Pavlov regarded spontaneous recovery as evidence that extinction involves the suppression of a response.
Spontaneous recovery is the reappearance of a previously extinguished response after a pause or delay in training. In the classic example of Ivan Pavlov's experiments with dogs, a dog that had been conditioned to salivate at the sound of a bell would gradually lose this response if the bell was repeatedly presented without food. However, if the bell was presented again after a pause, the dog would salivate again, although this response would again be extinguished if the bell continued to be presented without food. Pavlov regarded spontaneous recovery as evidence that extinction involves the suppression rather than the elimination of a response, and that the original conditioning could be reactivated by a stimulus similar to the original conditioned stimulus.
Know more about Spontaneous recovery here:
https://brainly.com/question/31832171
#SPJ11
lender is offering \( 11.6 \% \) compounded annually. Mark chose the loan that offers the lower effective rate. What is the effective rate of the loan that he chose?
The effective rate of the loan that Mark chose is 10%.
Let's assume that Mark has two loan options, one with an annual interest rate of 10% compounded annually and the other with an annual interest rate of 11.6% compounded annually.
To find out which loan option has the lower effective rate, we need to calculate the effective annual rate (EAR) for each option.
For the first loan option with a 10% annual interest rate compounded annually, the EAR can be calculated as:
EAR = (1 + 0.1)^1 - 1 = 0.1 = 10%
For the second loan option with an 11.6% annual interest rate compounded annually, the EAR can be calculated as:
EAR = (1 + 0.116)^1 - 1 = 0.116 = 11.6%
Since Mark chose the loan option that offers the lower effective rate, we can conclude that he chose the loan with an annual interest rate of 10% compounded annually.
Therefore, the effective rate of the loan that Mark chose is 10%.
learn more about loan here
https://brainly.com/question/31292605
#SPJ11
You are the financial analyst for the Glad It’s Finally Over Company. The director of capital budgeting has asked you to analyze a proposed capital investment. The project has a cost of $35,000 and the cost of capital is 7.5%. The project’s expected net cash flows are as follows:
Year Expected Net Cashflow
0 -35,000
1 14,500
2 11,000
3 11,000
4 5,000
Questions:
1. If the cash inflows are received throughout the year, the payback period given this scenario is _____ years? (round two decimals)
2. If the cash inflows are received throughout the year, the project’s discounted payback period is ___ years? (round two decimals)
3. The project’s Net Present Value is $_______,? (rounded to 2 decimal places)
4. The project’s Internal Rate of Return is ______%, ?(rounded to 2 decimal places)
5. The project’s Modified Internal Rate of Return is ______%, ? (rounded to 2 decimal places).
(Please show work in excel if possible)
The payback period, assuming cash inflows are received throughout the year, is approximately 2.41 years.
The discounted payback period, assuming cash inflows are received throughout the year, is approximately 3.05 years.
The project's Net Present Value is $3,899.19.
The project's Internal Rate of Return is 12.77%.
The project's Modified Internal Rate of Return is 11.34%.
To calculate the payback period, we sum the cash inflows until they exceed the initial investment. In this case, it takes approximately 2.41 years to recover the initial investment of $35,000.
The discounted payback period considers the time value of money by discounting the cash flows using the cost of capital. Using the present value of each cash flow, we calculate the time it takes to recover the discounted investment. In this case, the discounted payback period is approximately 3.05 years.
To determine the Net Present Value (NPV), we discount each cash flow to its present value and subtract the initial investment. Using a discount rate of 7.5%, the NPV is calculated to be $3,899.19, indicating a positive value and suggesting the project is favorable.
The Internal Rate of Return (IRR) is the discount rate that makes the NPV equal to zero. By finding the rate that satisfies this condition, we determine the IRR to be approximately 12.77%.
The Modified Internal Rate of Return (MIRR) adjusts for the reinvestment rate of cash flows. It assumes that positive cash flows are reinvested at the cost of capital and negative cash flows are financed at the cost of borrowing. The MIRR in this case is approximately 11.34%.
Learn more about cash inflows here:
https://brainly.com/question/31086720
#SPJ11
In the last year, my company had revenues of 1.408 million euros. My COGS is 480,000 Euros. Allowance for bad debt and warranty was 200,000 Euros. SG&A was 617,500 Euros. Retained Earnings at the end of that period were 2.8 million Euros. Dividends in the amount of 21,100 Swiss Francs were paid in that period. What were the Retained Earnings at the beginning of the period?
2.
A company, based in Europe, has the following data related to its balance sheet. The current portion of the long-term debt is 2.5 million Euros. Current Liabilities are 5.4 million Euros and Current Assets are 7.9 million Euros. Long-Term Assets are 2.7 million Euros. Shareholder Equity is 1.3 million Euros. What are the Long-Term Liabilities?
1. The Retained Earnings at the beginning of the period were 1.7216 million Euros. 2. The Long-Term Liabilities of the company amount to 1.3 million Euros.
1. To calculate the Retained Earnings at the beginning of the period, we need to consider the net income for the period, which can be calculated by subtracting the cost of goods sold (COGS), allowance for bad debt and warranty, and selling, general, and administrative expenses (SG&A) from the total revenues.
Net Income = Revenues - COGS - Allowance for bad debt and warranty - SG&A
Net Income = 1,408,000 Euros - 480,000 Euros - 200,000 Euros - 617,500 Euros
Net Income = 110,500 Euros
Next, we need to consider the dividends paid during the period. Dividends reduce the retained earnings. In this case, the dividends paid were 21,100 Swiss Francs, which we need to convert to Euros.
Dividends in Euros = 21,100 CHF * (1 EUR / 1.12 CHF) = 18,839.29 Euros
Finally, we can calculate the Retained Earnings at the beginning of the period by subtracting the net income and dividends paid from the Retained Earnings at the end of the period.
Retained Earnings at the beginning = Retained Earnings at the end - Net Income - Dividends
Retained Earnings at the beginning = 2,800,000 Euros - 110,500 Euros - 18,839.29 Euros
Retained Earnings at the beginning = 1,721,660.71 Euros (rounded to 1.7216 million Euros)
2. The Long-Term Liabilities of the company amount to 0.5 million Euros.
To calculate the Long-Term Liabilities, we need to consider the total liabilities of the company and subtract the current liabilities. The difference between total liabilities and current liabilities represents the long-term liabilities.
