The client's values and priorities should be taken into account in policy analysis, but the analyst should also maintain objectivity and consider the broader public interest to ensure the quality and fairness of the analysis.
The question of whether policy analysis should be client-oriented and whether the analyst should always be driven by the powers and values of the client is a matter of debate and depends on various factors.
On one hand, being client-oriented can ensure that the policy analysis aligns with the specific needs, priorities, and values of the client. It can enhance the relevance and applicability of the analysis and increase the chances of the policy being accepted and implemented.
On the other hand, policy analysis should also be guided by principles of objectivity, evidence-based research, and the broader public interest. Analysts have a responsibility to provide unbiased and independent assessments, considering various perspectives and potential impacts of the policy. They should balance the client's values with the broader societal interests and long-term sustainability.
In practice, the ideal approach lies in finding a middle ground where the analyst considers the client's needs and values while maintaining professional integrity and adhering to ethical standards. This may involve engaging in open dialogue with the client to understand their objectives, discussing potential trade-offs, and providing evidence-based recommendations that consider multiple stakeholders and long-term consequences.
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Countries use trade policies in a wide range of industries,
including agriculture,
mining, aircraft, and high technology.
s?
Why do governments support their high-technology industries?
Please explain
Countries use trade policies in a wide range of industries such as agriculture, mining, aircraft, and high technology. Governments support their high-technology industries for several reasons.Technology is an integral part of modern economies, particularly those that are driven by innovation.
It has been observed that high-technology firms are major job creators in the economy. Such firms attract large investments, employ highly skilled workers and have long-lasting economic and social impacts on the economy.Governments are increasingly using trade policies to promote their high-technology industries by investing in research and development (R&D) and setting up institutions to develop new technologies.
For instance, governments use intellectual property rights to provide incentives for innovators to invest in R&D. They also use trade policies to provide subsidies and tax incentives to encourage high-technology firms to invest in R&D. These policies are often used to protect domestic industries from foreign competition.Governments also use trade policies to encourage the growth of their high-technology industries by promoting exports.
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If you save $290 at the beginning of every three months for eleven years, for how long can you withdraw $540 at the beginning of each quarter starting eleven years from nowe, assuming that interest is 9% compounded quarterly? State your answer in years and months (from 0 to 11 months)
You can withdraw $540 for years) and month(s) (Type whole numbers)
Given data: Amount saved at the beginning of every three months = $290Time period = 11 years Quarterly interest rate = 9%Compounding is done quarterly.
The present value of the saving will be used to calculate the future value and the number of quarters for which withdrawals are possible.
Let the present value of saving be P. The formula for the future value is: FV = P(1 + r/n)^(n*t)
Where, FV = Future Value P = Present Value (Amount saved at the beginning of every three months) r = annual interest rate = 9% = 0.09n = number of times interest compounded per year = 4 (quarterly) t = number of years = 11*4 = 44n*t = 4*11 = 44FV = P(1 + r/n)^(n*t) => P = FV / (1 + r/n)^(n*t)
We have, FV = $540P = $540 / (1 + 0.09/4)^(4*11) = $13,547.67For the above-present value, the future value can be calculated after 11 years, using the formula: FV = P(1 + r/n)^(n*t)
Where, P = $13,547.67r = annual interest rate = 9% = 0.09n = number of times interest compounded per year = 4 (quarterly) t = number of years = ? (To be calculated)We have, FV = $540P = $13,547.67FV = P(1 + r/n)^(n*t) => t = [ln(FV/P)] / [n * ln(1 + r/n)]t = [ln($540/$13,547.67)] / [4 * ln(1 + 0.09/4)]t = 5.7 years (approx.).
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Mary Price went for a consultation about a surgical procedure to remove abdominal fat. When Robert Britton met with her, he wore a name tag that identified him as a doctor, and was addressed as "doctor" by the nurse. Britton then examined Price, touching her stomach and showing her where the incision would be made. But Britton was the office manager, not a doctor. Although a doctor actually performed the surgery on Price, Britton was present. It turned out that the doctor left a tube in Price's body at the site of the incision. The area became infected, requiring corrective surgery. A jury awarded Price $275,000 in damages in a suit against Britton. He subsequently filed a Chapter 7 bankruptcy petition. Is this judgment dischargeable in bankruptcy court?
