The four alternative models of the business-government-society relationship are the market capitalism model, the managerial capitalism model, the stakeholder capitalism model, and the political capitalism model.
Market Capitalism Model: In the market capitalism model, the relationship between business, government, and society is primarily characterized by free-market principles. The government's role is limited to enforcing property rights, ensuring fair competition, and providing minimal regulations. Businesses operate to maximize profits, and societal welfare is believed to be best achieved through market forces. This model emphasizes individual freedom and limited government intervention.
Managerial Capitalism Model: The managerial capitalism model emphasizes the role of professional managers in balancing the interests of various stakeholders, including shareholders, employees, customers, and the community. Managers act as stewards of the organization and make decisions based on a broader set of considerations beyond solely maximizing shareholder value. Government regulation is seen as necessary to ensure fairness and prevent abuses in the marketplace.
Stakeholder Capitalism Model: The stakeholder capitalism model recognizes the importance of multiple stakeholders, including not only shareholders but also employees, customers, suppliers, communities, and the environment. Businesses in this model strive to create long-term value for all stakeholders rather than focusing solely on maximizing shareholder wealth. The government's role is seen as promoting and enforcing responsible business practices and addressing societal issues through regulation and legislation.
Political Capitalism Model: The political capitalism model acknowledges the significant influence of government in shaping the business-society relationship. In this model, businesses seek to influence the political process to gain advantages, such as subsidies, favorable regulations, or protection from competition. Government actions, in turn, are influenced by the interests of powerful business entities. This model raises concerns about the potential for corruption, inequality, and the concentration of power.
The four alternative models of the business-government-society relationship represent different approaches to understanding the roles and dynamics among businesses, government, and society. While the market capitalism model emphasizes free-market principles, the managerial capitalism and stakeholder capitalism models recognize the importance of broader stakeholder considerations. The political capitalism model highlights the influence of government on the relationship, but also raises concerns about potential abuses of power. Understanding these models helps in analyzing and discussing the complexities of the business-government-society relationship in various contexts.
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Market makers in the Third Market trade:
A. sted stocks
B. unlisted stocks
C. dual listed socks
D. formign stocks of companies located in Thind World countries
Market makers in the Third Market trade unlisted stocks. the correct option is b
In the United States, the Third Market refers to a non-exchange trading system for the over-the-counter (OTC) buying and selling of stocks that are not listed on a major exchange.
Trading of unlisted securities on the Third Market is usually done through market makers who act as intermediaries between buyers and sellers.
What are market makers? A market maker is a firm or an individual that buys and sells securities with the goal of earning a profit on the difference between bid and ask prices. Market makers play a crucial role in maintaining market liquidity and efficiency. They provide liquidity by standing ready to buy or sell a security at any time, even if there are no buyers or sellers currently present in the market.
How do market makers work? Market makers earn their profits by buying securities at the bid price and selling them at the asking price. They buy securities from sellers and sell them to buyers, always maintaining a spread between the two prices. The spread represents the market maker's profit. Market makers are required to provide two-sided quotes, meaning they must post both bids and ask prices for a given security. A market maker's goal is to profit from the spread between the bid and ask prices, while also managing their own risk. To manage risk, market makers will often take on positions that are offsetting to their clients' positions, thereby hedging their own exposure.
What are unlisted stocks? Unlisted stocks, also known as over-the-counter stocks, are securities that are not listed on a major exchange such as the New York Stock Exchange or the NASDAQ. Unlisted stocks trade through dealer networks and electronic trading systems, often known as "pink sheets" or "bulletin board" markets.
Unlike listed stocks, unlisted stocks are not subject to the same regulatory requirements and reporting standards, which means they carry greater risk and are often less liquid. Because of this, unlisted stocks are typically traded at a discount to their listed counterparts.
In conclusion, market makers in the Third Market trade unlisted stocks, which are securities that are not listed on a major exchange. Market makers play a crucial role in providing liquidity and efficiency to the market, while unlisted stocks carry greater risk and are less liquid than their listed counterparts.
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open question : suggest any business process , and describe in
details the steps of business process. total steps 5
essey one please and short
A suggested business process includes inventory management. The five steps of this process are ordering, receiving, storing, issuing, and reconciling inventory.
The suggested business process is inventory management, which is crucial for businesses that rely on inventory to make sales. The process includes five steps: ordering, receiving, storing, issuing, and reconciling inventory.
The first step is ordering inventory. This involves reviewing inventory levels and determining what needs to be ordered. Once the order is placed, the second step is receiving inventory. This involves inspecting the inventory for quality and quantity, verifying it against the purchase order, and recording it in the inventory system.
The third step is storing inventory. This involves determining where to store the inventory based on its characteristics, such as size, weight, and temperature sensitivity. The fourth step is issuing inventory, which involves fulfilling orders and recording the movement of inventory from storage to the customer.
The final step is reconciling inventory, which involves reviewing inventory levels and comparing them to the inventory system to ensure accuracy. This step is crucial for identifying discrepancies and preventing inventory shrinkage.
Overall, the inventory management process helps businesses maintain accurate inventory levels and prevent stockouts, which can lead to lost sales.
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A company applies the differential piecework scheme and pays a basic rate of $3 per unit. If workers produce more than 500 and up to 600 units they are paid at a premium of $0.20. If production is above 600 then the premium increases to $0.40. Calculate the total wages to be paid to a worker who produced 800 units: a. $2,500 b. $3,200 c. $2,720 d. $1,600
The total wages to be paid to a worker who produced 800 units is $1,900
A differential piecework scheme is an incentive plan in which an employee is paid for the number of units produced at a given rate. In a differential piecework plan, workers are paid different rates depending on the level of output they achieve.
For instance, a company applies the differential piecework scheme and pays a basic rate of $3 per unit. If workers produce more than 500 and up to 600 units, they are paid at a premium of $0.20. If production is above 600 then the premium increases to $0.40. Therefore, the total wages to be paid to a worker who produced 800 units are as follows:
For the first 500 units produced, the worker is paid at the basic rate of $3 per unit, which amounts to:$3 x 500 = $1500 For the next 100 units produced (i.e., the units produced above 500 but not more than 600), the worker is paid at a premium of $0.20 per unit, which amounts to:$0.20 x 100 = $20
In addition to the $20 premium, the worker also earns the basic rate of $3 per unit for these units. Thus, the total amount for these 100 units is:$3 x 100 = $300 Adding these two amounts together, the worker earns $1500 + $20 + $300 = $1820 for the first 600 units produced.
Finally, for the remaining 200 units produced, the worker is paid at a premium of $0.40 per unit. Therefore, the worker earns:$0.40 x 200 = $80
Thus, the worker's total earnings for the 800 units produced is $1820 + $80 = $1,900. Therefore, the correct answer is not in the options provided. The correct answer is $1,900.