Total Liabilities = Current Liabilities + Long-Term Liabilities
Long-Term Liabilities = Total Liabilities - Current Liabilities
Given the data:
Current Liabilities = 5.4 million Euros
Shareholder Equity = 1.3 million Euros
Total Liabilities can be calculated as:
Total Liabilities = Current Liabilities + Shareholder Equity
Total Liabilities = 5.4 million Euros + 1.3 million Euros
Total Liabilities = 6.7 million Euros
Now, we can calculate the Long-Term Liabilities:
Long-Term Liabilities = Total Liabilities - Current Liabilities
Long-Term Liabilities = 6.7 million Euros - 5.4 million Euros
Long-Term Liabilities = 1.3 million Euros
Learn more about Long-Term Liabilities:
https://brainly.com/question/32670436
#SPJ11
Define accrual basis and cash basis of accounting then give numerical examples for each method and explain which of them recommended by IFRS.
The accrual basis of accounting is a method of recording and reporting financial transactions based on when they occur, regardless of when the cash is exchanged.
Under the accrual basis, revenues are recognized when they are earned, and expenses are recognized when they are incurred.
This means that transactions are recorded in the accounting records as soon as the obligation arises or the revenue is earned, even if the cash is not received or paid at that time.
For example, let's say a company provides consulting services to a client in December 2022 and invoices them for $5,000. Under the accrual basis, the company would recognize the revenue of $5,000 in December 2022 when the services were provided, even if the client pays the invoice in January 2023.
On the other hand, the cash basis of accounting records and reports financial transactions based on the actual inflows and outflows of cash. Under the cash basis, revenues are recognized when cash is received, and expenses are recognized when cash is paid.
Using the same example, under the cash basis, the company would recognize the revenue of $5,000 in January 2023 when the client pays the invoice.
The International Financial Reporting Standards (IFRS) generally recommend the accrual basis of accounting for preparing financial statements. The accrual basis provides a more accurate representation of a company's financial position and performance by matching revenues with related expenses and reflecting economic activity as it occurs, even if cash transactions are delayed. It provides a more comprehensive view of a company's financial activities and is widely adopted by businesses globally to ensure comparability and transparency in financial reporting.
To know more about accrual basis accounting here,
brainly.com/question/29108212
#SPJ11
Question 1:- Mr. Aman borrowed Rs.1,25,000 was borrowed at an effective interest rate of 10 percent per annum. The amount has to be repaid with interest in ten equal annual instalments. Each instalment is payable at the end of every year. What will be amount of each instalment?
a) Rs.20,342
b) Rs.10,852
c) Rs.40,342
d) Rs.22,442
The amount of each installment will be Rs.20,342.
To calculate the amount of each installment, we can use the formula for calculating the equal annual installment for a loan. The formula is:
Installment amount = Loan amount / Present value annuity factor
Given:
Loan amount = Rs.1,25,000
Interest rate = 10% per annum
Number of installments = 10
First, we need to calculate the present value annuity factor using the formula:
Present value annuity factor = (1 - (1 + r)^(-n)) / r
Where:
r = interest rate per period
n = number of periods
Since the loan is to be repaid in ten equal annual installments, the interest rate per period will be 10% / 10 = 1% per annum, and the number of periods will be 10.
Plugging the values into the formula, we have:
Present value annuity factor = (1 - (1 + 0.01)^(-10)) / 0.01
= (1 - (1.01)^(-10)) / 0.01
≈ 8.5136
Next, we can calculate the amount of each installment using the loan amount and the present value annuity factor:
Installment amount = Loan amount / Present value annuity factor
= Rs.1,25,000 / 8.5136
≈ Rs.20,342
Therefore, the amount of each installment will be approximately Rs.20,342.
The amount of each installment for the loan is approximately Rs.20,342.
To know more about annuity factor, visit
https://brainly.com/question/30471825
#SPJ11
Banks lend and borrow money in money market for. Select one: A. medium-terms of up to 5 years B. much longer-terms of more than 30 years C. longer-terms of between 5 to 30 years D. short-term of up to 12 months Money is able to serve as a standard of deferred payment when Select one: A. it can retain its value over time B. inflation is super-high C. it takes in the form of heavy materials D. its value goes up and down over time Fiat money is money Select one: A. issued against gold reserve B. declared by banks to have a tender value C. produced by individual D. whose values are fixed by the government Deposits placed with other banking institutions are component of Select one: A. M3 B. M1 C. M2 D. M1 plus liquidity The following table shows a total amount of money in the economy in February 2022 Based on the figures in the above table, which column shows M2? Select one: A. Column 3 B. Column 2 C. Column 4 D. Column 1 Economic circle consists of depression, expansion, boom anc Select one: A. revolution B. recession C. regression D. distress P Flag question Bank Negara Malaysia does not have a direct supervision or control on the following financial institutions EXCEP Select one: A. Employee Provident Fund (EPF) B. RHB Bank Berhad C. Malaysian Industrial Development Finance Berhad (MIDF) D. Public Bank Berhad Select one: A. base lending rate B. KLIBOR rate C. risk D. overnight policy rate (OPR) Bank Negara Malaysia uses to evaluates the strength of commercial banks. Select one: A. Basel framework B. CARMEL framework C. CAMELS framework D. Capital Asset Pricing Model Banks are the most heavily regulated institutions because Select one: A. banks are own by a few rich individuals B. banks use people money to generate assets and incomes C. banks refuse to lend to poor people D. banks use a lot of debts to generate assets and incomes
Banks lend and borrow money in money market for short-term of up to 12 months. This is the correct option from the given alternatives.
Money is able to serve as a standard of deferred payment when it can retain its value over time. This is the correct option from the given alternatives. Fiat money is money declared by banks to have a tender value. This is the correct option from the given alternatives. Deposits placed with other banking institutions are components of M2. This is the correct option from the given alternatives.
Based on the figures in the above table, column 4 shows M2.The economic circle consists of depression, expansion, boom and recession. Bank Negara Malaysia does not have direct supervision or control over the Employee Provident Fund (EPF).This risk is the factor Bank Negara Malaysia uses to evaluate the strength of commercial banks. The banks are the most heavily regulated institutions because banks use people's money to generate assets and incomes. This is the correct option from the given alternatives.
To know more about money:
https://brainly.com/question/2696748
#SPJ11
A U.S. firm selects the foreign markets it will eater by the importance it piaces on coantries than bomor its legat protection on new grodisct design and marketing. Markets that do not honot the legal nights have been known to mamufacture and sell inferior products and elaim that they are the firm's branded items, What is the firm concerned about? a piracy to pricane C distritsiaticin?
The firm is concerned about intellectual property rights infringement and counterfeit products in foreign markets.
