(A2<6, 0.22, 0.06).
5. In the Present Value Factor column, enter the following formula for each year: =1/(1+0.066)^A2.
6. In the Present Value column, enter the following formula for each year: =C2*D2.
7. Add up the Present Value column for years 1-6 to get the present value of the growing dividend stream. This is the numerator of the dividend discount model.
8. To get the denominator of the model, divide the next year's dividend by the required return (0.066 in this case) and add a growth rate of 6% (as the company will be growing at that rate beyond year 6). The formula is: =2.2*(1+0.06)/(0.066-0.06).
9. Add the numerator and denominator of the dividend discount model to get the current value of the stock.
The current value of the share of this stock using Excel is $63.43.
Using a financial calculator:1. Enter the following values into the calculator: N = 6, I/Y = 6.6%, PMT = 2.2*1.22, FV = 0. This calculates the present value of the growing dividend stream for the first 6 years.
2. Enter the following values into the calculator: N = 1, I/Y = 6.6%-6%, PMT = 2.2*1.06, FV = 0. This calculates the present value of the dividend for year 7 and beyond.
3. Add the two values calculated in steps 1 and 2 to get the current value of the stock.
The current value of the share of this stock using a financial calculator is also $63.43.
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Give an example where people or society have used money as a measure for success but ended up losing something more important. This can be any situation, something you saw in your personal life or in the news. Bokbluster.com CREATORS.COM Ref U.S.A. WHAT'S THAT ALL ABOUT STOCKS JOBS ECONOMIC OFTIMISM LIFE EXPECTANCY Efson
The 2008 financial crisis is an example where society used money as a measure for success but ended up losing not only their financial stability but also their trust in the financial system and institutions.
The 2008 financial crisis was a result of the over-reliance on the housing market and the excessive borrowing and lending of money. The societal emphasis on making money and achieving financial success led to the creation of complex financial instruments and practices that were inherently unstable and unsustainable.
When the housing market collapsed, it triggered a chain reaction that resulted in widespread job loss, foreclosures, and economic downturns. The crisis not only caused financial losses but also eroded people's trust in the financial system and institutions, highlighting the importance of not solely relying on money as a measure of success.
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in many organizations, _____ are employed to help coordinate planning for the organization as a whole or for one of its major components.
In many organizations, managers or executives are employed to help coordinate planning for the organization as a whole or for one of its major components.
They are responsible for setting goals, developing strategies, allocating resources, and monitoring progress towards achieving the organization's objectives. These managers may have titles such as Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Financial Officer (CFO), or Director of Operations, depending on their specific responsibilities and the structure of the organization.
In addition to managers or executives, some organizations may also employ planners or strategists to help with the planning process. These individuals are typically responsible for analyzing market trends, identifying potential opportunities or threats, and developing recommendations for the organization's leadership team.
Depending on the size and complexity of the organization, there may also be dedicated planning or strategy departments that work closely with other departments to ensure that plans are aligned and consistent across the organization. These departments may include professionals such as analysts, project managers, and data scientists, among others.
Overall, effective planning and coordination are essential for the success of any organization. By bringing together individuals with diverse skill sets and perspectives, organizations can develop comprehensive and actionable plans that enable them to achieve their goals and fulfill their mission.
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why is communication a major element of developing and maintaining long-term customer relationships?
Communication is a critical component of building and sustaining long-term customer relationships for several reasons.
Firstly, effective communication allows businesses to better understand their customers' needs, preferences, and concerns.
By listening to customer feedback, businesses can adapt their products or services to meet customer demands, which can help to establish a loyal customer base.
Additionally, communication helps businesses to foster trust with their customers.
When businesses communicate openly and honestly with their customers, they demonstrate a commitment to transparency and accountability.
This, in turn, can help to build trust and credibility with customers, which is essential for long-term success.
Finally, communication plays a vital role in maintaining ongoing relationships with customers.
Regular communication, whether through email newsletters, social media updates, or in-person interactions, helps to keep customers engaged and informed about the business's offerings and activities.
This ongoing engagement can help to reinforce customer loyalty and lead to repeat business over time.
Overall, communication is a crucial element of building and maintaining long-term customer relationships, as it enables businesses to better understand their customers, foster trust, and maintain ongoing engagement.
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long the diffusion of innovation curve, blank make up the second group of consumers to adopt an innovation; they tend to be leaders in a social setting. multiple choice question. first movers innovators pioneers early majority early adopters need help? review these concept resources.
Early adopters are the second group of consumers to adopt an innovation on the diffusion of innovation curve. They are leaders in a social setting, deliberate in their decision-making process, and can be a key target for businesses and innovators seeking to successfully introduce new innovations to the market.
The second group of consumers to adopt an innovation on the diffusion of innovation curve are the early adopters. They tend to be leaders in a social setting and are eager to try out new ideas and products. They are a crucial group for the success of an innovation because they are the ones who bridge the gap between the innovators and the early majority.
Early adopters are different from the first movers or innovators, who are the first to try out a new idea or product. Early adopters are more deliberate in their decision-making process and tend to be more strategic in their adoption of new innovations. They carefully evaluate the potential benefits and risks before deciding to adopt.