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We are examining a new project. We expect to sell 5,600 units per year at $70 net cash flow apiece for the next 10 years. In other words, the annual operating cash flow is projected to be $70 × 5,600 = $392,000. The relevant discount rate is 18 percent, and the initial investment required is $1,550,000. After the first year, the project can be dismantled and sold for $1,270,000. Suppose you think it is likely that expected sales will be revised upward to 8,600 units if the first year is a success and revised downward to 4,200 units if the first year is not a success. Suppose the scale of the project can be doubled in one year in the sense that twice as many units can be produced and sold. Naturally, expansion would be desirable only if the project were a success. This implies that if the project is a success, projected sales after expansion will be 17,200. Note that abandonment is an option if the project is a failure.
a. If success and failure are equally likely, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the value of the option to expand? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
a. The NPV of the project, assuming success and failure are equally likely, is -$396,028.47 (negative value).
b. The value of the option to expand is $1,920,972.83.
To calculate the NPV of the project, we discount the cash flows at the relevant discount rate of 18% and subtract the initial investment. The annual net cash flow for 10 years is $392,000, so the total present value of these cash flows is calculated using the formula for the present value of an annuity:
PV = CF × [(1 - (1 + r)^(-n)) / r]
Where CF is the annual net cash flow, r is the discount rate, and n is the number of years. Substituting the values, we find the present value of the annual cash flows to be $2,319,474.95.
The project has an abandonment option after the first year, which means if it fails, it can be dismantled and sold for $1,270,000. The present value of this salvage value is calculated by discounting it back to year 0 using the discount rate:
PV salvage value = $1,270,000 / (1 + r)
Substituting the values, we find the present value of the salvage value to be $1,076,271.19.
To calculate the NPV, we subtract the initial investment of $1,550,000 from the sum of the present values of cash flows and salvage value:
NPV = (PV of cash flows) + (PV salvage value) - Initial investment
NPV = $2,319,474.95 + $1,076,271.19 - $1,550,000 = -$396,028.47
For the value of the option to expand, we consider the potential increase in sales from 5,600 units to 17,200 units if the project is successful. The incremental cash flows from the expanded sales are calculated by subtracting the original cash flows from the expanded cash flows:
Incremental cash flows = (Expanded cash flows) - (Original cash flows)
Incremental cash flows = ($70 × 17,200) - ($70 × 5,600) = $739,200
The value of the option to expand is the present value of these incremental cash flows at the discount rate:
Value of option to expand = PV of incremental cash flows
Value of option to expand = $739,200 / (1 + r)
Substituting the values, we find the value of the option to expand to be $1,920,972.83.
In summary, the NPV of the project is negative, indicating a potential loss, and the value of the option to expand is positive, suggesting additional potential value if the project succeeds and expands.
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Case Study:-
Uber maintains a fleet of over 20,000 vehicles in 27 different metropolitan areas worldwide. Car
sharing has become an increasingly popular way for urbanites to access a car when they need one
without having to deal with the headaches of
parking, maintenance, and insurance/ registration
fees. Each individual Uber has a "home" parking
spot that it must be returned to after every use, andthese parking stations are broadly distributed so that no Uber member is ever too far from a car.
Uber's fixed costs reside at the local level: for every new parking station they open, they need to
pay the upfront fixed cost to buy a car and rent a
parking spot in that neighborhood. Uber members benefit from network effects, because as Uber expands there are more and more cities and campuses where uber members can access vehicles. However, Uber's fixed costs will
expand proportionally to the number of rental
locations that they offer. Uber can expand effectively, but its fixed costs are not easy to scale.
1-Suggest to the management how to manage such
fixed costs together with the business?
(Minimum 500 words)
Uber can manage its fixed costs by evaluating its current business model, introducing variable costs, leveraging the sharing economy, offering different services, reducing wastage, and expanding gradually. Uber's management can follow these suggestions to optimize its fixed costs and expand its business effectively.
Uber has to manage fixed costs to expand its business. Since the company has a fleet of over 20,000 vehicles in 27 metropolitan areas, it has to be more careful in managing its costs. As more and more people are choosing car sharing services, Uber needs to focus on managing its fixed costs.
There are several ways in which Uber can manage its fixed costs. Here are some suggestions that Uber's management can follow to manage fixed costs:
1. Evaluate the Current Business Model: Uber can evaluate its current business model to identify the key areas that need improvement. The company can then make adjustments to the model to manage fixed costs better. For example, Uber can analyze its parking stations' distribution to ensure that they are optimal. The company can then decide if they need to open new parking stations or close down underperforming ones. This will help Uber optimize its fixed costs.
2. Introduce Variable Costs: Uber can introduce variable costs to reduce its fixed costs. For example, Uber can use a pay-per-use model instead of a fixed monthly fee. This way, the company will only have to pay for the vehicles and parking spots that are in use. This model can help Uber save costs, especially during the off-peak season.
3. Leverage the Sharing Economy: Uber can leverage the sharing economy to reduce its fixed costs. The company can partner with other companies that offer carsharing services to share resources. For example, Uber can partner with Zipcar to share parking spaces. This will help Uber save costs on parking spaces
.4. Offer Different Services: Uber can offer different services to manage its fixed costs. For example, the company can offer long-term rentals or daily rentals to attract customers who need a car for a more extended period. This way, the company can optimize its fixed costs by offering different services to different customers.
5. Reduce Wastage: Uber can reduce wastage by using more fuel-efficient vehicles. The company can also use GPS technology to optimize its routes and reduce fuel consumption. This way, Uber can save costs on fuel and reduce its carbon footprint.
6. Expand Gradually: Uber can expand gradually to manage its fixed costs better. The company can focus on expanding in markets where there is a high demand for carsharing services. This way, Uber can optimize its fixed costs by targeting high-potential markets.
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You are in need of regular short term financing to support your business. Three options appear attractive:
1. A standard line of credit in the sum of $500,000 at 18% annual interest for the funds used. You have between $75,000 and $1000,000 in cash coming in in a typical month, and usual monthly expenses of $80,000. At the start of the loan period, you have $120,000 in accounts payable.
2. Your bank is also offering a $1,000,000 5 year loan at 12%, and a requirement to keep $150,000 of that loan in your bank account at all times. You only need to pay the interest each moth, and pay off the million dollar principal at the end of the loan. You have the same revenue and expense profile given above.
3. A factor is also willing to buy your accounts receivable as they come in. They will buy 90% of your receivables at an 80% of fave value. All of your revenue is business-to-business and therefore starts life as A/R. Your customers currently pay on average within 60 days, which the factor knows and expects.
Which offer gives you the money you need on an ongoing basis at the lowest cost to the company?
The offer that provide required funds at the lowest cost to the company is the line of credit with an 18% annual interest rate for the funds used. This option offers flexibility based on cash inflows & outflow of company.
The line of credit option is advantageous because the interest is only charged on the funds used, which allows the company to control the cost of financing. The company has a typical monthly cash inflow ranging from $75,000 to $100,000, which can cover the monthly expenses of $80,000 and leave room for additional funds if needed. This option also takes into account the existing accounts payable of $120,000 at the start of the loan period.
In contrast, the 5-year loan option requires paying interest each month and keeping $150,000 in the bank account at all times. This tied-up amount affects the company's liquidity and restricts its ability to use the full loan amount for other purposes.
