Hence, the question "At the end of the first year, what is total stockholders' equity?" would be option C. $884,000.
Given that Mango, Inc. had the following transactions in its first year of operations:
• Issued 34,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $26.00 per share.
• Earned net income of $73,000.
• Paid no dividends.
We can obtain the answer by calculating the total stockholders' equity as:
Total Stockholders' Equity = Total Assets - Total Liabilities
Using the given information, we can obtain:
Total Stockholders' Equity = Total Assets - Total Liabilities
Net income of $73,000 increases the stockholders' equity while paying no dividends doesn't affect it. In addition, the total number of shares issued is 34,000 with a par value of $1.00 per share, so the amount of capital stock is:$1.00 x 34,000 = $34,000. Now, we can calculate the Total Stockholders' Equity of Mango, Inc.
Total Stockholders' Equity = ($34,000 x $26.00) + $73,000 = $884,000
Therefore, option C. $884,000 is the correct answer.
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Parson Company acquired an 80 percent interest in Syber Company on January 1, 2017. Any portion of Syber's business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asset has subsequently undergone annual amortization based on a 15-year life. Over the past two years, regular intra-entity inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. All dividends are paid in the same period as declared. The individual financial statements for the two companies as well as consolidated totals for 2018 follow:
Parson Company acquired an 80 percent interest in Syber Company on January 1, 2017. Any portion of Syber's business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asset has subsequently undergone annual amortization based on a 15-year life.
Over the past two years, regular intra-entity inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. All dividends are paid in the same period as declared. The individual financial statements for the two companies as well as consolidated totals for 2018
Sales150,000120,000---270,000Cost of goods sold100,00080,000---180,000Operating expenses20,00015,000---35,000Net income30,00025,000---55,000
Elimination entry in respect of inventories: (120,000 × 25%)30,000-30,000-Consolidated net income for 201855,000As we see above that consolidated net income for 2018 is $55,000.
The consolidation process eliminated intra-entity transactions such as the inventory transfers.
Since the inventory had not been sold by the end of 2018, eliminating the intra-entity sale decreased the consolidated cost of goods sold and consolidated sales by $30,000 which resulted in a $55,000 consolidated net income. Therefore, the answer is, the consolidated net income for 2018 is $55,000.
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Exercise 8-1 1 ints Rook Hve Print D neces Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below: April $ 380,000 Saved Budgeted sales (all on ccount) $ 200,000 From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 20% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $310,000, and March sales totaled $340,000. February sales March sales April sales May $ 580,000 Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th? Complete this question by entering your answers in the tabs below. May sales June sales Total cash collections Required 1 Required 2 Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. Schedule of Expected Cash Collections Apell May June Total $ 1.160,000 Total Help Save & Exit Submit Check my work Exercise 8-1 1 10 poets Block O Hit Print References Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below: April 380.000 Required 1 Required 2 Seved Budgeted sales (all on eccount) From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 20% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $310,000, and March sales totaled $340,000. What is the accounts receivable balance on June 30th? Total accounts receivable at June 30 HAY $500,000 Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th? Complete this question by entering your answers in the tabs below. < Required 1 June $200,000 Total $1,160,000 Required 23 Help Save & Ext Submit Check my work upoate
The given problem requires us to prepare a schedule of expected cash collections from sales and determine the accounts receivable balance on June 30th for Silver Company.
From the given information, we know that peak sales occur in May, which is a popular time for Mother's Day gifts. We have been provided with the budgeted sales for each month in Q2 – April, May, and June – as well as the collection percentages based on past experience.
To prepare the schedule of expected cash collections, we need to calculate the cash collections for each month of Q2 by applying the relevant collection percentages to each month's sales. Based on the given information, 20% of sales are collected in the month of sale, 60% in the following month, and the remaining 20% in the second month following sale. Once we have calculated the cash collections for each month, we can add them up to get the total cash collections for the quarter.
To determine the accounts receivable balance on June 30th, we need to consider the portion of May sales that will still be outstanding at the end of the quarter. Since May sales have a collection period of two months, 20% of May sales will still be outstanding at the end of June. We can add this amount to the 60% of April sales that will still be outstanding at the end of June to arrive at the accounts receivable balance on June 30th.
In conclusion, preparing a schedule of expected cash collections from sales and determining the accounts receivable balance on June 30th requires an understanding of the collection percentages and the timing of sales for Silver Company. By using this information, we can accurately forecast the cash collections for Q2 and the accounts receivable balance on June 30th, which is useful for managing company finances.
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Critically evaluate the role taxation could play in the UK’s move towards the EU Green deal 2050 zero net emissions goal.
Taxation has the potential to play a significant role in the UK's transition to the EU Green Deal's zero net emissions target by 2050. The goal of the Green Deal is to make the European Union (EU) climate-neutral by 2050, which means that its net greenhouse gas emissions should be reduced to zero.
Taxes may be used to discourage carbon-intensive activities and encourage low-carbon ones, as well as to raise funds for green investment. Carbon pricing, carbon taxes, and subsidies, and tax incentives for low-carbon and energy-efficient goods and services are all examples of possible tax measures to support the green transition. Carbon pricing is one of the most well-known tax measures for climate action. It involves putting a price on carbon emissions, either through a tax or a cap-and-trade scheme. The goal of carbon pricing is to discourage carbon-intensive activities and encourage low-carbon ones by increasing the cost of carbon-intensive activities.
Carbon taxes, on the other hand, are taxes on carbon dioxide and other greenhouse gas emissions. The aim of a carbon tax is to reduce carbon emissions by increasing the cost of carbon-intensive activities. Carbon pricing, carbon taxes, and subsidies, and tax incentives for low-carbon and energy-efficient goods and services are all examples of possible tax measures to support the green transition. Tax incentives may be used to promote investment in green infrastructure, renewable energy, and energy efficiency, among other things. For example, businesses may be granted tax incentives for investing in low-carbon activities.
Subsidies may also be used to encourage green investment. A subsidy is a financial incentive that reduces the cost of a specific action. Tax incentives and subsidies for renewable energy, low-carbon transportation, and energy-efficient construction are all examples of green subsidies. In conclusion, taxation can play a significant role in the UK's transition to a low-carbon economy and zero net emissions by 2050. Tax measures like carbon pricing, carbon taxes, tax incentives, and subsidies can be used to support the transition. The UK government may use taxation as a tool to encourage the necessary behavioural changes to reduce carbon emissions and promote green investment, among other things. In the UK, taxes and other financial incentives are frequently used to encourage people to adopt environmentally friendly practices.
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1. ABC bonds were issued 20 years ago and carry a 5% coupon. These bonds mature in 5 years and currently sell for $878.34. Find the yield to maturity. Round intermediate steps and your final answer to four decimals and enter your answer in decimal format (EX: .XXXX).
2. Echo fund has $80 million in assets and $5 million in liabilities. Shares of the fund currently sell for $100, which represents a 20% discount below NAV. Find the number of shares outstanding. Round intermediate steps to four decimals and your final answer to the nearest whole share.
1) The yield to maturity of ABC bond is 5.6158%. 2)The number of shares outstanding is 50,012.
1. Yield to maturity is the anticipated rate of return on a bond investment if it is held until its maturity date. We'll use the formula to find the yield to maturity (YTM) in this scenario:
PV = ($25 x (1 - 1 / (1 + YTM) ^ (5 x 2))) / YTM + ($1,000 / (1 + YTM) ^ (5 x 2))
PV = $878.34, FV = $1,000, PMT = $25
n = 5 x 2 = 10
YTM = 5.6158%
Therefore, the yield to maturity of ABC bond is 5.6158%.
2. The Net Asset Value (NAV) of the Echo fund per share is $125. Since shares sell at a 20% discount, the current share price is $100 per share.
