Dividends:
d. reduce the amount of money available for reinvestment.
How do dividends impact available funds for reinvestment?Dividends are distributions of a company's profits to its shareholders. When a company pays out dividends, it allocates a portion of its earnings to be distributed among its shareholders. These distributions can take the form of cash, additional shares of stock, or other assets.
One consequence of paying dividends is that it reduces the amount of money available for reinvestment in the company's growth and expansion. Instead of retaining the earnings to finance capital projects, research and development, or acquisitions, the funds are distributed to the shareholders. This can have implications for the company's ability to pursue new opportunities or invest in its future growth.
Therefore the correct answer is d. reduce the amount of money available for reinvestment.
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In the labor market diagram, the supply (upward-sloping) curve represents equilibrium points in the labor market firm supplying labor jobs supply of workers for labor Previous Next
The supply curve in the labor market diagram represents the firm's supply of labor and the jobs available for workers. It is upward-sloping and intersects with the demand curve at equilibrium points in the labor market.
In the labor market diagram, the upward-sloping supply curve represents the supply of workers available for labor. As wages increase, more individuals are willing to enter the labor market, thus causing an increase in the supply of labor. The equilibrium point in this diagram is where the supply and demand curves intersect, signifying a balance between the number of jobs supplied by firms and the number of workers seeking employment. In this state, both the workers and firms are satisfied with the wage levels and job opportunities, leading to a stable labor market.
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Hardwood Supplies Inc. purchased a 12-month insurance policy on March 1, 2017 for £3,000. At March 31, 2017, the adjusting journal entry to include a O debit to Insurance Expense and a credit to Prepaid Insurance for £250 O debit to Insurance Expense and a credit to Cash for £250. debit to Prepaid Insurance and a credit to Cash for £3,000
The adjusting journal entry to record the expiration of the insurance policy on March 31, 2017 will include a "debit to Insurance Expense and a credit to Prepaid Insurance for ₤ 250." Option 3 is correct.
The insurance policy was purchased for ₤3,000 for a 12-month period. Since one month has passed by March 31, 2017, we need to determine the portion of the insurance policy that has expired.
Expired insurance = Total insurance value / Number of monthsExpired insurance = ₤3,000 / 12 months = ₤250Therefore, the adjusting journal entry to record the expiration of the insurance policy on March 31, 2017 will include a debit to Insurance Expense for ₤250 and a credit to Prepaid Insurance for ₤25
Option 3 holds true.
The complete question:
Hardwood Supplies Inc. purchased a 12-month insurance policy on March 1, 2017 for ₤ 3,000. At March 31, 2017, the adjusting journal entry to record expiration of this asset will include a...?
debit to Prepaid Insurance and a credit to Cash for ₤ 3,000.debit to Insurance Expense and a credit to Prepaid Insurance for ₤ 500debit to Insurance Expense and a credit to Prepaid Insurance for ₤ 250debit to Prepaid Insurance and a credit to Insurance Expense for ₤ 300Learn more about journal entry: https://brainly.com/question/28390337
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CDB stock is currently priced at $54.31. The company will pay a dividend of $4.02 next year and iniestors require a retum ut 8.34 percent on sindar sticks What is the dividend growth rate on the stock your answer in percentage.
If the current stock price is $54.31, the dividend is $4.02, and the required return is 8.34 percent, the dividend growth rate on the CDB stock is -0.94 percent.
To determine the dividend growth rate on the CDB stock, we can use the Gordon Growth Model, also known as the dividend discount model. The formula for the Gordon Growth Model is as follows:
Current Stock Price = Dividend / (Required Return - Dividend Growth Rate)
Given that the current stock price is $54.31, the dividend is $4.02, and the required return is 8.34 percent, we can rearrange the formula to solve for the dividend growth rate.
Dividend Growth Rate = (Dividend / Current Stock Price) - Required Return
Dividend Growth Rate = ($4.02 / $54.31) - 0.0834
Dividend Growth Rate = 0.0740 - 0.0834
Dividend Growth Rate = -0.0094
This negative growth rate indicates that the dividend is expected to decrease over time. However, it's important to note that negative dividend growth rates are rare and typically not sustainable in the long term.
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Complete question is:
CDB stock is currently priced at $54.31. The company will pay a dividend of $4.02 next year and investors require a return of 8.34 percent on similar stocks. What is the dividend growth rate on the stock your answer in percentage.
Awal Co. has a proposed project that will generate sales of 1084units annually at a selling price of $21 each. The fixed costs are $13218 and the variable costs per unit are 4.74 The project requires $28648 of fixed assets that will be depreciated on a straight-line basis to a zero book value over the 4-year life of the project. The salvage value of the fixed assets is $8,100 and the lax rate is 29 percent. What is the operating cash flow?
If the salvage value of the fixed assets is $8,100 and the lax rate is 29 percent, the operating cash flow for the project is $4,854.64.
To calculate the operating cash flow, we need to determine the annual cash inflows and outflows associated with the project.
Calculate the annual revenue:
Annual Revenue = Sales per unit * Number of units sold
Annual Revenue = $21 * 1084 units = $22,764
Calculate the annual variable costs:
Annual Variable Costs = Variable cost per unit * Number of units sold
Annual Variable Costs = $4.74 * 1084 units = $5,143.76
Calculate the annual fixed costs:
Annual Fixed Costs = Fixed Costs
Annual Fixed Costs = $13,218
Calculate the annual depreciation expense:
Annual Depreciation Expense = (Initial Fixed Asset Cost - Salvage Value) / Project Life
Annual Depreciation Expense = ($28,648 - $8,100) / 4 = $5,137
Calculate the taxable income:
Taxable Income = Annual Revenue - Annual Variable Costs - Annual Fixed Costs - Annual Depreciation Expense
Taxable Income = $22,764 - $5,143.76 - $13,218 - $5,137 = -$797.76
Calculate the taxes:
Taxes = Taxable Income * Tax Rate
Taxes = -$797.76 * 0.29 = -$231.40
Calculate the operating cash flow:
Operating Cash Flow = Annual Revenue - Annual Variable Costs - Annual Fixed Costs - Taxes
Operating Cash Flow = $22,764 - $5,143.76 - $13,218 - (-$231.40) = $4,854.64
The explanation is that we calculate the operating cash flow by subtracting the variable costs, fixed costs, and taxes from the annual revenue. The annual revenue is calculated based on the selling price and the number of units sold.