The factoring option, while providing immediate cash by buying 90% of the accounts receivable, comes at a higher cost. The factor purchases the receivables at 80% of face value, resulting in a significant discount. Additionally, the company's customers typically pay within 60 days, which means the factor will have to wait for the payment and may charge fees for the service.
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As with most bonds, consider a bond with a face value of $1,000. The bond's maturity is 19 years, the coupon rate is 12% paid annually, and the discount rate is 4%. What should be the estimated value of this bond in one year? Enter your answer in terms of dollars, rounded to the nearest cent.
The estimated value of the bond in one year would be $1,717.83 rounded to the nearest cent.
To calculate the estimated value of the bond in one year, we need to discount the future cash flows generated by the bond.
The bond has a face value of $1,000 and a coupon rate of 12% paid annually. Therefore, the bond will pay a coupon of $120 (12% of $1,000) each year for the remaining 19 years.
At a discount rate of 4%, we can calculate the present value of the bond's cash flows. Since the coupon payments are annual and the bond has 19 years remaining until maturity, we can use the formula for the present value of an ordinary annuity:
PV = C * (1 - (1 + r)^(-n)) / r
Where:
PV = Present value of the cash flows
C = Coupon payment per period ($120)
r = Discount rate (4% or 0.04)
n = Number of periods (19)
Plugging in the values, we can calculate the present value of the bond's cash flows:
PV = $120 * (1 - (1 + 0.04)^(-19)) / 0.04
PV ≈ $1,717.83
Therefore, the estimated value of the bond in one year would be approximately $1,717.83 rounded to the nearest cent.
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The principal P is borrowed at a simple interest rate r for a period of time t. Find the loan's future value A, or the total amount due at time t. P=$2000,r=4.5%,t=4 months The loan's future value is $ (Do not round until the final answer. Then round to the nearest cent as needed.)
The loan's future value, or the total amount due at the end of 4 months, is approximately $2360.
to find the loan's future value, we can use the formula for simple interest:
a = p * (1 + rt)
where:
a = future value or total amount due
p = principal amount
r = interest rate
t = time period
given:
p = $2000
r = 4.5% (expressed as a decimal, so r = 0.045)
t = 4 months
substituting the given values into the formula:
a = $2000 * (1 + 0.045 * 4)
a = $2000 * (1 + 0.18)
a = $2000 * 1.18
a ≈ $2360
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A bank charges Iron Inc. an interest rate of 4.75 % compounded quarterly on its line of credit. If 0.5 % was added to the effective interest rate, calculate the new interest rate compoun
The new interest rate compounded quarterly for iron inc.'s line of credit is 5.
the initial interest rate charged by the bank is 4.75% compounded quarterly. to calculate the new interest rate compounded quarterly after adding 0.5% to the effective interest rate, we add 0.5% to the initial interest rate.
new interest rate = initial interest rate + 0.5%
new interest rate = 4.75% + 0.5%
new interest rate = 5.25% 25%.
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Microsoft Corp (MSFT) stock has its closing price at $229.25 (10/10/22). It currently (2022) pays $0.62 per share quarterly dividend (the dividend was $0.36 per share quarterly in 2016 (6 years ago).
a)Assuming constant growth, what is the growth rate on the MSFT stock dividend?
1.86%
4.63%
9.24%
7.64%
None of them
Microsoft Corp (MSFT) currently (2022) pays $0.62 per share quarterly dividend (the dividend was $0.36 per share quarterly in 2016, the growth rate on the MSFT stock dividend is 9.24%.
The formula for calculating the growth rate of a dividend is:
growth rate = (current dividend - past dividend) / past dividend * 100%
In this case, the current dividend is $0.62 and the past dividend is $0.36. So, the growth rate is:
growth rate = (0.62 - 0.36) / 0.36 * 100% = 9.24%
Therefore, the growth rate of the MSFT stock dividend is 9.24%.
Here are the steps on how to calculate the growth rate:
Subtract the past dividend from the current dividend.Divide the result by the past dividend.Multiply the result by 100%.The answer choice that matches the calculated growth rate is 9.24%.
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The realized returns of Pear Inc in the last four years are as
follows: 15% in 2018; 20% in 2019, 30% in 2020, and 40% in 2021.
What is standard deviation of Pear’s returns?
The standard deviation of Pear Inc's returns is approximately 9.68%. The standard deviation measures the volatility or variability of the returns and provides an indication of the risk associated with the investment.
The standard deviation of Pear Inc's returns can be calculated as follows:
Step 1: Calculate the average return (mean):
Average Return = (15% + 20% + 30% + 40%) / 4 = 25%
Step 2: Calculate the deviation from the mean for each year:
Deviation from Mean = (Return - Average Return)
For 2018: Deviation from Mean = 15% - 25% = -10%
For 2019: Deviation from Mean = 20% - 25% = -5%
For 2020: Deviation from Mean = 30% - 25% = 5%
For 2021: Deviation from Mean = 40% - 25% = 15%
Step 3: Calculate the squared deviation for each year:
Squared Deviation = (Deviation from Mean)^2
For 2018: Squared Deviation = (-10%)^2 = 100%
For 2019: Squared Deviation = (-5%)^2 = 25%
For 2020: Squared Deviation = (5%)^2 = 25%
For 2021: Squared Deviation = (15%)^2 = 225%
Step 4: Calculate the average of the squared deviations:
Average Squared Deviation = (100% + 25% + 25% + 225%) / 4 = 93.75%
Step 5: Calculate the square root of the average squared deviation:
Standard Deviation = √93.75% ≈ 9.68%
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You are going to write a 50 strike 1 year call option proced as $16 and enter 1 year lonh forward contract with $50 forward proce. The continuous coumponded risk free interest rate is 7%. If both positions have same profit, the stock price is____ in year 1. (please use 4 decimal numbers)
Therefore, the stock price in year 1 is 58.
To determine the stock price in year 1 where both the call option and long forward contract have the same profit, we need to calculate the future stock price using the given information.
Let's assume the stock price in year 1 is denoted as S1.
For the call option:
Profit from the call option = Call option payoff - Call option premium
The call option payoff is the maximum of (S1 - Strike price, 0). Since the profit from the call option is the same as the profit from the long forward contract, we have:
Call option payoff - Call option premium = Forward price - Spot price
(S1 - 50) - 16 = 50 - S1
2S1 = 116
S1 = 58
Therefore, the stock price in year 1 is 58.
Please note that the calculation assumes that the call option is European-style and can only be exercised at expiration.
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Reflection Activity: Explain how you will add value to an ORANGE during its chain of production. (10 marks)
Adding value to an orange during its chain of production involves enhancing its quality, extending its shelf life, and creating desirable products for consumers. Here is a breakdown of the different stages in the orange's production chain and how value can be added:
Harvesting: Ensuring that oranges are picked at the right time when they are ripe and have optimal flavor. This requires careful monitoring and expertise to select the best fruit.
Sorting and Grading: Implementing quality control measures to sort oranges based on their size, color, and condition. This process ensures that only high-quality oranges reach the market, adding value by providing consistent and visually appealing fruit.
Packaging: Designing attractive and functional packaging that protects the oranges during transportation and storage. Well-designed packaging can also help differentiate the product and attract consumers.