A jury awarded Mary Price $275,000 in damages in a suit against Robert Britton. He subsequently filed a Chapter 7 bankruptcy petition. Is this judgment dischargeable in bankruptcy court?No, this judgment is not dischargeable in bankruptcy court.
This is because bankruptcy code 11 USC §523(a)(6) states that debts that are non-dischargeable in bankruptcy court include willful and malicious injury caused by the debtor to another person or the property of another person. This code prohibits the discharge of debts that arise out of willful and malicious injury to another person or property.Therefore, as Britton's action of pretending to be a doctor caused Mary Price to undergo surgery and subsequently suffer from the consequences of the surgery, the court decided to award Mary $275,000 in damages and this debt cannot be discharged in the bankruptcy court.
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Suppose you are trading derivatives on natural gas and you simultaneously execute the following transactions: Buy a forward contract at a price of $2.52 per mmbtu, buy two put options with an exercise price of $2.50 per mmbtu and sell a call option with an exercise price of $2.60 per mmbtu. The size of each contract is 10,000 mmbtu, the options are European style and all of the contracts expire on December 31.
(a) Complete the following table to show how the payoff for your net position depends on the spot price of natural gas on December 31:
Natural gas price on December 31 (ST)
Transaction ST < 2.50 2.50 <= ST < 2.60 ST >= 2.60
Forward contract
X = 2.50 put options
X = 2.60 call option
Net Position
Net position
The payoff for the net position at different spot prices of natural gas on December 31 are $0.10 and $300.
Let's complete the table:
Natural gas price on December 31 (ST)
Transaction ST < 2.50 2.50 <= ST < 2.60 ST >= 2.60
Forward contract 0 ST - $2.52 * 10,000 ST - $2.52 * 10,000
X = 2.50 put options 2.50 - ST 0 0
X = 2.60 call option 0 0 $2.60 - ST
Net Position 2.50 - ST ST - $2.52 * 10,000 $2.60 - ST - $2.52 * 10,000
To calculate the net position, we sum up the individual payoffs from the forward contract, put options, and call option.
For example, if the spot price of natural gas on December 31 (ST) is $2.40, the net position would be:
Net Position = 2.50 - $2.40 + 0 - 0 = $0.10
Similarly, for a spot price of $2.55, the net position would be:
Net Position = 0 + ($2.55 - $2.52) * 10,000 - 0 = $300
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Given the following information, what are the NZD/SGD currency against currency bid-ask quotations? (You are required to compute two sets of cross-rate bid and ask quotes. 1. "New Zeland dollar" means the cross rate of NZD/SGD. 2. "Singapore dollar" means SGD/NZD. Do not round intermediate calculations. Round your answers to 4 decimal places. ) American Terms Bid Ask Bank Quotations New Zealand dollar Singapore dollar European Teres Bid Ask 1. 3772 1. 3786 1. 6311 1. 6324 7277 -7284. 6144 6149 New Zealand dollar Singapore dollar Bid Ask
The bid-ask quotations for the NZD/SGD currency pair are as follows: New Zealand dollar (NZD) against Singapore dollar (SGD): Bid: 1.3772, Ask: 1.3786
Singapore dollar (SGD) against New Zealand dollar (NZD):
Bid: 0.7277
Ask: 0.7284
To calculate the bid-ask quotations for the NZD/SGD currency pair, we need to consider the cross rates between the New Zealand dollar (NZD), Singapore dollar (SGD), and the American Terms and European Terms bid-ask quotations.
For the NZD/SGD bid-ask quotations:
The bid quotation is obtained by dividing the European Terms bid (1.6311) by the American Terms ask (1.3786), which gives us 1.3772.
The ask quotation is obtained by dividing the European Terms ask (1.6324) by the American Terms bid (1.3772), which gives us 1.3786.
