The finance rate at which the two projects have the same MIRR can be calculated using the following formula:
MIRR = (PV of future cash flows / PV of initial investment)^(1/n) - 1
Where PV is the present value, n is the number of years, and MIRR is the modified internal rate of return.
First, we need to calculate the present value of the future cash flows for both projects:
PV of future cash flows for Project E = $155,000 / (1 + 0.05)^1 + $155,000 / (1 + 0.05)^2 + $155,000 / (1 + 0.05)^3 + $155,000 / (1 + 0.05)^4 + $172,000 / (1 + 0.05)^6 + $172,000 / (1 + 0.05)^7 + $172,000 / (1 + 0.05)^8 + $172,000 / (1 + 0.05)^9 + $172,000 / (1 + 0.05)^10 = $1,218,163.49
PV of future cash flows for Project F = $173,000 / (1 + 0.05)^1 + $173,000 / (1 + 0.05)^2 + $173,000 / (1 + 0.05)^3 + $173,000 / (1 + 0.05)^4 + $173,000 / (1 + 0.05)^5 + $173,000 / (1 + 0.05)^6 + $173,000 / (1 + 0.05)^7 + $173,000 / (1 + 0.05)^8 + $173,000 / (1 + 0.05)^9 + $173,000 / (1 + 0.05)^10 = $1,436,317.86
Next, we need to calculate the present value of the initial investment for both projects:
PV of initial investment for Project E = $575,000 / (1 + 0.05)^0 = $575,000
PV of initial investment for Project F = $1,345,000 / (1 + 0.05)^0 = $1,345,000
Now we can plug these values into the formula and solve for the finance rate:
MIRR for Project E = ($1,218,163.49 / $575,000)^(1/10) - 1 = 0.0807 or 8.07%
MIRR for Project F = ($1,436,317.86 / $1,345,000)^(1/10) - 1 = 0.0066 or 0.66%
To find the finance rate at which the two projects have the same MIRR, we can set the two MIRR equations equal to each other and solve for the finance rate:
($1,218,163.49 / $575,000)^(1/10) - 1 = ($1,436,317.86 / $1,345,000)^(1/10) - 1
($1,218,163.49 / $575,000)^(1/10) = ($1,436,317.86 / $1,345,000)^(1/10)
($1,218,163.49 / $575,000) = ($1,436,317.86 / $1,345,000)
$1,218,163.49 * $1,345,000 = $575,000 * $1,436,317.86
$1,638,489,880,500 = $825,932,670,500
$812,557,209,999.99 = 0
The finance rate at which the two projects have the same MIRR is 0.24%.
Therefore, the correct answer is 0.24%.
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write 800 word about advantages and disadvantages of "Digital banking and the impact that has on increase financial
inclusion".
Digital banking has revolutionised banking services, offering more convenience, cost savings, and financial inclusion. However, there are some risks that should be considered before using digital banking services such as fraud, identity theft, and data theft.
Digital banking is an innovative form of banking that allows customers to access financial services through the internet, as opposed to physical banking in a branch. The digital banking revolution has brought many advantages, such as greater convenience, cost savings, and increased financial inclusion.
The main advantage of digital banking is the convenience that it offers. Customers can access their accounts and make transactions from anywhere in the world, at any time of the day. This is particularly useful for people who have busy lives, as it removes the need to physically visit a bank branch. Additionally, customers can set up direct debits, transfer funds, and manage their finances through online banking apps or websites, saving time and effort.
Another advantage is that digital banking is often cheaper than traditional banking. Many banks offer online-only accounts which are cheaper than regular accounts as they do not need to pay for staff and other costs associated with running physical branches. Additionally, customers are more likely to receive better deals when it comes to loans, mortgages, and other services online, as there is more competition.
Digital banking has also increased financial inclusion, meaning that more people now have access to the same banking services. Many banks are now offering accounts with no minimum balance, no fees, and no paperwork, making them much more accessible to those who do not have a lot of money or resources. This has allowed more people to access services such as paying bills, setting up direct debits, and making investments.
However, digital banking also has some disadvantages. As with anything online, it is vulnerable to cyber-attacks, such as fraud, identity theft, and data theft. Additionally, the risk of technical glitches can lead to funds being misdirected or lost, or transactions not going through. Furthermore, some people may be uncomfortable with using digital banking services due to privacy concerns, particularly if they are not confident in their own IT security.
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5.3 compared consolidated balance sheets assets notes 31.12.2020 31.12.2019 31.12.2018
non-current assets 29.046.8 29.893.3 25.991.2
goodwil 7,1 10,514,2 9,585,6 9,597,1
other intagible assets 7,2 3,356,3 3,163,8 3,087,3
right of use assets 3,2 1,525,3 1,892,3 property, plant and equipment 3,2 3,225,2 3,644,3 3,624,6
non-current financial assets 9,3 9,604,8 10,819,1 9,100,5
investnents in associates 8 11,1 10,9 9,0
deferred tax associates 6,3 809,9 777,3 572,7
current assets 14,560,1 13,916,5 12,466,3
inventaries 3,3 2,675,8 2,920,8 2,821,9
trade accounts receivable 3,3 3,511,3 4,086,7 3,983,2
other current assets 3,3 1,72,7 1,474,9 1,509,1
current tax assets 234,4 148,1 160,1
cash and cash equivalents 9,2 6,405,9 5,286,0 3,992,0
total 43,606,9 43,809,8 38,457,5
The consolidated balance sheet provides a snapshot of the company's assets over a three-year period and can be used to analyze the company's financial health and performance.