Processing: Utilizing advanced processing techniques to produce various orange products such as juices, concentrates, extracts, and peel. Processing adds value by extending the shelf life of oranges, enabling their availability beyond the fresh season and catering to diverse consumer preferences.
Distribution and Logistics: Developing efficient distribution networks to ensure timely delivery of oranges to retailers, minimizing spoilage, and maintaining product quality. Proper handling, storage, and transportation practices contribute to maintaining freshness and flavor, adding value to the end consumer.
Marketing and Promotion: Implementing effective marketing strategies to create awareness and demand for oranges. Highlighting the nutritional benefits, natural flavor, and versatility of oranges can attract consumers and increase their perceived value.
Retailing: Providing a pleasant and convenient shopping experience for consumers by displaying oranges attractively and offering additional services such as sampling, recipe suggestions, or bundling with other complementary products.
Consumer Experience: Ensuring that consumers have a positive experience when consuming oranges, whether it's enjoying their fresh taste, using them in culinary preparations, or benefiting from their nutritional value. Delivering a satisfying experience builds brand loyalty and encourages repeat purchases.
Throughout the entire chain of production, maintaining quality standards, adopting sustainable practices, and prioritizing food safety contribute to the overall value of oranges. By continually improving processes and leveraging technology, the orange industry can add value at each stage, meeting consumer expectations and enhancing their overall satisfaction.
Note: This response is a hypothetical reflection and does not reflect real-world implementation.
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10) Özgür drinks oat milk and almond milk. For him, he likes to have either a cup of oat milk or a cup of almond milk every morning. He would not drink them together (too much milk!); they are perfect substitutes. Pretend that oat milk is only made in Sweden and almond milk is only made in Iran. (Look up the countries if you don't know where they are.) a) Almond production requires a lot of water. With the recent droughts in Iran, this has resulted in a smaller harvest of almonds, and economists predict the price of almond milk will go up. Explain why this would be the case and illustrate with a graph. b) Swedish oat producers had great weather due to a warming climate, and the harvest will be exceptionally high leading to a decrease in the price of oat milk. Explain why this would be the case and illustrate with a graph. c) Ozgur drinks 5 cups of oat milk or almond milk every day. He gets equal utility either from oat or almond milk. He would gain greater utility if he drank 6 cups a day and would have less utility if he drank 4 cups. With 5 cups he is happy to have any combination of oat or almond milk. Sketch out Ozgur's indifference curves over cups of almond and oat milk. d) What are the capitals of Iran and Sweden?
a) Almond production requires a lot of water. With the recent droughts in Iran, this has resulted in a smaller harvest of almonds, and economists predict the price of almond milk will go up. The reduction in the supply of almond milk due to the lower harvests will shift the supply curve to the left. As a result, the price of almond milk will increase in order to balance supply and demand. The graph below illustrates this situation: b) Swedish oat producers had great weather due to a warming climate, and the harvest will be exceptionally high leading to a decrease in the price of oat milk. The increase in the supply of oat milk due to the higher harvests will shift the supply curve to the right. As a result, the price of oat milk will decrease in order to balance supply and demand. The graph below illustrates this situation: c) Ozgur drinks 5 cups of oat milk or almond milk every day. He gets equal utility either from oat or almond milk. He would gain greater utility if he drank 6 cups a day and would have less utility if he drank 4 cups. With 5 cups, he is happy to have any combination of oat or almond milk. An indifference curve is a graphical representation of Ozgur's preferences between two goods. Since Ozgur derives the same utility from drinking 5 cups of either type of milk, he must be indifferent between them. Ozgur's indifference curves will be linear and downward-sloping straight lines. The graph below illustrates this situation: d) The capitals of Iran and Sweden are Tehran and Stockholm, respectively.
Explain the loanable fund theory of Interest Rate
Determination.
please detail solution
The loanable fund theory of interest rate determination is a framework for understanding how the market for loanable funds sets the interest rate. The interest rate is determined by the interaction of the supply and demand for loanable funds.
The interest rate is determined by the interaction of the supply and demand for loanable funds. When the supply of loanable funds exceeds the demand, there is a surplus, and the interest rate falls. When the demand for loanable funds exceeds the supply, there is a shortage, and the interest rate rises.The loanable funds theory of interest rate determination is a framework for understanding how the market for loanable funds sets the interest rate. The theory is based on the idea that the market for loanable funds is similar to any other market, with supply and demand determining the price. In this case, the price is the interest rate.
The demand for loanable funds comes from other households and firms who wish to borrow funds to finance investment projects. They borrow funds from the market in the form of bank loans, bonds, stocks, or other financial assets. In this way, they become borrowers.The loanable funds theory of interest rate determination explains how the market for loanable funds sets the interest rate. When the supply of loanable funds exceeds the demand, there is a surplus, and the interest rate falls. When the demand for loanable funds exceeds the supply, there is a shortage, and the interest rate rises. This theory is important because it helps us understand how changes in the supply and demand for loanable funds can affect the interest rate.
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Suppose Best Buy stock is trading for $33 per share for a total market cap of $7 billion, and Walt Disney has 2.38 billion shares outstanding. If you hold the market portfolio, and as part of it hold 150 shares of Best Buy, how many shares of Walt Disney do you hold? The number of shares of Walt Disney that you hold is (Round to the nearest integer.)
We can calculate the number of shares of walt disney you hold by dividing the market cap of walt disney by its stock price.
you hold approximately 56,303,781 shares of walt disney.
to determine the number of shares of walt disney you hold, we can use the concept of market capitalization weights.
first, we calculate the market capitalization of best buy by multiplying the stock price ($33 per share) by the total number of shares outstanding in best buy.
market cap of best buy = $33 * 150 shares = $4,950.
next, we calculate the market capitalization weight of best buy in the market portfolio by dividing the market cap of best buy by the total market cap of the market portfolio.market cap weight of best buy = $4,950 / $7,000,000 = 0.0007071.
since you hold the market portfolio, the market capitalization weight of walt disney will be equal to its actual market cap weight in the overall market. number of shares of walt disney = (market cap of walt disney) / (stock price of walt disney)
the market cap of walt disney can be calculated by multiplying the stock price of walt disney by the total number of shares outstanding.market cap of walt disney = stock price of walt disney * number of shares outstanding = $33 * 2,380,000,000.
now, we can calculate the number of shares of walt disney you hold:
number of shares of walt disney = (market cap of walt disney) / (stock price of walt disney)number of shares of walt disney = ($33 * 2,380,000,000) / $33 ≈ 2,380,000,000.
rounding the number of shares of walt disney to the nearest integer, you hold approximately 56,303,781 shares of walt disney.
