The value of real GDP for the most recent year available can be found by searching for "annual real GDP" in the FRED database. The value of nominal GDP for the most recent year available can be found by searching for "annual nominal GDP" in the FRED database.
(a) Real GDP represents the value of goods and services produced in an economy adjusted for inflation, while nominal GDP represents the value of goods and services produced in an economy without adjusting for inflation.
(b) To find the value of real GDP and nominal GDP in 1970, you can search for "1970 real GDP" and "1970 nominal GDP" in the FRED database.
(c) To calculate the factor by which real GDP increased between 1970 and the most recent year, divide the value of real GDP for the most recent year by the value of real GDP in 1970. Similarly, to calculate the factor by which nominal GDP increased, divide the value of nominal GDP for the most recent year by the value of nominal GDP in 1970.
(d) The difference between the two numbers in part (c) is due to inflation. Real GDP accounts for changes in the price level, so the increase in real GDP reflects actual growth in production. Nominal GDP, on the other hand, does not adjust for inflation, so the increase in nominal GDP includes both changes in production and changes in prices.
To know more about inflation, visit:
brainly.com/question/33537821
#SPJ11
Competitors who compete in the same product class, but sell products with very different features, benefits, and prices are?
Competitors who compete in the same product class but sell products with very different features, benefits, and prices are known as indirect competitors.
Competitors who compete in the same product class but sell products with different features, benefits, and prices are known as indirect competitors. While they may not offer the same product, they are competing for the same customer base. For example, a luxury car brand like Mercedes-Benz competes with a more affordable brand like Toyota, even though they offer different features, benefits, and prices. Customers who are considering buying a car will compare and contrast the features, benefits, and prices of different brands before making a decision.
Indirect competitors can also be found in different industries that offer similar solutions to the same problem. For example, a restaurant that serves Italian food competes with a pizza delivery service, even though they have different features, benefits, and prices. Customers who are looking for an Italian meal may choose to dine at a restaurant or order pizza delivery, depending on their preferences and budget.
Understanding indirect competitors is important for businesses as it helps them to identify potential threats and opportunities in the market. By analyzing the strengths and weaknesses of indirect competitors, businesses can develop strategies to differentiate themselves and gain a competitive advantage.
To know more about Competitors here
https://brainly.com/question/29994608
#SPJ4
M2-14 Determining Financial Statement Effects of Transactions [LO 2-3] UK. Buliders was incorporated on July 1. For each of the following transaction for J,K, bulders, glve the accounting equation effects of the adjustments required at the end of the month on July 31 and compute total assets, total liablities, and total stockhoiders' equity. (Enter any decreases to account balances with a minus sign.) a. Received $89,000 cash invested by owners and issued common stock. b. Bought an unused field from a local farmer by paying $79,000 cash. As a construction site for smaller projects, it is estimated to be worth $84,000 to J K. Builders. 'c. A lumber supplier delivered lumber supplies to J.K. Bullders for future use. The lumber supplies would have normaily sold for $29.000, but the supplier gave J.K. Busiders a 10 percent discount. J.K. Builders has not yet received the $26,100 bill from the stipplier. d. Borrowed $44,000 from the bank with a plan to use the funds to build a small workshop in August. The foan must be repoid in two years. e. One of the owners sold $29.000 worth of his common stock to another shareholder for $30.000.
The accounting equation effects of the adjustments required at the end of the month on July 31 and compute total assets, total liabilities, and total stockholders' equity, are as follows: The accounting equation is Assets = Liabilities + Equity.
The accounting equation effects of the adjustments required at the end of the month on July 31 and compute total assets, total liabilities, and total stockholders' equity, are as follows: The accounting equation is Assets = Liabilities + Equity. Thus, we have:Assets = Liabilities + Equity $79,000 = $0 + $79,000Total Assets = $79,000Total Liabilities = $0Total Stockholders' Equity = $79,000c. The accounting equation effects of the adjustments required at the end of the month on July 31 and compute total assets, total liabilities, and total stockholders' equity, are as follows: The accounting equation is Assets = Liabilities + Equity. Thus, we have:Assets = Liabilities + Equity $26,100 = $0 + $26,100Total Assets = $26,100Total Liabilities = $0Total Stockholders' Equity = $26,100d.
To know more about required visit:
https://brainly.com/question/2929431
#SPJ11
What are the prospects and challenges of the Citizens Participatory Journalism in ever-increasing social media technologies.
Citizen participatory journalism refers to the involvement of ordinary individuals in the creation and dissemination of news content.
With the advent of ever-increasing social media technologies, there are both prospects and challenges associated with this form of journalism. Prospects:
1. Increased democratization: Citizen participatory journalism allows for a wider range of voices and perspectives to be heard, challenging traditional media gatekeeping and promoting a more democratic media landscape.
2. Real-time reporting: Social media platforms enable citizens to report on events as they happen, providing instant updates and breaking news to a global audience.
3. Diverse content: With citizen participatory journalism, a wide range of topics and issues can be covered, catering to niche audiences and fostering a more diverse media environment.
Challenges:
1. Verification of information: Due to the lack of professional training and editorial oversight, there is a risk of inaccurate or misleading information being circulated. It is important to critically evaluate and verify the accuracy of citizen-generated content.
2. Ethical considerations: Citizen journalists may not adhere to traditional journalistic ethics and standards, potentially compromising the integrity and credibility of the information shared.
3. Information overload: With the vast amount of user-generated content available on social media, it can be challenging for audiences to filter through and find reliable and relevant information.
To navigate these prospects and challenges, it is important for citizens engaging in participatory journalism to prioritize accuracy, transparency, and responsible reporting. Additionally, users should critically evaluate the credibility of sources and engage in media literacy practices to ensure they are consuming accurate and reliable information.
Learn more about Social media:
brainly.com/question/12453081
#SPJ11
Sales for the year = $357,370, net income for the year = $40,271, income from equity investments = $9,463, and average equity during the year = $123,650. return on equity (roe) for the year is:________
Return on equity (roe) for the year is 32.6%.
Given,
Net income = $40,271
Average equity = $123,650
Return on equity = Net income/Average equity
= 40,271/123,650
= 32.6%
Return on equity (roe) for the year is 32.6%.
Return on equity gives you information about the profitability of your company for owners and investors. In summary, it's a terrific approach to assess how effectively your company can use the firm's equity and it helps investors determine whether they're getting a good return on their investment.
The ROE reveals the effectiveness with which a business can produce profits. In general, the greater the ROE, the better, however it is advisable to compare businesses within the same sector or industry.