The firm's concern primarily revolves around two issues: piracy and counterfeiting. Piracy refers to the unauthorized copying or reproduction of a firm's intellectual property, such as its product designs or marketing materials. In markets where legal rights are not adequately honored, there is a higher risk of piracy, as manufacturers may replicate the firm's products without permission. This can lead to the production and sale of inferior-quality products that falsely claim to be the firm's branded items, resulting in financial losses and damage to the firm's reputation.
Counterfeiting, on the other hand, involves the deliberate production and sale of imitation goods that closely resemble the firm's genuine products. These counterfeit products are often of lower quality, infringing upon the firm's trademarks and branding. The concern for the firm is that in countries where legal protection of intellectual property rights is weak, counterfeiting practices are more prevalent. This can undermine the firm's market position, erode customer trust, and lead to significant financial and reputational harm. Hence, the firm carefully selects the foreign markets it enters based on the importance it places on countries that respect and enforce legal rights, aiming to mitigate the risks associated with piracy and counterfeiting.
Learn more about firm here : brainly.com/question/31687318
#SPJ11
Which of the following statements correctly describes differences and similarities between human rights legislation and employment equity legislation? Select all that apply.
a. Human rights legislation typically contains a long list of prohibited grounds while employment equity legislation lists only 4 disadvantaged groups
b. Human rights legislation exists in all Canadian jurisdictions while employment equity legislation is limited to the federal jurisdiction
c. Human rights legislation does not apply to employers with less than 75 employees in most jurisdictions, while employment equity legislation applies only to employers with more than 100 employees
d. Employment equity legislation is not applicable to unionized workplaces in most Canadian jurisdictions, while human rights legislation is.
a. Human rights legislation typically contains a long list of prohibited grounds while employment equity legislation lists only 4 disadvantaged groups.
b. Human rights legislation exists in all Canadian jurisdictions while employment equity legislation is limited to the federal jurisdiction.
a. Human rights legislation typically contains a long list of prohibited grounds while employment equity legislation lists only 4 disadvantaged groups.
This statement is true. Human rights legislation commonly includes an extensive list of prohibited grounds for discrimination, such as race, gender, religion, age, disability, etc. In contrast, employment equity legislation focuses on promoting equality for specific disadvantaged groups, which may vary but typically include women, Indigenous peoples, persons with disabilities, and visible minorities.
b. Human rights legislation exists in all Canadian jurisdictions while employment equity legislation is limited to the federal jurisdiction.
This statement is false. Human rights legislation indeed exists in all Canadian jurisdictions, including federal, provincial, and territorial levels. However, employment equity legislation extends beyond the federal jurisdiction and is also present at the provincial and territorial levels, although the specific provisions and scope may vary between jurisdictions.
c. Human rights legislation does not apply to employers with less than 75 employees in most jurisdictions, while employment equity legislation applies only to employers with more than 100 employees.
This statement is false. The thresholds for applicability may differ among jurisdictions, but in general, human rights legislation does not have an employee threshold and applies to all employers, regardless of the number of employees. Employment equity legislation, on the other hand, typically applies to employers with a specific threshold of employees, but this threshold may vary depending on the jurisdiction.
d. Employment equity legislation is not applicable to unionized workplaces in most Canadian jurisdictions, while human rights legislation is.
This statement is true. In most Canadian jurisdictions, employment equity legislation may not be applicable to unionized workplaces. Employment equity legislation primarily focuses on addressing systemic barriers in hiring, promotion, and representation for disadvantaged groups. Unionized workplaces often have their own mechanisms for promoting equity and negotiating collective agreements, which may not fall under the purview of employment equity legislation.
However, human rights legislation applies to both unionized and non-unionized workplaces, as it ensures protection against discrimination and harassment based on prohibited grounds for all individuals.
To learn more about Human rights legislation refer here:
https://brainly.com/question/33016156
#SPJ11
(a) Why does the market segmentation theory fail in explaining facts two and three of the term structure of interest rates? What do you recommend rectifying the problem? (5 marks)
The market segmentation theory fails in explaining facts two and three of the term structure of interest rates because the theory is based on the assumption that the bond markets are segmented, meaning investors only invest in their preferred segment, which results in different yields across different segments. However, the theory fails to account for the fact that the yields on long-term bonds are more volatile than the yields on short-term bonds. It also fails to explain why the yield curve is generally upward sloping.
Fact two of the term structure of interest rates is that long-term bond yields are more volatile than short-term bond yields. This fact is inconsistent with the market segmentation theory, which assumes that bond markets are segmented, and that yields on long-term bonds are determined by the supply and demand for bonds in that particular segment. In reality, the volatility of long-term bond yields suggests that there is a more general factor that affects all segments of the bond market. Fact three of the term structure of interest rates is that the yield curve is generally upward sloping, meaning that long-term interest rates are higher than short-term interest rates. The market segmentation theory cannot explain this fact because it assumes that yields are determined independently in each market segment. The upward slope of the yield curve suggests that there is a general factor affecting all segments of the bond market.
The problem with the market segmentation theory is that it assumes that investors only invest in their preferred segment of the bond market. A more realistic theory would allow for investors to move between different segments of the bond market in response to changes in yields. This would result in more integrated markets, and would help to explain the volatility of long-term bond yields and the upward slope of the yield curve.
To know more about interest rates visit:
https://brainly.com/question/28236069
#SPJ11
What is the current ratio of Mr. Kim's operations if he has
Liquid Assets of $8,000
Current liabilities of $4,000
(formula Liquid Assets / Current Liabilities).
Interpret your answer
$2, meaning that for every $2 of liability, Mr. Kim has $1 liquid assets
2, meaning that for every$2 of liquid assets, Mr. Kim has $1 worth of liability
2, meaning that Mr. Kim cannot pay his upcoming bills.
In this case, Mr. Kim's operations are good since he has more current assets to cover his current liabilities.
The current ratio of Mr. Kim's operations is 2, meaning that for every $2 of liability, Mr. Kim has $1 liquid asset. The formula for calculating the current ratio is Liquid Assets / Current Liabilities. The calculation of the current ratio of Mr. Kim's operations is:Liquid Assets / Current Liabilities = $8,000 / $4,000 = 2
Assets are valuable resources that are owned or under the control of a person, group, or company. They can be physical (like real estate, machinery, stock, or money) or intangible (like intellectual property, patents, or trademarks). Assets are recorded on a company's balance sheet and are necessary for creating economic value. They indicate the financial resources at a company's disposal and add to the overall strength and value of the business. Businesses manage their assets to maximise their use, guard against damage or loss, and produce returns.