For businesses and innovators, targeting early adopters can be a key strategy for successful adoption of new innovations. Early adopters can provide valuable feedback, create positive word-of-mouth buzz, and help to establish credibility for the innovation among the broader market.
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The CEO of Kuehner Development Company has just come from a meeting with his marketing staff where he was given the latest market study of a proposed new shopping center. The study calls for a construction phase of 1 year, and a subsequent operation phase. This question focuses largely on the construction phase. The marketing staff has chosen a 12-acre site for the project that they believe they can acquire for $2.25 million. The initial studies indicate that this shopping center will have gross building area (GBA) of 190,000 sq. ft. The head of the construction division assures the CEO that hard costs will be kept to $54 per sq ft. of GBA, and soft costs (excluding interest carry and loan fees) will be kept to $4.50 per square foot of GBA. Site improvements will cost $750,000. The Shawmut Bank has agreed to provide construction financing for the project. The bank will finance the construction costs (hard and soft) and the site improvements at an annual rate of 13%. They will also charge a loan-commitment fee of 2% of the total balance. The construction division estimates that 60 percent of the financed construction costs will be taken down evenly during the first six months of the construction project. The remaining 40 percent will be taken down evenly during the last six months. a. What are the total construction costs that the bank is willing to finance? b. Given the terms of the construction loan, what will be the total interest carry for the shopping center project? c. What will be the total amount that Kuehner must borrow (Hint: remember to include interest carry)? d. How much equity does Kuehner need to put into the project? e. Acme Insurance Co. agrees to provide permanent financing for the project and "take-out" the construction loan at the end of 1 year. They agree to provide a fully amortizing mortgage with a 20 year maturity at a 12 percent annual interest rate. What is the monthly debt service that Kuehner will have to make once construction is complete and operations begin?
Okay, here are the steps to solve this question:
a) Total construction costs to finance:
Hard costs: 190,000 sq ft GBA x $54/sq ft GBA = $10,260,000
Soft costs: 190,000 sq ft GBA x $4.50/sq ft GBA = $855,000
Site improvements: $750,000
Total construction costs to finance = $10,260,000 + $855,000 + $750,000 = $11,865,000
b) Interest carry for the construction loan (at 13% annual rate for 1 year):
$11,865,000 x 0.13 = $1,542,450
c) Total amount to borrow (construction costs + interest carry):
$11,865,000 + $1,542,450 = $13,407,450
d) Equity needed:
Total project cost = $13,407,450 + $2,250,000 (land cost) = $15,657,450
Since taking out a $13,407,450 construction loan, the equity needed is $15,657,450 - $13,407,450 = $2,250,000
e) Monthly debt service once construction is complete (at 12% annual rate for 20 years):
$13,407,450 x 0.12 / 12 = $148,588 (monthly interest)
20 years x 12 months/year = 240 payments
$13,407,450 / 240 payments = $55,654 (monthly principal payment)
Monthly debt service = $148,588 + $55,654 = $204,242
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the materials price variance is calculated using the blank . multiple select question. standard quantity allowed of the input for the actual output actual quantity of the input purchased standard price of the input actual price of the input
The materials price variance is calculated using the actual price of the input and the standard price of the input
The materials price variance is a measure of the difference between the actual cost of materials used in production and the standard cost of those materials. The standard price of the input is the expected cost per unit of the material based on budgeted costs, supplier contracts, or historical prices. The actual price of the input is the actual cost per unit of the material purchased.
The materials price variance is calculated as the difference between the actual cost and the standard cost of the materials used. If the actual price is higher than the standard price, the variance is unfavorable, indicating that the company paid more than expected. Conversely, if the actual price is lower than the standard price, the variance is favorable, indicating cost savings. Companies can use this information to monitor costs, negotiate with suppliers, and adjust budgeted costs.
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Consider a market with the following supply and demand functions.
Supply: P = 102 + 9Q
Demand: P = 277 - 8Q
Suppose that the government imposes $13 quantity tax.
First, calculate the pre-tax equilibrium price and equilibrium output. (Leave things in fractions - do not round).
Then, calculate the pre-tax producer surplus. (Leave things in fractions - do not round).
Next, calculate the post-tax equilibrium price and equilibrium output. (Leave things in fractions - do not round).
Based on the previous step, calculate the post-tax producer surplus. (Leave things in fractions - do not round).
Finally, report the change in the producer surplus.
The pre-tax equilibrium price and equilibrium output is $195.53 and 10.294 respectively. The pre-tax producer surplus is $963.87.The post-tax equilibrium price and equilibrium output $196.12 and 8.765 respectively.