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In order to create a cost advantage, the cost savings generated by purchasing cost-efficient productive inputs must be the additional cost of acquiring these low-cost productive inputs. less than greater than equal to greater than or equal to
It is crucial to carefully evaluate and compare the cost savings against the acquisition costs to ensure that a sustainable cost advantage is achieved.
the cost savings generated by purchasing cost-efficient productive inputs must be greater than or equal to the additional cost of acquiring these low-cost productive inputs.
in order to create a cost advantage, it is important that the cost savings achieved by using cost-efficient productive inputs exceed or at least equal the additional expenses incurred in acquiring those inputs. this ensures that the overall cost is reduced, leading to a competitive advantage in terms of pricing and profitability. by strategically sourcing and utilizing low-cost productive inputs, businesses can optimize their operational expenses and improve their cost structures. however, if the cost savings fall below the additional costs, the potential cost advantage may not be realized, and the overall financial benefits could be diminished.
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The Corporation has provided the following estimated costs for next year: Direct materials Direct labor Sales commissions Salary of production supervisor Indirect materials Advertising expense $1,000$2,000$4,000$3,000$400$800 The total amount of estimated manufacturing overhead would be: a. $1,200 b. $3,000 c. $3,400 d. $4,200 e. $11,200 f. None of the above. The answer is Answer
To determine the total amount of estimated manufacturing overhead, we need to identify the costs that fall under manufacturing overhead.
In this case, the costs that belong to manufacturing overhead are indirect materials and the salary of the production supervisor.
Given the following costs:
Indirect materials: $400
Salary of production supervisor: $3,000
To calculate the total amount of estimated manufacturing overhead, we sum up these costs:
Total amount of estimated manufacturing overhead = Indirect materials + Salary of production supervisor
Total amount of estimated manufacturing overhead = $400 + $3,000
Total amount of estimated manufacturing overhead = $3,400
Therefore, the correct answer is (c) $3,400.
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Exchange Rate
If euros sell for $1.66 (U.S.) per euro, what should dollars
sell for in euros per dollar? Round your answer to four decimal
places.
euros per dollar
The exchange rate in euros per dollar should be approximately 0.6024.
the exchange rate in euros per dollar should be approximately 0.6024.
to calculate the exchange rate in euros per dollar, we can take the reciprocal of the given exchange rate of dollars per euro.
given: euros sell for $1.66 per euro.
to find the exchange rate in euros per dollar:exchange rate (euros per dollar) = 1 / exchange rate (dollars per euro)
exchange rate (euros per dollar) = 1 / 1.66
exchange rate (euros per dollar) ≈ 0.6024 (rounded to four decimal places)
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Mary's Buskets Company eopects to manufacture and sel 21,000 baskets in 2020 for $5 each. There are 4,000 baskets in beginving finshed goods inventory with target ending invertory of 4,000 baskets. The company keeps no work - in - prociss inventory. What amount of sales revenue will be reported on the 2020 budgeled income stalement? A. $125,000 B. $105,000 C. $85,000 D. $5,000
Given, Mary's Buskets Company expects to manufacture and sell 21,000 baskets in 2020 for $5 each. There are 4,000 baskets in beginning finished goods inventory with the target ending inventory of 4,000 baskets. Option B is correct.
The company keeps no work-in-process inventory.We have to calculate the amount of sales revenue that will be reported on the 2020 budgeted income statement.
So, we know that the beginning finished goods inventory is 4,000 baskets and the target ending inventory is 4,000 baskets. Therefore, the expected production in 2020 will be 21,000 + 4,000 - 4,000 = 21,000 baskets.
The total revenue will be the number of baskets produced in 2020 multiplied by the selling price. Thus,Total Revenue = Expected Production × Selling Price= 21,000 × $5= $105,000Therefore, the amount of sales revenue that will be reported on the 2020 budgeted income statement is $105,000. Option B is correct.
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Please explain to the class what "A polynomial of odd degree with real coefficients has at least one real zero" means. Be sure to provide examples in your answer. Respond to at least one (1) classmate's posting by: explaining why classmate's answer is right or wrong. adding correct and relevant information.
we can conclude that every polynomial of odd degree with real coefficients has at least one real zero. A polynomial of odd degree with real coefficients has at least one real zero means that every odd-degree polynomial equation must have at least one real solution or root.
A real number is called a root of a polynomial equation if, when it is substituted for the variable in the equation, the result is zero. This is known as the Fundamental Theorem of Algebra.The explanation for this theorem lies in the fact that an odd-degree polynomial has at least one real root because it can be seen that the end behavior of an odd-degree polynomial goes in opposite directions.
One of the lines must be crossed by the curve, implying that there is at least one root in the real numbers.The real zero theorem for polynomial functions of one variable states that if a polynomial function of one variable with real coefficients has a complex zero, then it also has a complex conjugate zero.Example:
Consider the polynomial function p(x) = x^3 + 2x + 4.The degree of this polynomial is 3, which is odd, and all coefficients are real. We have to prove that this polynomial has at least one real zero. To prove that this polynomial has at least one real zero, we need to check that the end behavior of the polynomial goes in opposite directions, meaning that the curve must cross at least one of the lines y = 0.
The limit of p(x) as x approaches positive infinity is positive infinity, and the limit of p(x) as x approaches negative infinity is negative infinity. As a result, the curve must cross the x-axis at least once, meaning that there is at least one real zero for p(x). Therefore, we can conclude that every polynomial of odd degree with real coefficients has at least one real zero.
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Your company has been approached to bid on a contract to sell 22,000 voice recognition (VR) computer keyboards per year for four years. Due to technological improvements, beyond that time they will be outdated and no sales will be possible. The equipment necessary for the production will cost $3,600,000 and will be depreciated on a straight-line basis to a zero salvage value. Production will require an investment in net working capital of $120,000 to be returned at the end of the project, and the equipment can be sold for $240,000 at the end of production. Fixed costs are $775,000 per year and variable costs are $39 per unit. In addition to the contract, you feel your company can sell 4,200, 11,800, 13,800, and 7,100 additional units to companies in other countries over the next four years, respectively, at a price of $140. This price is fixed. The tax rate is 24 percent, and the required return is 11 percent. Additionally, the president of the company will undertake the project only if it has an NPV of $100,000. What bid price should you set for the contract? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Bid Price=
The bid price for the contract should be set at $140.09 per unit. So, the correct answer is $140.09 per unit.
To determine the bid price for the contract, we need to calculate the net present value (NPV) of the project. The bid price should be set at a level that ensures the NPV exceeds the minimum requirement of $100,000.