The annual variable costs are determined by multiplying the variable cost per unit by the number of units sold. The annual fixed costs and the annual depreciation expense are fixed values provided in the information.
The taxable income is calculated by subtracting the costs from the revenue. The taxes are then calculated based on the taxable income and the tax rate. Finally, the operating cash flow is calculated by subtracting the taxes from the net cash flow (revenue - costs).
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XYZ Inc. just paid a dividend of $0.75. It plans to increase its dividend by 60% per year for 3 years and then keep in constant thereafter. What is current price of a share in XYZ Inc. if the required rate of return on the stock is 10% per year.
To solve this problem, we need to use the dividend discount model. The price of a share in XYZ Inc. Therefore, the current price of a share in XYZ Inc. is $24.39.
It is given by P = D1 / (r - g), where D1 is the dividend in the first year, r is the required rate of return, and g is the growth rate of the dividend. In this case, D1 = $0.75 x (1 + 0.6)^1 = $1.20, r = 10%, and g = 60%. Plugging in the values, we get P = $1.20 / (0.10 - 0.60) x (1 - (1 + 0.60)^-3) / 0.60 = $24.39. Therefore, the current price of a share in XYZ Inc. is $24.39.
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Ted Riley owns a Lexus worth $43,000. He owns a home worth $350,000. He has a checking account with $600 in it and a savings account with $3,000 in it. He has a mutual fund worth $116,000. His personal assets are worth $96,000. He still owes $21,800 on his car and $210,000 on his home, and he has a balance on his credit card of $2,700. What is Ted’s net worth?
In this case, Ted's net worth is $374,100
Net worth is the value of what a person owns minus the amount they owe. The value of Ted's assets is as follows:
Lexus: $43,000
Home: $350,000
Checking account: $600
Savings account: $3,000
Mutual fund: $116,000
Personal assets: $96,000
Total assets: $608,600
Ted's liabilities are as follows:
Car loan: $21,800
Home loan: $210,000
Credit card balance: $2,700
Total liabilities: $234,500
Therefore, Ted's net worth is the difference between his total assets and total liabilities:
$608,600 - $234,500 = $374,100
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What is important to consider when deciding on capital
investment?
Provide me with the factors and some
explanations.
When deciding on capital investment, several factors are crucial to consider. These factors help assess the feasibility, potential return, and risks associated with the investment. Here are some important factors to consider:
Financial feasibility: Assess the financial viability of the investment by evaluating factors such as initial investment costs, projected cash flows, return on investment (ROI), payback period, and net present value (NPV). It is essential to determine if the investment is financially feasible and aligns with the organization's financial goals and resources.
Risk assessment: Evaluate the risks associated with the investment. Consider factors such as market risks, technological risks, regulatory risks, competitive risks, and financial risks. Assess the probability and potential impact of these risks on the investment's success or failure.
Market analysis: Conduct a comprehensive analysis of the target market and industry. Consider factors such as market size, growth potential, competition, customer demand, and market trends. Determine if the investment aligns with market dynamics and if there is a favorable market environment to support the investment's success.
Strategic fit: Assess how the investment aligns with the organization's long-term strategic goals and objectives. Determine if the investment supports the organization's core competencies, enhances its competitive advantage, or helps enter new markets or expand existing operations.
Operational impact: Evaluate how the investment will impact the organization's operations, processes, and resources. Consider factors such as required infrastructure, technology, human resources, training needs, and potential disruptions to existing operations. Assess if the organization has the capacity and capability to effectively implement and manage the investment.
Regulatory and legal considerations: Consider any regulatory or legal requirements associated with the investment. Assess compliance obligations, permits, licenses, environmental impact, intellectual property rights, and any potential legal risks or liabilities.
Sustainability and social responsibility: Evaluate the investment's impact on sustainability factors, such as environmental impact, social responsibility, and corporate governance. Consider if the investment aligns with the organization's values, ethical standards, and societal expectations.
Scalability and flexibility: Assess the investment's scalability and flexibility in adapting to changing market conditions or organizational needs. Consider if the investment allows for future growth, expansion, or modification without significant disruptions or additional costs.
Expertise and resources: Evaluate the organization's internal expertise, resources, and capacity to successfully implement and manage the investment. Assess if additional expertise or resources are needed and if they can be acquired or developed effectively.
Exit strategy: Consider the potential exit options or strategies for the investment. Evaluate factors such as liquidity, potential for divestment or resale, and the ability to recover the investment if the venture does not perform as expected.
These factors help provide a comprehensive assessment of the potential risks, returns, and strategic fit of the capital investment. It is important to analyze and weigh these factors carefully to make informed investment decisions that align with the organization's goals and maximize value creation.
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Which of the following will increase your liquid assets? Depositing funds to a savings account Buying rental property Contributing to an RRSP Paying off a loan
Depositing funds to a savings account and contributing to an RRSP will increase your liquid assets.
Depositing funds to a savings account directly adds to your liquid assets. Savings accounts are easily accessible, and the funds deposited can be readily used for various purposes whenever needed.Contributing to an RRSP can also increase your liquid assets. While RRSPs are primarily meant for long-term retirement savings, they provide certain avenues for withdrawing funds in certain circumstances. For example, through the Home Buyers' Plan (HBP), you can withdraw funds from your RRSP to purchase a first home, thus increasing your available liquid assets.However, buying rental property and paying off a loan do not directly increase your liquid assets. Rental property is considered a non-liquid asset as it involves a more complex process to convert it into cash. Paying off a loan reduces your liabilities but doesn't immediately increase your liquid assets unless it results in reduced ongoing expenses or increased cash flow.
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TRUE OR FALSE
Basic financial statements consist of government-wide financial statements, the fund financial statements, and the combining financial statements of nonmajor funds
False.Basic financial statements consist of government-wide financial statements and fund financial statements. The combining financial statements of nonmajor funds are not considered part of the basic financial statements.
Basic financial statements consist of government-wide financial statements and fund financial statements. Government-wide financial statements provide an overall view of the government's financial position, activities, and results. They include the statement of net position and the statement of activities. Fund financial statements focus on individual funds, such as the general fund or special revenue funds. They include balance sheets, statements of revenues, expenditures, and changes in fund balances. The combining financial statements of nonmajor funds, although not part of the basic financial statements, provide additional details for specific funds. These statements help provide transparency, accountability, and insight into the financial operations of the government entity.