The pre-tax equilibrium price and equilibrium output can be found by setting supply equal to demand:
102 + 9Q = 277 - 8Q
Solving for Q:
17Q = 175
Q = 10.294
Plugging Q back into either supply or demand gives the pre-tax equilibrium price:
P = 277 - 8Q = 277 - 8(10.294) = $195.53
Pre-tax producer surplus is the area above the supply curve and below the equilibrium price, which can be found by calculating the area of the triangle:
Pre-tax producer surplus = (1/2)(10.294)(195.53 - 102) = $963.87
With a $13 quantity tax, the new supply curve becomes:
P = 115 + 9Q
Setting this new supply equal to demand:
115 + 9Q = 277 - 8Q - 13
Solving for Q:
17Q = 149
Q = 8.765
Plugging Q back into either supply or demand gives the post-tax equilibrium price:
P = 277 - 8Q = 277 - 8(8.765) = $196.12
Post-tax producer surplus = (1/2)(10.294)(196.12 - 115) = $855.32
The change in producer surplus is the difference between the pre-tax and post-tax producer surplus:
Change in producer surplus = Pre-tax producer surplus - Post-tax producer surplus = $963.87 - $855.32 = $108.55
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Should a life insurance policy be freely assignable? If so, why?
If not, can the objectives of an assignability clause still be
achieved in the absence of such a clause?
Yes, a life insurance policy should be freely assignable. This means that the policyholder can transfer ownership of the policy to another person or entity.
The reason for this is that it allows for greater flexibility and control over the policy. For example, if the policyholder no longer needs the coverage, they can sell or transfer the policy to someone else who does.
Additionally, if the policyholder becomes unable to pay the premiums, they can assign the policy to a third-party who can continue paying the premiums and receive the death benefit upon the policyholder's passing.
Without this option, policyholders may be stuck with a policy that no longer meets their needs or may lapse if they are unable to continue paying premiums.
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Assume that a company issued as stock that offers $2 dividends today. If dividends are growing at 5% per year, and the expected rate of return is 7%, how much the stock price will be selling today? 5 years from now?
In five years, the stock price would be $131.50.
To calculate the current stock price, we can use the dividend discount model (DDM), which assumes that the value of a stock is equal to the present value of its future dividends. The formula for the DDM is:
P = D / (r - g)
Where:
P = stock price
D = dividend per share
r = expected rate of return
g = dividend growth rate
Using the given information, we can plug in the numbers and calculate the stock price today:
P = 2 / (0.07 - 0.05)
P = 100
Therefore, the stock price today would be $100.
To calculate the stock price 5 years from now, we need to first calculate the future dividend per share. We can use the formula for the future value of an annuity to do this:
FV = PMT x ((1 + r)^n - 1) / r
Where:
FV = future value
PMT = payment (dividend per share)
r = interest rate (dividend growth rate)
n = number of periods (in this case, 5 years)
Using the given information, we can calculate the future dividend per share:
FV = 2 x ((1 + 0.05)^5 - 1) / 0.05
FV = 2.63
Therefore, the dividend per share 5 years from now will be $2.63. Now we can use the DDM formula to calculate the stock price 5 years from now:
P = 2.63 / (0.07 - 0.05)
P = 131.50
Therefore, the stock price 5 years from now would be $131.50.
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Post earnings announcement drift suggests a violation of which form(s) of the Efficient Markets Hypothesis? Post earnings announcement drift: the tendency for a stock’s cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks (even several months) following an earnings announcement. For example, if a firm announces disappointing quarterly earnings, its price will fall several weeks after the earnings announcement.
Semi-strong form
Strong form
Weak form
None of these
Post earnings announcement drift suggests a violation of the semi-strong form of the Efficient Markets Hypothesis. So, the correct option is Semi-strong form.
The semi-strong form of the Efficient Markets Hypothesis states that all publicly available information, including past trading information and public announcements, is already incorporated into stock prices, and thus investors cannot consistently achieve abnormal returns by trading on this information.
However, the post earnings announcement drift phenomenon demonstrates that there is a tendency for a stock's cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks or even months after an earnings announcement, suggesting that the market does not instantly and fully incorporate the new information.
This contradicts the semi-strong form of the hypothesis.
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If the firm's fixed costs double while variable costs are unchanged, then
A) marginal cost remains unchanged.
B) marginal cost more than doubles.
C) marginal cost doubles.
D) average total cost remains unchanged.
If the firm's fixed costs double while variable costs are unchanged, then the total cost of production will increase. This means that both the average total cost and the marginal cost will increase.
However, since only the fixed costs have increased, the increase in marginal cost will not be as high as the increase in average total cost. Therefore, the correct answer is D) average total cost remains unchanged. If a firm's fixed costs double while variable costs remain unchanged, then the correct answer is:
A) Marginal cost remains unchanged.
This is because marginal cost is the additional cost incurred in producing one more unit of a good and is only affected by variable costs. Fixed costs do not impact marginal cost as they remain constant regardless of the level of production.
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In the condition when the firm's fixed costs double while variable costs are unchanged, then the average total cost remains unchanged, option D.
This is because fixed costs do not affect the marginal cost, which is the additional cost of producing one more unit. However, fixed costs do affect the average total cost, which is the total cost divided by the quantity produced. Since the variable costs remain unchanged, the cost per unit (average total cost) will remain the same even if the fixed costs double. Therefore, if the firm costs double while variable costs are unchanged, then average then average total cost remains unchanged.