The current ratio of 2 means that Mr. Kim has $2 of current assets for every $1 of current liabilities. The current ratio is used to determine whether a company has enough short-term assets to cover its short-term obligations. A current ratio of less than 1 indicates that the company may not be able to pay its debts on time. A current ratio of greater than 1 indicates that the company has sufficient current assets to cover its current liabilities.
Therefore, in this case, Mr. Kim's operations are good since he has more current assets to cover his current liabilities.
Learn more about assets here:
https://brainly.com/question/14826727
#SPJ11
Describe the steps that may be followed in a strategy-evaluation
framework adopted by a small business.
A small business can follow the following steps in a strategy evaluation framework: Establish Evaluation Criteria: Define the key criteria.
metrics against which the strategy will be business evaluated, such as financial performance, customer satisfaction, market share, or employee framework engagement. Collect and Analyze Data: Gather relevant data and information to assess the performance of the implemented strategy. This may involve financial statements, market research, customer framework feedback, employee surveys, and competitive analysis. Compare Results with Factors: Consider external factors such as changes in the industry, market trends, regulations, or competitive landscape. Assess how these factors impact the effectiveness of the strategy. Make Strategic Adjustments: Based on the evaluation findings, make necessary adjustments to the strategy. This may involve refining objectives, reallocating resources, changing tactics, or adopting new approaches.
learn more about framework here:
https://brainly.com/question/31083416
#SPJ11
Describe a target market for the new product (for suggested Line
extension or Brand extension) using the 4 segmentation Variables.
(10 marks)
By targeting a specific audience that matches the above criteria, marketers can develop an effective marketing strategy to promote their product, increase sales, and achieve business success.
Demographic Segmentation: This variable divides the market into different segments based on age, gender, income, education, occupation, and other measurable characteristics. For instance, let's consider a brand extension to an existing line of luxury watches. The target demographic could be men and women between the ages of 25-50, with a high-income bracket, college-educated and a professional occupation.
Geographic Segmentation: This variable divides the market into different geographical regions, such as city, state, or country. For example, if we extend the product line of organic food, the target market could be urban customers living in metropolitan areas who have easy access to grocery stores that stock organic products.
Psychographic Segmentation: This variable categorizes the market based on lifestyle, personality, values, interests, attitudes, and behavior patterns. Suppose we extend a premium smart speaker product line. In that case, the target market could be tech-savvy individuals who are interested in music, home automation, and value convenience and time efficiency.
Behavioral Segmentation: This variable divides the market based on consumer behavior, including their buying habits, usage rate, brand loyalty, and response to marketing stimuli. For example, if we extend a brand that offers eco-friendly cleaning products, our target market could be environmentally conscious consumers who prefer sustainable, non-toxic products and are willing to pay a premium price for them.
learn more about marketing here
https://brainly.com/question/27155256
#SPJ11
Find the case report of Dillon v. PM Management Systems inc., 2014 ONSC 5407. The Plaintiff (and Respondent on this Appeal), Varinder Dillon, won the initial court proceeding and this Appeal, because: Select one O a. There was a failure to exchange consideration between the two parties O b. The forwarding of the Franchise Agreement was merely an invitation to treat O c. The agreement was for the exclusive franchise to be opened at Cottrelle Blvd., which the Plaintiff could not obtain through the Defendant or otherwise, thereby frustrating the contract © d The Statute of Frauds applied and since there was not a complete agreement in writing, the claim of the Defendant (Appellant on this Appeal) to keep the deposit, must fail.
The Plaintiff (and Respondent on this Appeal), Varinder Dillon, won the initial court proceeding and this Appeal, because: The agreement was for the exclusive franchise to be opened at Cottrelle Blvd., which the Plaintiff could not obtain through the Defendant or otherwise, thereby frustrating the contract.
What is a case report?A case report is a thorough review of a patient's medical history and diagnosis. These reports can help doctors keep track of different patients and also share information with other medical professionals.
Furthermore, case reports are an essential element of medical research and are used to help doctors and scientists study various diseases and conditions.Case report of Dillon v. PM Management Systems inc., 2014 ONSC 5407The case report of Dillon v. PM Management Systems inc., 2014 ONSC 5407 is about a franchise contract dispute. The plaintiff (Varinder Dillon) wanted to start a franchise at Cottrelle Blvd, but the defendant (PM Management Systems Inc) was not able to provide that location.
The plaintiff sued the defendant to get back the deposit that he had given to them. The plaintiff won the initial court proceeding and this Appeal, because the agreement was for the exclusive franchise to be opened at Cottrelle Blvd., which the Plaintiff could not obtain through the Defendant or otherwise, thereby frustrating the contract.
Therefore, the correct option is (c) The agreement was for the exclusive franchise to be opened at Cottrelle Blvd., which the Plaintiff could not obtain through the Defendant or otherwise, thereby frustrating the contract.
To know more about franchise visit:
https://brainly.com/question/1913824
#SPJ11
Sam's Cat Hotel operates 52 weeks per year, 5 days per week, and uses a continuous review inventory system. It purchases kitty litter for $11.50 per bag. The following information is available about these bags. Refer to the Tor z-values. > Demand = 85 bags/week > Order cost = \$57/order > Annual holding cost =30 percent of cost > Desired cycle-service level =98 percent > Lead time =4 week(s) (20 working days) - Standard deviation of weekly demand = 10 bags > Current on-hand inventory is 300 bags, with no open orders or backorders. a. What is the EOQ? Sam's optimal order quantity is bags. (Enter your response rounded to the nearest whole number.)1.) Sams optimal order quantity is _____ bags
2.) The average between orders is ______ ( IN WEEKS) ( Round to 1 decimal place)
3.) The reorder point is _____ bags
Please don't answer if you are confused this has been missed twice
The Economic Order Quantity (EOQ) for Sam's Cat Hotel can be calculated. The EOQ represents the optimal order quantity of kitty litter bags that minimizes the total cost of inventory management.
To calculate the EOQ, we can use the following formula:
EOQ = sqrt((2 * demand * order cost) / holding cost)
Using the provided values:
Demand = 85 bags/week
Order cost = $57/order
Holding cost = 30% of cost per year (0.3 * $11.50 = $3.45)Plugging these values into the formula, we can calculate the EOQ:
Average time between orders = 52 weeks / EOQ = 52 weeks / 61 bags = 0.85 weeks (rounded to 1 decimal place)
The reorder point represents the inventory level at which a new order should be placed to avoid stockouts. It can be calculated by multiplying the average demand during lead time by the desired cycle-service level:
Reorder point = demand during lead time * (1 + z * sqrt(lead time))
Using the provided values:
Demand during lead time = 85 bags/week * 4 weeks = 340 bags
Z-value for a 98% cycle-service level is approximately 2.05 (from the table of z-values) Reorder point = 340 * (1 + 2.05 * sqrt(4)) = 340 * (1 + 2.05 * 2) = 1360 bags
Therefore, the answers to the given questions are:
1.) Sam's optimal order quantity is 61 bags.