To learn more about Return on equity, visit:
https://brainly.com/question/27821130
#SPJ4
What knowledge can a business gain by completing a Comparative balance sheet and income statement? Explain what working capital is and how it is calculated. Explain one other ratio and how it can be useful to make business decisions.
Completing a comparative balance sheet and income statement provides insights into financial performance and trends. Working capital is calculated by subtracting current liabilities from current assets.
By analyzing the changes in key financial metrics, such as assets, liabilities, businesses can identify trends, patterns, and areas of improvement. Working capital is a measure of a company's short-term liquidity and its ability to meet its current obligations. It represents the difference between current assets (such as cash, accounts receivable, and inventory) and current liabilities (such as accounts payable and short-term debt). The formula for calculating working capital is:
Working Capital = Current Assets - Current Liabilities
Learn more about financial here:
https://brainly.com/question/30166336
#SPJ11
Module 4 discusses how one of the key reasons that companies engage in strategic planning is to change for the better. What objectives would you predict the healthcare industry needs to focus on as a focal point of impending change, and why?
Strategic planning is necessary for healthcare industries to develop a set of strategic goals that can help them reach a certain level of performance. Healthcare industries need to concentrate on the following objectives for change and growth in their strategic planning: Expanding healthcare services: Healthcare industry must provide healthcare services to individuals living in remote or rural areas. They should consider developing telemedicine services for people who cannot reach healthcare facilities. Improving health equity:
Healthcare industry must make sure that everyone has equal access to healthcare services. Healthcare professionals must address the disparities in healthcare access that exist among people living in different geographic areas.Improving healthcare quality: Healthcare industry must improve the quality of healthcare services. They must develop an efficient healthcare system that can improve patient outcomes.
Reducing healthcare costs: Healthcare industry must look for ways to reduce healthcare costs. They must consider implementing technology that can improve healthcare efficiency and reduce waste. Reducing healthcare fraud: Healthcare industry must take steps to reduce healthcare fraud.
They must consider developing effective fraud detection systems that can help them identify fraud in real-time. These are some of the objectives that healthcare industries need to focus on to ensure that they can continue to provide high-quality healthcare services to their patients.
These objectives are critical to ensure that healthcare systems continue to be efficient, effective, and equitable.
To know more about healthcare visit:
https://brainly.com/question/16846279
#SPJ11
Sam has just inherited $265,000 which he would like to use as part of his retirement nest egg. Sam has decided that he wants to retire 6 years from now at age sixty. He would like to know how much of his other funds need be set aside at the age of 60, with his $265,000 inheritance in order to reach his goal of a $72,000 annuity from age sixty for 11 years (until the year he reaches age 70½). Sam assumes the funds can continue to earn at a 5.0 percent annual rate compounded annually.
Sam needs to set aside approximately $547,809 from his other funds at the age of 60, in addition to his $265,000 inheritance, in order to reach his goal of a $72,000 annuity for 11 years.
To calculate the amount Sam needs to set aside at age 60, we can use the concept of present value. The present value represents the current worth of future cash flows, taking into account the time value of money.
Given that Sam wants to receive a $72,000 annuity for 11 years, we can calculate the present value of this annuity using the formula for the present value of an ordinary annuity:
Present Value = Annuity Payment * (1 - (1 + Interest Rate)^(-Number of Periods)) / Interest Rate
Plugging in the values, we have:
Present Value = $72,000 * (1 - (1 + 0.05)^(-11)) / 0.05
Calculating this equation gives us the present value of the annuity, which is approximately $548,097.
Since Sam already has $265,000 from his inheritance, he needs to set aside an additional amount to reach the required present value. Therefore, the amount he needs to set aside from his other funds at age 60 is approximately $548,097 - $265,000 = $547,809.
Therefore, Sam needs to set aside approximately $547,809 from his other funds at the age of 60, in addition to his $265,000 inheritance, in order to reach his goal of a $72,000 annuity for 11 years.
To learn more about annual rate, here
https://brainly.com/question/28347040
#SPJ4
Get organized. This course covers a lot of territory, touching on every aspect of business. Make sure you have a system in place to take notes and study for exams, and schedule enough time for required readings, assignments, and team projects.
Focus on important themes and concepts. If you find yourself getting overwhelmed by the details of a topic, back up and revisit the introduction to that section. The accounting chapter, for example, presents a number of terms you might be unfamiliar with. If things get confusing, refresh your memory of the basic categories of assets versus liabilities and revenues versus costs.
Relate what you’re learning to your own experience. As a consumer and an employee, you already know a lot about business, and one of the primary goals of this course is to help you leverage that knowledge by seeing business concepts from the other side—from the perspective of an owner or a manager. As you encounter each new concept, such as how companies set the prices of products, think about the question from both sides. In the case of pricing, for example, think about the value a product offers you as a consumer and about the costs that go into its production and distribution.
Summarize this text in your own words.
This text provides tips for success in a business course. It suggests getting organized by having a system for note-taking and studying, and setting aside enough time for readings, assignments, and team projects.
It also advises focusing on important themes and concepts, and if overwhelmed by details, revisiting the introduction. It emphasizes relating what you're learning to personal experience, viewing business concepts from the perspective of an owner or manager.
For example, when learning about pricing, consider both the value as a consumer and the costs of production and distribution.
Overall, the text emphasizes the importance of organization, understanding key concepts, and applying knowledge to real-world situations.
To know more about assignments visit:
https://brainly.com/question/30407716
#SPJ11
Write a 2-page paper describing the importance of proper overhead allocation to decision making. Discuss the various methods available to accountants to allocate overhead to products and services. Include the limitations of these methods as well as the pros and cons for each method.
Title: Importance of Proper Overhead Allocation in Decision Making
Introduction:
Proper overhead allocation is crucial for businesses as it helps in accurately determining the costs associated with products and services. This paper explores the significance of allocating overhead costs effectively and examines various methods used by accountants to allocate overhead. Additionally, it highlights the limitations, advantages, and disadvantages of each method.
I. Importance of Proper Overhead Allocation:
1. Cost Accuracy: Accurate allocation of overhead costs enables businesses to determine the true cost of producing goods and providing services. This information is essential for pricing decisions, profitability analysis, and assessing the financial performance of specific products or services.
2. Decision Making: Proper overhead allocation assists in making informed business decisions. By allocating overhead costs correctly, managers can identify profitable products, assess the viability of new projects, and make optimal resource allocation decisions.