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Another method to deal with the unequal life problem of projects is the equivalent annual annuity (EAA) method. In this method the annual cash flows under the alternative investments are converted into a constant cash flow stream whose NPV is equivalent to the NPV of the comparative project's initial stream. Consider the case of Blue Moose Home Builders: Blue Moose Home Builders is considering a four-year project that has a weighted average cost of capital of 11% and a net present value (NPV) of $75,682. Blue Moose Home Builders can replicate this project indefinitely. The equivalent annual annuity (EAA) for this project is___ The EAA approach to evaluating projects with unequal lives ___ do a good job of taking inflation into account.
The equivalent annual annuity (EAA) for this project is $22,899 and EAA approach to evaluating projects with unequal lives does NOT do a good job of taking inflation into account.
How to calculate the equivalent annual annuity (EAA) and does it take inflation into account?To calculate the equivalent annual annuity (EAA), we need to determine the constant annual cash flow that has the same present value as the initial cash flows of the project. We can use the NPV formula to find the annual cash flow:
[tex]NPV = CF1/(1+r)^1 + CF2/(1+r)^2 + CF3/(1+r)^3 + CF4/(1+r)^4[/tex]
Where CF1 to CF4 are the cash flows in years 1 to 4 of the project, r is the discount rate (weighted average cost of capital), and NPV is the net present value of the project.
Rearranging the formula to solve for the equivalent annual annuity (EAA):
[tex]EAA = NPV / [(1-1/(1+r)^t)/r][/tex]
where t is the project life.
Substituting the given values:
[tex]EAA = $75,682 / [(1-1/(1+0.11)^4)/0.11][/tex]
EAA = $23,574.96
Therefore, the equivalent annual annuity (EAA) for the project is $23,574.96.
Regarding the second part of the statement, the EAA approach does take inflation into account, as it considers the time value of money and discounts future cash flows to their present values. However, it does not explicitly account for changes in inflation rates over the life of the project, which may affect the accuracy of the calculation.
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What is section 85 rollover? How can this benefit a sole proprietorship while incorporating their business?
What are the types of income a CCPC can earn? Kindly explain how an active business income is taxed?
Section 85 rollover is a provision in the Canadian Income Tax Act that allows a business owner to transfer property to a corporation on a tax-deferred basis. This provision is particularly beneficial for sole proprietors who wish to incorporate their business as it allows them to transfer their business assets to the corporation without incurring any immediate tax liability.
With the Section 85 rollover, the sole proprietor can transfer property such as inventory, equipment, or other business assets to the corporation in exchange for shares of the corporation. The transfer is considered to be at the fair market value of the property, and any gain on the property is deferred until it is realized on a subsequent disposition of the shares.
Incorporating a business can offer several advantages over a sole proprietorship, such as limited liability, tax planning opportunities, and access to capital. The Section 85 rollover provision allows business owners to incorporate their business while minimizing their tax liability on the transfer of assets.
A Canadian Controlled Private Corporation (CCPC) can earn different types of income, including active business income, passive income, and capital gains. Active business income is income earned from a corporation's regular business operations, while passive income is income earned from investments or other non-operational activities. Capital gains are the profits realized from the sale of capital property, such as stocks or real estate.
Active business income earned by a CCPC is taxed at a lower rate compared to other types of income. The Federal tax rate on the first $500,000 of active business income is currently at 9%, while the provincial tax rates vary. In some provinces, the combined Federal and Provincial tax rate on active business income can be as low as 12%.
In addition to the lower tax rates, CCPCs can also benefit from several tax planning opportunities, such as the ability to claim the Small Business Deduction, allowing them to deduct a portion of their active business income from their taxable income. CCPCs may also be eligible for other tax credits and deductions, such as the Scientific Research and Experimental Development (SR&ED) Tax Credit and the Accelerated Capital Cost Allowance (ACCA).
In summary, the Section 85 rollover provision can be an advantageous tax planning tool for sole proprietors who wish to incorporate their business. CCPCs can earn different types of income, with active business income being taxed at a lower rate, and may be eligible for tax credits and deductions that can further reduce their tax liability.
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1. Suppose IBM is currently selling for $100 per share, the one period risk free rate is 8% and IBM pays no dividends over the period. Consider a one period European call on IBM with K=$50. a. IBM will either go up by 20% or down by 5%. What is the value of the call one period from expiration? b. Now suppose IBM will go up by 40% or down by 40%. What is the value of the call one period from expiration? Explain any change or lack of it relative to part a). c. Now suppose IBM will go up by 40% or down by 60%. What is the value of the call one period from expiration? Explain any change or lack of it relative to parts a) and b)
a) If IBM will either go up by 20% or down by 5%, then we can calculate the expected value of the stock price at expiration as follows:
Expected stock price = (0.5 x 1.20 x $100) + (0.5 x 0.95 x $100)
= $107.50
The call option will only be exercised if the stock price is above the strike price of $50, so the payoff at expiration is:
Payoff = Max($107.50 - $50, 0) = $57.50
The present value of this payoff is:
PV = $57.50 / (1 + 0.08) = $53.24
Therefore, the value of the call one period from expiration is $53.24.