To find the number of outstanding shares, we can use the following equation:
NAV = Total value of assets - Total value of liabilities
Total value of assets = Number of shares outstanding × Share price = $100 × Number of shares outstanding
Total value of liabilities = $5 million
Net Asset Value = Total value of assets - Total value of liabilities
$125 = ($100 × Number of shares outstanding) - $5,000,000
$5,000,000 = $100 × Number of shares outstanding - $125
$5,000,125 = $100 × Number of shares outstanding
Number of shares outstanding = $5,000,125 / $100 = 50,0012 shares
Thus, the number of shares outstanding is 50,012.
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You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug's profits will be $3 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 12% per year? The present value of the new drug is $ million. (Round to three decimal places.)
The present value of the new drug is approximately -$6.8777 million.
To calculate the present value of the new drug, we need to discount the expected future cash flows associated with the drug's profits. We can use the formula for the present value of a growing perpetuity:
PV = C / (r - g),
where PV is the present value, C is the cash flow in the first year ($3 million), r is the discount rate (12% or 0.12), and g is the growth rate (5% or 0.05).
Since the cash flows are expected to grow for 17 years, we can use the formula for the sum of a geometric series to calculate the present value of the cash flows over the 17-year period:
PV = C * (1 - (1 + g)^n) / (r - g),
where n is the number of years (17).
Plugging in the values, we have:
PV = $3 million * (1 - (1 + 0.05)^17) / (0.12 - 0.05),
PV = $3 million * (1 - 1.05^17) / 0.07.
Using a calculator, we find:
PV ≈ $3 million * (1 - 1.1459) / 0.07,
PV ≈ $3 million * (-0.1459) / 0.07,
PV ≈ -$6.8777 million.
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On the attached worksheet, you will find the UNADJUSTED trial balance of LADD AGENCIES for its year ended December 31, 2014. Ms. Ladd began her own detective agency in January 2013. She hired 2 other female detectives to work with her, along with a personal secretary named Mr. Spelling. In discussia with Ms. Ladd, you discover the following about LADD AGENCIES: 1. The office supplies were counted on December 31, 2013 with a cost value of $1,000.00. Duing 2014, the business purchased $3,250.00 of office supplies. The office supplies were counted on December 31, 2014 with a cost value of $1,200.00. 2. The bookkeeper is paid $2,000 every two weeks. She was last paid on December 24, 2014, so at December 31, 2014 she is owed one week's wages. She will be paid $2,000 on January 7, 2015 for the two-week period ended January 7, 2015. 3. Computer equipment was purchased on November 1, 2014 for $25,000. The business plans b use the computer equipment for 3 years, at which time its salvage/residual value is expected to be $7,000. In the year that a capital asset is purchased, depreciation is recorded to the nearest whole month. 4. Ms. Ladd has informed you that a billing from the Agency for services provided to Mr. Chaie in the amount of $4,000 has been mailed to him, but not recorded in the accounts of the business because the money was not received by December 31, 2014. Mr. Charlie has promised to pay in January2015. 5. The December 2014 telephone bill for $300 was received in the mail on January 5, 2015, so it was not paid before then, nor recorded in the unadjusted trial balance dated December 31, 2014. 6. Insurance costing $2,400 was purchased on September 1, 2014 for the period October 1, 2014 through September, 2015. 7. Ladd Agencies arranged a five-year note payable in order to purchase the equipment. Interest for December 2014 calculated at the rate of 1% per month on the loan balance will be paid on January 2, 2015. The loan calls for principle repayments of $5,000 per year each January 2 beginning January 2, 2015. 8. In reviewing the December 2014 deposits to the bank account, you find a cheque that was received from BAD Co. for $1,000. The money was credited to Detective Fees earned when it was received and the Agency had NOT completed the required work by December 31, 2014. 9. In December 2013, the business prepaid its rent through February 2014. Monthly rent is $1,000 per month. In December 2014, the company prepaid rent through March 2015. 10. SUBSEQUENT GENERAL JOURNAL ENTRY
General Journal of LADD Agencies for the year ended December 31, 2014: Date Account Titles and Debit Credit December 31, 2014Office Supplies Expense3,250.00Office Supplies3,250.00(To record office supplies purchased and inventory adjusted for year-end) December 31, 2014Salaries Payable2,000.00Salaries Expense2,000.00(To record accrued salaries at the end of the year) November 1, 2014Computer Equipment25,000.00.
Cash25,000.00(To record purchase of computer equipment)Depreciation Expense ($25,000 - $7,000)/36= $545.45 Depreciation Expense 545.45 Accumulated Depreciation-Computer Equipment 545.45(To record depreciation for computer equipment)4. January 2015Accounts Receivable4,000.00Detective Fees Earned4,000.00(To record the billing of Mr. Charlie for services rendered in 2014)5. January 2015Telephone Expense300.00
Accounts Payable300.00(To record the telephone bill received after year-end)6. September 1, 2014Prepaid Insurance2,400.00Cash2,400.00) Note: Depreciation for 2014 is calculated as follows: ($25,000 - $7,000) / 36 months = $545.45 per month. Depreciation for November and December 2014 will be: $545.45 * 2 = $1,090.90.
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Explain your attitude toward your college/university based on the tri-component attribute model.
Make sure you separate and explain the cognitive, affective, and conative elements.
List at least 5 points each under cognition and affect and 3 under conative.
You can use bullet points, but each one needs an explanation; in sufficient detail so that everyone else understands what you mean.
The tri-component model of attitudes is a theory created by psychologist Martin Fishbein and Icek Ajzen. The model explains the three components that affect an individual's attitude toward a particular object, like a university. These components are cognitive, affective, and conative.
I have a positive attitude towards my university, and I will explain why in the following paragraphs .Cognitive elementCognitive elements are all about beliefs and ideas, and this includes knowledge and information that one has acquired about a particular object or situation. Below are some of the reasons why I have a positive attitude toward my university.I believe that my university offers high-quality education, which will help me to achieve my goals.I think the professors are experienced and knowledgeable in their fields, and they have the ability to pass this knowledge on to their students.The curriculum at my university is designed to be comprehensive, which means I can gain a wide range of knowledge from different areas.I believe that the university has an excellent reputation, which will increase my chances of getting a job after graduation.I trust the university to provide me with the necessary tools and resources that will help me succeed.Affective element: Affective elements are all about feelings, and this includes emotions, values, and attitudes. Below are some of the reasons why I have a positive attitude toward my university.I feel proud to be part of this university, which has a rich history and has produced many successful graduates.I enjoy the campus environment, and I find it conducive to learning.I appreciate the support I receive from the university's staff and faculty, which has helped me to overcome challenges and achieve my goals.I feel a sense of belonging to this university, and I appreciate the diversity of the student body.I am grateful for the opportunities that my university has provided, which have helped me to develop as a person.Conative elementConative elements are all about behavior, and this includes actions and intentions. Below are some of the reasons why I have a positive attitude toward my university.I actively participate in class and take advantage of all the resources that the university has to offer.I make an effort to maintain good grades, which will increase my chances of being successful in the future.I engage in extracurricular activities, which allow me to connect with other students who share my interests.I am committed to graduating from this university, and I plan to use the knowledge and skills I have acquired to make a positive impact in my community and the world as a whole.
In conclusion, the tri-component model of attitudes explains the cognitive, affective, and conative elements that affect an individual's attitude toward a particular object, such as a university. My positive attitude toward my university is based on several factors, including my belief that the university offers high-quality education, the professors' experience and knowledge, the comprehensive curriculum, and the university's excellent reputation. I also have positive feelings toward the university, including pride, appreciation for the campus environment and the support I receive from staff and faculty, and a sense of belonging to the university. My positive conative elements include actively participating in class, maintaining good grades, engaging in extracurricular activities, and committing to graduating from the university.