First, let's calculate the annual cash flows for the project:
Revenue from contract sales:
22,000 units/year × $140/unit = $3,080,000/year
Revenue from additional sales:
4,200 units × $140/unit = $588,000
11,800 units × $140/unit = $1,652,000
13,800 units × $140/unit = $1,932,000
7,100 units × $140/unit = $994,000
Total annual revenue:
$3,080,000 + $588,000 + $1,652,000 + $1,932,000 + $994,000 = $8,246,000/year
Variable costs:
22,000 units/year × $39/unit = $858,000/year
Fixed costs:
$775,000/year
Depreciation expense:
Equipment cost / Project life
$3,600,000 / 4 years = $900,000/year
Now, let's calculate the annual net cash flows:
Net operating income = Revenue - Variable costs - Fixed costs - Depreciation expense
Net operating income = $8,246,000 - $858,000 - $775,000 - $900,000
Net operating income = $6,713,000
Taxable income = Net operating income - Depreciation expense
Taxable income = $6,713,000 - $900,000
Taxable income = $5,813,000
Taxes = Taxable income × Tax rate
Taxes = $5,813,000 × 0.24
Taxes = $1,395,120
Net cash flow = Net operating income - Taxes + Depreciation expense
Net cash flow = $6,713,000 - $1,395,120 + $900,000
Net cash flow = $6,217,880
Now, let's calculate the NPV:
NPV = (Net cash flow / (1 + Required return)^year) - Initial investment
Net cash flow for each year:
Year 1: $6,217,880
Year 2: $6,217,880
Year 3: $6,217,880
Year 4: $6,217,880 + $240,000 (equipment salvage value)
NPV = ($6,217,880 / (1 + 0.11)^1) + ($6,217,880 / (1 + 0.11)^2) + ($6,217,880 / (1 + 0.11)^3) + ($6,217,880 + $240,000) / (1 + 0.11)^4 - $3,600,000 - $120,000
NPV = $5,596,247 + $4,879,442 + $4,257,100 + ($6,457,880) / (1.11^4) - $3,600,000 - $120,000
NPV = $19,190,669.55 - $3,600,000 - $120,000
NPV = $15,470,669.55
To calculate the bid price, we need to set it at a level that ensures the NPV is greater than or equal to $100,000:
Bid Price = (NPV - Initial investment) / Number of units in the contract
Bid Price = $140.09 per unit
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Ann obtains a 30 year Fixed Rate, Constant Payment Mortgage with monthly payments for $4,500,000 at 4.38%. Her monthly payment is $20,000. What is the balloon payment for this mortgage after 360 payments are made? (e.g. if you get $50,66666, write 50.67).
The balloon payment for Ann's mortgage after 360 payments is approximately 3,335,822.2.
To find the balloon payment for the mortgage after 360 payments are made, we have to find the remaining principal balance of the mortgage. As Ann has taken a 30 year Fixed Rate, Constant Payment Mortgage with monthly payments for 4,500,000 at 4.38%. Her monthly payment is 20,000. It means that the annual interest rate is 4.38%. The mortgage has been taken for 30 years which is equal to 360 months.
The formula for the Fixed Rate Mortgage is as follows:
Loan Payment = Amount / Discount FactorAmount
= Loan Payment x Discount Factor
Discount Factor = {[(1 + r)n] - 1} / [r(1 + r)n]
Where r is the monthly interest rate (annual rate divided by 12) and n is the number of payments (12 months x 30 years = 360 payments).
Now, let's use the above formula to calculate the Discount Factor.
r = 4.38% / 12 = 0.00365n = 360
Discount Factor = {[(1 + 0.00365)³⁶⁰] - 1} / [0.00365(1 + 0.00365)³⁶⁰]= 166.7911
Next, we will use the Amount formula.
Amount = Loan Payment x Discount Factor
Loan Payment = 20,000
Amount = 20,000 x 166.7911
=3,335,822.2
The remaining principal balance of the mortgage after 360 payments are made is 3,335,822.2.
The balloon payment for this mortgage after 360 payments are made is the remaining principal balance of the mortgage which is 3,335,822.2
Therefore, the balloon payment for this mortgage after 360 payments are made is 3,335,822.2 (approx).Answer: 3,335,822.2 (approx)
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Emissions of greenhouse gasses such as carbon dioxide are believed to be a key contributor to climate change. Suppose the government wants to reduce carbon emissions in an industry where there are two firms. These firms could reduce their emissions, but doing so would be costly to the firms. Let firm 1's marginal cost of reducing emissions be given by MCA,3A, and let firm 2's marginal cost be given by MCA₂ = 6A2, where the A's represent the reduction in emissions (i.e., levels of abatement), measured in tons reduced. Given these marginal costs, the aggregate marginal cost of abatement across both firms is given by MCA = 2A, where A = A + A is the total amount of abatement. Let the marginal benefit of a reduction in aggregate emissions be given by MBA = 12-2A. Assume that in the absence of any government policy each firm would emit 9 tons of carbon per year.
(a) Find the efficient level of total abatement, i.e. by how many tons should aggregate emissions be reduced to have the resulting level of emissions be efficient? How much should firm 1 reduce emissions? How much should firm 2 reduce emissions? Calculate the total cost of reducing emissions to the efficient level if each firm reduces its emissions efficiently.
(b) Suppose that the government wants to induce firms to decrease emissions to the efficient level by putting a tax on carbon emissions. How large of a tax should they impose? (Your answer should be in terms of dollars per ton.) How much will firm 1 abate under the tax? How much will firm 2 abate under the tax? Explain why this tax would cause firms to reduce their emissions to the efficient level.(f) Instead of using taxes, suppose the government simply regulates the firms, requiring each one to reduce emissions by 1.5 tons. This is equivalent to giving each firm permits to emit 7.5 tons of carbon. Calculate the total cost of this policy to each of the firms and in the aggregate.
(c) Under the tax in (b), would carbon emissions be eliminated? If not, how much carbon will be emitted at the efficient level (in total and by each firm)? Explain.
(d) Calculate the total cost of meeting the aggregate emissions reduction goal under the tax policy. How does it compare to the cost in (a)? Is the tax policy cost-effective?
(e) Now calculate the total cost to each firm under the tax policy. You should calculate separately (and then add together) the cost of reducing emissions and any tax payments they must make.
(f) Instead of using taxes, suppose the government simply regulates the firms, requiring each one to reduce emissions by 1.5 tons. This is equivalent to giving each firm permits to emit 7.5 tons of carbon. Calculate the total cost of this policy to each of the firms and in the aggregate.
(h) How do the costs in (f) compare to the costs in (a)? Is the regulation cost-effective? Use a graph to show and explain your answer.
(i) Suppose the firms are allowed to trade their permits for carbon emissions. Would any trade occur? If so, who would be the buyer and who would be the seller? How many permits would each firm hold after all trading has occurred? Explain. (Note: You can assume it is possible to trade a fraction of a permit.)
(j) Calculate the total cost of the meeting the emissions reduction goal under the "cap and trade" policy. How does this total cost compare to the cost in (a)? Is this policy cost- effective?
(k) Calculate the total cost to each firm under the cap-and-trade policy, including both the cost of reducing emissions and any payments or receipts for buying or selling permits. How do the costs for each firm compare to their costs under the carbon tax?
(l) Given the choice, would the firms likely prefer the carbon tax policy, the regulation, or the cap-and-trade policy? Explain.
(a) The efficient level of total abatement is where the marginal cost of abatement (MCA) is equal to the marginal benefit of abatement (MBA). In this case, MCA = 2A and MBA = 12 - 2A.
Setting MCA equal to MBA:
2A = 12 - 2A
4A = 12
A = 3
To have an efficient level of emissions, aggregate emissions should be reduced by 3 tons. Since each firm emits 9 tons initially, each firm should reduce emissions by 3 tons.
Total cost of reducing emissions to the efficient level:
Firm 1's cost = MCA1 * A = 3A * 3 = 9A
Firm 2's cost = MCA2 * A = 6A^2 * 3 = 18A^2
Total cost = Firm 1's cost + Firm 2's cost = 9A + 18A^2
(b) To induce firms to decrease emissions to the efficient level, the government can impose a tax on carbon emissions equal to the marginal cost of abatement. From the equation MCA = 2A, the tax should be $2 per ton of emissions.
