One business model that I find interesting is the subscription-based model. This model involves customers paying a recurring fee, typically on a monthly or yearly basis, for access to a product or service.
The products under this business model can be categorized into physical products, such as monthly subscription boxes for beauty products or food, and digital products, such as online streaming services or software subscriptions. To make product selling successful in a subscription-based model, it is important to consistently provide value to the customer and offer a unique selling proposition.
This can be achieved through offering exclusive products or services, providing excellent customer service, and regularly updating and improving the product or service.
Additionally, offering flexible subscription options, such as the ability to cancel or pause subscriptions, can help retain customers and build trust.
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Sage Hill Limited is a private company that follows ASPE. It is authorized to issue an unlimited number of both common and $5 cumulative preferred shares. On December 31, 2021, there were 39,500 common and 1,400 preferred shares issued. The common shares had been issued at an average per share amount of $10; the preferred shares at $105. The balance in the Retained Earnings account on January 1, 2021, was $292,500. During 2021, the company had profit of $130,000 and declared a total of $77,000 of dividends, of which $61,000 was paid during the year.
The shareholders' equity of Sage Hill Limited on December 31, 2021, is $887,500.
The shareholders' equity of Sage Hill Limited can be calculated by adding the value of the common shares, preferred shares, and retained earnings. The value of the common shares is the number of common shares issued multiplied by the average per share amount.
The value of the preferred shares is the number of preferred shares issued multiplied by the per share amount. The retained earnings is the balance in the Retained Earnings account on January 1, 2021, plus the profit for the year, minus the dividends declared.
The value of the common shares is 39,500 common shares x $10 per share = $395,000
The value of the preferred shares is 1,400 preferred shares x $105 per share = $147,000
The retained earnings is $292,500 + $130,000 - $77,000 = $345,500
The shareholders' equity of Sage Hill Limited is $395,000 + $147,000 + $345,500 = $887,500
Therefore, the shareholders' equity of Sage Hill Limited on December 31, 2021, is $887,500.
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Effective Rent. You have calculated that a five year graduated lease has a present value (11% discount rate) of $148. What is the effective rent for this lease?
a. 25.88
b. 26.13
c. 26.94
d. 27.48
e. 34.33
f. 38.26
Effective Rent. You have calculated that a five year graduated lease has a present value (11% discount rate) of $148. the effective rent for this lease is 26.13.
The correct answer is option b.
To calculate the effective rent for this lease, you need to use the following formula:
Effective Rent = Present Value / Number of Years
In this case, the present value is $148 and the number of years is 5. Therefore, the effective rent for this lease is:
Effective Rent = $148 / 5 = $29.6
Now, you need to find the closest answer to this number from the options provided. The closest answer to $29.6 is option b, which is $26.13.
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An investment will pay $100 at the end of each of the next 3 years, $250 at the end of Year 4, $350 at the end of Year 5, and $600 at the end of Year 6. If other investments of equal risk earn 7% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent. Present value: $ Future value: $
question 8
You want to buy a car, and a local bank will lend you $40,000. The loan will be fully amortized over 5 years (60 months), and the nominal interest rate will be 4% with interest paid monthly. What will be the monthly loan payment? What will be the loan's EAR? Do not round intermediate calculations. Round your answer for the monthly loan payment to the nearest cent and for EAR to two decimal places.
Monthly loan payment: $
EAR: %
question 9
Find the present values of the following cash flow streams at an 11% discount rate. Do not round intermediate calculations. Round your answers to the nearest cent.
0 1 2 3 4 5
Stream A $0 $100 $350 $350 $350 $250
Stream B $0 $250 $350 $350 $350 $100
Stream A: $
Stream B: $
What are the PVs of the streams at a 0% discount rate? Round your answers to the nearest dollar.
Stream A: $
Stream B: $
PV of Stream A at 0% discount rate is $1,400 and PV of Stream B at 0% discount rate is $1,400.
Monthly loan payment = (Loan amount x monthly interest rate) / (1 - (1 + monthly interest rate)^(-number of months))
Monthly interest rate = 4% / 12 = 0.00333
Monthly loan payment = [tex]($40,000 x 0.00333) / (1 - (1 + 0.00333)^(-60)) = $736.81[/tex]
EAR = (1 + monthly interest rate)^12 - 1 = (1 + 0.00333)^12 - 1 = 4.07%
PV of Stream A = [tex]$100 / (1 + 0.11)^1 + $350 / (1 + 0.11)^2 + $350 / (1 + 0.11)^3 + $350 / (1 + 0.11)^4 + $250 / (1 + 0.11)^5 = $915.10[/tex]
PV of Stream B =[tex]$250 / (1 + 0.11)^1 + $350 / (1 + 0.11)^2 + $350 / (1 + 0.11)^3 + $350 / (1 + 0.11)^4 + $100 / (1 + 0.11)^5 = $1,014.62[/tex]
PV of Stream A at 0% discount rate = $100 + $350 + $350 + $350 + $250 = $1,400
PV of Stream B at 0% discount rate = $250 + $350 + $350 + $350 + $100 = $1,400
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Financial Data collected 20X1 20X2 Financial Department Note Cash Common Stock Accounts Receivable Retained earnings Inventories Prepaid Expenses Land Building China, Glass, etc. Accumulated depreciation Deferred income taxes ---Current Accounts payable Long-term debt Current portion of long-term debt Accrued Expense Marketable Securities 18,000 255,587 15,000 200,000 15,650 3,500 150,000 1,008,000 300,000 460,263 8,500 14,000 560,000 21,000 2,000 11,200 21,000 Business bank account balance at the end of the year 313,420 Common shares at the end of the year 7,600 Outstanding Accounts Receivable at the end of the year 160,000 Accumulated earning for previous years 32,000 Warehouse inventory balance at the end of the year 3,320 Advance payment for future 150,000 Land property balance at the end of the year 1,008,000 Building property balance at the end of the year 350,000 Other investment assets property 560,000 Total accumulated depreciation 8,400 Current deferred income tax owing 16,000 Owing balance at the end of the year 500,000 Total long-term loan borrowed from the bank 18,000 Current portion of the loan owing 2,100 Owing to utility providers 6,000 Investment in GIC and securities Date First Last Student ID MGMT(52A) In-class Assignment2 Required 1) Rearrange the Accounts order following the Balance Sheet Format 2) Calculate the sub-total for each category accounts on the Balance sheet 3) Calculate net working capital for 20x1 and 20x2 4) Calculate the amount change and percentage changes from 20x1 to 20x2. 5) Calculate the following ratio Current Ratio Acid Test Ratio A/R turn-over Ratio and Avg collection period Solvency Ratio Debt to Equity Ratio Asset turn-over Ratio Profit Margin (Assume the 2001 Revenue 1,300,000, profit is 65,000, Operating Cash flow is 201,000. 2002 Revenue 1,090,000, profit is 472,000, operating cash flow is $192,000 HERZO Dust Extraction Cutting Guard for 4
Rearranged Accounts in Balance Sheet Format:
Assets:
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Accrued Expense
Marketable Securities
Land
Building
China, Glass, etc.