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- The firm's tax rate is 35%6. - The current price of Harry Davis'12.5\% coupon, semiannual payment, noncallable bonds with 15 years remaining to maturity is 5 . Harry Davis does not use short-term interestbearing debt on a permanent basis. New bonds would be privately placed with no flotation cost. - The current price of the firm's 10\%, \$100 par value, quarterly dividend, perpetual preferred stock is \$. Harry Davis would incur flotation costs equal to 6% of the proceeds on a new issue. - Harry Davis' common stock is currently selling at $70 per share. Its last dividend (D0) was 5 , and dividends are expected to grow at a constant rate of 5.8% in the foreseeable future. Harry Davis' beta is 1.4, the yield on T-bonds is 5.6%, and the market risk premium is estimated to be 6%. For the own-bond-yield-plus-judgmental-risk-premium approach, the firm uses a 3.2% risk premium. - Harry Davis' target capital structure is 30% long-term debt, 10\% preferred stock, and 60% common equity. Group 3: Bond price=1150.25 -Preferred stock=107.54 - D0= 3.12 14. What is Harry. Davis' weiphted wererage cost of capital (WNACC)? 15. What factars influence a coempany's WACC: 16. Should the compuny ase its averall WACC as the hardle rate for rach of lis divisieas?
The company should not use its overall WACC as the hurdle rate for each of its divisions, as each division has its risk. Each division should use its risk-adjusted WACC as the hurdle rate for its projects.
14. Calculation of Weighted average cost of capital (WACC) is as follows:Given: Tax rate=35%, Bond Price= 1150.25, Preferred Stock=107.54, D0=3.12, Current Market price of common stock= $70, Growth rate (g)=5.8%, beta (β) =1.4, yield on T-Bonds(rf) =5.6%, Market Risk Premium(MRP) =6%, Judgmental Risk Premium(JRP) =3.2%.
Calculation: Cost of Debt(Kd)= (Coupon rate x (1 - Tax rate))Cost of Debt (Kd)= (12.5% x (1 - 35%))=8.12%Current yield(YTM) on Bond, Kd= = 8.47%Cost of Preferred Stock(Kps) =Dp/ NP*Kps (1-Flotation cost)Cost of Preferred Stock(Kps)= 3.12/107.54(1-.06)
Cost of Preferred Stock (Kps)= 2.87%Cost of Common Stock using CAPM(Ks) = Rf + β(MRP)Ks= 5.6% + 1.4(6%)Ks= 14.4%.Cost of Equity using own-bond-yield-plus-judgmental-risk-premium approach (Ks) =Kd (1 - Tax rate) + KjCost of Equity using own-bond-yield-plus-judgmental-risk-premium approach (Ks) =8.47%(1-.35) + 3.2%Cost of Equity using own-bond-yield-plus-judgmental-risk-premium approach (Ks)= 7.11%.
Therefore, WACC= (WdKd) + (WpsKps) + (WsKs)Where: Wd = Weight of Debt, Wps = Weight of Preferred Stock, Ws = Weight of Common Equity, Kd = Cost of Debt, Kps = Cost of Preferred Stock, Ks = Cost of Equity.Given, Target capital structure is 30% long-term debt, 10% preferred stock, and 60% common equity.
Substituting all the given values in the above equation, we get WACC= (0.3 x 7.11%) + (0.1 x 2.87%) + (0.6 x 14.4%)WACC= 2.133% + 0.287% + 8.64%WACC= 11.06%
Thus, the Weighted Average Cost of Capital (WACC) for Harry Davis is 11.06%.15. Factors that influence a company's WACC are as follows:
Market conditions, level of economic growth, rate of inflation, monetary and fiscal policies of the government, credit rating of the company, capital structure, financial leverage, business risks, financial risks, company size, company industry, and the stage of business growth.16.
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Why was Jim Hackett replaced by Jim Farley? What was the main strategies of Bill Hackett? Bill Farley? How did they differ?
Jim Hackett was replaced by Jim Farley because Hackett had completed his three-year plan and had decided to retire. The main strategy of Bill Hackett was to focus on mobility services, autonomous vehicles, and electric powertrains, which aimed to make Ford a leader in the industry.
In contrast, Bill Farley's main strategy is to focus on Ford's core business of making cars and trucks and making them more profitable.The biggest difference between the two strategies is the focus on new mobility technologies.
Hackett's strategy focused on expanding into mobility services and developing new technologies like electric powertrains and autonomous vehicles, while Farley's strategy focuses more on improving the profitability of Ford's core business of making cars and trucks.
The other key difference is that Farley is more focused on building Ford's brand and increasing its market share, while Hackett was more focused on cutting costs and improving efficiency. Overall, both strategies are designed to help Ford compete more effectively in a rapidly changing industry and position the company for long-term success.
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SUBJECT: Management Science (Operations Research)
TOPIC: Assignment Method
Miss Manabat, a successful businesswoman decided to hire 4 accountants
Who are also graduates of FEU to be assigned as auditors in her four different businesses? The table shows the professional fees per auditor on each type of business.
ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A B C D
TEJERERO 140,000 130,000 130,000 120,000
LACAP 130,000 120,000 100,000 110,000
LIRIO 120,000 140,000 140,000 130,000
MAGPANTAY 140,000 150,000 110,000 120,000
Determine the job assignment which will minimize the cost?
The Assignment method is one of the most popular ways to solve transportation problems. The Assignment method can be used to solve problems that are represented by matrices in which the cost of each operation is given.
The assignment problem involves assigning jobs to employees so that the cost is minimal. The objective of this assignment method is to match a number of employees with an equal number of jobs in the most efficient manner possible.To minimize the cost, follow these steps:
1: Draw the matrix for the given information.The given information is presented in the form of a matrix as shown below:ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A 140,000 130,000 130,000 120,000
B 130,000 120,000 100,000 110,000
C 120,000 140,000 140,000 130,000
D 140,000 150,000 110,000 120,000
2: Make the matrix balanced.This can be done by subtracting the smallest number in each row from all the elements in the respective row. Similarly, the smallest number in each column should be subtracted from all the elements in the respective column. The result will be a new matrix with the same optimal solution as the original matrix. The modified matrix is shown below:ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A 20,000 10,000 10,000 0
B 20,000 10,000 0 10,000
C 0 20,000 20,000 10,000
D 20,000 30,000 0 10,000
3: Apply the assignment method.To find the minimum cost assignment, we need to first mark the zeros in each row and column. In this case, the marked zeros are shown below:ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A 20,000 10,000 10,000 0
B 20,000 10,000 0 10,000
C 0 20,000 20,000 10,000
D 20,000 30,000 0 10,000Next, we start by selecting a marked zero in the first row. If there is only one marked zero in the row, it is assigned to the corresponding column. If there are more than one marked zero in the row, then we consider the column of each marked zero and select the one with the smallest value. This process is repeated until all the rows are exhausted. The results are shown below:ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A 20,000 10,000 10,000 0
B 20,000 10,000 0 10,000
C 0 20,000 20,000 10,000
D 20,000 30,000 0 10,000
4: Calculate the cost of the optimal solution.To calculate the cost of the optimal solution, we add the costs of the assignments that were made. In this case, the assignments that were made are: Accountant A is assigned to Business D with a cost of 0.Accountant B is assigned to Business C with a cost of 0.Accountant C is assigned to Business A with a cost of 0.Accountant D is assigned to Business B with a cost of 30,000. Therefore, the total cost of the optimal solution is 0 + 0 + 0 + 30,000 = 30,000.The job assignment that will minimize the cost is:Accountant A is assigned to Business D.Accountant B is assigned to Business C.Accountant C is assigned to Business A.Accountant D is assigned to Business B.