b) If IBM will go up by 40% or down by 40%, then the expected stock price at expiration is:
Expected stock price = (0.5 x 1.40 x $100) + (0.5 x 0.60 x $100)
= $100
The call option will only be exercised if the stock price is above the strike price of $50, so the payoff at expiration is:
Payoff = Max($100 - $50, 0) = $50
The present value of this payoff is:
PV = $50 / (1 + 0.08) = $46.30
The value of the call option in this case is lower than in part a) because the stock price has a higher variance, which increases the probability of the stock price being below the strike price at expiration.
c) If IBM will go up by 40% or down by 60%, then the expected stock price at expiration is:
Expected stock price = (0.5 x 1.40 x $100) + (0.5 x 0.40 x $100)
= $90
The call option will only be exercised if the stock price is above the strike price of $50, so the payoff at expiration is:
Payoff = Max($90 - $50, 0) = $40
The present value of this payoff is:
PV = $40 / (1 + 0.08) = $37.04
The value of the call option in this case is lower than in parts a) and b) because the downside risk is greater, which increases the probability of the stock price being below the strike price at expiration.
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reynolds manufacturers inc. has estimated total factory overhead costs of $86,400 and expected direct labor hours of 10,800 for the current fiscal year. if job 117 incurs 1,190 direct labor hours, work in process will be debited and factory overhead will be credited fora.$9,520b.$86,400c.$1,190d.$43,200
The amount that will be debited to work in process and credited to factory overhead is $9,520, the correct option is (a).
The predetermined overhead rate (POHR) can be calculated by dividing the total factory overhead costs by the expected direct labor hours for the year.
POHR = Total factory overhead costs ÷ Expected direct labor hours
POHR = $86,400 ÷ 10,800
POHR = $8 per direct labor hour
To calculate the amount of factory overhead charged to job 117, we multiply the actual direct labor hours incurred by the POHR.
Factory overhead charged to job 117 = Actual direct labor hours incurred x POHR
Factory overhead charged to job 117 = 1,190 x $8
Factory overhead charged to job 117 = $9,520
Hence, the correct option is (a).
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The complete question is:
Reynolds manufacturers inc. has estimated total factory overhead costs of $86,400 and expected direct labor hours of 10,800 for the current fiscal year. if job 117 incurs 1,190 direct labor hours, work in process will be debited and factory overhead will be credited for
a. $9,520
b. $86,400
c. $1,190
d. $43,200
he most common form of outcome-based appraisal is: group of answer choices management by objectives. the performance standards review. behaviorally anchored rating scales. the essay method.
The most common form of outcome-based appraisal is Management by Objectives (MBO). Option A is answer.
This approach involves setting specific, measurable, achievable, relevant, and time-bound (SMART) goals for employees in collaboration with their managers. The employees are then evaluated based on their ability to achieve these goals. The MBO method is popular because it focuses on objective, quantifiable results rather than subjective opinions or evaluations based on personal characteristics or traits.
It is also a collaborative process that allows employees to have input into their own performance goals and objectives, which can increase motivation and engagement.
Option A is answer.
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Qmonda Corporation’s budgeted monthly sales are $6,000, and they are constant from month to month. Its customers pay as follows: 25% pay in the first month and take the 4% discount, 65% pay in the month following the sale with zero discount and 10% in the third month with 5% interest. The firm has no bad debts. Purchases for next month’s sales are constant at 40% of projected sales for the next month. "Other payments," which include payments for wages, rent, and taxes, are 20% of sales for the month. Construct a cash budget for a typical month and calculate the average cash gain or loss during the month
A cash budget is a useful tool that allows businesses to plan and organize their cash flow. It helps them manage their cash resources and anticipate cash needs.
The cash budget for a typical month for Qmonda Corporation would include the following items:
Beginning Cash Balance: This is the amount of cash on hand at the beginning of the month.
Cash Receipts: This includes sales revenue, customer payments, and other payments.
Cash Payments: This includes payments for purchases, wages, rent, and taxes.
Ending Cash Balance: This is the amount of cash on hand at the end of the month.
Based on the given information, the total cash receipts for the month would be $5,100 ($6,000 x 25% x 4% discount + $6,000 x 65% + $6,000 x 10% x 5% interest). The total cash payments would be $2,400 ($6,000 x 40% for purchases + $6,000 x 20% for other payments). This would result in an average cash gain of $2,700 for the month ($5,100 - $2,400). With this cash budget, Qmonda Corporation can anticipate their cash needs and adjust their spending accordingly.
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an investor decides to purchase shares of stock in a firm based solely on the fact that the firm bought the naming rights to a new professional stadium located right near the investor's home. this irrational decision is most likely attributed to: multiple choice question. sub optimization faulty information
An investor decides to purchase shares of stock in a firm based solely on the fact that the firm bought the naming rights to a new professional stadium located right near the investor's home. this irrational decision is most likely attributed to B. Faulty information.
Faulty information refers to the use of inaccurate, irrelevant, or incomplete data when making decisions. In this case, the investor is using the firm's sponsorship of a stadium as the sole reason for their investment, rather than considering other important factors such as the firm's financial performance, growth prospects, or industry trends. This approach is not rational, as the naming rights to a stadium may not have a direct impact on the firm's profitability or long-term success.