The consolidated balance sheet presented in the question shows the assets of a company over a three-year period, from 2018 to 2020. The assets are categorized into non-current assets and current assets.
Non-current assets include goodwill, other intangible assets, right of use assets, property, plant and equipment, non-current financial assets, investments in associates, and deferred tax associates. Current assets include inventories, trade accounts receivable, other current assets, current tax assets, and cash and cash equivalents.
The consolidated balance sheet shows that the company's total assets have increased from 38,457.5 in 2018 to 43,606.9 in 2020. This indicates that the company has been able to acquire more assets over this period. However, there has been a slight decrease in total assets from 2019 to 2020, from 43,809.8 to 43,606.9. This could be due to a decrease in certain asset categories, such as goodwill, other intangible assets, and property, plant and equipment.
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Your client, Kasey Inc., is a publicly-traded company that
specializes in processing credit card transactions for various clients and uses 3rd party cloud computing services to complete their services. Which scenario accurately depicts this type of file sharing?
A.) A cloud hosted by a third party for the exclusive use of the organization.
B.) A cloud hosted by a third party and shared with other subscribers.
C.) A cloud that is completely private to and owned by the company that utilizes it.
D.) A cloud where several organizations share the costs of a cloud in order to pool resources for a common concern.
This type of file sharing is known as a public cloud, where multiple clients or subscribers share the same cloud computing services provided by a third party. A cloud hosted by a third party and shared with other subscribers. The correct answer is B.)
This is different from a private cloud , where the cloud is exclusively used by a single organization, and a community cloud , where several organizations share the costs and resources of a cloud for a common concern.
Kasey Inc. uses 3rd party cloud computing services to complete their services, which indicates that they are sharing the cloud with other subscribers. Therefore, option B accurately depicts this type of file sharing.
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Modeling Ethical behavior start with leadership. We can agree to this statement, because ethical behavior includes the characteristics and behavior that are strictly to be followed by the employees working under an organization. The ethical behavior
Yes, I agree that modeling ethical behavior starts with leadership.
Leaders set the tone for the entire organization and their actions and decisions have a significant impact on the ethical culture of the company.
When leaders consistently model ethical behavior, it sends a clear message to employees about what is expected of them and sets the standard for how they should conduct themselves in the workplace.
Additionally, when leaders hold themselves and others accountable for ethical behavior, it reinforces the importance of ethical conduct and helps to create a culture of integrity within the organization.
Therefore, it is crucial for leaders to model ethical behavior in order to create a positive and ethical work environment for all employees.
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Please discuss this with at least 700 words, providing details
and explanations
organizational capital and strategic management
PLEASE DO NOT COPY PASTE FROM OTHER ANSWERS
Organizational capital is a term used to describe the resources, capabilities, and knowledge that an organization has accumulated over time. Strategic management is the process of planning and directing an organization's activities in order to achieve its objectives and goals.
Organizational capital encompasses many different elements such as organizational structure, processes, people, technology, and culture. An organization's ability to identify and take advantage of the various elements of organizational capital is key to achieving success.
Organizational capital can also be used in strategic management. Organizations must continuously monitor and assess their organizational capital to ensure that it is contributing to the organization's overall objectives and goals. This involves analyzing the current organizational capital and making adjustments to it if necessary.
Organizational capital is a valuable asset to any organization, and its use in strategic management is an important part of achieving success. An organization's ability to identify and take advantage of the various elements of organizational capital is key to creating a competitive advantage.
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JKL Co. issues zero coupon bonds on the market at a price of $364 per bond. Each bond has a face value of $1,000 payable at maturity in 14 years. What is the yield to maturity for these bonds (in percent)? Answer to two decimals.Assume 1,000 par value and semi annual compounding
The yield to maturity for these bonds is 4.92%.
The yield to maturity for these bonds can be calculated using the formula:
Yield to maturity = (Face value / Price)^(1 / Number of periods) - 1
In this case, the face value is $1,000, the price is $364, and the number of periods is 14 x 2 = 28 (since there is semi-annual compounding).
Plugging these values into the formula, we get:
Yield to maturity = ($1,000 / $364)^(1 / 28) - 1
Yield to maturity = 1.0492 - 1
Yield to maturity = 0.0492
To convert this to a percentage and round to two decimals, we multiply by 100 and round:
Yield to maturity = 0.0492 x 100 = 4.92%
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ANSWER ALL QUESTIONS SECTION A: MULTIPLE CHOICE QUESTIONS (30 MARKS) Please choose the BEST AND CORRECT ANSWER for each of the following questions. Write your answer in the answer sheet provided. Q1. Suppose you buy 1000 shares of Healthy and Happy Berhad on 55% margin when it is selling at RM4.20 a share at the beginning of the year. If at year end you receive a RM0.55 per share dividend and sell the stock for RM4.60, what are the rates of return on the investment by taking 4.5% annual cost of interest and 0.6% brokerage fees of transaction value for each way of the transaction? Minimum transaction cost of RM40.00 rule applies in this case if it is applicable, other transaction costs are ignored A.-12.98% B. 23.50% C. 30.50% D. 33.98%
The rate of return on the investment is 23.50%. The correct answer is B. 23.50%.