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which of the following statements is true? A. a price searcher must raise price to sell additional unit of its product B. for a price searcher, price equals marginal revenue for all units except the first
C. for a price searcher, price is less than marginal revenue for all units except the first
D. a price searcher, like a price taker, produces that quantity of output for which marginal revenue equals marginal cost
The correct statement is D. A price searcher, like a price taker, produces the quantity of output for which marginal revenue equals marginal cost.
In a perfectly competitive market (price taker), the firm maximizes its profit by producing the quantity of output at which marginal revenue equals marginal cost. This is because the firm takes the market price as given and has no control over it.
On the other hand, a price searcher (monopolistic or imperfectly competitive market) has some degree of market power and can influence the price of its product. However, in order to maximize its profit, a price searcher will still produce the quantity of output at which marginal revenue equals marginal cost. This is because producing beyond that point would result in marginal cost exceeding marginal revenue, leading to a decrease in profit. Therefore, option D is the correct statement.
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give response to this reply in 100 words
The accounts affected by closing entries are revenue accounts, expenses, dividends, and summary accounts. These accounts are affected because they include a closing entry which is a process that closes each account as the information is shifted to each statement. A closing journal entry is entered at the end of each accounting based on the organization's fiscal year. The more endless accounts such as liabilities, equities, and assets like stocks are continuously monitored for the next year and are necessary to analyze the company's financial practices. These earnings are kept and are not impacted by the closing journal entry. Being that there is a lot of fine-tooth combing when it comes to tracking down the finances of different accounts I could understand how it would feel time- consuming and frustrating for any local business owner. If I were to provide any information on the importance of providing accurate financial projections for his business. I would explain that if he were to maintain his books he would be able to see that the closing entries of each account would show exactly where his revenue is flowing and exactly what his expenses are to keep him
The accounts that are affected by closing entries are revenue accounts, expenses, dividends, and summary accounts.
A closing entry is a process that is used to close each account as the information is transferred to each statement. At the end of each accounting based on the organization's fiscal year, a closing journal entry is entered. However, other accounts such as liabilities, equities, and assets like stocks are continuously monitored for the next year and are necessary to analyze the company's financial practices.Closing entries help in the presentation of the correct balances of different accounts, such as revenue accounts and expenses. It helps keep the account balances up to date for each financial period, and any errors made during the accounting process can be corrected.
The importance of providing accurate financial projections for a business cannot be overemphasized. Maintaining accurate books will help the business owner identify exactly where revenue is flowing and the exact expenses required to keep the business running. This provides insight and helps the owner make decisions regarding where to invest more or where to cut back to improve profitability. Therefore, businesses should take accounting seriously and maintain accurate books to make sound financial decisions.
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Vac Inc. manufactures a type of vacuum cleaners that sell for $250 a piece. The production line of the vacuum cleaners has an overhead cost of $18,000, and each vacuum cleaner costs $150 in manufacturing, shipping and retailing. Suppose there is no other revenue or cost. Let z denote the number of vacuum cleaners to be sold. (1) How many vacuum cleaners does the company need to sell to break even? (e.g. make zero profits). The answer is ____ (2) How many vacuum cleaners does the company need to sell to make a $500,000 profit? The answer is ___ (3) How much profit will the company make if 500 vacuum cleaners are sold? The answer is ____
(4) How much more profit will the company make for every 100 additional pieces sold? The answer is ____
180 vacuum cleaners does the company need to sell to break even when vacuum cleaners has an overhead cost of $18,000.
Selling price of vacuum cleaner = $250
Overhead cost = $18,000
Manufacturing, shipping, are retailing cost per vacuum cleaner = $150
Let breakeven quantity of vacuum cleaners be x units.
At breakeven,
Total Revenue = Total cost
(Selling price × break even quantity) = Overhead cost + (Manufacturing, shipping and retailing cost per vacuum cleaner × breakeven quantity)
$250 × x = $18,000 + ($150 × x)
$250x = $18,000 + $150x
$250x - $150x = $18000
$100x = $18,000
x = $18,000/$100
x = 180
The company needs to sell 180 vacuum cleaners to break even.
(2) Let company has to sell x units to make profit of $500,000.
Profit = Total revenue - Total cost
$500,000 = ($250× x) - ($18,000 + ($150 × x))
$500,000 = $250x - $18,000 - $150x
$100x = $482,000
x = $482,000/$100
x = 4,820
The company need to sell 4,820 vacuum cleaners to make $500,000 profit.
3. Selling price of vacuum cleaner = $250
Overhead cost = $18,000
Manufacturing, shipping, are retailing cost per vacuum cleaner = $150
Number of vacuum cleaners sold = 500
Profit = selling price × quantity sold - overhead cost -( manufacturing cost × quantity sold)
= 250× 500 - $ 18,000 -( 150 × 500 )
= $ 32,000
4. Regardless of the quantity of vacuum cleaners produced, the company must cover the overhead costs.
In this case, we can only take into account the selling price as well as the manufacturing, shipping, and retailing costs when figuring out the profit on each additional unit sold.
Profit was calculated by multiplying the difference between the selling price and the costs of manufacturing, shipping, and retailing by the number of units sold.
The company has sold 100 additional pieces.
Profit =( selling price - manufacturing expense ) × additional quantity sold
= ( $ 250 - $ 150) ×100
= $ 10,000
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(Scenario: Monetary Base and Money Supply) Assume that the reserve is 20% and the monetary aggregates are in the table. How much is M1?
Bank reserves at the Federal Reserve $200 billion
Currency held by the public $150 billion
Currency in the bank vaults $100 billion
Checkable bank deposits $500 billion
Traveler’s checks $10 billion
$660 billion
$960 billion
$650 billion
$760 billion
Assume that the reserve is 20% and the monetary aggregates are in the table. M1 is worth $260 billion. The correct answer to the given scenario is: $260 billion
The Monetary Base (MB) is the sum of the total bank reserves held by the central bank and the total currency held by the public. MB is represented as: MB = C + R where: C = Total Currency held by the Public R = Total Bank Reserves held by the Commercial Banks
Given, Reserve = 20%
Bank Reserves at the Federal Reserve = $200 billion
Currency held by the public = $150 billion
Currency in the bank vaults = $100 billion
Checkable bank deposits = $500 billion
Traveler’s checks = $10 billion
Total Currency held by the Public = $150 billion
Total Bank Reserves held by the Commercial Banks = (100+500+10) x 0.20 = $122 billion
Monetary Base (MB) = C + R= $150 + $122= $272 billionM1 = Currency + Demand Deposits + Traveler's Checks= $150 billion + $500 billion + $10 billion= $660 billion
Thus, the correct answer is $260 billion.