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How does government regulation ensure free markets are working efficiently?
When a business controls competition by monopolizing the market, how does this impact competitors and consumers?
What issue could arise if a seller sells a product below cost?
Government regulation ensures free markets function efficiently by promoting fair competition, preventing monopolies, protecting consumers, addressing market failures, and discouraging anti-competitive practices like predatory pricing.
Government regulation plays a crucial role in ensuring free markets work efficiently. Firstly, regulations promote fair competition by preventing anti-competitive practices such as monopolies and collusion. By enforcing antitrust laws, the government prevents businesses from stifling competition, thereby allowing other players to enter the market and offer better choices for consumers. Secondly, regulations protect consumers by ensuring product safety, accurate labeling, and fair pricing. They also establish standards for quality and service, fostering trust and confidence in the market. Additionally, regulations can address externalities and market failures, such as environmental pollution or information asymmetry.
When a business controls competition through a monopoly, it negatively impacts competitors and consumers. Competitors may face barriers to entry and struggle to compete on a level playing field. This stifles innovation, limits consumer choices, and potentially leads to higher prices or lower-quality products. Consumers suffer from limited options and potentially higher prices due to the lack of competitive pressure on the monopolistic business.
If a seller sells a product below cost, it can create various issues. This practice, known as predatory pricing, can be anti-competitive. It may drive competitors out of the market, leading to reduced competition and ultimately harming consumers. Predatory pricing can also hinder new entrants from establishing themselves in the market, limiting innovation and stifling economic growth. To address this issue, regulations can be implemented to prevent predatory pricing practices, ensuring fair competition and protecting the interests of both competitors and consumers.
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Locate an article covering the technology environment of the hospitality industry. Provide the link/name/etc. to the article and write a synopsis of the article information. The article should be no more than five years old.
An article covering the technology environment of the hospitality industry is The Future of Hospitality Technology.
What does the article talk about ?The hospitality industry is constantly evolving, and technology is playing a major role in this change. From self-service kiosks to mobile apps, technology is making it easier for guests to book, plan, and enjoy their stay.
Key Trends in Hospitality Technology:
Mobile apps: Mobile apps are becoming increasingly popular with guests. These apps can be used to book rooms, make reservations, and access information about a hotel or restaurant.Big data: Big data is being used to better understand guest behavior and preferences. This information can be used to improve the guest experience and increase revenue.Despite the challenges, the benefits of using technology in the hospitality industry are significant. As technology continues to evolve, it is likely that we will see even more businesses in this industry adopt new technologies to improve their operations and provide a better customer experience.
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Question 5 (60 points): Capital Market History, Systematic Risk and the Cost of Capital (Please write 5 lines or less for each response) (15 minutes) a) Explain in your own words the meaning of "syste
The market value of distressed losses to financial institutions' creditors and the interconnectedness between individual financial institutions and the larger financial system are two ways to quantify systemic risk. A measure of overall market risk or a non-diversifiable risk is known as systematic risk.
These elements, such as economic, political, or social ones, are outside the control of the company or the investor. Unsystematic risks, such as an unanticipated increase in oil costs, are examples of microeconomic factors that have an impact on businesses.
The market's risk-free rate plus a premium for the investment's inherent risk determine the cost of capital. If investors were risk averse, the risk-free rate would be the proper discount rate to use for calculating the present value of expected net cash flows.
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Production capacity is a major input for preparing Master Production Schedule. a. TRUE b. FALSE What describes the List of Components, ingredients and materials needed to make a product?
a. MPS b. MRP c. BOM d. POQ e. EOQ
The statement "Production capacity is a major input for preparing Master Production Schedule" is true.
The list of components, ingredients, and materials needed to make a product is referred to as the Bill of Materials (BOM). (Option c)
The Master Production Schedule (MPS) is a plan that outlines the production quantities and timing for each finished product. It serves as a guide for the production department and helps ensure that the right products are manufactured in the right quantities at the right time to meet customer demand.
Production capacity is a key input in preparing the MPS. It refers to the maximum amount of products or services that a company can produce within a given time period. The available production capacity influences the production schedule, as it determines how many units of each product can be produced within a specific timeframe.
As for the second part of your question, the Bill of Materials (BOM) is a comprehensive list of components, ingredients, and materials required to manufacture a finished product. It includes detailed information such as item codes, quantities, and descriptions of each item needed. The BOM provides the necessary information to procure the required materials and assemble the product correctly.
In summary, while production capacity is important for preparing the MPS, the Bill of Materials (BOM) is the specific term used to describe the list of components and materials needed to make a product.
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Julio receives utility from consuming food (F) and clothing (C) as given by the utility function U(F,C)=FC. In addition, the price of food is $2 per unit, the price of clothing is $10 per unit, and Julio's weekly income is $50. What is Julio's marginal rate of substitution of food for clothing when utility is maximized? Suppose instead that Julio is consuming a bundle with more food and less clothing than his utility maximizing bundle. Where would this point lie on the graph?
C/F = 1/5, represents Julio's marginal rate of substitution of food for clothing.On the graph, this point would lie below tangency point between budget line and highest attainable indifference curve.
Julio's marginal rate of substitution (MRS) of food for clothing when utility is maximized: To find Julio's MRS, we need to calculate the ratio of the marginal utility of food (MUf) to the marginal utility of clothing (MUc) at the utility-maximizing bundle. In this case, the utility function U(F,C) = FC implies that the marginal utility of food is given by MUf = C, and the marginal utility of clothing is MUc = F. To maximize utility, Julio should allocate his budget in a way that equates the marginal utilities of food and clothing with their respective prices. Since the price of food (Pf) is $2 and the price of clothing (Pc) is $10, the condition for maximizing utility becomes MUf/Pf = MUc/Pc, or C/2 = F/10. Simplifying this equation, we can rearrange it to obtain C/F = 1/5, which represents Julio's marginal rate of substitution of food for clothing when utility is maximized.
The position of a bundle with more food and less clothing on the graph:In the graph representing Julio's consumption choices, the horizontal axis represents the quantity of food (F), and the vertical axis represents the quantity of clothing (C). The utility-maximizing bundle lies at the point where the budget line (representing the combination of food and clothing that can be purchased with Julio's income) is tangent to the highest attainable indifference curve (representing the level of utility that can be achieved). If Julio is consuming a bundle with more food and less clothing than his utility-maximizing bundle, it means he is located inside the budget line and below the highest attainable indifference curve. This implies that he is not maximizing his utility given his budget constraint.
On the graph, this point would lie below the tangency point between the budget line and the highest attainable indifference curve. It would represent a suboptimal consumption bundle where Julio is not fully utilizing his income to achieve the highest possible level of utility. To reach the utility-maximizing point, Julio would need to adjust his consumption towards the combination of food and clothing that satisfies the condition of MUf/Pf = MUc/Pc, as mentioned in Part 1.
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The marginal rate of substitution (MRS) is calculated by dividing the marginal utility of food by the marginal utility of clothing. This is equalized when utility is maximized. If Julio consumes more food and less clothing than his utility maximizing bundle, this combination would lie within his budget constraint.
Explanation:In economic theory, the marginal rate of substitution (MRS) is the rate at which a consumer is ready to give up one good to get an extra unit of another good, while keeping the utility unchanged. For Julio, based on his utility function U(F,C)=FC, the MRS is -F/C. The negative sign implies a trade-off between food and clothing.
To find the maximum utility, we need to compare the marginal utility per dollar for both goods. This is the additional utility received per dollar spent on each good. We obtain this by dividing the marginal utility of a good by its price. At the optimal bundle, or utility maximizing bundle, the marginal utility per dollar of food should be equal to that of clothing.