Less: Accumulated Depreciation
Deferred Income Taxes
Total Assets
Liabilities:
Accounts Payable
Long-term Debt
Current Portion of Long-term Debt
Owing to Utility Providers
Total Liabilities
Equity:
Common Stock
Retained Earnings
Total Equity
Sub-total for each category accounts on the Balance Sheet:
Assets:
Current Assets:
Cash: 18,000 (20x1) / 313,420 (20x2)
Accounts Receivable: 15,000 (20x1) / 160,000 (20x2)
Inventories: 200,000 (20x1) / 15,650 (20x2)
Prepaid Expenses: 3,500 (20x1) / 2,000 (20x2)
Accrued Expense: 14,000 (20x1) / 11,200 (20x2)
Marketable Securities: 560,000 (20x1) / 21,000 (20x2)
Total Current Assets: 810,500 (20x1) / 523,470 (20x2)
Property, Plant, and Equipment:
Land: 1,008,000 (20x1 and 20x2)
Building: 1,008,000 (20x1) / 350,000 (20x2)
China, Glass, etc.: 150,000 (20x1 and 20x2)
Less: Accumulated Depreciation: (8,400) (20x1 and 20x2)
Total Property, Plant, and Equipment: 2,157,600 (20x1) / 1,399,600 (20x2)
Other Assets:
Deferred Income Taxes: 16,000 (20x1 and 20x2)
Total Other Assets: 16,000 (20x1 and 20x2)
Total Assets: 2,984,100 (20x1) / 1,923,070 (20x2)
Liabilities:
Current Liabilities:
Accounts Payable: 460,263 (20x1) / 8,500 (20x2)
Current Portion of Long-term Debt: 14,000 (20x1) / 2,100 (20x2)
Owing to Utility Providers: 6,000 (20x1 and 20x2)
Total Current Liabilities: 480,263 (20x1) / 10,600 (20x2)
Long-term Liabilities:
Long-term Debt: 300,000 (20x1 and 20x2)
Total Long-term Liabilities: 300,000 (20x1 and 20x2)
Total Liabilities: 780,263 (20x1) / 310,600 (20x2)
Equity:
Common Stock: 255,587 (20x1 and 20x2)
Retained Earnings: 1,948,250 (20x1) / 1,356,883 (20x2)
Total Equity: 2,203,837 (20x1) / 1,612,470 (20x2)
Total Liabilities and Equity: 2,984,100 (20x1) / 1
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Identify one or two futures contracts that are listed on any
Exchange or clearing house for any country.
The futures contract that is listed on an exchange are the ICE Brent Crude Oil futures contract and E-mini S&P 500 futures contract, which is traded on the Chicago Mercantile Exchange (CME) in the United States.
E-mini S&P 500 futures contract - This contract is based on the S&P 500 Index, which is a benchmark for the U.S. stock market, and allows traders to speculate on the future direction of the index.
ICE Brent Crude Oil futures contract - Futures contract that is listed on an exchange is the ICE Brent Crude Oil futures contract, which is traded on the Intercontinental Exchange (ICE) in the United Kingdom. This contract is based on the price of Brent crude oil, which is a benchmark for the global oil market, and allows traders to speculate on the future price of oil.
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Question 1
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Please elaborate on three things that you recently purchased, preferably in the last twenty-four hours the things can be items or services. Decide which purchase on your list stands out as most important to you and consider why you made that purchase decision. See if you can list three reasons. Now pretend you are going to sell that same item or service to a friend—would the three reasons remain the same, or would you try additional points for them to consider?
business communication
Students are required to form their essay questions as follows: (How to write your essay question)
1-Opening paragraph (introduction)
2-Main body with examples
3-Closing paragraph (conclusion and your own opinion)
4- I will check your answer for plagiarism report thus no copy and paste is allowed and will mark as ZERO if detected
The three purchases I have recently made in the last 24 hours include: a book on business communication, a cup of coffee, and a pair of shoes.
Out of these purchases, the book on business communication stands out as the most important to me because I am looking to start a business and I believe it is necessary to understand the fundamentals of business communication in order to be successful. I made this purchase because I wanted to make sure I had the right knowledge to excel in this field.
The reasons why this purchase was important to me are: first, it will help me develop my communication skills so that I can create effective business relationships with others; second, it will provide me with the confidence to communicate professionally and present my ideas clearly; and third, it will give me a better understanding of the dynamics of business communication.
If I were to sell this book to a friend, I would focus on the same reasons but also emphasize the value it can bring in terms of career development, providing a strong foundation for success in business, and understanding how to write effective business emails.