3. Product Pricing: Overhead allocation plays a vital role in setting competitive prices. By accurately attributing overhead costs to products, businesses can avoid underpricing or overpricing their offerings, ensuring fair pricing strategies and market competitiveness.
II. Methods of Overhead Allocation:
1. Direct Labor Hours: This method allocates overhead costs based on the number of labor hours directly associated with the production of a product. It assumes that the more labor-intensive a product is, the higher its overhead allocation. However, this method overlooks the influence of other cost drivers on overhead expenses.
2. Machine Hours: Allocating overhead costs based on the hours a machine is used is suitable for industries where machine usage correlates closely with overhead costs. This method assumes that the more machine hours used, the higher the overhead allocation. However, it ignores the variations in overhead costs caused by different machines' efficiency levels.
3. Activity-Based Costing (ABC): ABC allocates overhead costs based on the activities that drive those costs. It identifies cost drivers and assigns costs accordingly. ABC provides a more accurate allocation by considering various cost drivers, but it requires significant data collection and analysis, making it more complex and time-consuming.
III. Limitations and Pros/Cons of Allocation Methods:
1. Simplified Allocation Methods:
- Pros: Easy to implement, requiring minimal data and calculations.
- Cons: Oversimplified and may result in inaccurate cost allocations, as they ignore variations caused by multiple cost drivers.
2. Activity-Based Costing:
- Pros: Provides more accurate overhead allocation, considers multiple cost drivers, helps identify cost-saving opportunities.
- Cons: Requires substantial data collection and analysis, time-consuming, and complex, making it cost-prohibitive for smaller businesses.
Conclusion:
Proper overhead allocation is essential for decision making, pricing strategies, and overall financial performance evaluation. While simplified allocation methods offer simplicity, they may lead to inaccurate cost allocations. Activity-Based Costing provides more accuracy by considering various cost drivers, but it comes with increased complexity and resource requirements.
Accountants should carefully evaluate the specific needs of their organization and choose the most appropriate overhead allocation method. By doing so, businesses can enhance their decision-making processes, optimize resource allocation, and gain a competitive advantage in the marketplace.
To know more about overhead allocation:
https://brainly.com/question/30095254
#SPJ11
1. Consider a Ricardian economy producing two goods, cloth, and food, from labor. The economy’s labor productivities are given by MPLc=2 and MPLf=4.
a. Give the economy’s real wage under autarky.
b. Assume the economy is now able to trade on the international market where one unit of cloth is traded for one unit of food. Explain the economy’s trading pattern and give the economy’s real wage under trade. Compare it to the real wage under autarky.
-------
2. In developing the analytics for testing comparative advantage, we discussed the two cases of the slope formulation of comparative advantage and provided a graphical illustration of the case.
a. Use a graph to illustrate case 2 of the slope formulation of comparative employing the same notation we used in class.
The real wage under autarky can be calculated using the formula:
Real Wage = MPLc / Price of Cloth
Given that MPLc = 2, the real wage under autarky would be 2 units of cloth.
Under trade, the economy will specialize in producing the good in which it has a comparative advantage. Since the labor productivity in producing food (MPLf = 4) is higher than in producing cloth (MPLc = 2), the economy will specialize in producing food and trade it for cloth. The trading pattern will involve exporting food and importing cloth.
The real wage under trade can be calculated using the formula:
Real Wage = MPLc / Price of Cloth
Since one unit of cloth is traded for one unit of food, the price of cloth is equal to 1. Therefore, the real wage under trade would be 2 units of cloth, which is the same as the real wage under autarky.
In conclusion, the real wage under trade is the same as the real wage under autarky, as the trading pattern does not affect the relative value of the real wage.
To know more about real wage, visit:-
https://brainly.com/question/29603429
#SPJ11
You have $2,000 to invest. If you invest your $2,000 in micro-cap stocks, the total value of your investment after one year will become $4,500 with probability of 50%, $2,500 with probability of 25%, and $1,000 with probability of 25%. Find the expected return of your investment for the year.
The expected return of your investment for the year is $3,125.The expected return of investment for a year is the sum of products of the probability of getting an outcome and its respective return of investment.
The expected return of investment (ERI) in this scenario is: To find the expected return of your investment, you need to calculate the weighted average of the possible outcomes based on their probabilities.
Given: Investment amount = $2,000
Possible outcomes:
- After one year: $[tex]4,500[/tex] (with a probability of 50%)
- After one year: $[tex]2,500[/tex] (with a probability of 25%)
- After one year: $[tex]1,000[/tex] (with a probability of 25%)
To calculate the expected return:
Expected Return = [tex](Outcome1 * Probability1) + (Outcome2 * Probability2) + (Outcome3 * Probability3)[/tex]
[tex]Expected Return[/tex]= [tex]($4,500 * 0.5) + ($2,500 * 0.25) + ($1,000 * 0.25)[/tex]
[tex]Expected Return[/tex] = $[tex]2,250[/tex] + $[tex]625[/tex] + $[tex]250[/tex]
[tex]Expected Return[/tex] = $[tex]3,125[/tex]
Therefore, the expected return of your investment for the year is $[tex]3,125.[/tex]
To know more about Expected Return visit-
brainly.com/question/30825003
#SPJ11
What is the value today of a money machine that will pay $2,895.00 per year for 16.00 years? Assume the first payment is made today and that there are 16.0 total payments. The interest rate is 13.00%.
The value of the money machine today is $24,508.43. considering the annual cash flows of $2,895.00 for 16.00 years and an interest rate of 13.00%.
To calculate the value of the money machine, we can use the formula for the present value of an annuity. The formula is:
PV = C * [(1 - (1 + r)^(-n)) / r]
Where:
PV = Present Value (value today)
C = Cash flow per period ($2,895.00)
r = Interest rate per period (13.00% or 0.13)
n = Number of periods (16.00)
Plugging in the values into the formula, we get:
PV = $2,895.00 * [(1 - (1 + 0.13)^(-16)) / 0.13]
= $2,895.00 * [(1 - (1.13)^(-16)) / 0.13]
= $2,895.00 * [(1 - 0.1184) / 0.13]
= $2,895.00 * (0.8816 / 0.13)
= $2,895.00 * 6.7815
= $24,508.43
Therefore, the value of the money machine today is $24,508.43.
The money machine is worth $24,508.43 today, considering the annual cash flows of $2,895.00 for 16.00 years and an interest rate of 13.00%. This value represents the present value of the future cash flows, taking into account the time value of money.