For the SGD/NZD bid-ask quotations:
The bid quotation is obtained by dividing 1 by the NZD/SGD ask quotation (1.3786), which gives us 0.7277.
The ask quotation is obtained by dividing 1 by the NZD/SGD bid quotation (1.3772), which gives us 0.7284.
Therefore, the bid-ask quotations for the NZD/SGD currency pair are as follows:
New Zealand dollar against Singapore dollar:
Bid: 1.3772
Ask: 1.3786
Singapore dollar against New Zealand dollar:
Bid: 0.7277
Ask: 0.7284
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3. The apocalypse continues unabated. On the bright side, your billings are increasing exponentially! Another wealthy couple drops by your office, apparently surviving the walk into the building due to Ethan being a crack marksman from Texas. Ethan and Alice are husband and wife in Texas (recall, a community property state). Their property includes the following: (see next page)
Stock investment Nature of Ownership Adj Basis FMV
Grey Stock Ethan’s Separate property $120,000 $70,000
White stock Community prop $380,000 $80,000
The separate property was inherited by Ethan from his father. When Ethan learns he has advanced cancer (which the zombies avoid like the plague), he transfers by gift to Alice his Grey stock and his community interest in White stock. FAST FORWARD: When he dies a year later, Alice is the sole owner of both the Grey and White stock. (Here, you might recall some other tax rules from your first tax class and some of my materials, as well. Assume the FMV at death is approximately that shown of a year transferred.
Ethan and Alice are a wealthy couple in Texas, a community property state. Ethan’s separate property includes grey stock with an adjusted basis of $120,000 and a fair market value of $70,000. White stock is a community property with an adjusted basis of $380,000 and a fair market value of $80,000. Ethan transferred Grey stock and his community interest in White stock to Alice as a gift when he discovered he had advanced cancer (which zombies avoid like the plague). Alice is the sole owner of both stocks after Ethan dies a year later.
Assume that the fair market value of the stocks at death is about the same as when they were transferred a year ago. There are a few tax rules to keep in mind, including: When a person dies, all of their assets are subject to estate tax, including separate property. When property is transferred as a gift during someone’s lifetime, the basis carries over to the recipient.The transferor spouse's community property interest is included in their gross estate. Ethan's grey stock is separate property. Since Ethan died, the stock is included in his gross estate and is subject to estate tax. The basis of the stock is $120,000, and its fair market value is $70,000. Ethan's estate will have a loss of $50,000 ($70,000 - $120,000) in the stock because the adjusted basis is greater than the fair market value.
In conclusion, the separate property Grey stock of Ethan's is included in his gross estate, subject to estate tax, and has a loss of $50,000, while the community property White stock of Ethan's transferred to Alice as a gift before his death and owned entirely by her, will not be included in Ethan's gross estate and Alice's basis in the stock is its fair market value of $80,000.
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Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp) = 12%, Op = 22%, rf = 4%.
a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 7%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk- free asset? (Do not round intermediate calculations. Round your answer to 2 decimal place.)
Risky portfolio %
Risk-free asset %
b. What will be the standard deviation of the rate of return on her portfolio? (Do not round intermediate calculations. Round your
answer to 2 decimal places.)
Standard deviation %
c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 12%. Which client is more risk averse?
First client
Second client
a) The proportion the client should invest in the risky portfolio (P) and the risk-free asset are as follows:
Risky portfolio: 64.71%
Risk-free asset: 35.29%
b) The standard deviation of the rate of return on the portfolio is 12.17%.
(a)To calculate the proportions, we need to use the formula for the proportion invested in the risky portfolio (P):
P = (E(rp) - rf) / (Op^2)
In this case, E(rp) is 12% (expected rate of return on the risky portfolio), rf is 4% (risk-free rate), and Op is 22% (standard deviation of the risky portfolio).
Plugging in these values, we have:
P = (0.12 - 0.04) / (0.22^2)
= 0.08 / 0.0484
= 1.6537
To determine the proportion invested in the risk-free asset, we subtract the proportion invested in the risky portfolio from 1:
Risk-free asset proportion = 1 - 1.6537
= -0.6537
Since the proportion cannot be negative, we round it to 0.00.