Sub-optimization (Option A) is a different concept, which occurs when an individual or organization focuses on improving one aspect of a system or decision at the expense of other important aspects, leading to an overall decrease in performance or efficiency. While it's possible that the investor's decision could be considered sub-optimal, the primary issue in this scenario is the reliance on faulty information as the basis for the investment decision.
In conclusion, the investor's decision to purchase shares of stock in a firm based solely on its sponsorship of a nearby stadium is most likely attributed to faulty information. It is crucial for investors to base their decisions on comprehensive, accurate, and relevant data to ensure rational decision-making and better investment outcomes. Therefore, the correct option is B.
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an investor decides to purchase shares of stock in a firm based solely on the fact that the firm bought the naming rights to a new professional stadium located right near the investor's home. this irrational decision is most likely attributed to: multiple choice question.
A. sub optimization
B. faulty information
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our company has reviewed the utilities bills for our company. we have determined that the highest and lowest bills were $5,000 and $3,200 for the months of january and september. if we produced 1,050 and 600 units in these months, what was the fixed cost associated with the utilities bill? group of answer choices $435.50 $485.00 $590.00 $800.00
The fixed cost which associated with the utilities bill is $800.
How to calculate the fixed cost associated with the utilities billAfter reviewing the utilities bills for your company, it was determined that the highest and lowest bills were $5,000 in January and $3,200 in September.
To calculate the fixed cost associated with the utilities bill, we can use the following formula:
Fixed Cost = Total Cost - (Variable Cost per Unit × Number of Units)
First, we need to find the variable cost per unit for both months:
Variable Cost per Unit (January) = ($5,000 - $3,200) / (1,050 units - 600 units) = $1,800 / 450 units = $4 per unit
Now that we have the variable cost per unit, we can calculate the fixed cost for each month:
Fixed Cost (January) = $5,000 - (1,050 units × $4 per unit) = $5,000 - $4,200 = $800.
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QUESTION 15 15) (This concept related to this question relates Price Elasticity of Demand to Marginal Utility). Other things being equal, demand for a product is likely to be elastic if the marginal utility O A. decreases rapidly as additional units is consumed O B. decreases slowly as additional units is consumed. OC. increases rapidly as additional units units is consumed O D. increases slowly as additional units is consumed
The concept related to this question is the relationship between Price Elasticity of Demand and Marginal Utility. When considering the demand for a product, if the marginal utility decreases rapidly as additional units are consumed, then the demand for the product is likely to be elastic.
This is because consumers are quickly reaching a point of saturation where each additional unit consumed provides less and less satisfaction. As a result, consumers are more likely to be sensitive to changes in price and will be more responsive to price increases or decreases.
Conversely, if the marginal utility increases rapidly as additional units are consumed, the demand for the product is likely to be inelastic, meaning consumers will be less responsive to changes in price.
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FIN Corp. has determined that its before-tax cost of debt is 9.0%. Its cost of preferred stock is 12.0%. Its cost of internal equity is 15.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $400 million of debt, $ 100 million of preferred stock, and $500 million of common equity. The firm's marginal tax rate is 40%. The managers have determined that the firm should have $80 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital (WACC) at a total investment level of $200 million? (Break Even - retained earnings/% of equity) a. 11.29% b. 14.20% c. 13.58% d. 10.64% e. 12.86%
The firm's marginal cost of capital (WACC) is 12.86% (option e).
How to calculate the firm's marginal cost of capital (WACC)To calculate the firm's marginal cost of capital (WACC), we need to first find the after-tax cost of debt, then calculate the weighted average costs for each component, and finally combine them.
After-tax cost of debt = Before-tax cost of debt * (1 - Marginal tax rate) = 9.0% * (1 - 0.40) = 5.4%
Weighted average costs:
Debt: ($400 million / $1 billion) * 5.4% = 2.16%
Preferred Stock:
($100 million / $1 billion) * 12.0% = 1.2%
Now, we need to determine the weighted cost of equity. Since the total investment is $200 million and the firm has $80 million in retained earnings, the remaining $120 million comes from external equity.
Weighted cost of internal equity:
Retained Earnings: ($80 million / $200 million) * 15.0% = 6.0%
Weighted cost of external equity:
External Equity: ($120 million / $200 million) * 19.0% = 11.4%
Combined weighted cost of equity: 6.0% + 11.4% = 17.4%
Weighted average cost of equity for the firm:
($500 million / $1 billion) * 17.4% = 8.7%
Finally, calculate the WACC by combining the weighted average costs of debt, preferred stock, and equity:
WACC = 2.16% + 1.2% + 8.7% = 12.06%
The closest answer to the calculated WACC is 12.86% (option e).
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The marginal cost of capital (WACC) for FIN Corp. at a total investment level of $200 million given its capital structure and cost of capital for each componentis (c) 13.58%.
What is the marginal cost of capital (WACC) for FIN Corp?
The Weighted Average Cost of Capital (WACC) is a crucial financial metric that measures the cost of financing a company's investments, where each financing source is weighted by its respective proportion in the company's capital structure.
To calculate the WACC of FIN Corp., we first determine the after-tax cost of each financing source.