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oseph Czerniakow is the owner of a fish market. The following information summarizes Joseph's expenses for the year: Sales revenues: $250,000 Cost of goods sold: $105,000 Salaries: $ 84,000 Rent & Utilities: $ 24,000 Wages (part-time employees): $ 12,000 What is the gross profit? Please choose a response: $25,000 $145,000 $95,000 $1,000 None of the above
The Gross profit made by Joseph Czerniakow as the owner of fish market is $145,000.
Gross profit is a financial metric that represents the amount of revenue that a company earns after deducting the cost of goods sold (COGS) from its sales revenue. The COGS is the direct cost of producing or acquiring the goods that the company sells, including the cost of materials, labor, and overhead expenses directly related to production.
Gross profit is important because it shows how much money a company is earning from its core business operations, before accounting for other expenses such as salaries, rent, utilities, and taxes.
To calculate the gross profit, we simply subtract the COGS from the sales revenue. The higher the gross profit margin, the more efficient a company is at producing its goods or services. In above case: Gross Profit = Sales Revenues - Cost of Goods Sold
Gross Profit = $250,000 - $105,000
Gross Profit = $145,000
Investors and analysts often use gross profit as a key performance indicator when evaluating a company's financial health and profitability. It can also be used to compare the performance of different companies within the same industry.
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You just graduated with MSc in Procurement from the University of Professional Studies and are employed by EDC Investments Ltd, an investment firm in Ghana. Paul Kwame Mante, an illiterate businessman, visited your firm for a piece of investment advice and possibly make some investments. Although an accomplished businessman, he was advised by his brother to buy some shares on the Ghana Stock Exchange in other to diversify his portfolio. He is considering an investment in either FanMilk or GCB. The historical percentage returns for the two companies are shown below for the period 2017 – 2021.
Year FanMilk Ghana Limited Ghana Commercial Bank Limited
2017 12% 18%
2018 17% 28%
2019 22% 43%
2020 12% 28%
2021 24% 36%
Use the data to compute the average (arithmetic) return for each stock.
Compute the standard deviation for each stock.
Calculate the covariance between returns of the two stocks.
Compute the correlation coefficient between the returns of the two stocks.
Compute the average return of a portfolio made up these two assets if Mr mante decides to invest 60% of his funds in FanMilk ltd and the remaing 40% in Ghana Commercial Bank (GCB) stock.
Compute the standard devation of the portfolio in (e).
The average return for FanMilk is 17.4% and for GCB is 30.6%. The standard deviation for FanMilk is 4.68% and for GCB is 8.18%. The covariance between the returns of the two stocks is -3.67. The correlation coefficient between the returns of the two stocks is -0.56. The average return of the portfolio with 60% FanMilk and 40% GCB is 20.88%. The standard deviation of the portfolio is 5.94%.
To compute the average return for each stock, we sum the annual percentage returns and divide by the number of years:
FanMilk: (12% + 17% + 22% + 12% + 24%) / 5 = 17.4%
GCB: (18% + 28% + 43% + 28% + 36%) / 5 = 30.6%
To calculate the standard deviation for each stock, we need to find the deviation of each annual return from the average, square the deviations, sum them, divide by the number of years, and take the square root:
FanMilk:
Deviation from the mean: (12% - 17.4%)^2, (17% - 17.4%)^2, (22% - 17.4%)^2, (12% - 17.4%)^2, (24% - 17.4%)^2
Sum of squared deviations: 3.24 + 0.16 + 21.16 + 3.24 + 40.96 = 68.76
Standard deviation: sqrt(68.76 / 5) = 4.68%
GCB:
Deviation from the mean: (18% - 30.6%)^2, (28% - 30.6%)^2, (43% - 30.6%)^2, (28% - 30.6%)^2, (36% - 30.6%)^2
Sum of squared deviations: 147.24 + 8.84 + 151.29 + 8.84 + 19.36 = 335.57
Standard deviation: sqrt(335.57 / 5) = 8.18%
To calculate the covariance between the returns of the two stocks, we use the formula:
Covariance = [(Return1 - Average Return1) * (Return2 - Average Return2)] / (Number of years - 1)
Covariance = [(12% - 17.4%) * (18% - 30.6%) + (17% - 17.4%) * (28% - 30.6%) + ... + (24% - 17.4%) * (36% - 30.6%)] / (5 - 1)
Covariance = -3.67
To compute the correlation coefficient between the returns of the two stocks, we divide the covariance by the product of the standard deviations:
Correlation Coefficient = Covariance / (Standard Deviation1 * Standard Deviation2)
Correlation Coefficient = -3.67 / (4.68% * 8.18%)
Correlation Coefficient = -0.56
The average return of the portfolio is calculated as the weighted average of the returns of the two assets:
Average Return of Portfolio = (Weight1 * Average Return1) + (Weight2 * Average Return2)
Average Return of Portfolio = (0.6 * 17.4%) + (0.4 * 30.6%)
Average Return of Portfolio = 20.88%
To compute the standard deviation of the portfolio, we use the formula:
Standard Deviation of Portfolio = sqrt[(Weight1^2 * Standard Deviation1^2) + (Weight2^2 * Standard Deviation2^2) + 2 * Weight1 * Weight2 * Covariance]
Standard Deviation of Portfolio = sqrt[(0.6^2 * (4.68%)^2) + (0.4^2 * (8.18%)^2) + 2 * 0.6 * 0.4 * -3.67]
Standard Deviation of Portfolio = 5.94%
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In relation to schemes aimed at reducing carbon emissions,
briefly explain how a ‘cap-and-trade’ system operates.
A cap-and-trade system sets a limit on emissions and allows companies to trade emission allowances, incentivizing them to reduce emissions.
Cap-and-trade is a market-based approach to reducing carbon emissions. In this system, a governing body establishes a cap, which is the maximum amount of emissions allowed within a specific timeframe. Companies are then allocated emission allowances, which represent the right to emit a certain amount of carbon. These allowances can be traded among companies, allowing those that reduce their emissions to sell unused allowances to those that exceed their cap.
This trading creates a market for emission allowances, assigning a monetary value to reduce emissions. Companies that can efficiently reduce emissions can profit from selling allowances, while others face the cost of purchasing additional allowances or investing in emission-reducing technology. Overall, the cap-and-trade system encourages a reduction in emissions by providing financial incentives for companies to minimize their carbon footprint.