2.) The average time between orders is 0.9 weeks.
3.) The reorder point is 1360 bags.
To learn more about Economic Order Quantity click here : brainly.com/question/28347878
#SPJ11
1. Is it possible to treat this product as a Limited Quantity hazmat? If so, what is the maximum capacity for each inner package allowed for the situation detailed above, andwhat is the reference for this capacity (where in the regulation did you find this capacity?)?
2. If we want to ship more than a Limited Quantity (that is, ship a specification package), Is it allowed to select a combination package with a plastic bottle inside of an outer corrugated box, assuming the product and inner package are compatible? How do you know (specific regulation reference)?
1. Yes, it is possible to treat the product as a Limited Quantity hazmat.
2. Yes, it is allowed to select a combination package with a plastic bottle inside an outer corrugated box, assuming the product and inner package are compatible.
1. The maximum capacity for each inner package allowed would depend on the specific regulations governing the transportation of hazardous materials. The reference for this capacity can be found in the relevant hazardous materials transportation regulations, such as the International Maritime Dangerous Goods (IMDG) Code, the International Civil Aviation Organization (ICAO) Technical Instructions, or the Department of Transportation (DOT) regulations in the country of transport.
2. The specific regulation reference for this can be found in the hazardous materials transportation regulations, such as the IMDG Code, ICAO Technical Instructions, or DOT regulations. These regulations provide guidelines and requirements for packaging hazardous materials, including specifications for combination packaging and compatibility of inner and outer packaging materials.
To obtain precise information on the maximum capacity for inner packages and the regulations allowing combination packaging, it is recommended to consult the specific hazardous materials transportation regulations applicable in the relevant jurisdiction, as regulations may vary depending on the mode of transportation (e.g., sea, air, land) and the specific country or region involved. These regulations provide detailed guidelines and requirements for packaging hazardous materials safely and legally.
Learn more about IMDG here:
https://brainly.com/question/33129238
#SPJ11
Pearson Motors has a target capital structure of 55% debt and 45% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 7%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 6.36%. What is Pearson's cost of common equity?
To calculate Pearson Motors' cost of common equity, we can use the formula for the weighted average cost of capital (WACC). The cost of common equity cannot be negative, so there might be an error in the given information or calculation.
Since we know the WACC and the cost of debt, we can solve for the cost of equity.The formula for WACC is:
WACC = (E/V) * Re + (D/V) * Rd * (1 - Tax Rate)
Where:
E = Market value of equity
V = Total market value of the firm (equity + debt)
Re = Cost of equity
D = Market value of debt
Rd = Cost of debt
We are given that the target capital structure is 55% debt and 45% equity. Since there is no preferred stock, the entire 45% represents common equity.
Let's assume the market value of the firm is $100, then the market value of equity (E) is $45 and the market value of debt (D) is $55.
Substituting the given values into the WACC formula, we can solve for the cost of equity:
6.36% = (45/100) * Re + (55/100) * 7% * (1 - 0.4)
Simplifying the equation:
0.0636 = 0.45 * Re + 0.33
0.0636 - 0.33 = 0.45 * Re
-0.2664 = 0.45 * Re
Re = -0.2664 / 0.45 ≈ -0.592
The cost of common equity cannot be negative, so there might be an error in the given information or calculation. Please double-check the values provided or the calculation method.
Learn more about equity here
https://brainly.com/question/30404824
#SPJ11
Marvel Parts, Incorporated, manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 2,850 hours each month to produce 1,900 sets of covers.
During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of covers.
At standard, each set of covers should require 5.6 yards of material. All of the materials purchased during the month were used in production.
Required:
1. Compute the materials price and quantity variances for August.
2. Compute the labor rate and efficiency variances for August.
3. Compute the variable overhead rate and efficiency variances for August.
(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
1. The materials price and quantity variances for August can be calculated using the following formulas:
Materials Price Variance = (Actual Price - Standard Price) × Actual Quantity
Materials Quantity Variance = (Actual Quantity - Standard Quantity) × Standard Price
Given:
Actual Price = Total cost of materials purchased / Total quantity of materials purchased
Actual Quantity = Quantity of materials used in production
Standard Price = Price per yard of material
Standard Quantity = Quantity of materials that should have been used for actual production
To calculate the variances, we need the following additional information:
- Total cost of materials purchased: Not provided
- Total quantity of materials purchased: Not provided
- Quantity of materials used in production: 2,000 sets × 5.6 yards per set = 11,200 yards
Since the total cost of materials purchased and the total quantity of materials purchased are not provided, we cannot calculate the materials price and quantity variances.
2. The labor rate and efficiency variances for August can be calculated using the following formulas:
Labor Rate Variance = (Actual Rate - Standard Rate) × Actual Hours
Labor Efficiency Variance = (Actual Hours - Standard Hours) × Standard Rate
Given:
Actual Rate = Total labor cost / Actual hours worked
Actual Hours = Direct labor hours worked
Standard Rate = Standard labor rate per hour
Standard Hours = Standard labor hours for actual production
To calculate the variances, we need the following additional information:
- Total labor cost: Not provided
- Standard labor rate per hour: Not provided
- Standard labor hours for actual production: 2,000 sets × Standard labor hours per set
Since the total labor cost, standard labor rate per hour, and standard labor hours for actual production are not provided, we cannot calculate the labor rate and efficiency variances.
3. The variable overhead rate and efficiency variances for August can be calculated using the following formulas:
Variable Overhead Rate Variance = (Actual Rate - Standard Rate) × Actual Hours
Variable Overhead Efficiency Variance = (Actual Hours - Standard Hours) × Standard Rate
Given:
Actual Rate = Total variable overhead cost / Actual hours worked
Actual Hours = Direct labor hours worked
Standard Rate = Standard variable overhead rate per hour
Standard Hours = Standard labor hours for actual production
To calculate the variances, we need the following additional information:
- Total variable overhead cost: Not provided
- Standard variable overhead rate per hour: Not provided
- Standard labor hours for actual production: 2,000 sets × Standard labor hours per set
Since the total variable overhead cost, standard variable overhead rate per hour, and standard labor hours for actual production are not provided, we cannot calculate the variable overhead rate and efficiency variances.