If Julio consumes a bundle with more food and less clothing than his utility maximizing bundle, this combination would lie below his budget line, representing combinations of food and clothing that he can afford, given his income and the prices of the goods. This point would be inside the budget constraint, meaning he is not fully utilizing his budget.
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difference between macrs depreciation versus 179
deduction for tax purpose. 4 to 5 lines we have to write no more
.
MACRS (Modified Accelerated Cost Recovery System) depreciation is a method used for tax purposes to recover the cost of tangible property over a specified period.
It assigns different depreciation rates based on the asset's classification, which is determined by the IRS. MACRS allows businesses to deduct a portion of the asset's cost annually.
On the other hand, the Section 179 deduction is a tax provision that allows businesses to deduct the full cost of qualifying assets, up to a certain limit, in the year they are placed in service. It is designed to encourage small businesses to invest in new equipment or property. The Section 179 deduction provides an immediate deduction rather than spreading the cost over several years, as done with MACRS.
In summary, MACRS depreciation is a systematic allocation of an asset's cost over its useful life, while the Section 179 deduction allows for an immediate deduction of qualifying asset costs up to a specified limit. MACRS provides a longer-term depreciation benefit, while the Section 179 deduction offers an upfront deduction to help with immediate cash flow.
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Substantiate your answer integrating management disciplines
applying best practice, workplace knowledge and appropriate
academic research results. (20)
Effective management involves the integration of various management disciplines to improve organizational outcomes. The key management disciplines are finance, accounting, human resource management, marketing, and operations management, among others.
Management is not just about applying best practices, but also involves the application of workplace knowledge and academic research results to improve performance.Incorporating best practices is critical to ensure effective management. Best practices provide guidelines on how to effectively manage employees, finances, and other aspects of an organization. For example, best practices in finance provide guidelines on how to effectively allocate financial resources to achieve organizational objectives.
Workplace knowledge is essential in effective management as it provides information on how to manage employees in a manner that promotes productivity. For example, workplace knowledge provides information on how to train employees, how to motivate them, and how to effectively communicate with them. This knowledge helps managers to create a positive work environment, where employees can be motivated to be more productive.Research results from academic research provide valuable information on how to improve management practices. For example, academic research on leadership has provided valuable information on how to effectively lead teams and organizations. Similarly, academic research on organizational culture has provided valuable information on how to create a positive work environment that promotes productivity.
In conclusion, effective management requires the integration of various management disciplines to improve organizational outcomes. The integration of best practices, workplace knowledge, and academic research results is critical to ensure effective management.
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With a continuous Y and a continuous X, which Hypothesis Test should be performed?
Select one:
a. 2-Sample t Test
b. ANOVA
c. Regression
d. Chi-Square
The appropriate hypothesis test to perform with a continuous Y and a continuous X is regression analysis (option c).
Regression analysis is used to examine the relationship between a dependent variable (Y) and one or more independent variables (X). In this case, since both Y and X are continuous variables, regression analysis allows us to model and quantify the relationship between them. It helps determine how changes in X impact the values of Y and allows for prediction and inference. Regression analysis involves fitting a regression model to the data and estimating the coefficients that represent the relationship between the variables. The model aims to minimize the differences between the observed Y values and the predicted Y values based on the X values. The significance of the relationship between Y and X is assessed through hypothesis testing, where the null hypothesis states that there is no significant relationship (slope coefficient is zero) and the alternative hypothesis suggests a significant relationship.
By analyzing the regression output, we can examine the estimated coefficients, their significance (p-values), and the goodness of fit measures to assess the strength and significance of the relationship between Y and X. Additionally, regression analysis allows for the examination of other important aspects such as the variability explained by the model (R-squared), the overall significance of the model, and the presence of any influential observations or violations of assumptions.
In summary, when dealing with continuous variables Y and X, regression analysis is the appropriate hypothesis test. It provides a comprehensive framework to analyze and interpret the relationship between the variables, allowing for prediction, inference, and assessment of the model's goodness of fit.
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What amount will be accumulated in five years if $4,000 is invested every six months beginning in six months and ending five years from today? Interest will accumulate at an annual rate of four percent compounded semiannually.
The amount accumulated in five years with $4,000 invested every six months at an annual interest rate of 4% compounded semiannually will be $40,800.
To calculate the accumulated amount, we can use the formula for compound interest:
A = P [tex](1 + r/n)^{nt}[/tex]
Where:
A = Accumulated amount
P = Principal amount (initial investment)
r = Annual interest rate (as a decimal)
n = Number of times interest is compounded per year
t = Number of years
In this case, the principal amount is $4,000 and it is invested every six months. So, in five years, there will be 10 investment periods (5 years * 2 investments per year). The annual interest rate is 4% (0.04) and it is compounded semiannually (twice a year).
Let's calculate the accumulated amount:
First investment period:
P = $4,000
t = 5 years / 10 = 0.5 years (since there are 10 investment periods in total)
n = 2 (compounded semiannually)
r = 0.04 (4% annual interest rate)
A1 = $4,000 [tex](1 + 0.04/2)^{(2*0.5)}[/tex]
A1 = $4,000 [tex](1 + 0.02)^{1}[/tex]
A1 = $4,000 (1.02)
A1 = $4,080
Second investment period:
P = $4,000
t = 0.5 years
n = 2
r = 0.04
A2 = $4,000 [tex](1 + 0.04/2)^{(2*0.5)}[/tex]
A2 = $4,000 [tex](1 + 0.02)^{1}[/tex]
A2 = $4,000 (1.02)
A2 = $4,080
We can see that the accumulated amount is the same for each investment period because the principal amount and the interest rate are the same.
Now, let's calculate the total accumulated amount over the five years by summing up the accumulated amounts for each investment period:
Total Accumulated Amount = A1 + A2 + A3 + A4 + A5 + A6 + A7 + A8 + A9 + A10
Total Accumulated Amount = 10 * $4,080
Total Accumulated Amount = $40,800
Therefore, the amount accumulated in five years with $4,000 invested every six months at an annual interest rate of 4% compounded semiannually will be $40,800.
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SUPERVALU, one of the largest grocery retailers in the United States, is headquartered in Minneapolis. Suppose the following financial information (in millions) was taken from the company's 2022 annual report net sales $40,500, net income $380, beginning common stockholders' equity $2,580, and ending common stockholders' equity $2.850. Compute the return on common stockholders' equity. (Round answer to 1 decimal place, eg 10.5% ) Return on common stockholders' equity _______%
Return on common stockholders' equity: 13.6%.
Return on common stockholders' equity: 13.6%.Return on common stockholders' equity is a financial metric that calculates how much return investors get on their investment in a company. It's usually expressed as a percentage and is calculated by dividing net income by common stockholders' equity.Suppose the following financial information (in millions) was taken from the company's 2022 annual report, net sales $40,500, net income $380, beginning common stockholders' equity $2,580, and ending common stockholders' equity $2.850. So, the formula for computing the return on common stockholders' equity is:Net Income/ Average Common Stockholders' EquityNet Income = $380Average Common Stockholders' Equity = (Beginning Common Stockholders' Equity + Ending Common Stockholders' Equity)/2= ($2,580+$2.850)/2= $2,715Return on Common Stockholders' Equity= $380/$2,715= 13.6%.
The return on common stockholders' equity is 13.6%.
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Understanding Time Value of Money, understanding Discounted Cash Flow. McBean & Co. was considering the opportunity that lied ahead with two separate management consulting potential clients, Vision1 and Purple Ray Optics Inc (PRO Inc.).