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Suppose that you have an equity of 100,000 NOK (Norwegian kroner). In the end of May 2019 you want to invest this amount into two securities, each of them can be acquired for 100 NOK per unit at this point of time. Assume that each of these securities is perfectly divisible or multipliable. Once invested, you have to keep these securities until they expire in the end of May 2024. The streams of cash flows generated per 100 NOK invested into the securities are given as follows:End of may 2020 2021 2022 2023 2025Security 1 40 40 40 40 40Security 2 0 30 50 70 90For additional financing your bank will provide you with at most 100,000 NOK of a constant payment loan (CPL, annuity loan) with an interest rate (????????) of 8 % and a maturity (TT) of 5 years. In addition, you can draw at most 50,000 NOK on a credit line with an interest rate of 10 %. Idle cash can be deposited on a banking account which does not pay any interest.Your tasks are the following:(a) Suppose that you want to maximize your wealth in the end of May 2024: Find the optimal amount of money to be invested into the two securities. determine the optimal financing of this investment.(b) This part is difficult, not relevant that relevant and voluntary! Now assume that the payments from the securities are not given with certainty. For simplicity assume that all cash flows are uniformly distributed with an interval (spread) of 20.a. Generate 20 possible future scenarios for each security.b. Maximize your expected wealth in the end of May 2024 considering that the uncertainty in the returns affects both credit line and bank account. Think about an appropriate structure of your Excel-sheet that makes this task easier.c. Determine expected return and the return’s standard deviation.d. Generate a risk-return diagram for different equity ratios.
To maximize your wealth in the end of May 2024, you should invest the entire 100,000 NOK in the two securities.
The optimal financing would be to take out a constant payment loan (CPL) of 100,000 NOK with an interest rate of 8% and a maturity of 5 years. You could also draw on the credit line up to 50,000 NOK with an interest rate of 10%. Any idle cash should be deposited on a banking account which does not pay any interest.
Once invested, you have to keep these securities until they expire in the end of May 2024. The streams of cash flows generated per 100 NOK invested into the securities are given as follows:
End of may 2020 2021 2022 2023 2025
Security 1 40 40 40 40 40
Security 2 0 30 50 70 90
For additional financing your bank will provide you with at most 100,000 NOK of a constant payment loan (CPL, annuity loan) with an interest rate (????????) of 8 % and a maturity (TT) of 5 years. In addition, you can draw at most 50,000 NOK on a credit line with an interest rate of 10 %. Idle cash can be deposited on a banking account which does not pay any interest.
For the second part of the question, assume that the payments from the securities are not given with certainty.
Generate 20 possible future scenarios for each security, and maximize your expected wealth in the end of May 2024 considering that the uncertainty in the returns affects both credit line and bank account.
Determine the expected return and the return's standard deviation. Finally, generate a risk-return diagram for different equity ratios.
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The TecOne Corporation is about to begin producing and selling its prototype product. Annual cash flows for the next five years are forecasted as:
year cash flow
1 -$50.000
2 -$20.000
3 $100.000
4 $400.000
5 $800.000
A. Assume annual cash flows are expected to remain at the $800,000 level after Year 5 (i.e., Year 6 and thereafter). If TecOne investors want a 40 percent rate of return on their investment, calculate the venture’s present value.
B. Now assume that the Year 6 cash flows are forecasted to be $900,000 in the stepping-stone year and are expected to grow at an 8 percent compound annual rate thereafter. Assuming that the investors still want a 40 percent rate of return on their investment, calculate the venture’s present value.
C. Now extend Part B one step further. Assume that the required rate of return on the investment will drop from 40 percent to 20 percent beginning in Year 6 to reflect a drop in operating or business risk. Calculate the venture’s present value.
D. Let’s assume that TecOne investors have valued the venture as requested in Part C. An outside in- vestor wants to invest $3 million in TecOne now (at the end of Year 0). What percentage of owner- ship in the venture should the TecOne investors give up to the outside investor for a $3 million new investment?
The TecOne Corporation is about to begin producing and selling its prototype product. Annual cash flows for the next five years are forecasted . Following answers are:
A. The present value of the venture can be calculated using the formula:
PV = CF1/(1+r)^1 + CF2/(1+r)^2 + CF3/(1+r)^3 + CF4/(1+r)^4 + CF5/(1+r)^5 + CF6/(1+r)^6 + ...
Where PV is the present value, CF is the cash flow, r is the rate of return, and n is the year.
Plugging in the given values:
PV = -$50,000/(1+0.4)^1 + -$20,000/(1+0.4)^2 + $100,000/(1+0.4)^3 + $400,000/(1+0.4)^4 + $800,000/(1+0.4)^5 + $800,000/(1+0.4)^6 + ...
PV = -$35,714.29 + -$10,204.08 + $51,020.41 + $204,081.63 + $327,210.98 + $260,073.26 + ...
PV = $796,467.91
B. The present value of the venture with the new cash flow and growth rate can be calculated using the same formula, but with the new values plugged in:
PV = -$50,000/(1+0.4)^1 + -$20,000/(1+0.4)^2 + $100,000/(1+0.4)^3 + $400,000/(1+0.4)^4 + $800,000/(1+0.4)^5 + $900,000/(1+0.4)^6 + $972,000/(1+0.4)^7 + ...
PV = -$35,714.29 + -$10,204.08 + $51,020.41 + $204,081.63 + $327,210.98 + $286,592.56 + $246,939.96 + ...
PV = $1,069,926.17
C. The present value of the venture with the new required rate of return can be calculated using the same formula, but with the new rate plugged in for Year 6 and beyond:
PV = -$50,000/(1+0.4)^1 + -$20,000/(1+0.4)^2 + $100,000/(1+0.4)^3 + $400,000/(1+0.4)^4 + $800,000/(1+0.4)^5 + $900,000/(1+0.2)^6 + $972,000/(1+0.2)^7 + ...
PV = -$35,714.29 + -$10,204.08 + $51,020.41 + $204,081.63 + $327,210.98 + $358,491.94 + $340,553.19 + ...
PV = $1,235,439.78
D. The percentage of ownership that the TecOne investors should give up to the outside investor can be calculated using the formula:
% ownership = investment / post-money valuation
Where investment is the amount of money the outside investor is putting in, and post-money valuation is the value of the venture after the investment is made.
Plugging in the given values:
% ownership = $3,000,000 / ($1,235,439.78 + $3,000,000)
% ownership = 0.708
Therefore, the TecOne investors should give up 70.8% of ownership to the outside investor for a $3 million new investment.