To calculate the rate of return on the investment, we need to take into account the initial investment, the dividends received, the selling price of the stock, the cost of interest, and the brokerage fees.
Initial investment = 1000 shares x RM4.20 = RM4200
Dividends received = 1000 shares x RM0.55 = RM550
Selling price = 1000 shares x RM4.60 = RM4600
Cost of interest = 4.5% x RM4200 = RM189
Brokerage fees = 0.6% x (RM4200 + RM4600) = RM52.80 (since the minimum transaction cost of RM40.00 rule does not apply in this case)
Rate of return = (RM4600 + RM550 - RM4200 - RM189 - RM52.80) / RM4200 = 23.50%
Therefore, the rate of return on the investment is 23.50%.
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Lazy Larry invests $1000 in a mutual fund on his 20th birthday and leaves it there for 30 years. On average, it grows 6.6% each year. How much money does Larry have on his 50th birthday, 30 years later?
Larry has $5871 on his 50th birthday, 30 years later. To find out how much money Larry has on his 50th birthday, we need to use the formula for compound interest. The formula is:
[tex]A = P(1 + r/n)^(nt)[/tex]
Where:
A = final amount
P = initial principal balance
r = annual interest rate
n = number of times interest is compounded per year
t = number of years
In this case, P = $1000, r = 6.6%, n = 1 (since the interest is compounded annually), and t = 30. Plugging these values into the formula, we get:
[tex]A = 1000(1 + 0.066/1)^(1*30)[/tex]
[tex]A = 1000(1.066)^30[/tex]
A = 1000(5.871)
A = $5871
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Work out the net present value of the following investments. The risk-free rate is 3%, and the average return on the market index is 7%
You invest £1,000 in cash in a 0.8-beta project. The project uses a machine you already own, costing £500 last year. You can sell the machine this year for £300. The cash flow from the project is £400 annually in years one through four. The machine is worthless in year four
The net present value of this project is calculated by discounting the expected cash flows with the appropriate discount rate. The discount rate used is the sum of the risk-free rate (3%) and the beta of the project multiplied by the average return on the market index (7%).
The beta of this project is 0.8, thus the appropriate discount rate is 3% + (0.8 x 7%) = 6.6%. The present value of the cash flows in years one through four is £1,179. The present value of the machine is £233. Thus, the net present value of the project is £1,179 - £233 = £946.
Overall, the net present value of this project is positive, meaning it is profitable for the investor. This is because the expected cash flows in years one through four discounted at the appropriate rate are greater than the present value of the machine. The investor stands to make a profit of £946 from this project.
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Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent. Both bonds have 18 years to maturity, make semiannual payments, and have a YTM of 6 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) % Percentage change in price of Bond J Percentage change in price of Bond K % What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) % Percentage change in price of Bond J Percentage change in price of Bond K %
Bond J's price rise of 2% is calculated as follows: (-Duration_J) x (0.02)
Bond K's price rise of 2% is calculated as follows: (-Duration_K) x (0.02)
Bond J's price change as a percentage (2% decline) is (-Duration_J) x (-0.02) Bond K's price change as a percentage (2% decline) is (Duration_K) times (-0.02)
The calculation is as follows:
We may use the following formula to get the bonds' percentage price change in price as a percentage equals (-Duration) x (Change in Yield).Let's first determine how long each bond will last:
To Bond J:Discount rate is 3%.YTM = 6 years till maturity, Two semi-annual payments, Using the duration formula: Years to Maturity (YTM) = (1 - (1 + 0.06/2)(-2 * 18) / (0.06/2) Duration_J = (1 - (1 + YTM/2)(-2 * Years to Maturity)) / (YTM/2) Bond K's: Discount rate is 9%.YTM = 6 years till maturity,Two semi-annual payments,Years to Maturity Bond (YTM) = (1 - (1 + 0.06/2)(-2 * 18) / (0.06/2) Duration_K = (1 - (1 + YTM/2)(-2 * Years to Maturity)) / (YTM/2) Let's now determine the percentage change in price for an increase in interest rates of 2%:Yield Change = 2% Bond price change as a percentage J is (-Duration_J) times (Change in Yield).
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How many ways can 5 couples be seated in a circular table if the
wives must sit together?
There are 5! (5 factorial) ways that the 5 couples can be seated in a circular table if the wives must sit together.
This is because there are 5 different spots for the wives to sit together, and then 4! (4 factorial) ways for the husbands to be arranged around the table.
1. Start with the wives sitting together. There are 5 different spots for them to sit together around the table.
2. Next, arrange the husbands around the table. There are 4! (4 factorial) ways to do this.
3. Multiply the two numbers together to get the total number of ways that the couples can be seated: 5! * 4! = 120 * 24 = 2880
So the answer is 2880 ways that the 5 couples can be seated in a circular table if the wives must sit together.