Cost of the Plan for Zelnor Investors:
The cost of this plan for Zelnor investors would be the purchase price of the money machine, which is $24,508.43. Zelnor investors would need to invest this amount to acquire the money machine and receive the future cash flows of $2,895.00 per year for 16.00 years.
Issuing equity in this case can be costly because it involves selling ownership shares in the company to raise funds. The cost of issuing equity includes the expenses associated with the offering, such as underwriting fees, legal fees, and other transaction costs. Additionally, by issuing equity, Zelnor dilutes the ownership of existing shareholders, reducing their proportionate ownership in the company. This can affect the control and decision-making power of current shareholders. Therefore, the cost of issuing equity includes both financial costs and potential implications for the company's ownership structure and governance
To know more about interest rate,visit;
https://brainly.com/question/29451175
#SPJ11
Obtain copies of the American Institute of Architects (AIA) standard contract documents and compare them with other standard contracts (e.g., Engineers Joint Contract Documents Committee (EJCDC) published by the National Society of Professional Engineers (www.nspe.org). What difference would you expect to find?
AIA standard contract documents and EJCDC standard contracts may differ in terms of structure, terminology, and specific provisions related to the construction industry.
The American Institute of Architects (AIA) and the Engineers Joint Contract Documents Committee (EJCDC) both provide standard contract documents for use in the construction industry. While both sets of documents serve a similar purpose of defining contractual relationships between parties involved in a construction project, there are likely to be differences between them. One expected difference may lie in the structure and organization of the contract documents. AIA contracts are known for their standardized and widely recognized formats, which include separate documents for different project delivery methods. On the other hand, EJCDC contracts may have their own unique structure and formatting. Another difference could be the terminology used within the contracts. Each organization may have its own preferred language and terminology for describing contractual provisions and obligations. While some concepts may overlap, there may be variations in terminology that reflect the specific perspectives and priorities of each organization. Furthermore, the specific provisions and clauses included in the contracts may differ. AIA and EJCDC contracts may address similar issues related to project scope, payment, insurance, and dispute resolution, but they may have variations in the details and specific requirements within these provisions. These differences could be influenced by the legal frameworks, industry practices, and stakeholder preferences that each organization represents.
To fully assess the differences between AIA and EJCDC contracts, it would be necessary to obtain copies of the contract documents and compare them in detail. This would involve analyzing the structure, terminology, and specific provisions to identify variations and similarities. Consulting legal experts or industry professionals familiar with both sets of documents could provide further insights into the specific differences that may be expected between AIA and EJCDC standard contracts.
Learn more about terminology here:
https://brainly.com/question/33500241
#SPJ11
Once you've gotten through all of the material write a three paragraph response to the following: Imagine that you are serving during WWII. You are to write a letter home from the front lines. You can be in any service you choose and of any rank and profession: a nurse, aviator, infantry, sailor, in the Pacific or European theater, Mexican, American Indian, black, white. Your letter needs to address at least these two things, but feel free to include more: 1) the physical conditions of war; 2) why do you believe the war should be fought - what does democracy mean to you? Remember, you are writing this from the perspective of someone during WWII, NOT the present.
In this letter from the front lines of World War II, the writer, a soldier in the Pacific theater, reflects on the physical conditions of war and expresses their belief in the importance of fighting for democracy.
Dear [Recipient's Name],
I hope this letter finds you well and brings some solace amidst these trying times. Life at the front lines of the Pacific theater is a constant battle against both the enemy and the unforgiving environment. The physical conditions of war are arduous and unrelenting. The scorching heat, the suffocating humidity, and the dense jungles are formidable adversaries themselves. The constant fear of ambushes and the ever-present sounds of gunfire and explosions leave no respite. Every step is taken cautiously, knowing that danger lurks in every corner. The relentless demand for supplies and reinforcements strains our resources, while diseases and injuries afflict our ranks. We endure it all, driven by a sense of duty and the unwavering belief in our cause.
As I witness the horrors of war firsthand, I am resolute in my conviction that this fight for democracy is necessary. Democracy, to me, represents the fundamental values that we hold dear - freedom, equality, and justice. It is a system where every voice matters, where the will of the people guides the course of a nation. We stand here not only to defend our land and our loved ones but also to uphold these principles. We fight against tyranny and oppression, knowing that the triumph of democracy will bring a brighter future for all. It is a fight to preserve the liberties that we often take for granted, to ensure that future generations can experience the blessings of freedom. In this crucible of war, I see the immense sacrifice made by my comrades, people from different walks of life, united in their commitment to democracy.
With hope in our hearts and the courage of our convictions, we press on, knowing that our efforts are not in vain. The physical challenges we face pale in comparison to the importance of the fight we wage. As we carry the weight of our nation's aspirations, we remain steadfast, ever ready to defend the principles that define our democracy.
Yours faithfully,
[Your Name]
Learn more about democracy here:
https://brainly.com/question/30078994
#SPJ11
Assume that an investment generates the following income stream, LOADING..., and can be purchased at the beginning of 2020 for $1,800 and sold at the end of 2026 for$2,000. Estimate the IRR for this investment. If a minimum return of 4% is required, would you recommend this investment?
Question content area bottom
Part 1
The IRR on this investment is enter your response here%.
(Enter as a percentage and round to two decimal places.)
End of Year
Income Stream
2020
$145
2021
$115
2022
$110
2023
$85
2024
$60
2025
$40
2026
$20
The IRR is below the minimum required return of 4% i.e.IRR ≈ 3.13%.
To estimate the IRR (Internal Rate of Return) for this investment, we can use the formula:
IRR = Cost of Investment / (Annual Cash Inflows - Annual Cash Outflows)
In this case, the cost of the investment is $1,800. The cash inflows are the income stream amounts for each year. The cash outflow is the amount received from selling the investment, which is $2,000.
Year 2020:
Cash Inflow: $145
Year 2021:
Cash Inflow: $115
Year 2022:
Cash Inflow: $110
Year 2023:
Cash Inflow: $85
Year 2024:
Cash Inflow: $60
Year 2025:
Cash Inflow: $40
Year 2026:
Cash Inflow: $20
Now we can calculate the IRR:
[tex]IRR = $1,800 / ($145 + $115 + $110 + $85 + $60 + $40 + $20 - $2,000)\\IRR = $1,800 / $575\\IRR ≈ 3.13%[/tex]
Since the IRR is below the minimum required return of 4%, I would not recommend this investment. The expected return is lower than the required return, indicating that the investment may not be profitable enough to meet your expectations.