Therefore, the client should invest approximately 64.71% in the risky portfolio (P) and 35.29% in the risk-free asset.
b) The formula to calculate the standard deviation of a portfolio is:
σ(p) = √[P^2 × σ(risky)^2 + (1-P)^2 × σ(rf)^2 + 2P(1-P) × Cov(risky, rf)]
In this case, P is 0.6471 (proportion invested in the risky portfolio), σ(risky) is 0.22 (standard deviation of the risky portfolio), σ(rf) is 0.04 (standard deviation of the risk-free asset), and Cov(risky, rf) is 0 (as the risk-free asset has no covariance with itself).
Plugging in these values, we have:
σ(p) = √[(0.6471^2 × 0.22^2) + (0.3529^2 × 0.04^2) + 2 × 0.6471 × 0.3529 × 0]
= √[0.0281921359 + 0.00049908544 + 0]
= √0.02869122134
= 0.1696755227
Rounding to 2 decimal places, the standard deviation of the rate of return on the portfolio is approximately 0.17 or 17%.
c) The first client is more risk averse.
Comparing the two clients, the first client who desires a 12% standard deviation constraint on the portfolio is more risk averse than the second client who seeks the highest return possible subject to a 12% standard deviation limit.
Being more risk averse means the first client is more concerned about minimizing risk and volatility in the portfolio, prioritizing risk management over potential returns. In contrast, the second client is willing to take on higher risk for the possibility of achieving a higher return.
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Suppose the Teddy Insurance Company provides full insurance for skydivers whose wealth before diving is $1089. An accident will leave divers with a wealth of $196. The company divides the divers into two classes, safe (probability of an accident =0.22 ) and unsafe (probability of an accident =0.69 ). The utility of wealth for all divers is given by the function: U(W)= W
a) Calculate the utility of no insurance for the safe diver. [3 marks] b) Calculate the utility of no insurance for the unsafe diver. [3 marks] c) If the insurance premium paid by safe divers is $589, will safe divers buy insurance? [4 marks] (Show your calculations and round your final answer to one decimal place) d) If the insurance premium paid by unsafe divers is $589, will unsafe divers buy insurance? [4 marks] (Show your calculations and round your final answer to one decimal place) e) If only unsafe divers buy insurance and the premium is $589, what is the insurance company's profit? [3 marks]
a) The utility of no insurance for the safe diver is $825.16.
b) The utility of no insurance for the unsafe diver is $587.23.
c) The expected utility with insurance is $1006.62, so safe divers will buy insurance.
d) The expected utility with insurance is $698.20, so unsafe divers will not buy insurance.
e) The insurance company's profit will be $29,883.
a) Calculation of the utility of no insurance for the safe diver:
The utility of wealth for all divers is given by the function U(W) = W. For a safe diver, the probability of an accident is 0.22. In case of no insurance, the diver will be left with a wealth of $196. The wealth before diving is $1089. So, the expected utility without insurance will be:
U(W)= W = $196 x 0.22 + $893 x 0.78 = $825.16
b) Calculation of the utility of no insurance for the unsafe diver:
For an unsafe diver, the probability of an accident is 0.69. In case of no insurance, the diver will be left with a wealth of $196. The wealth before diving is $1089. So, the expected utility without insurance will be:
U(W)= W = $196 x 0.69 + $893 x 0.31 = $587.23
c) Calculation of the expected utility of the safe diver with insurance:
If the insurance premium paid by safe divers is $589, then the wealth after the accident will be $1089 - $589 = $500. The expected utility with insurance will be:
U(W)= W = $500 x 0.22 + $1089 x 0.78 = $1006.62
Since the expected utility with insurance is higher than the expected utility without insurance, the safe divers will buy insurance.
d) Calculation of the expected utility of the unsafe diver with insurance:
If the insurance premium paid by unsafe divers is $589, then the wealth after the accident will be $1089 - $589 = $500. The expected utility with insurance will be:
U(W)= W = $500 x 0.69 + $1089 x 0.31 = $698.20
Since the expected utility with insurance is lower than the expected utility without insurance, the unsafe divers will not buy insurance.
e) Calculation of the insurance company's profit:
If only unsafe divers buy insurance and the premium is $589, then the number of unsafe divers is 0.69 x 100 = 69.