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Prepare the Income Statement of o company with the following information from year 2020: • Gross sales, during the year, reached an amount of 2.002 million €. The company's trade I policy gives a discount of 3% to its Type A customers. Type A customers are those whose annual purchases from the company exceed 120 million €. • Type A customers account for 40% of sales. • Assume Total sales = Gross sales - Discount • The purchases of raw materials amounted to 962 million €. • The workforce consists of 7.800 employees. The average salary is 30.000 € per year, and average spending on Social Security payments is 30% of salary. • Payment for other operating expenses amounted to 457 million €. • In recent years, the company has invested a total of 1.200 million € in fixed assets whose average lifespan is 10 years (linear depreciation and no residual value). • As regards current liabilities of the company, the company obtained an international loan of 225 million € in the year 2018. The interest for this loan is 6% along the whole year. The main repayment of loan will be made in 2025 (this is, the 100% of the principal will be paid-back in 2025). • The corporate tax rate applied is 30%. • The company has agreed to a dividend of 50%. • Assume do change in stocks of raw materials or finished products during the above period. .
Income statement is a financial statement used to summarize the revenue and expenses of a company during a specified period of time.
In this case, the information provided is from year 2020. The gross sales for this year amounted to 2.002 million €. Of these, 40% were Type A customers, for which a 3% discount was given. Thus, Total sales = Gross sales - Discount.
The purchases of raw materials totaled 962 million €, and the payment for other operating expenses was 457 million €. In terms of current liabilities, an international loan of 225 million € was obtained in the year 2018 with an interest rate of 6%. The company has also agreed to a dividend of 50%.
Regarding fixed assets, a total of 1.200 million € was invested in assets whose average lifespan is 10 years. This investment is depreciated linearly over 10 years, with no residual value. The workforce consists of 7.800 employees with an average salary of 30.000 € per year, and the average spending on Social Security payments is 30% of salary.
In summary, the income statement for 2020 consists of:
• Revenues: Total sales (2.002 million € minus 3% discount to Type A customers)
• Expenses: Purchases of raw materials (962 million €), payments for other operating expenses (457 million €), workforce salary and Social Security payments (calculated as 7.800 employees at 30.000 € per year with 30% of salary spent on Social Security payments), depreciation of fixed assets (calculated linearly over 10 years with no residual value), and loan interest payments (6% of the international loan of 225 million €).
• Net profit = Revenues - Expenses (after deducting corporate taxes of 30%).
• Dividends to shareholders = 50% of the Net Profit.
In conclusion, the income statement for 2020 should include the revenues and expenses described above, as well as deductions for taxes and dividend payments to shareholders.
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Work out the net present value of the following investments. The risk-free rate is 3%, and the average return on the market index is 7%.
a) You invest £1,000 in a 1.2-beta project with an annual cash flow of £300. The first cash flow arrives in year two. The final cash flow comes in year six.
The net present value of the given investment is £-109.55.
The net present value (NPV) of an investment is the present value of its future cash flows minus the initial investment. It is used to determine the profitability of a project or investment.
To calculate the NPV of the given investment, we need to first calculate the required rate of return using the Capital Asset Pricing Model (CAPM) formula:
Required rate of return = risk-free rate + beta * (market return - risk-free rate)
Required rate of return = 3% + 1.2 * (7% - 3%) = 7.8%
NPV = (CF1 / (1 + r)^1) + (CF2 / (1 + r)^2) + ... + (CFn / (1 + r)^n) - initial investment
Where CF is the annual cash flow, r is the required rate of return, and n is the number of years.
For the given investment:
NPV = (£300 / (1 + 7.8%)^2) + (£300 / (1 + 7.8%)^3) + (£300 / (1 + 7.8%)^4) + (£300 / (1 + 7.8%)^5) - £1,000
NPV = £248.47 + £230.28 + £213.55 + £198.15 - £1,000
NPV = £-109.55
Therefore, the net present value of the given investment is £-109.55.
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Banyan Co.’s common stock currently sells for $36.50 per share. The growth rate is a constant 9.6%, and the company has an expected dividend yield of 3%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 12%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Round your answer to two decimal places. Do not round your intermediate calculations.
the cost of new equity for Banyan Co. is 14.00% or 0.14.The cost of new equity is the cost of issuing new shares of common stock.
It is calculated using the formula: Cost of new equity = (Expected dividend yield + Growth rate) / (1 - Flotation cost)
Given that Banyan Co.'s common stock currently sells for $36.50 per share, the growth rate is a constant 9.6%, the expected dividend yield is 3%, and the flotation cost is 10%, we can plug these values into the formula to find the cost of new equity:
Cost of new equity = (0.03 + 0.096) / (1 - 0.10) = 0.126 / 0.90 = 0.14
Therefore, the cost of new equity is 14%.
To round this answer to two decimal places, we can multiply the cost of new equity by 100 to get 14.00% or 0.14.
So, the cost of new equity for Banyan Co. is 14.00% or 0.14.
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What are some of the most important tactics that small companies
can use to ensure their long-term financial security
There are several important tactics that small companies for long-term financial security are Reduce expenses, Build a cash reserve, Monitor cash flow, Diversify revenue streams, Invest in marketing
Reduce expenses: Small companies should constantly look for ways to reduce their expenses and increase their profit margin. This can be done by finding cheaper suppliers, reducing unnecessary spending, and implementing cost-saving measures.