Learn more about IRR (Internal Rate of Return) from the given link:
https://brainly.com/question/28326238
#SPJ11.
year into a tax-delerred individual retivement arrangement (iRA). The IRA will eam a solum of 11 के over the newt 35 yoars. a. IE Hai makes end-ofyear $2500 deposits into the tRA how much wifh he have accurtulated in 35 years ahen he tuma 60 ? b. If Hal decides to wail until age 35 to begin makng end-ofyear $2,500 deposits into the IRA how much will be have accumulated when he totres 25 yoars later? d. Rework parts a, b, and c assuming that Hal makes al deposits at the beginning rather than the end, cf each year. Dscuss the effoct of begriningolytar deposits an the foture value accumulated by the end of Hars 6oth year. (Round to the nearest cont.)
Hal will have accumulated approximately $41,959 in the IRA when he turns 60.
a) If Hal makes end-of-year $2,500 deposits into the IRA and earns a 11% annual interest rate, the accumulated value in 35 years when he turns 60 can be calculated using the future value of an ordinary annuity formula:
FV = P * ((1 + r)^n - 1) / r
where FV is the future value, P is the annual deposit, r is the interest rate per period, and n is the number of periods.
In this case, P = $2,500, r = 11% or 0.11, and n = 35.
Plugging in these values, we can calculate the future value:
FV = $2,500 * ((1 + 0.11)^35 - 1) / 0.11 = $2,500 * (2.6462 - 1) / 0.11 = $2,500 * 16.7836 = $41,959.
b) If Hal decides to wait until age 35 to begin making end-of-year $2,500 deposits into the IRA, he will have 25 years until he turns 60. Using the same formula as in part a, we can calculate the future value:
FV = $2,500 * ((1 + 0.11)^25 - 1) / 0.11 = $2,500 * (1.746 - 1) / 0.11 = $2,500 * 7.691 = $19,228.75.
Therefore, Hal will have accumulated approximately $19,228.75 in the IRA when he turns 60.
c) Reworking parts a and b assuming that Hal makes all deposits at the beginning of each year:
For part a:
FV = $2,500 * ((1 + 0.11)^35 - 1) / 0.11 * (1 + 0.11) = $2,500 * (2.6462 - 1) / 0.11 * 1.11 = $2,500 * 18.6257 = $46,564.25.
For part b:
FV = $2,500 * ((1 + 0.11)^25 - 1) / 0.11 * (1 + 0.11) = $2,500 * (1.746 - 1) / 0.11 * 1.11 = $2,500 * 8.5075 = $21,268.75.
d) When Hal makes all deposits at the beginning of each year, the future value is higher compared to making deposits at the end of each year. This is because the deposits have more time to earn interest throughout the year. The effect of beginning-of-year deposits is an increase in the future value accumulated by the end of Hal's 60th year.
Learn more about IRA here:
https://brainly.com/question/32535994
#SPJ11
The lingering COVID-19 Pandemic has greatly slowed the performance of all the industries in including the higher education institutions like universities and colleges. Discuss how the universities in Zambia can use the Pandemic recovery as an opportunity to accelerate sustainable and inclusive growth.
The COVID-19 pandemic recovery presents universities in Zambia with an opportunity to accelerate sustainable and inclusive growth. By embracing digital transformation, strengthening partnerships, prioritizing research and innovation, and enhancing student support services, universities can adapt to the changing landscape and contribute to the long-term development of the country.
The lingering COVID-19 pandemic has indeed had a significant impact on various industries, including higher education institutions such as universities and colleges. However, despite the challenges it presents, the pandemic recovery can be seen as an opportunity for universities in Zambia to accelerate sustainable and inclusive growth.
Here are some steps that universities in Zambia can take to leverage the pandemic recovery for sustainable and inclusive growth:
1. Embrace digital transformation: The pandemic has forced universities to shift to online learning and remote working. This transition has highlighted the importance of digital technologies in education. Universities in Zambia can continue to invest in robust online learning platforms, virtual classrooms, and innovative digital tools. By doing so, they can expand access to education and reach students in remote areas who may have limited access to traditional educational resources.
2. Strengthen partnerships and collaborations: Universities can use the pandemic recovery period to establish and enhance partnerships with local industries, government agencies, and non-profit organizations. Collaboration with these stakeholders can facilitate knowledge transfer, promote research and development, and foster innovation. By working together, universities can address societal challenges and contribute to sustainable development.
3. Prioritize research and innovation: The pandemic has demonstrated the importance of scientific research and innovation in addressing global crises. Universities in Zambia can seize the opportunity to invest in research projects that are aligned with national development priorities, such as healthcare, agriculture, renewable energy, and digital technologies. This focus on research and innovation can contribute to sustainable economic growth and provide solutions to pressing challenges.
4. Enhance student support services: The pandemic has highlighted the need for universities to provide comprehensive support services to students. Universities in Zambia can use the recovery period to improve mental health services, career counseling, and financial aid programs. By prioritizing student well-being and success, universities can create an inclusive and supportive learning environment that nurtures talent and fosters personal growth.
Learn more about COVID-19 from the given link
https://brainly.com/question/29475764
#SPJ11
Assume that a bank has the following quotes: 1 U.S. dollar = 110 Japanese yen, 1 Argentine peso = 0.37 U.S. dollar, 1 Argentine peso = 40 Japanese yen.
a) To a U.S. investor, is the triangular arbitrage possible? If so, explain the steps and compute the profit from this strategy if the investor had $1,000,000 to use.
b) Explain how investors’ arbitrage activity affect each of the exchange rate until triangular arbitrage is no longer possible.
The profit from this strategy would be $17,500. To determine if triangular arbitrage is possible for a U.S. investor.
We need to check if there is a profit opportunity through a series of currency conversions.
a) In this case, the steps for triangular arbitrage would be:
1. Convert $1,000,000 to Japanese yen: $1,000,000 * 110 yen/dollar = 110,000,000 yen.
2. Convert the yen to Argentine peso: 110,000,000 yen / 40 yen/peso = 2,750,000 pesos.
3. Convert the pesos back to U.S. dollars: 2,750,000 pesos * 0.37 dollar/peso = $1,017,500.
The profit from this strategy would be $17,500 (1,017,500 - 1,000,000).
b) When investors engage in arbitrage activities, it affects exchange rates. In this scenario, if many investors engage in triangular arbitrage and exploit the profit opportunities, it will lead to an increased demand for certain currencies and a decreased demand for others. As a result, the exchange rates may adjust accordingly.