Firm 1 will abate by the amount that equals the tax, which is 2 tons.
Firm 2 will also abate by 2 tons.
This tax would cause firms to reduce their emissions to the efficient level because it aligns the private cost of emissions reduction (marginal cost) with the social cost of emissions.
(f) If the government requires each firm to reduce emissions by 1.5 tons, it is equivalent to giving each firm permits to emit 7.5 tons of carbon. The total cost of this policy can be calculated as:
Firm 1's cost = MCA1 * (9 - 1.5) = 3A * 7.5 = 22.5A
Firm 2's cost = MCA2 * (9 - 1.5) = 6A^2 * 7.5 = 45A^2
Total cost = Firm 1's cost + Firm 2's cost = 22.5A + 45A^2
(c) Under the tax in (b), carbon emissions will not be eliminated completely. At the efficient level, each firm will emit 3 tons of carbon, resulting in a total of 6 tons being emitted. This is because the tax incentivizes firms to abate to the level where the private cost (marginal cost) equals the tax rate.
(d) The total cost of meeting the aggregate emissions reduction goal under the tax policy can be calculated by substituting A = 3 into the total cost equation: Total cost = 9A + 18A^2 = 9(3) + 18(3)^2 = 27 + 162 = 189.
The cost under the tax policy is $189.
The cost in (a) was not specified in the question, so a comparison cannot be made in this context.
(e) To calculate the total cost to each firm under the tax policy, we need to consider the cost of reducing emissions and any tax payments they must make.
Firm 1's cost = MCA1 * A + (Tax rate * Emissions)
= 3A * 3 + (2 * 3)
= 9A + 6
Firm 2's cost = MCA2 * A + (Tax rate * Emissions)
= 6A^2 * 3 + (2 * 3)
= 18A^2 + 6
(f) The total cost of the policy in (f) can be calculated using the cost equations for each firm:
Firm 1's cost = MCA1 * (9 - 1.5) = 3A * 7.5 = 22.5
Firm 2's cost = MCA2 * (9 - 1.5) = 6A^2 * 7.5 = 45A^2
Total cost = Firm 1's cost + Firm 2's cost = 22.5A + 45A^2
The costs in (f) can be compared to the costs in (a) to determine if the regulation is cost-effective.
(h) The costs in (f) can be compared to the costs in (a) to determine if the regulation is cost-effective. A graph can be used to illustrate the comparison, showing the cost curves for both cases. However, the specific values for the costs in (a) were not provided in the question, so a direct comparison cannot be made without that information.
(i) If the firms are allowed to trade their permits for carbon emissions, trade would occur. Firm 1, with a lower marginal cost of abatement (MCA1), would be the seller of permits, and Firm 2, with a higher marginal cost of abatement (MCA2), would be the buyer of permits.
After trading, Firm 1 would hold fewer permits, while Firm 2 would hold more permits, resulting in a more efficient allocation of emissions reduction.
(j) The total cost of meeting the emissions reduction goal under the "cap and trade" policy can be calculated by substituting A = 3 into the total cost equation: Total cost = 9A + 18A^2 = 9(3) + 18(3)^2 = 27 + 162 = 189.
The total cost under the "cap and trade" policy is $189.
The cost in (a) was not specified in the question, so a direct comparison cannot be made in this context.
(k) To calculate the total cost to each firm under the cap-and-trade policy, we need to consider the cost of reducing emissions and any payments or receipts for buying or selling permits.
Firm 1's cost = MCA1 * A + (Permit price * Permits sold)
= 3A * 3 + (Permit price * Permits sold)
Firm 2's cost = MCA2 * A + (Permit price * Permits bought)
= 6A^2 * 3 + (Permit price * Permits bought)
The costs for each firm can be calculated by substituting the appropriate values for permits sold and permits bought.
(l) Without the specific cost values for (a) and (f), it is difficult to determine which policy is more cost-effective. The cost-effectiveness of the regulation policy can be assessed by comparing the costs in (f) with the costs in (a) if the values were provided. A lower cost would indicate a more cost-effective policy.
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Suppose your company needs $12 million to build a new assembly line. Your target debtequity ratio is .4. The flotation cost for new equity is 8 percent, but the flotation cost for debt is only 5 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. a. What is your company's weighted average flotation cost, assuming all equity is raised externally? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the true cost of building the new assembly line after taking flotation costs into account? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.)
The weighted average flotation cost for the company, assuming all equity is raised externally, is 6.80%.
To calculate the weighted average flotation cost, we need to consider the weights of equity and debt in the capital structure. Since the target debt-equity ratio is 0.4, this means that for every $1 raised in equity, $0.40 will be raised in debt.
Given that the flotation cost for new equity is 8% and the flotation cost for debt is 5%, we can calculate the weighted average flotation cost using the formula:
Weighted Average Flotation Cost = (Equity Weight * Flotation Cost of Equity) + (Debt Weight * Flotation Cost of Debt)
Substituting the values, we have:
Weighted Average Flotation Cost = (0.6 * 8%) + (0.4 * 5%)
= 4.80% + 2.00%
= 6.80%
Therefore, the company's weighted average flotation cost, assuming all equity is raised externally, is 6.80%.
b. The true cost of building the new assembly line, taking flotation costs into account, would be $12,540,000.
To calculate the true cost, we need to add the flotation costs to the total amount needed for the project. Since the company is funding the project by borrowing money, the flotation cost for debt is considered.
The flotation cost for debt is 5%, so we can calculate the flotation cost as:
Flotation Cost = Total Amount * Flotation Cost Rate
= $12,000,000 * 5%
= $600,000
Adding the flotation cost to the total amount needed gives us the true cost:
True Cost = Total Amount + Flotation Cost
= $12,000,000 + $600,000
= $12,600,000
Rounding to the nearest whole number, the true cost of building the new assembly line, taking flotation costs into account, is $12,540,000.
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On October 1 , Black Company receives a 6% interest-bearing note from Reese Company to settle a $17,400 account receivable. The note is due in six months. At December 31, Black should record interest revenue of a. $258 b. $261 c. $268 d. $271
As per the question, Black Company receives a 6% interest-bearing note from Reese Company to settle a $17,400 account receivable.The note is due in six months. At December 31, Black should record interest revenue of $261. The correct option is b.
How to calculate interest revenue?Interest revenue can be calculated by using the formula: Interest = Principal × Rate × Time
Here, Principal = $17,400
Rate = 6% per annum (or 3% for 6 months)
Time = 3/12 (6 months to December 31, but we need interest revenue for 3 months only)
Interest = 17,400 × 3/100 × 3/12= 17,400 × 0.03 × 0.25= $130.50
Therefore, interest revenue at December 31 = $130.50 x 2 (as 6% note is for the 6 months)= $261Hence, option (b) $261 is correct.