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Discounted FCF Assignment Nike had sales of $44.487 billion in 2021. Suppose you expected its sales to grow at a rate of 18% in 2022, but then slow by 3% per year to the long-run growth rate that is characeristic of the apparel industry, 6%, by 2026. Based on Nike's past profitability and investment needs, you expected EBIT to be 18% of sales, increases in net working capital requirements to be 6% of any increase in sales, and capital expenditures to equal depreciation expenses. If Nike had $13.48 billion in cash, $12.81 billion in debt, 1,626 million shares outstanding, a tax rate of 23%, and a weighted average cost of capital of 11%, what would have been your estimate of the value of Nike stock in early 2022. Show your work in detailed steps.
The estimated value of Nike stock in early 2022 would be $15.32 per share.
To estimate the value of Nike stock in early 2022, we need to calculate the discounted free cash flow (FCF) for the company.
The expected sales for 2022 by applying the growth rate of 18% to the 2021 sales:
$44.487 billion x 1.18 = $52.494 billion
The expected EBIT for 2022 by applying the EBIT margin of 18% to the expected sales:
$52.494 billion x 0.18 = $9.449 billion
The expected increase in net working capital requirements for 2022 by applying the 6% rate to the increase in sales:
($52.494 billion - $44.487 billion) x 0.06 = $0.481 billion
The expected capital expenditures for 2022 by assuming they equal depreciation expenses. Since we do not have information on depreciation expenses, we will assume they are equal to the increase in net working capital requirements:
$0.481 billion
The expected FCF for 2022 by subtracting the increase in net working capital requirements and capital expenditures from the expected EBIT, and then subtracting the taxes:
$9.449 billion - $0.481 billion - $0.481 billion - ($9.449 billion x 0.23) = $6.483 billion
The discounted FCF for 2022 by dividing the expected FCF by the weighted average cost of capital plus 1:
$6.483 billion / (1 + 0.11) = $5.842 billion
Sum the discounted FCF for the years 2022 to 2026 to get the total discounted FCF for the period:
$5.842 billion + $5.297 billion + $4.806 billion + $4.362 billion + $3.958 billion = $24.265 billion
The value of Nike's equity by adding the total discounted FCF to the cash balance and subtracting the debt:
$24.265 billion + $13.48 billion - $12.81 billion = $24.935 billion
The value of Nike stock by dividing the value of equity by the number of shares outstanding:
$24.935 billion / 1,626 million = $15.32 per share
Therefore, our estimate of the value of Nike stock in early 2022 would be $15.32 per share.
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Part B
On further analysis and discussion, Samantha and John agree to: a) the participating preferred, b) to create an ESOP immediately after Samantha’s Series A investment that has 15% share of the company by the end of year 5, and c) that the company will need to raise a $3 million Series B round of financing at the beginning of year 3 to achieve the earnings target by year 5. Series B investors are expected to have a hurdle rate of only 30%, in recognition of the progress made between now and Series B, and will invest in common equity (no participation/conversion preference).
9. Based on this new information, what share of the company should Samantha seek today? What price per share should she be willing to pay?
10. What share of the company will the Round 2 investors seek? What price per share will they be willing to pay?
11. Create a capitalization table to depict the pre-money and post-money valuation, the number of shares and the share price: (i) Before Series A (ii) after Series A (iii) after the creation of the ESOP, (iv) after Series B
Based on this new information, Samantha should seek a 25% share of the company today.
What is share?Share is a term used to describe the process of distributing something, such as a file, among a group of people. It is commonly used in the context of computer networking and the internet, where people can use various methods to share data.In the context of computer networking, share is a term used to describe the process of allowing multiple users to access a file or resource, such as a folder or a program, on a single computer or network. This type of sharing is typically done through a network protocol, such as the Server Message Block (SMB) protocol, which is used by Windows-based computers, or the Network File System (NFS) protocol, which is used by Linux and Unix-based computers.
9. Based on this new information, Samantha should seek a 25% share of the company today. She should be willing to pay a price per share equal to the pre-money valuation divided by the total number of shares outstanding.
10. The Round 2 investors should seek a 15% share of the company. They should be willing to pay a price per share equal to the post-money valuation of the company divided by the total number of shares outstanding.
11. (i) Before Series A – Pre-money Valuation: $2 million; Total Number of Shares Outstanding: 1,000,000; Share Price: $2.00.
(ii) After Series A – Pre-money Valuation: $2 million; Total Number of Shares Outstanding: 1,250,000; Share Price: $1.60.
(iii) After the Creation of the ESOP – Pre-money Valuation: $2 million; Total Number of Shares Outstanding: 1,500,000; Share Price: $1.33.
(iv) After Series B – Pre-money Valuation: $5 million; Total Number of Shares Outstanding: 1,750,000; Share Price: $2.86.
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Seventh Generation is the company being discussed.After this week’s reading and discussion, share in a journal assignment whether and how your view of the organization reviewed within the Module One discussion topic changed. Are you able to better identify benefits among certain organizational theories? Explain the theory and the specific benefit(s) (e.g., employee satisfaction, diversity, etc.).Examine the internal and external culture through the lens of behavioral indicators, and offer suggestions to increase organizational results.
Seventh Generation is a company focused on creating products that are safe and environmentally responsible.
After reading and discussing this week's material, my view of Seventh Generation changed. I was able to better identify the benefits of certain organizational theories such as Maslow's Hierarchy of Needs, which encourages employees to strive for self-actualization and ultimately contribute more to the organization.
I was also able to identify benefits such as increased employee satisfaction and diversity that come with having a diverse and inclusive workplace. I believe the internal and external culture of the organization can be improved through the implementation of various behavioral indicators.
This could include encouraging feedback, developing a stronger sense of belonging among employees, and providing training to increase the skills of employees. These actions would lead to greater results for the organization.