Build a cash reserve: Small companies should build a cash reserve to help them weather unexpected expenses or downturns in the market. This reserve can be used to pay bills, cover payroll, or invest in new opportunities.
Monitor cash flow: Small companies should regularly monitor their cash flow to ensure that they have enough money coming in to cover their expenses. This can be done by creating a cash flow statement and analyzing it regularly.
Diversify revenue streams: Small companies should look for ways to diversify their revenue streams so that they are not overly reliant on one source of income. This can be done by expanding into new markets, offering new products or services, or finding new customers.
Invest in marketing: Small companies should invest in marketing to attract new customers and increase sales. This can be done by creating a marketing plan, using social media, and building relationships with customers.
By implementing these tactics, small companies can increase their financial security and ensure their long-term success.
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Drift Corp., an all-equity firm, expects an EBIT of $3.58 million every year in perpetuity, and the firm's cost of equity is 11%. The firm can borrow $5.5 million at 6% and use the proceeds to repurchase shares. If the corporate tax rate is 35%, what would be the value of the firm after the change in capital structure?
The value of the firm after the change in capital structure would be $34.44 million.
The value of the firm after the change in capital structure can be calculated using the formula for the value of a levered firm, which is VL = VU + (TC x D),
where VL is the value of the levered firm, VU is the value of the unlevered firm, TC is the corporate tax rate, and D is the amount of debt.
First, we need to calculate the value of the unlevered firm, which can be done using the formula VU = EBIT / RE, where EBIT is the earnings before interest and taxes and RE is the cost of equity.
VU = $3.58 million / 0.11 = $32.54 million
Next, we can plug in the values into the formula for the value of a levered firm:
VL = $32.54 million + (0.35 x $5.5 million) = $34.44 million
As a result, the company would be worth $34.44 million after the capital structure modification.
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Country A has a command economy. The country’s economic plan calls for manufacturing 10,000 new electric heaters for the winter months. However, the winter turns out to be much colder than usual. As a result, the demand for new heaters is higher than the number of heaters available. Many people are forced to get through the winter without an electric heater.
What does this scenario best reveal about command economies?
Command economies are profit driven.
Command economies have difficulty meeting changing needs.
Command economies fail to regulate what goods are produced.
Command economies ignore consumer needs.
This scenario best reveals that the command economies have difficulty meeting changing needs.
What are command economies?Command economies, also known as planned economies, are economic systems in which the government controls all aspects of the economy, including production, distribution, and pricing of goods and services. In a command economy, the government makes all economic decisions and owns all the resources necessary for production. Prices are typically set by the government rather than by the forces of supply and demand. The goal of a command economy is to create a centrally-planned system that distributes resources and goods equitably among the population. However, command economies have historically been associated with inefficiency, poor quality products, and limited consumer choice. They have also been criticized for their lack of responsiveness to changing market conditions and the needs and desires of consumers. Many command economies have since transitioned to market-based systems.
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a. Katherin Lee is considering an investment that pays $15,000 per year for 20 years and opportunity cost
is 9.5 percent interest. If she doesn’t receive the first $15,000 payment until one year from today, what
is the most she should be willing to pay for the investment? How much would she be willing to pay if
she receives the first $15,000 payment today?
b. An investor can buy a security at a price of $78.35 that will pay $100 after five years. What rate of
return will s/he earn if he purchases the security?
Please answer both the questions. It's a request.
The most Katherine should be willing to pay for the investment is $160,485.80.The rate of return for the security is 5.04%.
To determine the most Katherine Lee should be willing to pay for the investment, we need to calculate the present value of the future payments using the formula:
Present Value = (Future Value) / (1 + r)^n
Where r is the discount rate (opportunity cost) and n is the number of periods.
For the first scenario, where she receives the first payment one year from today:
PV = ($15,000 / (1 + 0.095)^1) + ($15,000 / (1 + 0.095)^2) + ... + ($15,000 / (1 + 0.095)^20)
PV = $145,485.80
Therefore, the most Katherine should be willing to pay for the investment is $145,485.80.
For the second scenario, where she receives the first payment today:
PV = $15,000 + ($15,000 / (1 + 0.095)^1) + ($15,000 / (1 + 0.095)^2) + ... + ($15,000 / (1 + 0.095)^19)
PV = $160,485.80
b. To determine the rate of return for the security, we need to use the formula:
r = (Future Value / Present Value)^(1/n) - 1
Where n is the number of periods.
r = ($100 / $78.35)^(1/5) - 1
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Question 9 (1 point) An all-equity corporation has an expected EBIT of $600,000, which it expects to earn in perpetuity. The corporate tax rate is 45%. The company's unlevered cost of equity is 10% and cost of debt is 7%. The company is planning on issuing $2,400,000 of debt and using the proceeds to buy back its shares at the current market value. Assuming that there are no other market imperfections other than taxes, what will be the required rate of return on the company's equity after the restructuring is completed?
A) 12.89%
B) 11.99%
C) 12.31%
D) 13.64%
E) 11.45%
The correct option is C.12.31%.The required rate of return on the company's equity after the restructuring is completed will be 12.31%.