The insurance company's profit will be:
P = $589 x 69 - $196 x 69 = $29,883.
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A firm has a profit margin of 6.5% and an equity
multiplier of 1.7. Its sales are $270 million, and it has total
assets of $135 million. What is its ROE? Do not round intermediate
calculations. Round
ROE = Profit Margin * Total Asset Turnover * Equity Multiplier , The Return on Equity (ROE) is 0.1105 or 11.05% (rounded to two decimal places).
To calculate the Return on Equity (ROE), we need to use the formula:
ROE = Profit Margin × Equity Multiplier
Profit Margin = 6.5% (0.065)
Equity Multiplier = 1.7
ROE = 0.065 × 1.7
ROE = 0.1105
The Return on Equity (ROE) is approximately 0.1105 or 11.05% (rounded to two decimal places).
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Complete Question :
A firm has a profit margin of 6.5% and an equity multiplier of 1.7. Its sales are $270 million, and it has total assets of $135 million. What is its ROE? Do not round intermediate calculations. Round your answer to two decimal places.________%
Your retired client has accumulated investment and retirement assets totaling $7,266,000. Assume the client expects to live for another 24 years and that he assumes an annual inflation rate of 1.48 percent. To leave his heirs the future value of the $7,266,000 at the end of the 24 years, the value of the assets at that time would need to grow to $_____. (Please write your answer in "Your Answer" box).
The $7,266,000 in investment and retirement assets that your retired customer has accumulated after 24 years of accumulation would need to expand in value to reach $12,747,408.55 at an annual inflation rate of 1.48 percent.
For more details, let's calculate the future value of the retirement assets to be left to his heirs over the given time period.
Step 1: Calculate Future Value The formula for calculating the future value of retirement assets can be derived as follows:
FV = PV (1 + r / n)^(n x t)Where, FV is the future value, PV is the present value, r is the interest rate, t is the number of years, and n is the compounding periods per year.
So, the following formula can be used to determine the future worth of the retirement assets that will be left to his heirs after 24 years: CFV = $7,266,000 x (1 + 0.0148 / 1)^(1 x 24)= $12,747,408.55
Therefore, the value of the assets at that time would need to grow to $12,747,408.55 to leave his heirs the future value of the $7,266,000 at the end of 24 years.
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The preferences and views of voters in primary and general
elections are usually similar.
The statement is False. The preferences and views of voters in primary and general elections are not always similar.
While there may be some overlap between the preferences and views of voters in primary and general elections, it is not accurate to assume that they are usually similar. Primary elections typically involve party members selecting their preferred candidate from within their party. These voters may have specific ideological or policy preferences that align with the party's platform. On the other hand, general elections involve a broader electorate, including voters from different political affiliations and independents. The general election allows voters to choose among candidates from different parties, which can lead to a wider range of preferences and views.
Additionally, primary elections often attract more ideologically extreme voters who are more politically engaged, while general elections tend to have a more diverse and representative voter turnout. This difference in voter composition can contribute to variations in preferences and views between primary and general elections. Therefore, it is essential to recognize that the preferences and views of voters can differ depending on the context and nature of the election.
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b) Besides adopting social media, propose and explain
i) two conventional (traditional) promotion tools in order for Sugarbun to encourage Sabasco sales among its business buyers.
ii) Two non-store based retailing to reach sabasco end consumers
i) Two conventional promotion tools in order for Sugarbun to encourage Sabasco sales among its business buyers are trade shows and direct mail .
ii) Two non-store based retailing to reach sabasco end consumers are e-commerce and mobile app based purchase.
i) To encourage Sabasco sales among its business buyers, Sugarbun can consider using two conventional promotion tools:
1. Trade shows: Sugarbun can participate in industry-specific trade shows where business buyers gather to showcase their products. This can help them establish direct contact with potential buyers, showcase their products, and build relationships.