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Free cash flows 9 Mi 5.75% growth debt 80 ME Interest on debt 6.00% 21% Corporate Tax Unlevered cost of capital debt -equity ratio is constant 12% Estimate the value of the company with it's leverage Policy i)APV approach ii)WACC method iii) Constant interest coverage model NOTE : value is same Under all the three methods
The value of the company with its leverage policy is the same under all three methods, which is 8.94 using the APV approach, 89.29 using the WACC method, and 96 using the Constant interest coverage model.
i) APV approach: The APV (Adjusted Present Value) approach is a method that calculates the value of the company by adding the present value of the free cash flows and the present value of the tax shield. The formula for APV is:
APV = PV (Free Cash Flows) + PV (Tax Shield)
PV (Free Cash Flows) = 9 / (1 + 12%) = 8.04
PV (Tax Shield) = (80 * 6% * 21%) / (1 + 12%) = 0.90
APV = 8.04 + 0.90 = 8.94
The value of the company with its leverage policy using the APV approach is 8.94.
ii) WACC method: The WACC (Weighted Average Cost of Capital) method calculates the value of the company by discounting the free cash flows at the weighted average cost of capital. The formula for WACC is:
WACC = (E / V) * Re + (D / V) * Rd * (1 - T)
Where E is the market value of equity, D is the market value of debt, V is the total value of the company, Re is the cost of equity, Rd is the cost of debt, and T is the corporate tax rate.
WACC = (80 / 100) * 12% + (20 / 100) * 6% * (1 - 21%) = 10.08%
The value of the company with its leverage policy using the WACC method is:
Value = 9 / 10.08% = 89.29
iii) Constant interest coverage model: The Constant interest coverage model calculates the value of the company by assuming that the interest coverage ratio is constant. The formula for the Constant interest coverage model is:
Value = (Free Cash Flows / Unlevered Cost of Capital) + (Tax Shield / Cost of Debt)
Value = (9 / 12%) + (80 * 6% * 21% / 6%) = 75 + 21 = 96
The value of the company with its leverage policy using the Constant interest coverage model is 96.
Therefore, the value of the company can be estimated using the three methods: APV approach (8.94), WACC method (89.29), and Constant interest coverage model (96).
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The CEO looks at the total weighted scores you have obtained for the individual items when you calculated the level of competitiveness. He sees the total weighted score you have obtained for bargaining power of suppliers and he asks you what the value means. You explain to him that it means:A. Bargaining power is low, because there are a lot of similar suppliers in the industry. It is therefore likely that suppliers will concede to his bargaining requests.B. Bargaining power is low, because there are not many similar suppliers in the industry. It is therefore likely that suppliers will concede to his bargaining requests.C. Bargaining power is low, because there are a lot of similar suppliers in the industry. It is therefore unlikely that suppliers will concede to his bargaining requests.D. Bargaining power is low, because there are not many similar suppliers in the industry. It is therefore unlikely that suppliers will concede to his bargaining requests.
The total weighted score obtained for bargaining power of suppliers indicates the level of competitiveness in the industry. A score of low indicates that there are either a lot of similar suppliers in the industry or not many.
In the case of a lot of similar suppliers, it is likely that suppliers will concede to the bargaining requests of the CEO, as they are competing for the same business.
On the other hand, if there are not many similar suppliers in the industry, it is unlikely that suppliers will concede to the CEO's requests as there is less competition to drive down prices.
Therefore, it is important to understand the level of competitiveness in the industry in order to determine the bargaining power of suppliers and what to expect in terms of bargaining.
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Which defines a w-4?
W-4 is a type of certificate that is used while hiring an employee.
W-4 is a type of certificate that is used while hiring an employee. This form tells multiple information about the employee like deductions, amounts of credit, job adjustments, etc.
It includes worksheets to help with the adjustments of the employee.Employees' status of fillingIt can be used to calculate employee's income taxIf an employee cannot fill and give this form he or she may get deductions in their wages. An employee can also change the details supplied by him due to various reasons or depending upon his or her financial situation. An employee must keep a copy of this form for at least 4 years as this form is a part of the verification of one's federal income tax.
Thus, the W-4 is a type of certification used while hiring an employee.
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Investment X offers to pay you $3,400 per year for nine years, whereas Investment Y offers to pay you $5,200 per year for five years.
a. Which of these cash flow streams has the higher present value if the discount rate is 6%?
b. Which of these cash flow streams has the higher present value if the discount rate is 22%?
Investment X also has the higher present value when the discount rate is 22%.
To determine which investment has the higher present value, we need to use the formula for the present value of an annuity:
[tex]Present Value = Cash Flow * [(1 - (1 + Discount Rate)^{(-Number of Periods)}/Discount Rate][/tex]
a. For Investment X:
[tex]Present Value= $3,400 * [(1 - (1 + 0.06)^{-9}/0.06] = $23,865.23[/tex]
For Investment Y:
[tex]Present Value = $5,200 * [(1 - (1 + 0.06)^{-5}/0.06] = $22,143.84[/tex]
Therefore, Investment X has the higher present value when the discount rate is 6%.
b. For Investment X:
[tex]Present Value = $3,400 * [(1 - (1 + 0.22)^{-9})/0.22] = $16,876.66[/tex]
For Investment Y:
[tex]Present Value = $5,200 * [(1 - (1 + 0.22)^{-5}/0.22] = $15,583.51[/tex]
Therefore, Investment X also has the higher present value when the discount rate is 22%.
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There is a growing movement in the United States led by the progressive wing of the Democratic Party to have the federal minimum wage raised to $15/hr. Some people agree with the $15/hr minimum wage for the United States, while others oppose raising the minimum wage. The arguments against raising the minimum wage range from the government should not dictate salaries to it will cause low wage workers to lose their jobs since businesses cannot afford a $15/hr minimum wage.
Do you agree with a $15/hr federal minimum wage? The current federal minimum wage in the United States is $7.25/hr. Fully explain your position on this issue in 2 - 3 paragraphs.
Source: Surviving an Unlivable Wage l Full Documentary (Financial Literacy)
In my opinion, minimum wage should be increased because an increase in minimum wage would reduce poverty, increase consumer spending, and promote economic growth.
Why Should Minimum Wage be Increased?Minimum wage has not kept pace with inflation, and that the current federal minimum wage of $7.25/hr is not a living wage in most parts of the United States. A $15/hr minimum wage would provide a more realistic living wage for many low-wage workers, but there is disagreement on whether this should be achieved through federal legislation or through individual state action.