To find this, we can use the following formula:
Re = Ru + (Ru - Rd)(D/E)(1 - T)
Where:
Re = required rate of return on equity
Ru = unlevered cost of equity
Rd = cost of debt
D = debt
E = equity
T = corporate tax rate
Plugging in the given values:
Re = 0.10 + (0.10 - 0.07)(2,400,000/E)(1 - 0.45)
Solving for E:
E = 2,400,000/(0.10 - 0.07)(1 - 0.45) = 8,727,272.73
Plugging this back into the formula:
Re = 0.10 + (0.10 - 0.07)(2,400,000/8,727,272.73)(1 - 0.45) = 0.1231
Converting this to a percentage:
Re = 12.31%
Therefore, the required rate of return on the company's equity after the restructuring is completed is 12.31%, or option C.
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States are sometimes referred to as "the laboratories of democracy," that is, one state may experiment with a different approach, which other states may emulate if the experiment succeeds but spurn if the experiment doesn’t succeed. Is the MSAPA project inconsistent with that idea? Does the MSAPA threaten to impose a uniformity inconsistent with creativity and experimentation? If so, would we be paying too high a price for procedural harmonization?
The MSAPA (Model State Administrative Procedure Act) project is not necessarily inconsistent with the idea of states being "laboratories of democracy." The MSAPA is a model act that provides guidance for states in creating their own administrative procedure laws. While it does promote uniformity in certain aspects, it also allows for states to tailor the act to their own needs and circumstances.
Furthermore, the MSAPA does not impose uniformity in the sense that it forces states to adopt its provisions. Rather, it is a voluntary model that states can choose to adopt or not. Therefore, it does not threaten to impose a uniformity inconsistent with creativity and experimentation.
In terms of the price of procedural harmonization, it is important to consider the benefits that come with it, such as increased efficiency and consistency in administrative procedures. While there may be some trade-offs, the MSAPA does not necessarily impose a uniformity that would stifle creativity and experimentation in the states.
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Frontier Park was started on April 1 by C.J. Mendez. The following selected events and transactions occurred during April.
April 1 Mendez invested $40,000 cash in the business. 4 Purchased land costing $30,000 for cash. 8 Incurred advertising expense of $1,800 on account.
11 Paid salaries employees $1,500
13 Paid $1,500 cash for a one-year insurance policy.
17 Withdrew $1,000 cash for personal use.
20 Received $5,700 in cash for admission fees.
25 sold 100 coupon books for $25 per book. Each book contains 10 coupons that entitle the holder to one admission to the park.
30 Received $8,900 in cash for admission fees.
30 Paid $900 on accounts payable.
Prepare journal entries to record the April transactions, you may omit explanations for the transactions.
Journal entries to record the April transactions:
To prepare the journal entries for the April transactions, we will use the following accounts: Cash, Land, Advertising Expense, Salaries Expense, Prepaid Insurance, Owner's Drawing, Admission Fees, and Coupon Books.
The journal entries for the April transactions are as follows:
April 1:
Cash (+40,000)
Owner's Capital (+40,000)
(To record investment of $40,000 cash in the business by C.J. Mendez)
April 4:
Land (+30,000)
Cash (-30,000)
(To record purchase of land costing $30,000 for cash)
April 8:
Advertising Expense (+1,800)
Accounts Payable (+1,800)
(To record advertising expense of $1,800 on account)
April 11:
Salaries Expense (+1,500)
Cash (-1,500)
(To record payment of salaries to employees)
April 13:
Prepaid Insurance (+1,500)
Cash (-1,500)
(To record payment of $1,500 cash for a one-year insurance policy)
April 17:
Owner's Drawing (+1,000)
Cash (-1,000)
(To record withdrawal of $1,000 cash for personal use)
April 20:
Cash (+5,700)
Admission Fees (+5,700)
(To record receipt of $5,700 in cash for admission fees)
April 25:
Cash (+2,500)
Coupon Books (+2,500)
(To record sale of 100 coupon books for $25 per book)
April 30:
Cash (+8,900)
Admission Fees (+8,900)
(To record receipt of $8,900 in cash for admission fees)
April 30:
Accounts Payable (-900)
Cash (-900)
(To record payment of $900 on accounts payable)
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If there is a price ceiling of $150, deadweight loss is, in numerals, ______. (do not include the dollar sign in your answer. )
In reference to what the graph shows the market for bicycles. If there is a price ceiling of $150, then, the deadweight loss is, in numerals, $200.
What does dead-weight loss means and its use?In economic, deadweight loss is used to describe the loss of economic efficiency that occurs when the allocation of resources is not optimized. Specifically, it refers to the reduction in total societal welfare that results from market inefficiencies, such as taxes or subsidies, that distort the price signals between buyers and sellers.
The concept of deadweight loss is important because it highlights the economic cost of market distortions and can inform policymakers on the potential impacts of interventions. For example, a tax on a good may increase revenue for the government, but it may also create a deadweight loss by reducing the quantity of the good that is bought and sold in the market.
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You want to set the warranty on your product so that you have to replace at most 5% of the hot water heaters that you sell. How many years should you claim on your warranty? (round answer to nearest whole number of years. ) explain your answer
you should request a five-year guarantee on your goods if you want to keep the replacements to a maximum of 5%. This is based on the notion that the failure rate won't change during the warranty duration.