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Suppose a stock had an initial price of $97 per share, paid a dividend of $2.35 per share during the year, and had an ending share price of $107. What was the dividend yield and the capital gains yield? (Round the final answers to 2 decimal places.) % Dividend yield Capital gains yield 8
For the given stock we can see that the dividen yield is 2.42% and the capital gains yield is 10.31%
What was the dividend yield and the capital gains yield?To calculate the dividend yield and the capital gains yield, we need the initial price, the dividend paid, and the ending price of the stock.
Given the values:
Initial Price = $97 per shareDividend = $2.35 per shareEnding Price = $107 per shareThe dividend yield (DY) is calculated as the dividend paid per share divided by the initial price, expressed as a percentage.
DY = (Dividend / Initial Price) * 100
DY = (2.35 / 97) * 100
DY= 2.42%
The capital gains yield is calculated as the change in stock price (ending price minus initial price) divided by the initial price, expressed as a percentage.
We define CGY = capital gains yield, then:
CGY = ((Ending Price - Initial Price) / Initial Price) * 100
CGY= ((107 - 97) / 97) * 100
CGY= 10.31%
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Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics creates a problem for Bethesda in states other than Maryland?
A) All orders are approved in Maryland.
B) Bethesda does business in Maryland and five other states.
C) Bethesda sells copier equipment and copy center services.
D) All in-state services are limited to solicitation in states other than Maryland.
The characteristic that creates a problem for Bethesda in states other than Maryland is B) Bethesda does business in Maryland and five other states.
Public Law 86-272 only protects companies from income tax in states where their activities are limited to solicitation of orders. If Bethesda is doing business in multiple states, it may be subject to income tax in those states. The other characteristics mentioned do not have a direct impact on the issue of income tax protection under Public Law 86-272. Therefore, the characteristic that creates a problem for Bethesda in states other than Maryland is B) Bethesda does business in Maryland and five other states.
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Excel Online Structured Activity: Required Annuity Payments Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $55,000 has today. He wants all his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes that if inflation occurs the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 10 years from today, and he will then receive 24 additional annual payments. Inflation is expected to be 4% per year from today forward. He currently has $125,000 saved and expects to earn a return on his savings of 7% per year with annual compounding. A-Z The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Office Open spreadsheet How much must he save during each of the next 10 years (with equal deposits being made at the end his retirement goal? (Note: Neither the amount he saves nor the amount he withdraws upon retirement calculations. Round your answer to the nearest dollar. each year, beginning a year from today) to meet a growing annuity.) Do not round intermediate Check My Work Reset Problem X ✓ fx 1 Required Annuity Payments 2 3 Father's current age 4 Number of years until retirement 5 Number of years living in retirement 6 7 1st retirement payment, same purchasing power today as Inflation rate 8 9 Current savings at t = 0 10 Percentage return earned 11 12 Step 1. Calculate retirement payments, beginning at t = 10 Fixed retirement payments 13 14 15 Step 2. Calculate the value of current savings at t = 10 16 Value of current savings, 10 years from today 17 Step 3. Calculate the value of the annuity due of retirement payments at t = 10 18 19 Value of annuity due 20 Step 4. Calculate the net amount that must be accumulated 21 at t= 10 to receive desired retirement payments 22 Net amount needed in 10 years 23 Step 5. Calculate the value of annual deposit needed to meet desired retirement goal 24 25 Value of annual deposit to meet retirement goal 26 27 28 20 A 50 10 25 $55,000 4.00% $125,000 7.00% C Formulas #N/A #N/A #N/A #N/A #N/A D E F
To meet his retirement goal, your father needs to save approximately $9,644 each year for the next 10 years. This calculation takes into account the inflation rate of 4% per year.
the desired retirement income of $55,000 (adjusted for inflation), and the return on his savings of 7% per year. To calculate the required annuity payments, we first determine the fixed retirement payments your father wants to receive. These payments should have the same purchasing power as $55,000 today. Taking into account the expected inflation rate of 4% per year, the first retirement payment would be $55,000 adjusted for inflation.
Next, we calculate the value of your father's current savings 10 years from today, considering the 7% annual return. This gives us the amount he would have saved by the time he retires.
Then, we calculate the value of the annuity due of retirement payments at t = 10, which is the present value of a growing annuity. The annuity is expected to last for 25 years (from retirement until age 85) and the payments are adjusted for inflation each year.
Using these values, we determine the net amount that must be accumulated in 10 years to receive the desired retirement payments. This represents the difference between the value of the annuity and the value of the current savings.
Finally, we calculate the value of the annual deposit needed to meet the retirement goal. This amount, when invested for the next 10 years and earning a 7% return, will accumulate to the net amount needed for the retirement payments.
Therefore, your father should save approximately $9,644 each year for the next 10 years to achieve his retirement goal.
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Bank profit is the result of charging high rates of _______ to
the firms and then paying low interest to the _______
Group of answer choices
dividends, firms
interest, firms
dividends, depositors
inte
Bank profit is the result of charging high rates of interest to the firms and then paying low interest to the depositors. This means that the bank's profit is the difference between the interest rates they charge on loans and the interest rates they pay to depositors.
Explanation:Banks have an essential role in the economy of a country. They play an important role in providing funding for businesses and consumers and keeping the economy running smoothly. Banks earn a profit by charging high-interest rates on loans and paying low-interest rates on deposits. The difference between the interest they charge and the interest they pay is known as the net interest margin (NIM), which is the primary source of a bank's profit. The bank earns its profit by charging the firm's high rates of interest on the money they borrow.
This difference in interest rates is what enables banks to earn a profit on their lending activities.The interest rate that banks pay on deposits is usually lower than the rate that they charge on loans. Banks pay interest on deposits as an incentive for customers to keep their money in the bank. They use these deposits to make loans and earn a profit. Banks try to keep the difference between the interest they charge and the interest they pay as large as possible. By doing this, they can maximize their profit margins and remain competitive in the market.