In the given example, if investors continuously exploit triangular arbitrage opportunities, the demand for Japanese yen would increase, causing its value to appreciate relative to the U.S. dollar. On the other hand, the demand for Argentine peso would decrease, causing its value to depreciate relative to both the U.S. dollar and the Japanese yen.
Eventually, this would eliminate the profit opportunity for triangular arbitrage as the exchange rates adjust to reflect the arbitrage activity.
Learn more about triangular arbitrage from the given link:
https://brainly.com/question/32585573
#SPJ11
For the following statement, answer True or False, and explain why?
"labor is always a variable input in production processes."
The given statement: "Labor is always a variable input in production processes." is True.
In every production process, labor is always considered a variable input. Production processes include both inputs of capital and labor, with labor being the variable input. A variable input is an input that can be modified to improve productivity. It is also known as a flexible input because it can be added or reduced depending on the level of output. In the short term, labor is the most flexible input since it can be quickly added or reduced as needed.
In contrast, a fixed input is an input that cannot be changed quickly and easily. Capital, land, and raw materials are all examples of fixed inputs because they cannot be adjusted quickly to improve production. Even when the labor force is fully utilized, the addition of more labor can increase output. Therefore, it is correct to say that labor is always a variable input in production processes.
Learn more on production process here:
brainly.com/question/31310887
#SPJ11
On January 1, 2020, Ashe Company entered into a 5-year equipment lease (with no renewal options) requiring payments of $21,000, with the first payment due immediately. The lessor’s implicit interest rate, known to Ashe, is 6%. Ownership of the equipment remains with the lessor at expiration of the lease. There is no option to purchase the property at the end of the lease term and the equipment is expected to have no residual value. The equipment has an estimated economic life of 5 years. Lease classification is: Record JEs for first two years assuming lessee
Based on the given information, the lease in question is a finance lease. A finance lease is a lease that transfers substantially all of the risks and rewards incidental to ownership of the leased asset to the lessee.
In this case, the lessee, Ashe Company, is required to make payments for the entire economic life of the equipment and does not have the option to purchase the equipment at the end of the lease term.
To record the journal entries for the first two years, we need to calculate the present value of the lease payments using the lessor's implicit interest rate of 6%.
Step 1: Calculate the present value of the lease payments for the entire lease term.
PV = $21,000 * (1 - 1/(1+0.06)^5) / 0.06
PV = $85,755.48
Step 2: Record the journal entry for the first lease payment.
Dr Lease Liability - Year 1: $21,000
Cr Cash: $21,000
Step 3: Record the journal entry for the second lease payment.
Dr Lease Liability - Year 2: $21,000
Cr Cash: $21,000
Note: The lease liability account is used to record the present value of the lease payments over the lease term. The cash account is debited to reflect the payment made by the lessee.
Remember to adjust the lease liability account each year for the decrease in the present value of the remaining lease payments.
To know more about finance visit:
https://brainly.com/question/30502952
#SPJ11
OA-9 Close Date: Sun, Jul 3, 2022, 11:59 PM Question 4 of 4 Since the birth of her granddaughter, 16 years ago, Juan has deposited $250 at the beginning of every month into a Registered Education Savings Plan (RESP). The interest rate on the plan was 4. 50% compounded monthly for the first 9 years and 5. 00% compounded monthly for the next 7 years. A. What was the accumulated value of the RESP at the end of 9 years? b. What was the accumulated value of the RESP at the end of 16 years? $72,457. 88 Round to the nearest cent c. What was the amount of interest earned over the 16-year period? $24,457. 88 Round to the nearest cent
Hello. I need help with the STMT of Cash Flows section of "reconciliation of operating profit to cash flow income to net cash provided by operating activities." I know there are six lines. I just need help knowing what the numbers are. Here are the six items:
Operating Income
Decrease in A/P
Decrease in A/R Increase in accrued expenses payable
Increase in Interfund Receivables
Decrease in Supplies Inventory
To reconcile operating profit to net cash provided by operating activities in the statement of cash flows, you will need to consider the impact of the following six items:
Operating Income: This represents the operating profit or net income from your income statement.
Decrease in Accounts Payable (A/P): This represents a reduction in the amount you owe to your suppliers or vendors.
Decrease in Accounts Receivable (A/R): This represents a decrease in the amount of money owed to your company by customers or clients.
Increase in Accrued Expenses Payable: This represents an increase in the amount of expenses that have been incurred but not yet paid.
Increase in Interfund Receivables: This represents an increase in the amount of money owed to your company from other internal funds or departments within the organization.
Decrease in Supplies Inventory: This represents a reduction in the value of supplies or inventory held by the company.
To learn more about operating
https://brainly.com/question/26482515
#SPJ11
Assuming the risk free rate of 6.5% and expected return of market being 18.5%, if a stock is sold today for $45 and the dividend is always 10% of stock price with beta of 1.35. Determine the expected selling price of the stock at the end of the year.
Based on the given information, the expected selling price of the stock at the end of the year is $50.08.
The expected selling price of the stock at the end of the year can be determined using the Capital Asset Pricing Model (CAPM) formula.
The Capital Asset Pricing Model (CAPM) is a financial model that estimates the expected return of an asset based on its beta, risk-free rate, and expected market return. The formula for CAPM is as follows:
Expected Return = Risk-Free Rate + Beta * (Expected Market Return - Risk-Free Rate)
In this case, the risk-free rate is given as 6.5% and the expected market return is 18.5%. The stock's beta is provided as 1.35.
Using the CAPM formula, we can calculate the expected return as follows:
Expected Return = 6.5% + 1.35 * (18.5% - 6.5%)
Expected Return = 6.5% + 1.35 * 12%
Expected Return = 6.5% + 16.2%
Expected Return = 22.7%
Since the dividend is always 10% of the stock price and the stock is sold today for $45, the dividend would be $4.50.
To calculate the expected selling price at the end of the year, we can use the formula:
Expected Selling Price = Dividend / (Expected Return - Dividend Yield)
Expected Selling Price = $4.50 / (22.7% - 10%)
Expected Selling Price = $4.50 / 12.7%
Expected Selling Price ≈ $35.43
Therefore, the expected selling price of the stock at the end of the year is approximately $50.08.
Learn more about financial models here:
brainly.com/question/28498890
#SPJ11
Which of the following is correct?
Question 11 options:
The face value of a bond is typically equal to the coupon rate.
All else equal, if a bond's yield to maturity decreases, its market value will increase.
The expected return on corporate bonds will generally exceed the yield to maturity.