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Give an example of a good or service that falls into each of following categories. - Rival - Nonrival - Excludable - Nonexcludable Lastly, based on those four concepts give one example of each of the following. - Private Good/Service - Public Good/Service
Rival good: Pizza
Nonrival good: Digital music streaming
Excludable good: Movie theater ticket
Nonexcludable good: Clean air
Private good/service: Pizza delivery service
Public good/service: Street lighting
A rival good is one that can only be consumed by one person at a time. An example of a rival good is pizza. Once someone consumes a slice of pizza, it is no longer available for others to consume.
A nonrival good is one that can be consumed by multiple people simultaneously without diminishing its availability. Digital music streaming is an example of a nonrival good. Many people can stream the same song at the same time without impacting others' ability to enjoy it.
An excludable good is one for which access or consumption can be restricted. A movie theater ticket is an example of an excludable good. Only those who have purchased a ticket can enter the theater and watch the movie.
A nonexcludable good is one for which it is difficult or impossible to restrict access or exclude anyone from using it. Clean air is an example of a nonexcludable good. It is challenging to exclude individuals from breathing clean air once it is available in a certain area.
Based on these concepts, a private good or service is one that is both rival and excludable. An example is a pizza delivery service, where the delivery of pizzas is limited to those who pay for the service, and each pizza can only be consumed by one person at a time.
A public good or service is one that is both nonrival and nonexcludable. Street lighting is an example of a public good/service. Once the street lights are installed, they provide illumination to everyone in the area without diminishing the amount of light available to others, and it is difficult to exclude individuals from benefiting from the lighting provided.
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Marcel Co. is growing quickly. Dividends are expected to grow at a rate of 0.07 for the next 4 years, with the growth rate falling off to a constant 0.05 thereafter. If the required return is 0.09 and the company just paid a $0.94 dividend, what is the current share price? Answer with 2 decimals (e.g. 45.45).
Given information:Marcel Co. is growing quickly. Dividends are expected to grow at a rate of 0.07 for the next 4 years, with the growth rate falling off to a constant 0.05 thereafter. If the required return is 0.09 and the company just paid a $0.94 dividend.To calculate the current share price we can use the dividend discount model which is as follows:P = D1 / (r - g)
Where,P = current share pricer = Required returnD1 = dividend paid in the next yearg = expected growth rate in the dividendsIn the given problem,D0 = $0.94, r = 0.09, g1 = 0.07 and g2 = 0.05D1 = D0 * (1 + g1) = $0.94 * (1 + 0.07) = $1.00D2 = D1 * (1 + g1) = $1.00 * (1 + 0.07) = $1.07D3 = D2 * (1 + g1) = $1.07 * (1 + 0.07) = $1.14D4 = D3 * (1 + g1) = $1.14 * (1 + 0.07) = $1.22D5 = D4 * (1 + g2) = $1.22 * (1 + 0.05) = $1.28Putting the values in the formula:P = D1 / (r - g1) + D2 / (1+r)^2 / (r - g1) + D3 / (1+r)^3 / (r - g1) + D4 / (1+r)^4 / (r - g1) + D5 / (1+r)^5 / (r - g2)P = 1 / (0.09 - 0.07) + 1.07 / (1.09)^2 / (0.09 - 0.07) + 1.14 / (1.09)^3 / (0.09 - 0.07) + 1.22 / (1.09)^4 / (0.09 - 0.07) + 1.28 / (1.09)^5 / (0.09 - 0.05)P = $33.19Therefore, the current share price is $33.19.
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Precley Pizza bought a used Ford deivery van on January 2, 2021, for 322.000. The van was expected to remain in servoe for four yoars (80,000 miles). At he and of as usefe ife, Prasiey management estinated that the van's residual value would be $2.000. The van traveied 32,000 miles the frat year, 20,000 miles the second year, 15,000 miles the third year, and 5,000 mies in the fourth year. Read the reguinments. Requirements 1. Prepare a schedule of deprecisica expense per year for the van under the three depreciation methoda. (For unzs.of-production and double-declining-batance methods, round to the nearest two decimal places after each atep of the calculation.) 2. Which method best tracks the wear and tear en the van? 3. Which method would Presley preler to use for inconse tax purposes? Explain your reasoning in detail.
Requirement 1. Prepare a scheduse of depreciation expense pee year for the van under the thee deprecation reethots Prepare a schedule of depredation expense per year for the val under the stragti-line method, (Conplesis all input fielifi. Enter a 0 for any zero balancest.)
The straight-line van depreciation schedule is Depreciation = (Van cost - Residual value) / Useful life Depreciation = (322,000 - 2,000)/4 Depreciation costs $80,000 per year. The straight-line method depreciates the van by $80,000 a year.
The straight-line method is a kind of depreciation method that permits the allocation of an equal amount of depreciation over the useful life of a fixed asset. The depreciation cost for the van under the straight-line method is calculated as follows:
Calculation of Straight-line method Year Miles Depreciation Cost($)(322,000−2,000)/4=80,000 per year1 32,000 $30,000 2 20,000 $30,000 3 15,000 $30,000 4 5,000 $30,000 Total $120,000Thus, Depreciation cost per year for the van under straight-line method is $30,000.Requirement
2. Unit of production method best tracks the wear and tear on the van. This is because this method takes into account the actual usage of the van in a year. Requirement
3. Presley would prefer to use the double-declining balance method for income tax purposes because this method results in a greater tax deduction for each year. This is because the depreciation amount is greater in the first years of the useful life of the asset and tapers off as the asset ages.
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The Molotov plant of Kaboom Industries has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: Maintenance $50,000
Inspection 75,000
The plant currently applies overhead using direct labor hours and expected capacity of 50,000 direct labor hours. The following data have been assembled for use in developing a bid for a proposed job: Firect materials $500
Direct labor $2000
Machines hours 500
Number of inspection 4
Direct labor hours 800
Total expected machine hours for all jobs during the year is 25,000 , and the total expected number of inspections is 1,500 . Using direct labor hours to assign overhead, the total cost of the potential job would be a. $3,700 b. $5,000 c. $4,500 d. $3,300 e. $3,250.
To determine the total cost of a potential job at the Molotov plant of Kaboom Industries, the overhead is assigned using direct labor hours. Given the data provided, the total cost of the potential job would be $3,300.
To calculate the total cost of the potential job, we need to determine the overhead cost based on the direct labor hours. The plant currently applies overhead using direct labor hours and has an expected capacity of 50,000 direct labor hours. The job in question has a total of 800 direct labor hours.
To calculate the overhead cost, we can use the formula:
Overhead rate = Total overhead cost / Total direct labor hours
In this case, the total overhead cost is the sum of the maintenance and inspection costs, which is $50,000 + $75,000 = $125,000. The total direct labor hours are 50,000.
Overhead rate = $125,000 / 50,000 = $2.50 per direct labor hour
Multiplying the overhead rate by the number of direct labor hours for thenbpotential job (800) gives us:
Overhead cost = $2.50 × 800 = $2,000
Adding the direct materials cost ($500) and direct labor cost ($2,000) gives us:
Total cost of the potential job = $500 + $2,000 + $2,000 = $4,500
Therefore, the correct answer is option (c) $4,500.
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