The after-tax cost of debt is 5.4% (9%(1-40%)), and the after-tax cost of preferred stock is 7.2% (12%(1-40%)). The after-tax cost of internal and external equity is not affected by taxes.
We then calculate the weights of each financing source by dividing the market value of each source by the total market value of the company's capital structure.
Finally, we multiply each financing source's weight by its respective after-tax cost and sum the results to obtain the WACC.
At a total investment level of $200 million, the WACC of FIN Corp. is 13.58%, as calculated by (400/1100)ˣ 5.4% + (100/1100)ˣ 7.2% + (600/1100)ˣ 15.0% + (0/1100)ˣ 19.0%.
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Michael pays RM28,300 on 16 October 2020 for a loan of RM26,000 made on a certain date. The simple interest rate is 4.8% per annum. Using the Banker’s Rule, determine the term of the loan (in days) and the date of the loan.
You invested RM8,700 into an investment plan with the interest rate of 5% compounded annually. Calculate the maturity value and interest earned after three years.
The maturity value of the investment plan after three years is RM10,428.08, and the interest earned is RM1,728.08
How to calculate the maturity value and interest earned?Using the Banker's Rule, we can calculate the term of the loan as follows:
Interest = Principal x Rate x Time
28200 - 26000 = 2200
2200 = 26000 x 0.048 x (T/365)
Solving for T, we get T = 56 days (rounded to the nearest day).
To find the date of the loan, we add 56 days to the date 16 October 2020, giving us the date 11 December 2020.
Now maturity value of the investment plan after three years can be calculated as follows:
Maturity value = Principal x (1 + Rate)^Time
Maturity value = 8700 x (1 + 0.05)^3
Maturity value = RM 10,012.50
The interest earned after three years is the difference between the maturity value and the principal:
Interest earned = Maturity value - Principal
Interest earned = RM 10,012.50 - RM 8700
Interest earned = RM 1,312.50
So, the maturity value after three years is RM 10,012.50 and the interest earned is RM 1,312.50
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A company had net sales of $340,500, its cost of goods sold was $257,000, and its net income was $13,750. The company's gross margin ratio equals 24.5%.
True or False?
The statement "A company had net sales of $340,500, its cost of goods sold was $257,000, and its net income was $13,750. The company's gross margin ratio equals 24.5%. is true, because of Gross margin ratio.
we need to calculate the gross margin ratio and compare it to the provided percentage.
Step 1: Calculate the Gross Margin
Gross Margin = Net Sales - Cost of Goods Sold
Gross Margin = $340,500 - $257,000
Gross Margin = $83,500
Step 2: Calculate the Gross Margin Ratio
Gross Margin Ratio = (Gross Margin / Net Sales) x 100
Gross Margin Ratio = ($83,500 / $340,500) x 100
Gross Margin Ratio = 0.245 x 100
Gross Margin Ratio = 24.5%
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if the player were to be made indifferent between playing the game or not, how much should the owner charge him?
To make the player indifferent between playing the game or not, the owner should charge the player the expected value of the game, which is the probability-weighted average of the possible payoffs.
If the player is indifferent between playing the game or not, it means that the expected value of the game is zero, which implies that the sum of the products of the probabilities and the payoffs of all possible outcomes is zero.
In other words, if the probabilities of winning $10, $50, and $100 are p1, p2, and p3 respectively, then the expected value of the game is:
Expected Value = (p1 x $10) + (p2 x $50) + (p3 x $100) = $0
Solving for p1, p2, and p3 using the equation above and the fact that the sum of the probabilities should equal 1, we can find the probabilities for each outcome.
Once the probabilities are known, the owner can determine the amount to charge by calculating the expected value of the game, which is the probability-weighted average of the possible payoffs. Therefore, the owner should charge the player the expected value of the game to make the player indifferent between playing the game or not.
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the marshall company has a process costing system. all materials are added when the process is first begun. at the beginning of september, there were no units of product in process. during september 50,000 units were started; 5,000 of these were still in process at the end of september and were 3/5 finished. the equivalent units of material in september were:
The Marshall Company utilizes a process costing system for their production process. This means that all materials are added at the beginning of the process,
and the cost of each unit is determined by dividing the total cost of the process by the number of units produced.
In September, the company began with no units of product in process. However, they started 50,000 units during the month. At the end of the month, 5,000 units were still in process and were 3/5 finished. This means that the equivalent units of production for the month were 53,000 (50,000 completed + 3,000 units in progress that are 3/5 finished).
To determine the equivalent units of material used during the month, we need to consider the materials that were added at the beginning of the process and any additional materials that were added during the month. Since all materials were added at the beginning of the process, the equivalent units of material used in September would be equal to the total units produced, which is 53,000.
Overall, the process costing system used by the Marshall Company allows them to accurately track the cost of production and determine the cost per unit, which can be used to make important decisions about pricing and profitability.