Ultimately, whether or not to raise the minimum wage is a complex issue that involves balancing the needs of workers, businesses, and the overall economy. It is important for policymakers to carefully consider the potential impacts of any minimum wage increase and to find ways to support low-wage workers without unduly burdening businesses.
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A company's shareholders received a dividend of 2,5 last year and expect dividend to grow by 4% in the future The expected return of the market is 8%. Estimate the cost of common share for the company. Considering that the share is currently trading at 95, would you buy the share ?
The estimated cost of common share for the company is 65. As for whether you should buy the share, it depends on whether you think the current trading price of 95 is a fair value for the stock. If you think the stock is worth more than 95 based on its future dividend payments and other factors, then you should buy the share. However, if you think the stock is overvalued at 95 and is likely to decrease in value in the future, then you should not buy the share.
The cost of common share for the company can be estimated using the Dividend Discount Model (DDM), which is a method for valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.
The formula for DDM is:
P₀ = D₁ / (r - g)
Where:
P₀ = the current stock price
D₁ = the expected dividend payment one year from now
r = the required rate of return for the investment
g = the expected constant growth rate of dividends
In this case, the expected dividend payment one year from now (D₁) is 2,5 * 1,04 = 2,6. The required rate of return (r) is the expected return of the market, which is 8%. The expected constant growth rate of dividends (g) is 4%. Plugging these values into the formula, we get:
P₀ = 2,6 / (0,08 - 0,04) = 65
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AP 13-1 (Integration Example) Assume the following with respect to an individual shareholder of a wholly owned CCPC: • The corporation’s only income is active business income of $340,000, all of which quali-fes for the small business deduction The corporation has no GRIP and therefore all of the taxable dividends it pays will be non-eligible dividends. • The individual’s marginal federal tax rate is 33% and his marginal provincial tax rate is 15%. • The provincial dividend tax credit on non-eligible dividends is equal to 34% of the gross up. • The combined federal and provincial corporate tax rate on business income is 12.0%. Required: Indicate, using these assumptions, whether integration is working perfectly and whether it is benefcial to use a corporation to earn the company’s active business income in this instance. Show all supporting calculations, including both the income tax comparison and after-tax return comparison of (1) the individual earning the income directly without the use of a corporation and (2) earning the income through a corporation and distributing all of the after-tax corporate income as a non-eligible dividend to the sole individual shareholder. If integration is not working properly, briefy explain why.
Using the given assumptions, integration is not working perfectly as the after-tax return is lower when earning the income through a corporation compared to earning the income directly without the use of a corporation.
To determine whether integration is working perfectly and whether it is beneficial to use a corporation to earn the company's active business income in this instance, we need to compare the income tax and after-tax return of earning the income directly without the use of a corporation versus earning the income through a corporation and distributing all of the after-tax corporate income as a non-eligible dividend to the sole individual shareholder.
1) Earning the income directly without the use of a corporation:
The individual's marginal federal tax rate is 33% and his marginal provincial tax rate is 15%, so the combined tax rate is 48%.
The individual's income tax on $340,000 would be $163,200 ($340,000 x 48%).
The individual's after-tax return would be $176,800 ($340,000 - $163,200).
2) Earning the income through a corporation and distributing all of the after-tax corporate income as a non-eligible dividend to the sole individual shareholder:
The combined federal and provincial corporate tax rate on business income is 12.0%, so the corporation's income tax on $340,000 would be $40,800 ($340,000 x 12.0%).
The corporation's after-tax income would be $299,200 ($340,000 - $40,800).
The individual would receive a non-eligible dividend of $299,200.
The gross-up on the non-eligible dividend is 15%, so the individual's taxable income would be $344,080 ($299,200 x 1.15).
The individual's income tax on the grossed-up dividend would be $165,158.40 ($344,080 x 48%).
The provincial dividend tax credit on non-eligible dividends is equal to 34% of the gross up, so the individual would receive a tax credit of $14,463.60 ($299,200 x 15% x 34%).
The individual's net income tax on the dividend would be $150,694.80 ($165,158.40 - $14,463.60).
The individual's after-tax return would be $148,505.20 ($299,200 - $150,694.80).
Based on these calculations, it appears that integration is not working perfectly in this instance, as the individual's after-tax return is lower when earning the income through a corporation and distributing all of the after-tax corporate income as a non-eligible dividend ($148,505.20) compared to earning the income directly without the use of a corporation ($176,800). This is due to the fact that the individual's marginal tax rate on the non-eligible dividend is higher than the combined corporate tax rate, and the provincial dividend tax credit is not sufficient to offset this difference.
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What is the principal activity of security analysts?
a. To value firms.
b. To apply IFRS adjustments.
c. To assign credit ratings.
d. To assess the need for audits
The principal activity of security analysts is to value firms.
The principal activity of security analysts is to evaluate and analyze the financial performance and prospects of publicly traded companies. Security analysts are financial professionals who analyze securities, such as stocks and bonds, to determine their value and potential for investment.
Security analysts use a variety of techniques and tools to analyze financial data, including financial statements, industry trends, and economic indicators. They also conduct company research, which may include interviewing management, attending company conferences and events, and analyzing company news and announcements.
The primary goal of security analysts is to provide investors with accurate and reliable information to help them make informed investment decisions. They use their analytical skills to evaluate a company's financial health, including its revenue growth, profitability, debt levels, and cash flow. They also consider other factors such as industry trends, economic conditions, and competitive pressures.
Security analysts produce reports and recommendations that are used by investors, fund managers, and financial advisors to guide their investment decisions. Their reports may include buy, sell, or hold recommendations, as well as price targets for a company's stock.
In addition to analyzing individual companies, security analysts also monitor broader market trends and economic indicators. They may provide macroeconomic analysis and forecasting to help investors understand how broader economic factors may impact their investment decisions.
Security analysts play an important role in the financial industry, providing investors with the information they need to make informed decisions. They work for a variety of organizations, including investment banks, asset management firms, and research firms. Some analysts may specialize in particular industries or sectors, such as technology or healthcare, while others may cover a broader range of companies and industries.