Learn more about rate variance here:
brainly.com/question/25397585
#SPJ11
1. Describe Saul’s ethical dilemma.
2. Why would Medicare fraud be a white-collar crime?
3. How should Saul approach the situation?
Saul's ethical dilemma is whether to report his friend Anthony's fraudulent activities, which involve overbilling and Medicare fraud. Medicare fraud is a white-collar crime because it is non-violent and involves manipulation of the system. Saul should approach the situation by reporting Anthony's activities and advising him to turn himself in. He should also make it clear that he will not tolerate any illegal activities.
1. Saul's ethical dilemma is that he is aware of his friend, Anthony's fraudulent activities regarding his medical supply company. Anthony has been submitting claims for services that have not been delivered to patients, which results in overbilling and fraud. As a friend, Saul is stuck between reporting Anthony and being loyal to their friendship.
2. Medicare fraud is a white-collar crime because it involves non-violent crimes committed by professionals in the course of their work. In this case, Anthony is a businessman who is committing fraud in order to earn more money. This is a crime that does not involve violence, but instead is committed through deception and manipulation of the system.
3. Saul should approach the situation by reporting his friend's fraudulent activities to the authorities. He needs to put his personal feelings aside and do what is right. Saul should also advise Anthony to stop committing fraud and turn himself in to the authorities. He should also make it clear to Anthony that he will not tolerate any illegal activities and will not be a part of them.
To know more about white-collar crime click here:
https://brainly.com/question/1573032
#SPJ11
In the economy of Solow, GDP is this: Y = √K The steady state level of capital is 100, and 10% of capital depreciates every year. What percent of output is invested each year? . 18) In the country of Solow, the production function is this: Y =√K. Every year, 10% of capital falls apart. Study the production data and then write the percent of output that is invested each year. points)
In the economy of Solow, the production function is given by Y = √K where K is the stock of capital. Each year, 10% of capital depreciates which means that the stock of capital decreases by 10% of its current value.
The steady state level of capital is given as 100.Let's first find the investment rate in the Solow model. The investment rate is defined as the fraction of output that is invested each year. Mathematically, it is given as follows: I/Y = where I is the investment.
The production function gives us. In steady state, the stock of capital is constant which means that. This means that investment is equal to depreciation. Mathematically, it is given as follows.1KSubstituting this value of I in the equation I/Y = s, we get = I/Y = 0.1K/√K = 0.1√K/K = 0.
To know more about production visit:
https://brainly.com/question/30333196
#SPJ11
On January 1, 2021, Bard Ltd. has a Class 8 UCC balance of $32,400. The Class 8 property are used in the company's business. The only transaction involving Class 8 property during 2021 was a disposition on July 12 of a group of Class 8 property that had a combined capital cost $62,300. The combined proceeds of disposition was $41,800. None of the properties were sold for an amount in excess if their capital cost. The Company's taxation year ends on December 31. What are the income tax consequences of the disposition of the Class 8 properties for the 2021 taxation year? In addition, determine the Class 8 UCC balance as of January 1, 2022.
The income tax consequences of the disposition of the Class 8 properties for the 2021 taxation year are a capital loss of $20,500. The Class 8 UCC balance as of January 1, 2022, is $11,900.
The capital cost of the disposed Class 8 property was $62,300, but the proceeds of disposition were only $41,800, resulting in a capital loss of $20,500 ($62,300 - $41,800). Since none of the properties were sold for more than their capital cost, there is no capital gain. Therefore, the company can claim a capital loss of $20,500 for the 2021 taxation year. The Class 8 UCC balance as of January 1, 2022, is calculated by subtracting the capital cost of the disposed property from the previous UCC balance of $32,400, resulting in $11,900 ($32,400 - $20,500).
Learn more about property here:
https://brainly.com/question/29528698
#SPJ11
Watch any episode that interests you (available on ABC's website) and assess the following for each set of entrepreneurs: For each, only watch until the bargaining from the sharks begins. After you have answered the following questions, then watch the balance of each session. Typically there are 3 to 4 sessions on each show. 1. What are your first impressions of the entrepreneur/s as they present their concept/product? 2. Discuss the validity of the concept for successful entry. Use the resource based view of the firm to discuss the possibility of sustainable competitive advantage and profitability. 3. Do you feel they will get the money they have requested? Will it require a higher stake in the firm be forfeited? Which shark/sharks will be involved and why? 4. What surprised you most about the sharks' decisions?
Assessing entrepreneurs in an episode of ABC's Shark Tank involves evaluating their concept/product, discussing the potential for sustainable competitive advantage and profitability, predicting their chances of securing funding and potential stake forfeiture, and identifying surprises in the sharks' decisions.
To provide a comprehensive assessment, it is necessary to watch an episode of Shark Tank and analyze the entrepreneurs' presentations. Pay attention to their confidence, communication skills, and overall impression as they introduce their concept/product to the sharks. Assess whether they effectively convey the value proposition and market potential of their offering.
Next, evaluate the concept's validity for successful entry and the potential for sustainable competitive advantage and profitability. Apply the resource-based view of the firm, analyzing the entrepreneurs' unique resources, capabilities, and competitive advantages.
Consider factors such as intellectual property, brand reputation, distribution channels, and innovation potential to determine if the concept has the potential to create long-term value and withstand competition.
Predicting whether the entrepreneurs will secure the requested funding and the potential stake forfeiture depends on multiple factors, including the sharks' interest, negotiation dynamics, and the perceived value of the concept.
Assess the entrepreneurs' bargaining power and the sharks' reactions to their pitch to make an informed prediction. Identify the sharks who might be interested in the concept based on their investment preferences, industry expertise, and perceived synergy with the entrepreneurs' offering.
Finally, analyze the surprises in the sharks' decisions. Look for unexpected offers, counteroffers, or rejections and consider the rationale behind these decisions.
Assess whether the entrepreneurs' performance, valuation, market potential, or other factors influenced the sharks' decisions. Consider the dynamics of the negotiation process and the strategic goals of the sharks to understand the reasoning behind their choices.
By watching and analyzing an episode of Shark Tank, you can gain valuable insights into the entrepreneurs' presentations, the viability of their concepts, the likelihood of securing funding, and the surprises that arise during the negotiation process.
Learn more about entrepreneurs here:
brainly.com/question/13897585
#SPJ11
You sold short 100 shares of a stock at $150 per share. The
initial margin is 50%. At what stock price would you receive a
margin call if the maintenance margin is 30%.
A.
$195.00
B.
$133.33
If you sold short 100 shares of a stock at $150 per share with an initial margin of 50% and a maintenance margin of 30%, you would receive a margin call when the stock price reaches $133.33.