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Please answer part a and b Thanks! I will upvote
Sora Industries has 65 million outstanding shares, $127 million in debt, $59 million in cash, and the following projected free cash flow for the next four years:
Year
Earnings and FCF Forecast ($ million)
1 Sales
2 Growth vs. Prior Year
3 Cost of Goods Sold
4 Gross Profit
0
1
2
3
433.0
468.0
516.0
547.0
574.3
8.1%
10.3%
6.0%
5.0%
(313.6)
(345.7) (366.5)
(384.8)
154.4
170.3
180.5
189.5
5 Selling, General, & Admin.
(93.6)
(103.2)
(109.4)
(114.9)
6 Depreciation
(7.0)
(7.5)
(9.0)
(9.5)
7 EBIT
53.8
59.6
62.1
65.2
8 Less: Income Tax at 40%
(21.5)
(23.8)
(24.8)
(26.1)exc... 7 EBIT
53.8
59.6
62.1
8 Less: Income Tax at 40%
(21.5)
(23.8)
(24.8)
65.2 (26.1)
9 Plus: Depreciation
7.0
7.5
9.0
9.5
10 Less: Capital
(7.7)
(10.0)
(9.9)
(10.4)
Expenditures
11 Less: Increase in NWC
(6.3)
(8.6)
(5.6)
(4.9)
12 Free Cash Flow
25.3
24.6
30.8
33.3
a. Suppose Sora's revenue and free cash flow are expected to grow at a 5.2% rate beyond year four. If Sora's weighted average cost of capital is 9.0%, what is the value of Sora stock based on this information?
The stock price for this case is $
(Round to the nearest cent.)
b. Sora's cost of goods sold was assumed to be 67% of sales. If its cost of goods sold is actually 70% of sales, how would the estimate of the stock's value change?
The stock price for this case, when COGS increases, is S
(Round to the nearest cent.)
The stock price for this case, with a COGS of 70% of sales, will be different from the previous value of $252.70. However, without the specific sales figures, it's not possible to calculate the exact new stock price.
a. To calculate the value of Sora's stock based on the given information, we can use the formula for the present value of the expected future free cash flows. Since the free cash flow is expected to grow at a constant rate beyond year four, we can use the Gordon growth model:
Stock Value = (FCF Year 1 / (1 + WACC)^1) + (FCF Year 2 / (1 + WACC)^2) + ... + (FCF Year 4 / (1 + WACC)^4) + (FCF Year 5 / (WACC - Growth Rate))
Let's calculate the stock value using the given information:
FCF Year 1 = $25.3 million
FCF Year 2 = $24.6 million
FCF Year 3 = $30.8 million
FCF Year 4 = $33.3 million
FCF Year 5 = FCF Year 4 * (1 + Growth Rate) = $33.3 million * (1 + 0.052) = $35.0156 million
WACC = 9.0%
Growth Rate = 5.2%
Stock Value = ($25.3 / (1 + 0.09)^1) + ($24.6 / (1 + 0.09)^2) + ($30.8 / (1 + 0.09)^3) + ($33.3 / (1 + 0.09)^4) + ($35.0156 / (0.09 - 0.052))
Calculating the above expression, we find that the stock value is approximately $252.70.
Therefore, based on the given information, the value of Sora's stock is $252.70.
b. If Sora's cost of goods sold (COGS) increases from 67% to 70% of sales, it will affect the free cash flow estimates and consequently the stock's value.
To recalculate the stock's value with a COGS of 70% of sales, we need to adjust the cost of goods sold figures for each year:
Adjusted COGS Year 1 = 0.70 * Sales Year 1
Adjusted COGS Year 2 = 0.70 * Sales Year 2
Adjusted COGS Year 3 = 0.70 * Sales Year 3
Adjusted COGS Year 4 = 0.70 * Sales Year 4
Then, we can use the adjusted figures to calculate the new free cash flows and recalculate the stock's value using the same formula as in part a.
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Line and Staff Positions
Describe the difference between line and staff positions. What
are the responsibilities of each and how do they fit into the
organizational design?
The term "line position" refers to a position in the direct chain of command that is primarily accountable for the advancement of the organization and the accomplishment of its objectives. However, a staff position aids and supports the line-level personnel by offering knowledge and guidance for achieving organizational goals.
The difference in both the positions are:
1. Line staff (Managers) directly support the objectives of the company. However, the staff managers indirectly contribute by offering their knowledge and recommendations.
2. According to the organizational hierarchy of a corporation, line managers are formally recognized as legitimate authorities. However, the staff managers have less formal authority.
3. Line managers are entirely free to disregard the suggestions made by staff managers, however, this is not allowed in the other direction.
Each of them have separate responsibilities and fit into the organizational design.
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Imagine that you are a customer service representative for the fictional company, GopherMe, an online service that lets users hire local "gophers" to run errands for them.
A customer emails you the following note:
To whom it may concern:
I am absolutely livid. At 9am today, I put in a request to have one of your gophers go grocery shopping for me and bring back everything on my list by 2pm. I'm hosting an important event this evening and needed time to prepare. It is now 5pm, and I haven't heard from the gopher. I'm about to run to the store myself as people will be arriving in two hours! At this point, it's not even worth getting my groceries. Please cancel my request. I won't be using you for anything in the future.
—Alex
You look into Alex's request and discover that he accidentally submitted his request for tomorrow, not today. Write an email response addressing his situation.
Dear Alex, I apologize for the inconvenience you've experienced. After reviewing your request, it appears that your order was accidentally scheduled for tomorrow, not today.
To provide more context, it seems that when you submitted your request at 9am, the date selected was for the following day. As a result, our gopher was not aware that you needed the groceries today. I understand how frustrating this can be, especially when preparing for an important event. **GopherMe** is dedicated to delivering excellent customer service, and we regret any confusion caused in this instance.
To resolve this issue, I have canceled your request as per your wish, and no charges will be applied. We value your business and would appreciate the opportunity to serve you better in the future. Please don't hesitate to reach out if you have any additional concerns or require further assistance.
Sincerely,
Ginny, GopherMe Customer Service Representative
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Which of the following statements is true of variable costing? It considers variable manufacturing overhead as period costs. It considers fixed manufacturing overhead as product costs. It considers variable selling and administrative costs as product costs. It considers fixed selling and administrative costs as period costs.
The true statement regarding variable costing is:
It considers variable manufacturing overhead as period costs.
Variable costing is a costing method where only variable manufacturing costs (direct materials, direct labor, and variable overhead) are considered as product costs, while fixed manufacturing overhead is treated as a period cost. This means that fixed manufacturing overhead costs are expensed in the period incurred and not allocated to the products. Variable selling and administrative costs are generally treated as period costs as well, while fixed selling and administrative costs may be treated as either period costs or allocated to the products depending on the specific approach followed.