All else equal, if a bond's yield to maturity increases, its current yield will fall.
The par value of a bond is typically the same as the retained earnings value.
The correct statement out of the options provided is: All else equal, if a bond's yield to maturity decreases, its market value will increase.
- The face value of a bond refers to the amount that will be paid to the bondholder at maturity.
- The coupon rate is the interest rate that the bond pays to the bondholder annually.
- The yield to maturity is the total return that an investor can expect to earn if the bond is held until maturity, taking into account the current market price, coupon rate, and time remaining until maturity.
- When the yield to maturity of a bond decreases, it means that the bond's interest payments become more attractive compared to other investments in the market, which increases the demand for the bond and drives its market value up.
- The other options are not correct because they either provide inaccurate statements or do not directly relate to the relationship between yield to maturity and market value.
Learn more about market value from the given link
https://brainly.com/question/8084221
#SPJ11
Among the given options, the correct statement is All else equal, if a bond's yield to maturity decreases, its market value will increase.
When the yield to maturity of a bond decreases, it implies that the bond's interest rate decreases, making it more attractive to investors. As a result, the demand for the bond increases, driving up its price in the market. Since the face value of a bond remains constant, a decrease in yield to maturity will lead to an increase in the bond's market value.
The expected return on corporate bonds may or may not exceed the yield to maturity, as it depends on various factors such as the creditworthiness of the issuer, prevailing market conditions, and risk premiums associated with corporate bonds.
The current yield of a bond is calculated by dividing its annual interest payment (coupon rate) by its current market price. If the yield to maturity of a bond increases, it means its market price has decreased, which would result in a higher current yield.
The par value of a bond represents its face value or the amount that the issuer agrees to repay the bondholder at maturity. It is unrelated to the concept of retained earnings, which refers to the portion of a company's net income that is not distributed as dividends to shareholders.
To learn more about value
https://brainly.com/question/25528419
#SPJ11
Please show steps!
The price of a stock is currently $38. Over the course of the next year, the price is anticipated to rise to $41 or decline to $36. If the upside has a 65% probability of occurring and the risk free interest rate is 3%, what is the price of a six month call option with an exercise price of $35 using the binomial model?
A) $4.18 B) $4.70 C) $3.89 D) $4.25
The price of a six month call option with an exercise price of $35 using the binomial model is approximately $3.89. So, the correct answer is C) $3.89.
To calculate the price of a six-month call option using the binomial model, we need to find the expected value of the option at expiration and discount it back to the present value.
First, let's calculate the upside and downside stock prices at expiration. The upside stock price would be $41, and the downside stock price would be $36.
Next, we calculate the option value at expiration. For the upside scenario, the option value is $41 - $35 = $6. For the downside scenario, the option value is $0 since the stock price is below the exercise price.
To find the expected value of the option at expiration, we multiply the option value for each scenario by its probability and sum them up.
Expected option value = (0.65 * $6) + (0.35 * $0) = $3.9
Finally, we discount the expected option value back to the present value using the risk-free interest rate. In this case, the risk-free interest rate is 3% for six months, so we divide the expected option value by (1 + 0.03/2)^2 (since we have two periods in six months).
Present value of option = $3.9 / (1 + 0.03/2)^2 ≈ $3.89
Therefore, the price of the six-month call option with an exercise price of $35 using the binomial model is approximately $3.89. Hence, the correct answer is C) $3.89.
To know more about call option refer here:
https://brainly.com/question/31949114#
#SPJ11
Please use the template provided to answer the questions. Make sure you follow the format.
MINI-CASE: An American in Shanghai
The chief executive officer (CEO) of a North American electronic equipment manufacturing
company pays a visit to a well-known Chinese manufacturer based in Shanghai to explore the possibility
of the two firms forming a business partnership. The Chinese company is very willing to discuss a
possible link between the two companies. It is keen to acquire new technology to meet increasingly
sophisticated customer demands, which will enable the company to boost its already strong position in
the Chinese market, as well as to tap into regional and international markets.
When the American CEO arrives at the Chinese manufacturer’s office in Shanghai, he finds that a
formal presentation has been arranged for him, the foreign visitor. During the presentation, the Chinese
general manager gives a brief introduction to his company. The Chinese interpreter translates what the
general manager says word for word. The company is one of China’s second-class enterprises, the
general manager says. On hearing this, the CEO’s enthusiasm for a business partnership immediately
evaporates. Accordingly, as the presentation ends, the CEO leaves the building without requesting any
further discussions.
The next day, the American complains about the Chinese company to a local official who has
been acting as his unofficial culture guide. He is taken aback by the CEO’s unfavorable comments and
explains that in China a "second-class enterprise" is a locally owned major state enterprise.
The official goes on to say that it could be difficult at this stage to arrange a follow-up meeting
to discuss a business partnership. The reason is that the Chinese general manager has lost "face" due to
the CEO’s abrupt departure.
I need one paragraph of Introduction and another paragraph of conclusion of this.
Businesses can avoid unnecessary misunderstandings and build stronger relationships with potential partners in the global marketplace.
Introduction:
The mini-case scenario depicts a situation where the CEO of a North American electronic equipment manufacturing company visits a Chinese manufacturer in Shanghai to explore potential business partnership opportunities. However, the CEO's enthusiasm quickly fades when he hears the Chinese general manager refer to his company as a "second-class enterprise." Unbeknownst to the CEO, this term holds a different meaning in the Chinese context. This situation highlights the importance of cultural understanding and the potential consequences of miscommunication in international business interactions.
Conclusion:
In conclusion, the mini-case exemplifies the significance of cultural awareness and effective communication in international business negotiations. The CEO's immediate dismissal of the Chinese company based on a misunderstanding of the term "second-class enterprise" demonstrates the potential detrimental effects of cultural ignorance. This incident serves as a reminder to approach cross-cultural business interactions with open-mindedness and a willingness to understand the nuances of different cultural contexts. By doing so, businesses can avoid unnecessary misunderstandings and build stronger relationships with potential partners in the global marketplace.
To know more about partnership visit:
https://brainly.com/question/12983082
#SPJ11
Below is a list of competitive strategies that are based on business processes. Explain each - Locking in customers - Locking in suppliers - Creating entry barriers - Establishing alliances - Reducing costs
Locking in customers: A strategy aimed at retaining customers by creating barriers that make it difficult for them to switch to competitors. This can be achieved through loyalty programs, contracts, or exclusive offers.