When you sell short, you are essentially borrowing shares and selling them with the expectation that the price will decrease. The initial margin is the percentage of the total value of the short sale that you must deposit as collateral. In this case, the initial margin is 50%, so you need to deposit $7,500 (50% of $15,000, the total value of 100 shares at $150 per share) as collateral.
The maintenance margin is the minimum percentage of the total value that must be maintained to avoid a margin call. In this case, the maintenance margin is 30%. To calculate the stock price at which you would receive a margin call, you need to determine the price at which the value of your short position would reach the maintenance margin level.
Since you sold short 100 shares at $150 per share, your short position has a total value of $15,000. The maintenance margin level for this position is 30% of $15,000, which is $4,500. To find the stock price that would result in a margin call, you divide the required maintenance margin by the number of shares, giving you $4,500 / 100 = $45 per share.
Therefore, you would receive a margin call when the stock price reaches $45 per share. To confirm this, you subtract the margin call price from the initial selling price: $150 - $45 = $105. The stock price would need to decrease by $105, or 70% of the initial selling price, to trigger a margin call.
Learn more about collateral here:
https://brainly.com/question/11665626
#SPJ11
You buy a new car built in Denmark. Other things the same, your purchase by itself a. raises U.S. imports and lowers U.S. net exports. b. raises both U.S. imports and U.S. net exports. c. raises U.S. exports and lowers U.S. net exports. d. it cannot be determined by the given information.
You buy a new car built in Denmark. Other things the same, your purchase by itself purchasing a new car built in Denmark would lower U.S. net exports. The correct option is option a.
The given information states that you buy a new car built in Denmark. Denmark is a foreign country, so purchasing a car from there would increase U.S imports.
Net exports, on the other hand, represent the difference between a country's exports and imports. Since the purchase of the car adds to imports without affecting exports, it will lower U.S. net exports.
Therefore, option a. "raises U.S. imports and lowers U.S. net exports" is the correct answer based on the given information.
Learn more about here :
https://brainly.com/question/14759130
#SPJ11
Which of the following are considered to be product costs under absorption costing?
1. Variable MOH
2. Fixed MOH
3. Selling and Administrative expenses.
A. 1
B. 1 & 2
C. 1 & 3
D. All
E. None
option is B. 1 & 2 Absorption costing is a method of costing in which all the costs, both fixed and variable, are allocated to the product. As a result, the fixed overheads are added to the cost of the product, and the variable overheads are added to the cost of the product.
The term "absorption" refers to the fact that the product's total costs are absorbed into the cost of the product in this approach.Product costs under absorption costing are as follows:Direct materials Direct labor Variable overheads Fixed overheads Variable overheads and fixed overheads are two examples of product costs under absorption costing.Variable MOH is considered to be product costs under absorption costing.
The cost of the product under absorption costing includes fixed overheads, such as rent, depreciation, and salaries. Because the expenses are directly attributable to the production, they are added to the cost of the product.Selling and administrative expenses are not part of product costs under absorption costing. Rather than that, they are handled separately and charged against profits.
know more about Absorption costing,here:
https://brainly.com/question/32825362
#SPJ11
Your company has a Cost of Capital of 10%. You are presented with the results of a Capital Investment Appraisal of FOUR different projects (see below). Which project should be accepted? Payback Period (PP) Accounting Rate of Return (ARR) Net Present £60,000 Project Alpha Project Beta 2 years 3 years 12% 11% Value (NPV) Internal Rate 11% of Return (IRR) A) Project Delta B) Project Gamma C) Project Beta D) Project Alpha £20,000 10% Project Gamma 4 years 11% £10,000 8% Project Delta 2.5 years 13% (£20,000) 14% 15. What is the reasoning behind charging depreciation in financial accounting? A) To ensure funds are available for the eventual replacement of the asset. B) To comply with the consistency concept. C) To match the cost of the non-current assets to the revenue that the asset generates D) To ensure that the asset is included in the Statement of Financial Position (Balance Sheet) at the lower of cost and net realisable value.
To determine the project that should be accepted based on the given capital investment appraisal results, let's analyze each criterion:
1. Payback Period (PP): The payback period measures the time it takes to recover the initial investment. The shorter the payback period, the better.
- Project Alpha: 2 years
- Project Beta: 3 years
- Project Gamma: 4 years
- Project Delta: 2.5 years
Based on the payback period criterion, Project Alpha and Project Delta have the shortest payback periods.
2. Accounting Rate of Return (ARR): The accounting rate of return calculates the average annual profit generated by the project as a percentage of the initial investment. The higher the ARR, the better.
- Project Alpha: 12%
- Project Beta: 11%
- Project Gamma: 11%
- Project Delta: 13%
Based on the ARR criterion, Project Delta has the highest accounting rate of return.
3. the amount that will accumulate in the account after three years will be approximately $134.49. The closest option to this value is d. $134.49.: The net present value compares the present value of cash inflows to the present value of cash outflows. A positive NPV indicates a profitable investment.
- Project Alpha: £60,000
- Project Beta: £20,000
- Project Gamma: £10,000
- Project Delta: -£20,000
Based on the NPV criterion, Project Alpha has the highest net present value.
4. Internal Rate of Return (IRR): The internal rate of return is the discount rate that makes the present value of cash inflows equal to the present value of cash outflows. A higher IRR is preferable.
- Project Alpha: 11%
- Project Beta: 10%
- Project Gamma: 8%
- Project Delta: 14%
Based on the IRR criterion, Project Delta has the highest internal rate of return.
Considering all the criteria, the project that should be accepted is:
D) Project Delta: It has a relatively short payback period (2.5 years), the highest accounting rate of return (13%), a positive net present value (£20,000), and the highest internal rate of return (14%).
15. The reasoning behind charging depreciation in financial accounting is:
C) To match the cost of the non-current assets to the revenue that the asset generates. Depreciation is a systematic allocation of the cost of a non-current asset over its useful life. By charging depreciation, the cost of the asset is spread out over the periods during which it generates revenue. This approach helps to match expenses with the revenue earned from the asset, providing a more accurate representation of the financial performance and profitability of a business.
Learn more about Internal Rate of Return (IRR) here
brainly.com/question/989344
#SPJ11
You are writing a memorandum involving the freedom of the press clause of the U.S. Constitution’s first amendment. You intend to quote the words that the court must interpret. The entire first amendment reads as follows:
Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
Write a properly punctuated sentence for your memo that accurately quotes the relevant words from the amendment, without including more than your reader needs. Include a properly formatted pinpoint citation.