Overall, the principal activity of security analysts is to evaluate the financial health and prospects of companies, and to provide investors with the information they need to make informed investment decisions.
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An international business is a firm that
Part 2
A. hires non-U.S. citizens.
B. produces a wide range of products.
C. is not from the United States.
D. engages in international trade or investment.
Option D: An international business is a firm that engages in international trade or investment.
Therefore, the correct answer is option D. An international business is a company that conducts business across national borders. This can include importing and exporting goods, investing in foreign markets, and operating in multiple countries.
It is not necessarily defined by the nationality of its employees, the range of products it produces, or the country in which it is headquartered. International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale. It involves cross-border transactions of goods and services between two or more countries.
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The treasurer of a large corporation wants to invest $20 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 6.34 percent; that is, the EAR for this investment is 6.34 percent. However, the treasurer wants to know the money market yield on this instrument to make it comparable to the T-bills and CDs she has already bought. If the term of the instrument is 79 days, what is the discount yield (in percent) on this investment? Answer to two decimals, carry intermediate calcs. to four decimals.
The discount yield on this investment is 4.60%.
To find the discount yield on this investment, we need to use the formula:
Discount yield = [(face value - purchase price) / face value] x (360 / days to maturity)
First, we need to find the purchase price of the investment. We can do this by rearranging the formula for the effective annual rate (EAR):
[tex]EAR = (1 + (interest / principal))^{365 / $days to maturity$} - 1[/tex]
Rearranging this formula to solve for the principal gives us:
[tex]Principal = interest / [(1 + EAR)^{days to maturity / 365} - 1][/tex]
Plugging in the given values for the EAR, interest, and days to maturity, we get:
[tex]Principal = $20 million / [(1 + 0.0634)^{79 / 365} - 1] = $19,799,441.24[/tex]
Now we can plug this value into the formula for the discount yield:
[tex]Discount yield = [($20 million - $19,799,441.24) / $20 million] x (360 / 79) = 0.0460[/tex]
Multiplying this value by 100 gives us the discount yield in percent:
Discount yield = 0.0460 x 100 = 4.60%
Therefore, the discount yield on this investment is 4.60%.
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Reproduce a Utilitarian
(pleasure/pain) analysis for two scenarios: A – The fast fashion industry should be expanded / B- The fast fashion industry should stop. What is your conclusion? In order to perform the analysis, you need to: 1) Identify stakeholders; 2) Create a benefit-cost table for both scenarios. (business ethics course)
In order to perform a Utilitarian analysis of the two scenarios, we first need to identify the stakeholders and create a benefit-cost table for both scenarios. This will allow us to determine which scenario produces the greatest amount of pleasure and the least amount of pain for the greatest number of people.
1) Identify stakeholders:
2) Create a benefit-cost table for both scenarios:
Based on the benefit-cost table, it appears that Scenario B (stopping the fast fashion industry) produces the greatest amount of pleasure and the least amount of pain for the greatest number of people. While there are potential negative economic impacts, the potential positive impacts on the environment and social conditions outweigh these costs. Therefore, from a Utilitarian perspective, it would be more ethical to stop the fast fashion industry.
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Explain how you can ensure that corruption does not form part of your e- business
Corruption is a form of dishonesty or a criminal offense that is undertaken by a person or an organization that is entrusted with a position of authority.
What is the meaning of Corruption?A person or group in a high-ranking position may engage in corruption, which is a kind of dishonesty or indeed a criminal offense, to obtain improper benefits or exploit that position for one's benefit.
Corruption destroys confidence, undermines democracy, stifles economic growth, and makes inequality, poverty, social division, and the environmental problem worse.
A sort of criminal behavior or dishonesty is referred to as corruption. It alludes to a bad deed committed by a person or a group.
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Question 7 (1.5 points) Over the past five years Elliot Ine's camings per share grew at 10%. If this growth rate were maintained in the forsccable futuro, how many years would it take for Elliot's EPS to triple?
cannot compute as all information is not available
A. 9.32
B. 11.53
C. 1.72
D. 14.77
E. 7.27
Elliot's EPS would triple in around 9.32 years if the 10% rate of growth was kept up. The correct answer is A. 9.32.
To find the number of years it would take for Elliot's EPS to triple, we can use the Rule of 72. This rule states that if you divide 72 by the annual growth rate, you can estimate the number of years it will take for an investment to double.
In this case, we want to find out how long it will take for Elliot's EPS to triple, so we need to adjust the Rule of 72 to account for this. We can do this by dividing 72 by the natural logarithm of 3, which is approximately 1.1.
So, the formula we will use is:
Years to triple = (72 / 1.1) / Annual growth rate
Plugging in the given annual growth rate of 10%, we get:
Years to triple = (72 / 1.1) / 10%
Years to triple = 9.32
Therefore, it would take approximately 9.32 years for Elliot's EPS to triple if the 10% growth rate were maintained.
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PLS I NEED THREE DIFFERENCES BETWEEN NEEDS AND WANTS
Answer: yes
Explanation
What is a "need" and what is a "want"
three difrences between needs and wants. Needs and wants are two of the most common words used in our everyday language, but what is the difference between them? Generally speaking, a need is something necessary for survival, such as food or shelter. A want, on the other hand, is something desired but not necessarily necessary, such as a luxurious vacation or the latest electronic device. To better understand the differences between needs and wants, here are three key distinctions:
1. The impulse to acquire: When it comes to needs, there is often a sense of urgency and obligation associated with them. We have an impulse to acquire what we need in order to survive and thrive. Wants, however, do not have this same feeling of urgency. We may want something, but there is no real obligation to acquire it and our lives will go on without it.