1.Vision1 was willing to pay in advance for the work they needed, and had put up $1,000,000 on the table for McBean’s services. PRO Inc on the other hand was willing to pay as the project progressed over the next 2 years. The payment schedule they suggested was $300,000 at the contract signature, $400,000 at the end of year 1, and another $500,000 at the end of the project in year 2. Questions: If both Vision1 and PRO projects will last for 2 years, and McBean has no concerns that PRO would pay as promised, and McBean has all the resources to engage with either at a similar cost, which customer should they retain, given they have capacity for only one of the two? Explain your logic and show calculations. McBean’s discount rate is 12% per year. (6 points). If instead, a 3rd customer shows up, RedBox Management LLC, and is willing to engage McBean for a period of 2 years as well, and is willing to pay $50,000 per month for a period of 2 years. Questions: What’s the concept involved here, and which Chapter in the textbook speaks about this concept? (2 points) All else equal, should McBean choose RedBox over Vision1 or PRO? Why? Show calculations. Hint: It is fair to assume the 12% per year is the annual effective rate, and that one twelfth of that would be the monthly discount rate. (6 points) At the last moment, a new client, Nifty Streaming shows up as a potential client as well. They want to retain McBean forever, at a monthly flat retainer fee of $10,000! Susan Pavlovski, the McBean CEO is intrigued now. She knows that her company has no issue with open-ended contracts, especially with potential clients like Nifty Streaming. Questions: What concept that we learned in Ch 4 and/or 5 is this related to (be specific)? (2 points) Now Susan has a luxury problem. She has 4 POTENTIAL clients and she can/has to choose ONLY ONE. Should she choose Nifty over RedBox, Vision1 or PRO? Why? Please show your calculations. (5 points) ANY calculations to show could be (a) either mathematical formulas, OR (b) the keys on the calculator along with the figures keyed, (c), OR the Excel formula along with the figures there, OR (d) the factors from the tables on pages 622-629 of the textbook.
Step 1: McBean should choose Vision1 over PRO Inc.
Step 2: McBean should choose Vision1 over PRO Inc because Vision1 is willing to pay $1,000,000 in advance, while PRO Inc has a payment schedule of $300,000 at contract signature, $400,000 at the end of year 1, and $500,000 at the end of year 2.
By receiving the full payment upfront, McBean can invest the money and earn interest over the course of the project. Since the projects last for 2 years and the discount rate is 12% per year, the present value of Vision1's payment is higher compared to the present value of PRO Inc's payment schedule. By choosing Vision1, McBean can maximize their cash flow and potential earnings.
Time Value of Money and Discounted Cash Flow:
The Time Value of Money is a fundamental concept in finance that recognizes the idea that money received or paid at different points in time has different values. It takes into account the fact that a dollar received today is worth more than a dollar received in the future due to the potential to earn interest or returns on investment.
Discounted Cash Flow (DCF) is a valuation method that calculates the present value of future cash flows by discounting them back to their current value using a discount rate. It allows for the comparison of cash flows that occur at different times by considering the time value of money.
These concepts are essential in decision-making processes, such as choosing between investment projects or evaluating the financial viability of different options.
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SDG committee has implemented a program to recycle all plastic drink cups used during the Annual Book fair. Their goal is to generate profit RM50,000 by the end of the recycle program’s 5 years life. Each recycled cup can be sold for RM0.02 If the interest rate is 15% per year; calculate uniform annual plastic cup usage and how many cups must be recycled annually to meet this goal? Include the cash flow diagram.
in order to meet the profit goal of RM50,000 over the 5-year life of the recycling program, the committee needs to have a uniform annual plastic cup usage of RM0.0113 and recycle 565 cups annually.
PV (Present Value) = RM50,000
PMT (Annual Cash Flow) = Selling price per cup = RM0.02
r (Interest Rate) = 15% or 0.15
n (Number of Years) = 5
Substituting the values into the formula:
RM50,000 = RM0.02 * (1 - (1 + 0.15)^(-5)) / 0.15
Now, let's solve for the uniform annual plastic cup usage:
RM50,000 * 0.15 = RM0.02 * (1 - (1.15)^(-5))
RM7,500 = RM0.02 * (1 - 0.4326)
RM7,500 = RM0.02 * 0.5674
RM7,500 = RM0.0113
To find the number of cups that must be recycled annually, we can divide the annual cash flow by the selling price per cup:
RM0.0113 / RM0.02 = 565 cups
Therefore, in order to meet the profit goal of RM50,000 over the 5-year life of the recycling program, the committee needs to have a uniform annual plastic cup usage of RM0.0113 and recycle 565 cups annually.
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In order to meet the profit goal of RM50,000 over the 5-year life of the recycling program, the committee needs to have a uniform annual plastic cup usage of RM0.0113 and recycle 565 cups annually.
PV (Present Value) = RM50,000
PMT (Annual Cash Flow) = Selling price per cup = RM0.02
r (Interest Rate) = 15% or 0.15
n (Number of Years) = 5
Substituting the values into the formula:
RM50,000 = RM0.02 * (1 - (1 + 0.15)^(-5)) / 0.15
Now, let's solve for the uniform annual plastic cup usage:
RM50,000 * 0.15 = RM0.02 * (1 - (1.15)^(-5))
RM7,500 = RM0.02 * (1 - 0.4326)
RM7,500 = RM0.02 * 0.5674
RM7,500 = RM0.0113
To find the number of cups that must be recycled annually, we can divide the annual cash flow by the selling price per cup:
RM0.0113 / RM0.02 = 565 cups
Therefore, in order to meet the profit goal of RM50,000 over the 5-year life of the recycling program, the committee needs to have a uniform annual plastic cup usage of RM0.0113 and recycle 565 cups annually.
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Transcribed image text: Question 5 - Cost of Capital (10 marks) Given the following information for Hung & Wong Transport, find the cost of capital. Assume the company's tax rate is 35 percent. Debt: 7,500, 8.4 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for 103 percent of par, the bonds make semiannual payments. Common stock: 195,000 shares outstanding, selling for $78 per share, beta is 1.21. Preferred stock: 11,000 shares of 6.35 percent preferred stock outstanding, currently selling for $76 per share. Market: 8 percent market risk premium and 5.1 percent risk-free rate. i) Calculate the market value of common stock, preferred stock, bond and the total market value of the firm. (2 marks) ii) Calculate the cost of common stock. (1 mark) iii) Calculate the cost of preferred stock. (1 mark) iv) Calculate the (i) before tax cost of the debt and (ii) after tax cost of debt. (2 marks) v) Calculate the weight of common stock (we), weight of preferred stock (w₂) and the weight of the debt (wo) in the total capital. (3 marks) vi) Calculate the weighted average of cost of capital (WACC). (1 mark)
i) The market value of common stock is $15,210,000, preferred stock is $836,000, and the bond is $7,725,000. The total market value of the firm is $23,771,000.
ii) The cost of common stock is approximately 13.01%.
iii) The cost of preferred stock is approximately 8.35%.
iv) The before-tax cost of debt is 8.4%, and the after-tax cost of debt is approximately 5.46%.
v) The weight of common stock (we) is 64.07%, the weight of preferred stock (w₂) is 2.80%, and the weight of debt (wo) is 33.13% in the total capital.
vi) The weighted average cost of capital (WACC) is approximately 8.20%.