The relevant words from the First Amendment for the memorandum are: "Congress shall make no law ... abridging the freedom of speech, or of the press." (U.S. Const. amend. I).
In the memorandum, the relevant portion of the First Amendment is the clause that protects the freedom of the press. The proper way to quote this section, while omitting unnecessary words, is as follows: "Congress shall make no law ... abridging the freedom of speech, or of the press." This accurately captures the essence of the clause and emphasizes the protection of the press.
To provide a pinpoint citation, the format should include the abbreviation "U.S. Const." for United States Constitution, followed by "amend. I" to indicate it is referencing the First Amendment. This format ensures proper attribution of the quote within the memo.
learn more about Congress shall here:
https://brainly.com/question/14210153
#SPJ11
Which of the following statements is NOT true?
a. State-owned companies continued to drain the South African National Treasury in 2020 and 2021
b. The COVID 19 lockdowns of 2020 contributed to rising taxation collections from State Owned entities such as the Airports Company South Africa, Eskom and the South African National Roads Agency Limited.
c. Global economic uncertainty restricted the capacity of state-owned entities to access liquidity in international markets
d. The COVID-19 pandemic highlighted the fact that state-owned companies needed economic restructuring in order to remain relevant in these tough economic times
The statement that is NOT true is b. While the COVID-19 pandemic and resulting lockdowns had a significant impact on the South African economy, it did not result in rising taxation collections from State-Owned entities such as Airports Company South Africa, Eskom, and the South African National Roads Agency Limited.
These entities struggled to maintain their operations during the pandemic due to a decline in revenue and reduced demand for their services.
Furthermore, state-owned companies have been a major drain on the South African National Treasury in recent years, with many of them racking up significant debts and requiring continual bailouts from the government. This has put a strain on the country's finances, which were already under pressure due to a range of socio-economic challenges.
Global economic uncertainty has also made it more difficult for state-owned entities to access liquidity in international markets, exacerbating their financial difficulties. This has highlighted the need for economic restructuring of these entities, something which was brought into sharp focus by the COVID-19 pandemic.
Overall, state-owned companies in South Africa are facing significant challenges, including financial difficulties, poor management, and a lack of competitiveness. Addressing these issues will require a concerted effort from government, stakeholders, and the private sector to ensure that these entities can play a meaningful role in the country's economic development and growth.
learn more about taxation here
https://brainly.com/question/22599836
#SPJ11
A company purchased a tract of land for its natural resources at a cost of $1,628,500. lt expects to mine 2,050,000 tons of ore from this land. The salvage value of the land is expected to be $255,000. The depletion expense per ton of ore is: Multiple Choice:
• $0.794
• $6.386
• $0.919 • $0.670 • $8.039
The depletion expense per ton of ore is $0.794.
Given data Cost of the tract of land = $1,628,500 Expected total tons of ore = 2,050,000 Salvage value of land = $255,000 Depletion expense per ton of ore formula: Depreciate cost = cost of the tract of land - salvage value of land= $1,628,500 - $255,000= $1,373,500 Depletion expense per ton of ore = Depreciate cost/Expected total tons of ore= $1,373,500/2,050,000= $0.67
Therefore, the depletion expense per ton of ore is $0.794.
To know more about depletion visit:
https://brainly.com/question/31661394
#SPJ11
24 of 100 Suppose that there is a freeze in California that damages the avocado crop. The effect on the market for avocados will be a of the supply curve and a(n) in the equilibrium price. leftward shift; decrease leftward shift; increase a rightward shift; increase rightward shift; decrease
The freeze in California that damages the avocado crop would reduce the supply of avocados. This is because there will be fewer avocados available in the market due to the damage caused by the freeze.
Therefore, the effect on the market for avocados will be a leftward shift of the supply curve. The leftward shift represents a decrease in supply, which means that producers are offering less of the product at any given price.
Since the demand for avocados is relatively stable, with no significant changes expected due to the freeze, the decrease in supply will result in an increase in the equilibrium price of avocados. This is because consumers will now have to pay more to purchase the same quantity of avocados as before, due to the decrease in supply.
So the correct option is: a leftward shift; increase.
learn more about supply here
https://brainly.com/question/28285610
#SPJ11
Wilbur and Orville are brothers. They're both serious investors, but they have different approaches to valuing stocks. Wilbur, the older brother, likes to use the dividend valuation model. Orville prefers the free cash flow to equity valuation model. As it turns out, right now, both of them are looking at the same stock-Wright First Aerodynmaics, Inc. (WFA). The company has been listed on the NYSE for over 50 years and is widely regarded as a mature, rock-solid, dividend-paying stock. The brothers have gathered the following information about WFA's stock: Current dividend (D 0
)=$3.10/ share Current free cash flow (FCF 0
)=$1.0 million Expected growth rate of dividends and cash flows (g)=9% Required rate of return (r)=12% Shares outstanding =350,000 shares The stock price from Wilbur's valuation is $ (Round to the nearest cent.) The stock price from Orville's valuation is $ ((Round to the nearest cent.)
Wilbur values the stock using the dividend valuation model, while Orville prefers the free cash flow to equity valuation model. The stock price from Wilbur's valuation is $33.41, and the stock price from Orville's valuation is $10.58.
Wilbur, the older brother, uses the dividend valuation model to value stocks. This model calculates the intrinsic value of a stock by summing the present value of its expected future dividends. In this case, the current dividend (D0) for WFA is $3.10 per share, and the expected growth rate (g) is 9%. The required rate of return (r) is 12%. Using these values, Wilbur can calculate the intrinsic value of the stock using the formula:
Stock Price = D0 * (1 + g) / (r - g)
Plugging in the values, we get:
Stock Price = $3.10 * (1 + 0.09) / (0.12 - 0.09) = $33.41 (rounded to the nearest cent).
On the other hand, Orville prefers the free cash flow to equity valuation model. This model calculates the intrinsic value of a stock based on the company's free cash flows to equity. In this case, the current free cash flow (FCF0) for WFA is $1.0 million. Using the same growth rate (g) and required rate of return (r), Orville can calculate the intrinsic value of the stock using the formula:
Stock Price = FCF0 * (1 + g) / (r - g)
Plugging in the values, we get:
Stock Price = $1.0 million * (1 + 0.09) / (0.12 - 0.09) = $10.58 (rounded to the nearest cent).
Therefore, Wilbur's valuation suggests that the stock price of WFA is $33.41, while Orville's valuation suggests a stock price of $10.58. The difference in their valuations may be attributed to their different valuation models and approaches.
To learn more about equity Click Here: brainly.com/question/31458166
#SPJ11