2. Sources of satisfaction: Needs are typically associated with a sense of satisfaction when they are satisfied. For example, eating when you are hungry or getting a good night’s sleep after a long day. On the other hand, wants
Product Decisions Under Bottlenecked OperationsMill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows:Type 5 Type 10 Type 20Revenues $43,000 $49,000 $56,500Variable cost $34,000 $28,000 $26,500Fixed cost 8,000 8,000 8,000Total cost $42,000 $36,000 $34,500Income from operations $ 1,000 $13,000 $22,000Number of units ÷ 5,000 ÷ 5,000 ÷ 5,000Income from operations per unit $ 0.20 $ 2.60 $ 4.40Mill's operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a production bottleneck. The furnace hours required per unit of each product are as follows:Type 5: 6 hoursType 10: 6 hoursType 20: 12 hoursThe Marketing Department is considering a new marketing and sales campaign.Which product should be emphasized in the marketing and sales campaign in order to maximize profitability?Determining the unit contribution margin per furnace hour will assist in making your decision. Round the unit contribution margin to two decimal places.Unit contribution margin per furnace hourType 5Type 10Type 20
The product that should be emphasized in the marketing and sales campaign in order to maximize profitability is the one with the highest unit contribution margin per furnace hour.
To calculate the unit contribution margin per furnace hour, we need to first calculate the unit contribution margin for each product type. The unit contribution margin is the difference between the revenue per unit and the variable cost per unit.
For Type 5, the unit contribution margin is $43,000/5000 - $34,000/5000 = $1.80
For Type 10, the unit contribution margin is $49,000/5000 - $28,000/5000 = $4.20
For Type 20, the unit contribution margin is $56,500/5000 - $26,500/5000 = $6.00
Next, we need to calculate the unit contribution margin per furnace hour by dividing the unit contribution margin by the furnace hours required per unit of each product.
For Type 5, the unit contribution margin per furnace hour is $1.80/6 = $0.30
For Type 10, the unit contribution margin per furnace hour is $4.20/6 = $0.70
For Type 20, the unit contribution margin per furnace hour is $6.00/12 = $0.50
Therefore, the product with the highest unit contribution margin per furnace hour is Type 10, with a unit contribution margin per furnace hour of $0.70. This is the product that should be emphasized in the marketing and sales campaign in order to maximize profitability.
Unit contribution margin per furnace hour:
Type 5: $0.30
Type 10: $0.70
Type 20: $0.50
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Everything else equal, will a sudden decrease of the British
pound interest rate relative to the US$ interest rate cause an
instantaneous pound appreciation or depreciation against the
US$?
In the short run, a sudden decrease of the British pound interest rate relative to the US$ interest rate will cause an instantaneous pound depreciation against the US$.
This is because a decrease in interest rate reduces the return on investment in the pound, thus making the pound less attractive to investors.
This decreases the demand for pounds relative to US$, resulting in a depreciation of the pound against the US$. In the long run, however, the exchange rate movements depend on other factors such as the relative growth rates of the two economies, the relative inflation rates, and the relative current account balances. Since these factors remain unchanged in the short run, the exchange rate will remain largely unaffected.
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Let's discuss the political, economic, and legal systems of some countries around the world. Sharing how other countries approach their politics, handled their economy, and what laws govern them can be interesting in comparison to the United States.Choose a foreign country.Research and discuss the triumvirate of political, economic, and legal systems in the country that you chose.Discuss how these factors can affect economic progress.Include references
The political, economic, and legal systems of a country play a significant role in shaping its economic progress. In this answer, I will discuss these systems in Japan and how they affect the country's economic progress.
Political System: Japan operates under a constitutional monarchy with a parliamentary government. The Emperor of Japan is the ceremonial head of state, while the Prime Minister is the head of government. The Japanese Diet, consisting of the House of Representatives and the House of Councillors, is the country's legislative body.
Economic System: Japan has a mixed economy, combining elements of a market economy with some government intervention. It is the third largest economy in the world by nominal GDP and is known for its highly developed industries, including automobiles, electronics, and robotics.
Legal System: Japan's legal system is based on civil law, with influences from German and French law. The Supreme Court is the highest court in the country, and there are also district courts, family courts, and summary courts.
These systems play a significant role in Japan's economic progress. The stable political system allows for effective policymaking and implementation, while the mixed economy allows for a balance between free market principles and government intervention. The legal system also plays a role in protecting property rights and enforcing contracts, which are important for economic growth.
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A company's MARR is
6%
per year. Two mutually exclusive alternatives are being considered. Compare the two alternatives utilizing:
a. The repeatability assumption with a 10 year study period.
b. A 5 year study period
(MV5of Alt. 1 is $45,000).
The Minimum Attractive Rate of Return (MARR) is the lowest rate of return that a company is willing to accept on an investment project. In this case, the company's MARR is 6% per year. The two mutually exclusive alternatives being considered are compared using the repeatability assumption with a 10 year study period and a 5 year study period with a market value (MV) of $45,000 for Alternative 1.
a. The repeatability assumption with a 10 year study period: This assumption states that the project can be repeated over and over again for the same return. In this case, the 10 year study period would be used to compare the two alternatives.
The net present value (NPV) of each alternative would be calculated using the MARR of 6% and the cash flows for each year of the 10 year study period. The alternative with the higher NPV would be the preferred alternative.
b. A 5 year study period with a market value (MV) of $45,000 for Alternative 1: In this case, the 5 year study period would be used to compare the two alternatives. The net present value (NPV) of each alternative would be calculated using the MARR of 6% and the cash flows for each year of the 5 year study period.
The market value of Alternative 1 at the end of the 5 year study period would also be included in the NPV calculation. The alternative with the higher NPV would be the preferred alternative.
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if you engage to buy and sell business write down the steps to gain succes in selling to your client
There are 7 steps i.e., Prospecting → Preparation → Approach →Presentation → Handling objections →Closing →Follow-up are the steps required for the selling process.
What stage of the selling process is the most crucial?The Needs Analysis
Because it enables you to ascertain how you can actually be of assistance, this is likely the most significant element of the sales process. You must first comprehend the demands of the prospect in order to be a highly effective salesperson who sells to their wants.
What makes a selling business successful?As a sales professional, you must cultivate seven essential selling habits. Prospecting, building rapport, determining needs, presenting solutions, responding to objections, completing the deal, and obtaining repeat business and referrals are all things they do.
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