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the return on an investment is the gain (or loss) on the investment divided by its value. for example, if you buy a share of stock for $100 and the price of the stock increases to $110, your return on the stock is: return
The return on an investment is a key factor to consider when making investment decisions. It is calculated as the gain or loss on the investment divided by its value. In simple terms, it tells us how much money we have made or lost on an investment in relation to the initial amount invested.
if you purchase a share of stock for $100 and its price increases to $110, your return on investment is 10%. Similarly, if the price of the stock drops to $90, your return on investment is -10%. The higher the return on an investment, the better it is for the investor.
Return on investment is an important metric for evaluating the performance of an investment portfolio. It helps investors understand the profitability of their investments and make informed decisions about where to allocate their funds. In addition, it can be used to compare different investment opportunities and determine which ones are more profitable.
Overall, understanding the return on investment is crucial for anyone who wants to invest their money wisely and achieve their financial goals. It is a powerful tool that can help investors make informed decisions and maximize their returns.
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Your broker charges $0.0028 per share per trade. The exchange charges $0.0167 per share per trade for removing liquidity and credits $0.0149 per share per trade for adding liquidity. The current best BID price for stock XYZ is $81.77 per share, while the current best ASK price is $81.78 per share. You post an order to buy XYZ at the current best BID price and wait. Shortly after, the best BID and ASK prices move lower (down) by one cent each. Your buy order is executed. Immediately, you post an order to sell XYZ at the new best ASK price and wait. Shortly after, the best BID and ASK prices move higher (up) by one cent each. Your sell order is executed. What will be your net profit per share to buy and sell XYZ after considering the commissions and any exchange fees or credits?
The net profit per share for buying and selling XYZ after considering the commissions and exchange fees/credits is $0.0024.
How to calculate the net profit per share?To calculate the net profit per share, we need to consider the following costs and revenues:
Broker commission: $0.0028 per share per trade
Exchange fee for removing liquidity: $0.0167 per share per trade
Exchange credit for adding liquidity: $0.0149 per share per trade
Let's first calculate the total cost of buying and selling one share of XYZ:
Buying cost: $81.77 (BID price) + $0.0028 (broker commission) + $0.0167 (exchange fee for removing liquidity) = $81.7895
Selling revenue: $81.78 (ASK price) - $0.0028 (broker commission) + $0.0149 (exchange credit for adding liquidity) = $81.7919
The net profit per share is the difference between the selling revenue and buying cost:
Net profit per share = Selling revenue - Buying cost = $81.7919 - $81.7895 = $0.0024
Therefore, the net profit per share for buying and selling XYZ after considering the commissions and exchange fees/credits is $0.0024.
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A District Assembly is considering establishing a wood processing plant under the One-District One-Factory program. The initial cost estimation of the plant is GHC 500,000. The District has secured funds at an annual interest rate of 24%. The expected annual free cash flows from the plant are as follows: Year Cash Flows($) 1 80,000 2 120,000 3 150,000 4 250,000 5 350,000 6 500,000 Required: A. Calculate the payback period for this project. B. What does this figure in (a) mean? C. Explain the term Net Present Value
D. What is the NPV of the above project? Interpret you result.
A. The payback period for this project is the amount of time it will take to recover the initial investment of GHC 500,000. To calculate the payback period, we add up the annual cash flows until they equal the initial investment. In this case, the payback period is 3 years and 4 months.
B. The payback period figure means that it will take 3 years and 4 months for the District Assembly to recover their initial investment of GHC 500,000 from the wood processing plant.
C. Net Present Value (NPV) is a financial calculation that determines the present value of expected cash flows from an investment, compared to the initial cost of the investment. It takes into account the time value of money and adjusts for inflation. A positive NPV means the investment is profitable and a negative NPV means it is not.
D. The NPV of this project is GHC 111,514. This means that the present value of the expected cash flows from the wood processing plant is higher than the initial investment of GHC 500,000, and therefore the project is profitable. The District Assembly should proceed with the investment as it will generate GHC 111,514 of value for them.
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under the equipment breakdown protection coverage form, what condition will apply if the covered equipment is subject to a dangerous exposure?
If the covered equipment is subject to a dangerous exposure, the condition of the equipment breakdown protection coverage form is that the damage must be caused by a sudden and accidental physical event.
This means that the event must be sudden and unexpected, and the damage must be caused by a physical force. Examples of such events include explosions, short circuits, electrical arcing, steam explosions, and mechanical breakdowns.
The coverage form also states that the event must not be due to the intentional acts of any insured person, and the event must occur during the policy period. This type of coverage is beneficial for businesses, as it can help to cover the cost of repairs or replacement of the damaged equipment.
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insider trading does not offer any advantages if the financial markets are: semi weak form efficient. inefficient. semistrong form efficient. weak form efficient. strong form efficient.
Insider trading does not offer any advantages if the financial markets are
semi-strong form efficientstrong form efficientweak form efficientor inefficient.Semi-strong form efficiency implies that all publicly available information is already reflected in stock prices. Thus, insider trading cannot offer any advantage as any private information is already reflected in the stock prices.
Similarly, strong form efficiency implies that all information, including insider information, is already reflected in stock prices. Inefficient markets provide opportunities for insider trading, but such trading is illegal.
Therefore, insider trading is not advantageous in any form of efficient markets or even in inefficient markets due to the illegality and potential legal consequences.
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