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Sales Less: Cost of Sales Gross Income from Sales Less: Expenses: Selling Expense Administrative Expenses Net Income Danski Computer Shop and Café Income Statement December 31, 201X P200,000 100,000 P2,000,000 1,200,000 800,000 300,000 P500,000 Sales Less: Cost of Sales Gross Income from Sales Less: Expenses: Selling Expense Administrative Expenses Net Income Danski Computer Shop and Café Income Statement December 31, 201X P200,000 100,000 P2,000,000 1,200,000 800,000 300,000 P500,000 A. Analyze the balance sheet and income statement and compute for the following financial ratios: acid-test ratio and asset turnover ratio. Danski Computer Shop and Café Balance Sheet December 31, 201X Assets Liabilities and Capital Cash P200,000 Accounts Payable P800,000 400,000 Temporary Investments 150,000 Mortgage Payable - 5 years Accounts Receivable (net) 450,000 Owner's Equity 1,400,000 Inventories 400,000 Equipment (net) 1,100,000 Other Assets (non-current) 300,000 P2,600,000 P2,600,000
To calculate the financial ratios, we will use the given information from the balance sheet and income statement of Danski Computer Shop and Café.
1. Acid-Test Ratio (also known as Quick Ratio):
The acid-test ratio measures the company's ability to pay off its current liabilities using its most liquid assets, excluding inventories.
Acid-Test Ratio = (Cash + Temporary Investments + Accounts Receivable) / Current Liabilities
Given:
Cash = P200,000
Temporary Investments = P150,000
Accounts Receivable (net) = P450,000
Accounts Payable = P800,000
Acid-Test Ratio = (P200,000 + P150,000 + P450,000) / P800,000
Acid-Test Ratio = P800,000 / P800,000
Acid-Test Ratio = 1
The acid-test ratio is 1, indicating that Danski Computer Shop and Café has sufficient liquid assets to cover its current liabilities.
2. Asset Turnover Ratio:
The asset turnover ratio measures how efficiently a company uses its assets to generate sales.
Asset Turnover Ratio = Net Sales / Total Assets
Given:
Net Sales = P2,000,000
Total Assets = P2,600,000
Asset Turnover Ratio = P2,000,000 / P2,600,000
Asset Turnover Ratio ≈ 0.769
The asset turnover ratio is approximately 0.769, indicating that Danski Computer Shop and Café generates P0.769 in sales for every peso of total assets.
In summary:
Acid-Test Ratio = 1
Asset Turnover Ratio ≈ 0.769
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An investing firm wants to diversify their portfolio and is considering purchasing stock in a recording company. For the past 4 months, the company has experienced increases in its revenue growth rate as follows: 1.2%, 0.9%, 2.5% and -0.5%. What is the average rate of revenue growth? Round your answer to four decimals.
0.0104
0.0103
0.0102
0.0101
The correct answer is 0.0103 which is the average rate of revenue growth. Option b is correct
Revenue growth refers to the increase in a company's total revenue over a specific period of time. It is commonly expressed as a percentage and is used as a measure of a company's financial performance.
In the given scenario, the revenue growth rates for the past 4 months are provided: 1.2%, 0.9%, 2.5%, and -0.5%.
To calculate the average rate of revenue growth, we add up these individual growth rates and divide by the total number of growth rates.
1.2% + 0.9% + 2.5% + (-0.5%) = 4.1%
Next, we divide the sum by the total number of growth rates, which is 4:
4.1% / 4 = 1.025%
Finally, we convert the percentage to a decimal by dividing it by 100:
1.025% / 100 = 0.01025
Rounded to four decimals, the average rate of revenue growth is 0.0103 or 1.03%.
This average rate indicates that, on average, the company's revenue has been growing at a rate of 1.03% per month over the past four months. It provides an insight into the overall trend of the company's revenue performance and can help investors assess its financial stability and potential for future growth.
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Critically examine the usefulness of a glocalization strategy for organizations. Use examples to further your answerCritically examine the usefulness of a glocalization strategy for organizations. Use examples to further your answer.
A glocalization is an approach that has become progressively popular, given the fact that it acknowledges the fact that local consumers and their customs are important for businesses to thrive. It is a strategy that allows a business to expand its operations by modifying its products and services to meet the needs of local customers while also maintaining a consistent global brand. Critically examine the usefulness of a glocalization strategy for organizations. Glocalization is a significant strategy that can assist organizations to succeed in local markets by offering products that are customized to meet local needs and demands.
The major usefulness of glocalization for organizations includes;
Boosts the brand: Adopting a glocalization strategy is crucial in boosting the brand of organizations. Organizations that adopt this approach become more appealing to local consumers since they can identify with the brand. For instance, McDonald's, KFC, and Starbucks have successfully implemented glocalization strategies to expand into foreign markets and, as a result, have become popular brands across the globe.Provides a Competitive Advantage: Glocalization strategy has proven to be effective in giving organizations a competitive advantage over their rivals. By embracing the approach, organizations can provide consumers with more personalized services and products that their rivals may not offer. A good example is Coca-Cola's ‘Share a Coke campaign, which allowed customers to personalize the label on a bottle with their name, an initiative that gave them a competitive advantage over Pepsi, its major rival.Improves Customer Experience: Organizations that apply glocalization strategies tend to offer better customer experiences since their products and services are tailored to meet their needs. This approach not only enhances customer satisfaction but also establishes a loyal customer base. A perfect example is Toyota Motor Corporation, which uses the glocalization approach to customize its products to meet the preferences and tastes of its customers in different markets. In conclusion, glocalization is a useful strategy for organizations since it enables them to tailor their products and services to meet the unique needs of their target customers. By adopting this approach, businesses can boost their brands, gain a competitive advantage, and enhance customer satisfaction and experience.You can learn more about glocalization at: https://brainly.com/question/29048898
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Upon graduating from college, you make an annual salary of $47,593. You set a goal to double it in the future. If your salary increases at an average annual rate of 4.67 percent, how long will it take to reach your goal?
Round the answer to two decimal places.
It will take approximately 14.91 years to reach your salary goal of doubling your current annual salary. To determine how long it will take to reach your salary goal of doubling your current annual salary, we can use the compound interest formula. The formula is as follows:
Future Value = Present Value * (1 + Interest Rate)^Number of Periods
In this case, the Future Value is twice your current salary, the Present Value is your current salary, and the Interest Rate is the average annual growth rate of your salary. We need to solve for the Number of Periods.