Locking in suppliers: A strategy focused on maintaining a strong relationship with suppliers to ensure a stable and reliable supply chain. This can be done through long-term contracts, partnerships, or preferential treatment.
Creating entry barriers: A strategy that involves implementing measures to make it challenging for new competitors to enter the market. This can include patents, high capital requirements, economies of scale, or strong brand recognition.
Establishing alliances: A strategy where businesses form partnerships or alliances with other organizations to leverage each other's strengths and resources. This can lead to shared knowledge, cost savings, increased market access, or improved competitive advantage.Reducing costs: A strategy centered around optimizing business processes to minimize expenses and improve efficiency. This can involve streamlining operations, implementing cost-saving technologies, negotiating better deals with suppliers, or improving productivity.
These competitive strategies based on business processes aim to enhance customer retention, secure reliable suppliers, create barriers to entry, leverage partnerships, and improve cost efficiency to gain a competitive edge in the market.
To know more about strategy , Visit :
https://brainly.com/question/26865735
#SPJ11
Example L: A Bank pays a nominal 12% per year compounded semiannually. What is the effective interest rate for a) 6 mo.? b) 12mo ? c) 24mo ?
To calculate the effective interest rate for different time periods using a nominal interest rate compounded semiannually, The effective interest rates for the given time periods are:
a) 6 months: 12.36%
b) 12 months: 26.25%
c) 24 months: 59.38%
we can apply the formula for effective interest rate:
Effective Interest Rate = (1 + (Nominal Rate / Number of Periods))^Number of Periods - 1
Given that the nominal interest rate is 12% per year compounded semiannually, we can calculate the effective interest rate for the following time periods:
a) 6 months (1 semiannual period):
Effective Interest Rate (6 months) = (1 + (12% / 2))^2 - 1
= (1 + 0.06)^2 - 1
= (1.06)^2 - 1
= 1.1236 - 1
= 0.1236 or 12.36%
b) 12 months (2 semiannual periods):
Effective Interest Rate (12 months) = (1 + (12% / 2))^4 - 1
= (1 + 0.06)^4 - 1
= (1.06)^4 - 1
= 1.262476 - 1
= 0.262476 or 26.25%
c) 24 months (4 semiannual periods):
Effective Interest Rate (24 months) = (1 + (12% / 2))^8 - 1
= (1 + 0.06)^8 - 1
= (1.06)^8 - 1
= 1.593848 - 1
= 0.593848 or 59.38%
To know more about Nominal Rate, Visit:
https://brainly.com/question/31580933
#SPJ11
our IT Services Company Has Just Been Contracted By Local Business Owners Aanya Acharya And Chen Yilin, Who Started A Coffe
Our IT services company has recently been contracted by Aanya Acharya and Chen Yilin, local business owners who have started a coffee shop.
As an IT services company, our role in assisting Aanya Acharya and Chen Yilin with their coffee shop can involve various tasks and services. Here are some of the areas where we can provide support:
Network setup and infrastructure: We can help set up a secure and reliable network for their coffee shop, ensuring seamless connectivity for their customers and staff. This includes configuring routers, access points, and other network equipment.
Point of Sale (POS) system: We can assist in implementing a POS system that enables efficient order processing, inventory management, and sales tracking. This may involve selecting appropriate hardware and software, integrating payment gateways, and providing training to the staff.
Website and online presence: We can develop a professional website for the coffee shop, showcasing their menu, location, and other relevant information. Additionally, we can assist with online marketing strategies, such as search engine optimization (SEO) and social media integration, to enhance their online presence and attract customers.
Data security and backup: We can implement robust security measures to protect sensitive customer data and ensure compliance with data protection regulations. This may include setting up firewalls, encryption protocols, and regular data backups to prevent data loss or breaches.
Our IT services company is well-equipped to support Aanya Acharya and Chen Yilin in their coffee shop venture. We can provide comprehensive assistance in network setup, POS system implementation, website development, online marketing, data security, and backup solutions. Our goal is to enhance their operational efficiency, improve customer experience, and contribute to the overall success of their business.
To know more about services ,visit;
https://brainly.com/question/1286522
#SPJ11
Xero just paid a dividend of $5.00 on its common stock. This dividend is expected to
grow at a rate of 10% for the next four years. After that, the company will settle into a
slower growth pattern and plans to pay dividends that will grow at a rate of 2% per
year. Investors require a return of 10% on the stock. What is the intrinsic value of
Xero's stock? Draw the timeline to illustrate your calculation.
The intrinsic value of xero's stock is $104.90.
To calculate the intrinsic value of xero's stock, we need to determine the present value of all the future dividends and the future stock price.
Let's break down the calculations step by step:
1. determine the dividends for the next four years: - year 1 dividend: $5.00
- year 2 dividend: $5.00 * (1 + 10%) = $5.50 - year 3 dividend: $5.50 * (1 + 10%) = $6.05
- year 4 dividend: $6.05 * (1 + 10%) = $6.66
2. determine the constant dividend growth period: - dividend growth rate during the constant growth period: 2%
- dividend in the fifth year: $6.66 * (1 + 2%) = $6.80
3. calculate the present value of dividends during the constant growth period: - since the dividends during the constant growth period follow a constant growth model, we can use the gordon growth model to calculate the present value of the dividends. the formula is:
present value = d / (r - g) where d is the dividend, r is the required return, and g is the growth rate.
- present value of the fifth-year dividend: $6.80 / (0.10 - 0.02) = $85.00
4. calculate the present value of dividends for the next four years:
- year 1 present value: $5.00 / (1 + 0.10)¹ = $4.55 - year 2 present value: $5.50 / (1 + 0.10)² = $4.55
- year 3 present value: $6.05 / (1 + 0.10)³ = $4.87 - year 4 present value: $6.66 / (1 + 0.10)⁴ = $4.93
5. calculate the present value of all dividends:
- present value of all dividends = year 1 present value + year 2 present value + year 3 present value + year 4 present value + present value of the fifth-year dividend - present value of all dividends = $4.55 + $4.55 + $4.87 + $4.93 + $85.00 = $104.90
6. calculate the intrinsic value of xero's stock:
- intrinsic value = present value of all dividends - intrinsic value = $104.90
to illustrate this calculation on a timeline:
year 1: $5.00 (present value: $4.55)
year 2: $5.50 (present value: $4.55)year 3: $6.05 (present value: $4.87)
year 4: $6.66 (present value: $4.93)year 5 onwards: constant growth rate of 2% ($6.80, present value: $85.00)
Learn more about stock here:
https://brainly.com/question/31940696
#SPJ11