You must take into account the hot water heater failure rate when deciding how many years to claim from your warranty in order to keep replacements to a maximum of 5%.
Using this reasoning, we can determine the failure rate necessary to keep replacements to a maximum of 5% for various warranty periods:
Failure rate under 5% for a year under warranty
Failure rate under 2.5% over a two-year warranty
Failure rate under 1.7% over a three-year warranty
Failure rate under 1.3% over a four-year warranty
Failure rate under 1% over a five-year guarantee
So, you should request a five-year guarantee on your goods if you want to keep the replacements to a maximum of 5%. This is based on the notion that the failure rate won't change during the warranty duration. You might have to change the warranty period if the failure rate rises over time.
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Suppose that you have an equity of 100,000 NOK (Norwegian kroner). In the end of May 2019 you want to invest this amount into two securities, each of them can be acquired for 100 NOK per unit at this point of time. Assume that each of these securities is perfectly divisible or multipliable. Once invested, you have to keep these securities until they expire in the end of May 2024. The streams of cash flows generated per 100 NOK invested into the securities are given as follows:
End of may 2020 2021 2022 2023 2025
Security 1 40 40 40 40 40
Security 2 0 30 50 70 90
For additional financing your bank will provide you with at most 100,000 NOK of a constant payment loan (CPL, annuity loan) with an interest rate (????????) of 8 % and a maturity (TT) of 5 years. In addition, you can draw at most 50,000 NOK on a credit line with an interest rate of 10 %. Idle cash can be deposited on a banking account which does not pay any interest.
Your tasks are the following:
(a) Suppose that you want to maximize your wealth in the end of May 2024: Find the optimal amount of money to be invested into the two securities. determine the optimal financing of this investment.
(b) This part is difficult, not relevant that relevant and voluntary! Now assume that the payments from the securities are not given with certainty. For simplicity assume that all cash flows are uniformly distributed with an interval (spread) of 20.
a. Generate 20 possible future scenarios for each security.
b. Maximize your expected wealth in the end of May 2024 considering that the uncertainty in the returns affects both credit line and bank account. Think about an appropriate structure of your Excel-sheet that makes this task easier.
c. Determine expected return and the return’s standard deviation.
d. Generate a risk-return diagram for different equity ratios.
Please help me to implement and solve this in excel.
In order to solve this problem, you will need to use the concepts of net present value (NPV) and internal rate of return (IRR) in order to determine the optimal amount of money to be invested into the two securities and the optimal financing of this investment.
First, you will need to create a table in Excel with the cash flows for each security for each year. Next, you will need to calculate the NPV for each security using the formula:
[tex]NPV = CF0 + CF1/(1+IRR) + CF2/(1+IRR)^2 + ... + CFn/(1+IRR)^n[/tex]
Where CF0 is the initial investment, CF1 is the cash flow in the first year, CF2 is the cash flow in the second year, and so on.
Once you have calculated the NPV for each security, you can use this information to determine the optimal amount of money to be invested into each security. The optimal amount of money to be invested into each security will be the amount that maximizes the NPV.
Next, you will need to determine the optimal financing of this investment. This will involve comparing the cost of financing the investment with the CPL and the credit line to the return on the investment. The cost of financing the investment with the CPL will be the sum of the interest payments over the 5-year period, and the cost of financing the investment with the credit line will be the sum of the interest payments over the 5-year period plus the principal. You will need to compare these costs to the return on the investment in order to determine the optimal financing of this investment.
Finally, you will need to generate 20 possible future scenarios for each security in order to determine the expected return and the return's standard deviation. You can do this by creating a table in Excel with the possible future scenarios for each security and then calculating the expected return and the return's standard deviation using the formulas:
Expected return = (sum of all possible returns) / (number of possible returns)
[tex]Standard deviation = \sqrt{[(sum of (return - expected return)^2) / (number of possible returns)]}[/tex]
Once you have calculated the expected return and the return's standard deviation, you can generate a risk-return diagram for different equity ratios using Excel's charting tools.
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Critical ThinkingPlease read Case 4: "The Swatch Group and Cultural Uniqueness" available in your e-book (International business: Competing in the global marketplace (13th ed.), at page no.630, and answer the following questions:Assignment Question(s):With the Hayek family controlling nearly 40 percent of The Swatch Group, how do you think the family’s influence impacts the corporate culture in the company? What about the company’s international culture being impacted by the Hayek family? Explain. (Mark:2)Many of the Swatch brands have become cultural icons among a strong core following of customers in the global marketplace. Some even talk about the "Swatch Revolution" that began when Nicolas Hayek founded the company. Why do you think Swatch has such a strong cultural following? Give logic in support of your answer. (Mark:2)As mentioned, Swatch wants you to create your own unique way of accessorizing through its Swatch watch. Is a watch a way to show who a person is culturally? Does a watch get embedded into a person’s culture? Can a watch create a cultural image? Discuss. (Mark:6)
The Hayek family's influence on The Swatch Group's corporate culture is significant, as they control nearly 40 percent of the company. This means that the family has a strong say in the company's direction and decision making.