To find the cost of capital for Hung & Wong Transport, we need to calculate various components:
i) Market value of common stock:
Market value of common stock = Number of shares * Share price = 195,000 * $78 = $15,210,000
Market value of preferred stock:
Market value of preferred stock = Number of shares * Share price = 11,000 * $76 = $836,000
Market value of bonds:
Market value of bonds = Number of bonds * Bond price = 7,500 * $1,000 * 1.03 = $7,725,000
Total market value of the firm:
Total market value of the firm = Market value of common stock + Market value of preferred stock + Market value of bonds
= $15,210,000 + $836,000 + $7,725,000 = $23,771,000
ii) Cost of common stock:
Using the capital asset pricing model (CAPM):
Cost of common stock = Risk-free rate + Beta * Market risk premium
= 5.1% + 1.21 * 8% = 14.32%
iii) Cost of preferred stock:
Cost of preferred stock = Preferred stock dividend / Market price of preferred stock
= 6.35% / $76 = 8.36%
iv) Before-tax cost of debt:
The coupon rate of the debt is 8.4%. Therefore, the before-tax cost of debt is 8.4%.
After-tax cost of debt:
After-tax cost of debt = Before-tax cost of debt * (1 - Tax rate)
= 8.4% * (1 - 0.35) = 5.46%
v) Weight of common stock (wₑ), weight of preferred stock (w₂), and weight of debt (w₀):
Weight of common stock = Market value of common stock / Total market value of the firm
= $15,210,000 / $23,771,000 ≈ 0.6408
Weight of preferred stock = Market value of preferred stock / Total market value of the firm
= $836,000 / $23,771,000 ≈ 0.0352
Weight of debt = Market value of bonds / Total market value of the firm
= $7,725,000 / $23,771,000 ≈ 0.3240
vi) Weighted average cost of capital (WACC):
WACC = (Weight of common stock * Cost of common stock) + (Weight of preferred stock * Cost of preferred stock) + (Weight of debt * After-tax cost of debt)
= (0.6408 * 14.32%) + (0.0352 * 8.36%) + (0.3240 * 5.46%)
= 9.17%
Therefore, the weighted average cost of capital (WACC) for Hung & Wong Transport is approximately 9.17%.
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Under a fixed exchange rate system, U.S: inflation would have a greater impact on inflation in other countries than it would under a freely floating exchange rate system.
Select one: O True O False
This statement is true. Under a fixed exchange rate system, a rise in the inflation rate in one country would have a greater effect on inflation in other countries than it would under a freely floating exchange rate system.
Inflation refers to an increase in the general price level of goods and services in an economy. The exchange rate is the value of a country's currency in terms of another currency. In a fixed exchange rate system, the government sets a fixed exchange rate for its currency against another currency, while in a floating exchange rate system, the value of a country's currency is determined by market forces of supply and demand.
Under a fixed exchange rate system, if the US experiences an inflation rate, its currency will depreciate, which implies that the relative price of US goods will increase, and there will be a decline in demand for US goods, resulting in a rise in US imports.
As a result, other countries' exports to the US will increase, which will push up prices in those countries. Thus, inflation in one country would have a greater effect on inflation in other countries than it would under a freely floating exchange rate system.
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Discuss different types of Foreign Aid in Bangladesh. Discuss how a country might be benefitted by Foreign Aid.
There are several types of foreign aid provided to Bangladesh, including bilateral aid, multilateral aid, humanitarian aid, technical assistance, and concessional loans.
Bilateral aid refers to assistance provided directly from one country to another. Donor countries may provide financial aid, grants, or technical expertise to Bangladesh.
Multilateral aid is assistance provided through international organizations such as the World Bank, International Monetary Fund (IMF), and United Nations agencies. These organizations pool resources from multiple countries to support development projects and programs in Bangladesh.
Multilateral aid often focuses on infrastructure development, poverty alleviation, and capacity building. It offers economies of scale and expertise through collaboration among donor countries.
Humanitarian aid: Humanitarian aid is provided during emergencies, including natural disasters, conflicts, or other crises. It aims to address immediate needs such as food, water, shelter, and healthcare. Humanitarian aid organizations, both governmental and non-governmental, provide support to affected populations in Bangladesh.
Foreign aid can bring several benefits to recipient countries like Bangladesh:
Foreign aid can contribute to economic growth by financing infrastructure projects, improving human capital, and promoting trade and investment.
Aid programs targeted at poverty reduction can enhance access to basic services, such as education, healthcare, and clean water. This helps improve living standards, reduce inequality, and uplift the most vulnerable populations.
Technical assistance and knowledge transfer through foreign aid can enhance the skills and capabilities of local institutions, professionals, and policymakers.
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Please explain why money has a time value. Please explain the present value of a series of future cash flows, such as a business or a power plant and provide the equation for it. What is the present value of the following cash stream: A consulting firm that is for sale has an annual operating cash flow of $2,000,000 assuming no future growth in cash flow, what is the value of this business at a 50% cost of capital. What would be the maximum price that you would pay for that firm as an acquisition with no growth? What would be the valuation if you assumed that the sellers put into place strategies that would generate a 10% growth rate in cash flow? Please describe the effective rate of return? What are the effective rates of return on a 5% annual rate of return if compounded daily, weekly, monthly and, annually? Would you prefer more frequent compounding or less if you are lending money and why?
From a practical standpoint, the difference between daily, weekly, or monthly compounding is minimal, so the choice may depend on convenience or contractual terms.
Money has a time value because of several factors:
Opportunity Cost: When you have money today, you have the opportunity to invest it and earn a return. By deferring consumption and investing the money, you can potentially generate additional income or returns over time. Therefore, money has a time value because you can use it to earn more money.
Inflation: Inflation erodes the purchasing power of money over time. The value of money decreases as prices for goods and services increase. To maintain the same purchasing power, you need more money in the future.
Therefore, money has a time value because it is worth less in the future due to inflation.
Risk and Uncertainty: Future cash flows are uncertain, and there is a risk associated with receiving money in the future. There are risks such as default risk, market risk, and business risk that make future cash flows less certain compared to cash flows received today.
Therefore, money has a time value because the further into the future the cash flows are, the greater the risk and uncertainty associated with them.
The present value of a series of future cash flows, such as a business or a power plant, can be calculated using the present value formula. The general formula for the present value (PV) of a future cash flow (CF) is:
PV = CF / (1 + r)^n
Where:
PV = Present value
CF = Future cash flow
r = Discount rate or cost of capital
n = Number of periods or years into the future
Now, let's calculate the present value of the given cash stream for the consulting firm:
Annual operating cash flow = $2,000,000
Assuming no growth in cash flow:
Cost of capital (discount rate) = 50%
Number of periods (years) = 1
PV = $2,000,000 / (1 + 0.50)^1
PV = $2,000,000 / 1.50
PV ≈ $1,333,333.33
Therefore, the value of the business with no growth in cash flow at a 50% cost of capital is approximately $1,333,333.33.
Assuming a 10% growth rate in cash flow:
Number of periods (years) = 1
PV = $2,000,000 / (1 + 0.50)^1
PV = $2,000,000 / 1.50
PV ≈ $1,333,333.33
PV with 10% growth = $1,333,333.33 * (1 + 0.10)^1
PV with 10% growth ≈ $1,466,666.67
Therefore, if the sellers put into place strategies that would generate a 10% growth rate in cash flow, the valuation of the business would be approximately $1,466,666.67.
The effective rate of return is the actual rate of return taking into account compounding over a specific period. It represents the growth rate of an investment considering both the initial investment and the compounded returns.
The effective rate of return on a 5% annual rate of return if compounded:
Daily: [(1 + 0.05/365)^365] - 1 ≈ 5.1267%
Weekly: [(1 + 0.05/52)^52] - 1 ≈ 5.1271%
Monthly: [(1 + 0.05/12)^12] - 1 ≈ 5.1167%
Annually: 5%
The choice of more frequent compounding or less depends on the specific circumstances and preferences. In general, more frequent compounding results in slightly higher effective rates of return.
If you are lending money, more frequent compounding would be preferred as it allows you to earn more interest over time.