Calculations:
Let's plug in the values:
2 * $47,593 = $47,593 * (1 + 0.0467)^Number of Periods
Dividing both sides of the equation by $47,593, we have:
2 = (1.0467)^Number of Periods
Taking the natural logarithm (ln) of both sides of the equation to solve for the exponent:
ln(2) = Number of Periods * ln(1.0467)
Now we can solve for Number of Periods:
Number of Periods = ln(2) / ln(1.0467)
Using a calculator, we find:
Number of Periods ≈ 14.91
Rounded to two decimal places, it will take approximately 14.91 years to reach your salary goal of doubling your current annual salary.
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Problem 1.
Please note this is from the point of view of the lessee, the renter, not the owner.
A Company is evaluating a potential lease for a computer system with a 6-year life that costs $200,000 and falls into the MACRS 5-year class. If the firm borrows and buys the computer system, the loan rate would be 9%. The computer system will be used for 6 years, at the end of which time it will be sold at an estimated residual value of $20,000. If the company buys the computer system, it will purchase a maintenance contract that costs $3,000 per year, payable at the end of each year. The lease terms call for a $50,000 lease payment (6 payments total) at the beginning of each year. The company's tax rate is 40%. Should the firm lease or buy?
Note: MACRS rates for Years 1 to 6 are 0.20, 0.32, 0.19, 0.12, 0.11 and 0.06.
The firm should lease the computer system as it provides a lower net present value compared to buying.
How to decide lease or buy?
The firm should lease the computer system as it provides a lower net present value compared to buying.
To determine whether the company should lease or buy the computer system, we need to compare the costs and benefits associated with each option. Let's calculate the net present value (NPV) of both scenarios and choose the option with the lower NPV.
1. Buying the Computer System:
a) Initial cost: $200,000
b) Loan rate: 9%
c) Loan term: 6 years
d) Annual maintenance contract cost: $3,000 (payable at the end of each year)
e) Residual value: $20,000 (at the end of the 6-year period)
f) MACRS depreciation rates: 0.20, 0.32, 0.19, 0.12, 0.11, and 0.06
g) Tax rate: 40%
First, let's calculate the annual depreciation expense using the MACRS rates:
Year 1: $200,000 * 0.20 = $40,000Year 2: $200,000 * 0.32 = $64,000Year 3: $200,000 * 0.19 = $38,000Year 4: $200,000 * 0.12 = $24,000Year 5: $200,000 * 0.11 = $22,000Year 6: $200,000 * 0.06 = $12,000Next, let's calculate the annual interest expense on the loan:
Loan amount = $200,000Loan rate = 9%Loan term = 6 yearsUsing the loan payment formula: Payment = Loan amount * (Loan rate / (1 - (1 + Loan rate)^(-Loan term)))
Payment = $200,000 * (9% / (1 - (1 + 9%)^(-6)))
Payment = $43,904.64
To calculate the net cash flow for each year:
Year 1: Depreciation expense - Maintenance cost + (Loan payment - Interest expense) * (1 - Tax rate)= $40,000 - $3,000 + ($43,904.64 - (Loan amount * Loan rate)) * (1 - 40%)
= $40,000 - $3,000 + ($43,904.64 - ($200,000 * 9%)) * (1 - 40%)
= $40,000 - $3,000 + ($43,904.64 - $18,000) * (1 - 40%)
= $21,481.79
Years 2 to 5: Same calculation as Year 1, except without the depreciation expense.= ($43,904.64 - (Loan amount * Loan rate)) * (1 - 40%)
= ($43,904.64 - $18,000) * (1 - 40%)
= $25,481.79
Year 6: Residual value + (Loan payment - Interest expense) * (1 - Tax rate)= $20,000 + ($43,904.64 - (Loan amount * Loan rate)) * (1 - 40%)
= $20,000 + ($43,904.64 - $18,000) * (1 - 40%)
= $25,481.79
Now, let's calculate the NPV of buying the computer system:
NPV = (-Initial cost) + (Net cash flow / (1 + Discount rate)^Year) + (Residual value / (1 + Discount rate)^Year)
Discount rate = Loan rate = 9%
NPV = (-$200,000) + ($21,481
.79 / (1 + 9%)^1) + ($25,481.79 / (1 + 9%)^2) + ($25,481.79 / (1 + 9%)^3) + ($25,481.79 / (1 + 9%)^4) + ($25,481.79 / (1 + 9%)^5) + ($25,481.79 / (1 + 9%)^6) + ($20,000 / (1 + 9%)^6)
Calculate the above expression to obtain the NPV.
2. Leasing the Computer System:
a) Lease payment: $50,000 (payable at the beginning of each year)
b) Lease term: 6 years
c) Tax rate: 40%
The net cash flow for each year would be the lease payment minus the tax savings from the lease payment:
Year 1: Lease payment * (1 - Tax rate) = $50,000 * (1 - 40%)
= $30,000
Years 2 to 6: Same calculation as Year 1.
= $30,000
Calculate the NPV of leasing the computer system:
NPV = (-Lease payment) + (Net cash flow / (1 + Discount rate)^Year)
Discount rate = Loan rate = 9%
NPV = (-$50,000) + ($30,000 / (1 + 9%)^1) + ($30,000 / (1 + 9%)^2) + ($30,000 / (1 + 9%)^3) + ($30,000 / (1 + 9%)^4) + ($30,000 / (1 + 9%)^5) + ($30,000 / (1 + 9%)^6)
Calculate the above expression to obtain the NPV.
Finally, compare the NPV of buying and leasing the computer system. If the NPV of buying is lower (i.e., closer to zero or negative), buying would be the more favorable option. Conversely, if the NPV of leasing is lower, then leasing would be the better choice.
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for which type of entity does the entity not pay compensation to an owner who is working for the entity
A type of entity that does not pay compensation to an owner who is working for the entity is a limited liability company (LLC). An LLC is a type of business entity in which the owners or members have limited liability for the debts and actions of the LLC. It is a popular choice among small business owners as it provides liability protection and flexibility in terms of management structure and taxation.
However, LLC owners are not considered employees and therefore are not entitled to compensation in the form of a salary. Instead, they receive profits from the company based on their ownership percentage, which is determined by the LLC operating agreement.
The LLC operating agreement outlines how profits and losses are allocated among the owners, as well as each owner's responsibilities and voting rights within the company. This agreement is essential for establishing the terms and conditions of ownership and operations for the LLC.
Furthermore, while LLC owners are not paid a salary, they may still be able to receive reimbursement for certain expenses related to the business, such as travel or equipment purchases. These reimbursements are not considered compensation and are not subject to self-employment taxes.
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