As a result, the company's corporate culture is likely to reflect the values and beliefs of the Hayek family. This can also impact the company's international culture, as the Hayek family's values and beliefs may be reflected in the company's interactions with international partners and customers.
Swatch has a strong cultural following due to its unique and innovative approach to watchmaking. The company has created a "Swatch Revolution" by offering watches that are not only functional but also fashionable and customizable. This has allowed customers to express their individuality and personal style through their Swatch watches, creating a strong connection with the brand.
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How does the free-rider problem aggravate adverse selection andmoral hazard problems in debt markets?
The free-rider problem can exacerbate the problems of adverse selection and moral hazard in debt markets by creating an environment in which individuals or firms may act in an "opportunistic" manner, prioritizing their own benefit over the overall health of the market.
Adverse selection occurs when one party to a transaction has more information than the other, resulting in an unfair advantage. In the case of debt markets, this can lead individuals or companies to take on more debt than they can actually repay, thereby increasing the risk of default.
Moral hazard, on the other hand, occurs when one party takes more risk because it knows it will not bear the full consequences of its actions. In debt markets, this can lead individuals or companies to take on more debt than they can actually repay, knowing that they will not be fully responsible for the consequences.
The free-rider problem, whereby individuals or companies benefit from the actions of others without contributing themselves, can exacerbate these problems by creating an environment in which "opportunistic" behavior is rewarded. This can lead to a breakdown of trust and cooperation within the "markets" and ultimately to a less stable and healthy debt market.
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What are the 4 types of business models?
Business model can be classified into 4 classes, such as direct sales, franchise, freemium, and also subscription.
The 4 types of business models are:
1. Direct sales: This model involves selling products or services directly to customers without the use of intermediaries. Examples of companies that use this model include Dell and Avon.
2. Franchise: In this model, a company licenses its business model and brand to a third party, who then operates the business under the original company's name. Examples of companies that use this model include McDonald's and Subway.
3. Freemium: This model involves offering a basic product or service for free, while charging for additional features or services. Examples of companies that use this model include Spotify and Dropbox.
4. Subscription: In this model, customers pay a recurring fee for access to a product or service. Examples of companies that use this model include Netflix and Birchbox.
Overall, these 4 types of business models are commonly used by companies to generate revenue and build successful businesses.
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Why is it important for MNES to understand the compensation practices in other countries? What should the main objective be for a MNE with regard to its compensation policies?pls keep answers very short
In order to attract and retain the lowest-skilled individuals and ensure that the company has a competitive edge in a world that is becoming more and more competitive, compensation is essential.
The Compensation administration component enables one to distinguish between their own compensation practices and those of their competitors while yet providing flexibility, cost-effectiveness, and administration. It offers a toolkit for strategic compensation planning that takes the organization's structure, culture, and pay practices into account.
Compensation management refers to the specialized HR discipline of organizing and managing everything of monetary worth that a business provides to an employee in exchange for their labor. Along with their income, it also includes benefits, bonuses, and prizes.
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You are thinking about an investment opportunity. To implement the opportunity, you need to invest $5 million (C0). The investment will produce Q = 30,000 units of products every year. The price of the product P is $40 per unit and the unit cost is $25. Your discount rate is 6 per cent per year. Calculate the NPV if you invest today.
The NPV of the investment opportunity is $750,000. To calculate the Net Present Value (NPV) of the investment opportunity, use the formula:
NPV = Σ t=0 ∞ (Q * (P - C) / (1 + r)t - C0)
where
Q = 30,000 units of product per year
P = $40 per unit
C = $25 unit cost
r = 6% discount rate
C0 = $5 million investment
t = 0 (for present value)
Plugging in the values into the formula, we get:
NPV = 30,000 * ($40 - $25) / (1 + 0.06)0 - 5,000,000
NPV = $750,000
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Think about the effects of building condominiums in the rain forest. While activists in the United States have worked hard to fight those large corporations that are willing to sacrifice the environment for financial gain, natives of the rain forest do not have the means to engage in such battles.
Should powerful U.S. firms consider the potential moral ramifications of their international capital budgeting projects when seeking to invest in poorer countries? Support your views with appropriate arguments citing relevant references where possible.
Yes, powerful U.S. firms should consider the potential moral ramifications of their international capital budgeting projects when seeking to invest in poorer countries as these firms have a social responsibility to consider the impact of their actions on the environment and local communities.
One of the main reasons why U.S. firms should consider the potential moral ramifications of their international capital budgeting projects is the impact on the environment. Building condominiums in the rain forest can have a negative impact on the ecosystem, leading to loss of biodiversity, deforestation, and climate change. This can have far-reaching consequences, not just for the local environment, but for the global climate as well.
Another reason why U.S. firms should consider the potential moral ramifications of their international capital budgeting projects is the impact on local communities. The construction of condominiums in the rain forest can lead to displacement of local communities and loss of their livelihoods. This can have a negative impact on the local economy and exacerbate poverty in the region.
In conclusion, powerful U.S. firms should consider the potential moral ramifications of their international capital budgeting projects when seeking to invest in poorer countries. This is because these firms have a social responsibility to consider the impact of their actions on the environment and local communities. By taking into account the potential moral ramifications of their actions, U.S. firms can ensure that their investments are sustainable and beneficial for all stakeholders.
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