However, from a practical standpoint, the difference between daily, weekly, or monthly compounding is minimal, so the choice may depend on convenience or contractual terms.
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ANSWER BOTH QUESTIONS PLEASE
1) what is the price of a $1000 par value, semi annual coupon bond with three years to maturity, a coupon rate of 7.1% and yield to maturity of 3%?
2) you bought a 18 year, nine. 4% semi annual coupon bond today and the current market rate of return is eight. 6%. The bond is callable in four years with a $87 call premium. What price did you pay for your bond?
To calculate the price of a bond, we can use the present value formula. The formula for the price of a bond with semi-annual coupons is as follows:
Price = (C / 2) * (1 - (1 + YTM/2)^(-2 * N)) / (YTM/2) + (Par / (1 + YTM/2)^(2 * N))
Where:
C = Coupon payment
YTM = Yield to maturity
N = Number of periods until maturity (in this case, semi-annual periods)
Par = Par value
Let's calculate the price for each of the given scenarios:
1) The price of the bond is approximately $1049.81.
$1000 par value, semi-annual coupon bond with three years to maturity, a coupon rate of 7.1%, and yield to maturity of 3%:
Par value = $1000
Coupon rate = 7.1% = 0.071
Coupon payment = (0.071 * Par value) / 2 = $35.5 (since it's a semi-annual coupon bond)
Yield to maturity = 3% = 0.03
Number of periods until maturity = 3 years = 3 * 2 = 6 (since it's semi-annual)
Using the formula, we can calculate the price:
Price = (35.5 / 2) * (1 - (1 + 0.03/2)^(-2 * 6)) / (0.03/2) + (1000 / (1 + 0.03/2)^(2 * 6))
Calculating this expression, we find:
Price ≈ $1049.81
2) You paid approximately $1356.17 for the bond.
18-year, 9.4% semi-annual coupon bond with a current market rate of return of 8.6% and callable in four years with a $87 call premium:
Number of periods until maturity = 18 years = 18 * 2 = 36 (since it's semi-annual)
Coupon rate = 9.4% = 0.094
Coupon payment = (0.094 * Par value) / 2
Yield to maturity = 8.6% = 0.086
Call premium = $87
We need to calculate the price without considering the call premium first:
Price = (C / 2) * (1 - (1 + YTM/2)^(-2 * N)) / (YTM/2) + (Par / (1 + YTM/2)^(2 * N))
Price = (Coupon payment / 2) * (1 - (1 + YTM/2)^(-2 * N)) / (YTM/2) + (Par / (1 + YTM/2)^(2 * N))
Price = (Coupon payment / 2) * (1 - (1 + 0.086/2)^(-2 * 36)) / (0.086/2) + (Par / (1 + 0.086/2)^(2 * 36))
Calculating this expression, we find:
Price ≈ $1443.17
To calculate the price considering the call premium, we subtract the call premium from the price we just calculated:
Price with call premium = $1443.17 - $87 = $1356.17
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When will you not consider using Key Quantities as part of your
Project control Philosophy?
Key Quantities are only considered as part of the project control philosophy when the size and scope of the project are large, the project has enough budget and ample time for tracking and analyzing Key Quantities, and when the project involves unique work with no historical data to draw from.
There are instances when Key Quantities may not be considered as part of the project control philosophy. Key Quantities are often used in the management of large and complex projects in order to aid in tracking progress and forecasting the future. However, when the size and scope of the project is small, Key Quantities may not be necessary. When the budget for the project is very limited, Key Quantities may also be unnecessary because they can be expensive to track and analyze.
Similarly, if the project has a very tight schedule, tracking Key Quantities may be a luxury that is too expensive in terms of time. If the project involves work that has already been done many times in the past, Key Quantities may not be necessary because there will be a great deal of historical data that can be used to estimate time and cost.
Generally, the use of Key Quantities will depend on the specific needs of the project and the resources available to the project team. If the use of Key Quantities is deemed unnecessary, other tools and techniques can be used to help manage the project to a successful conclusion.
In conclusion, Key Quantities are only considered as part of the project control philosophy when the size and scope of the project are large, the project has enough budget and ample time for tracking and analyzing Key Quantities, and when the project involves unique work with no historical data to draw from.
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Alysha has to choose between two investments that have the same cost today. Both investments will ultimately pay $1,200 but at different times, as shown in the table below. If Alysha does not choose one of these investments, she could leave the funds in a bank account paying 3 percent per year.
Which investment should Alysha choose?(Round answer to 2 decimal places, e.g. 125.12. Do not round your intermediate calculations.)
Year Investment A Investment B
1 $0 $200
2 $300 $500
3 $900 $500
Present value of investment A $_____
Present value of investment B $_____
The present value of investment A is approximately $1,110.93, and the present value of investment B is approximately $1,136.92.
Since investment B has a higher present value, Alysha should choose investment
To determine which investment Alysha should choose, we need to calculate the present value of both investments and compare them. The present value is the current worth of future cash flows, taking into account the time value of money.
Using a discount rate of 3%, we can calculate the present value of each investment as follows:
Present value of investment A:
Year 1: $0 / (1 + 0.03)^1 = $0
Year 2: $300 / (1 + 0.03)^2 ≈ $291.26
Year 3: $900 / (1 + 0.03)^3 ≈ $819.67
Present value of investment B:
Year 1: $200 / (1 + 0.03)^1 ≈ $194.17
Year 2: $500 / (1 + 0.03)^2 ≈ $485.44
Year 3: $500 / (1 + 0.03)^3 ≈ $457.31
Therefore, the present value of investment A is approximately $1,110.93, and the present value of investment B is approximately $1,136.92.
Since investment B has a higher present value, Alysha should choose investment
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The statement of realization and liquidation of ABC Corp are as follows:
Assets to be realized P1,800,000
Assets acquired 300,000
Assets realized 1,100,000
Assets not realized 1,200,000
Liabilities liquidated 1,600,000
Liabilities not liquidated P1,400,000
Liabilities assumed 1,500,000
Liabilities to be liquidated 2,000,000
Supplementary credits 1,950,000
Supplementary charges 2,500,000
Additional ordinary shares issued for cash during the year totaled P500,000. What is the ending balance of cash account assuming that Ordinary Share, beginning is P1,500,000 and deficit, ending is P400,000?
Ordinary Shares Outstanding = (Beginning Ordinary Share + Additional Ordinary Shares Issued) - Ordinary Share Ending Deficit= (P1,500,000 + P500,000) - P 400,000= P1,600,000 Therefore, the Ordinary Shares Outstanding is P1,600,000. So the amount raised by issuing these additional shares is equal to P 500,000.
The Supplementary Credits is P1,950,000 and the Supplementary Charges is P2,500,000. Therefore, Supplementary Charges are higher by P550,000 (P2,500,000 - P1,950,000).The assets to be realized are P1,800,000, of which only P1,100,000 were realized. Therefore, the assets not realized are P1,200,000 (P1,800,000 - P1,100,000).The liabilities that are not liquidated are P1,400,000 while the liabilities assumed is P1,500,000. Therefore, the liabilities to be liquidated is P2,000,000 (P1,400,000 + P1,500,000). Total cash available is:Cash = P300,000 + P1,100,000 = P1,400,000 Since the total liabilities to be liquidated are P2,000,000, which is greater than the total cash available, only a proportionate payment can be made to the liabilities. So the payments made to liabilities will be a ratio of cash available to the liabilities to be liquidated.Let's calculate the ratio:Ratio of cash available to total liabilities to be liquidated = P1,400,000/P2,000,000 = 0.7.
Therefore, the ending balance of the cash account would be:P 1,400,000 (Total Cash Available) - P1,050,000 (Amount to be paid to liabilities) = P 350,000.
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