2. Direct mail: Sugarbun can send promotional materials, such as catalogs or brochures, directly to business buyers. This can provide detailed information about their products and offerings, and can be personalized to cater to specific needs or preferences.
ii) To reach Sabasco end consumers, Sugarbun can explore two non-store based retailing methods:
1. E-commerce: Sugarbun can establish an online presence and sell its products through an e-commerce platform. This allows consumers to conveniently purchase Sabasco products online, providing them with a wider reach and accessibility.
2. Mobile applications: Sugarbun can develop a mobile application that enables consumers to browse and purchase Sabasco products directly from their smartphones. This provides a convenient and user-friendly platform for consumers to access and order products from anywhere at any time.
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Robotic Atlanta Inc. just paid a dividend of $4.00 per share (that is, D0 = 4.00). The dividends of Robotic Atlanta are expected to grow at a rate of 20 percent next year (that is, g1 = .20) and at a rate of 10 percent the following year (that is, g2 = .10). Thereafter (i.e., from year 3 to infinity) the growth rate in dividends is expected to be 5 percent per year. Assuming the required rate of return on Robotic Atlanta stock is 22 percent, compute the current price of the stock. (Round your answer to 2 decimal places and record your answer without dollar sign or commas).
To calculate the current stock price of Robotic Atlanta, first, the dividends should be calculated using the formula for dividends with constant growth. The formula is D1 = D0 (1+g), where D0 is the current dividend and g is the dividend growth rate.
Using the dividend discount model, we can calculate the current stock price of Robotic Atlanta. The dividend of the company is $4.00 per share, and it is expected to grow at a rate of 20% next year, 10% the year after, and 5% from year 3 onwards. The required rate of return is 22%.
The expected dividend for the first year is $4.80, and the expected dividend for the second year is $5.28. These dividends can be discounted using the required rate of return to find their present values, which are $3.93 and $3.82, respectively.
To calculate the current stock price in year 2, we need to calculate the present value of all future dividends beyond year 2, which is the present value of a growing perpetuity. Using the formula PVGP = D/(r-g), where D is the dividend in year 3 and beyond, r is the required rate of return, and g is the growth rate of dividends, we can calculate the present value of all future dividends.
The current stock price of Robotic Atlanta is $37.00.
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The best way to win the sell of a prospect (or new client- someone you have never worked with before) is by establishing a rapport before going into your sales pitch. If you are meeting the new client in their office, the best way to establish a rapport is by
Find out if the person likes the same hobbies as you.
Looking for clues in their office such as pictures, plaques, or awards.
Both A and B
None of the above
The best way to establish a rapport with a new client before giving a sales pitch is by both finding out if the person likes the same hobbies as you and looking for clues in their office.
The best way to establish a rapport with a new client before giving a sales pitch is by looking for clues in their office, such as pictures, plaques, or awards. This option is listed as B.
By observing their office décor and personal items, you can gain insights into their interests and values. For example, if you notice pictures of golfing or hiking, you can use that information to initiate a conversation about those hobbies and create a connection with the client. This can help build trust and make them more receptive to your sales pitch.
On the other hand, option A suggests finding out if the person likes the same hobbies as you. While having shared hobbies can be a point of connection, it is not as reliable as observing the clues in their office. People have diverse interests, and assuming that they have the same hobbies as you might not always be accurate. Therefore, option A alone is not the best way to establish a rapport.
Option C states that both A and B are the best ways to establish a rapport, and this is the correct answer. By combining the strategies of finding shared hobbies and looking for clues in their office, you can maximize your chances of establishing a connection and rapport with the new client.
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Student ID: THE BUSINRSS CYCLE WORKSHEET 1 felow, you will define and explore the following concepts: the business cycie, expansionary period, recessionary period, expansionary gap, and recessionary gap. Port 1: Complete the statement helow. The business cycle is defined as the periodic cycle up-and-down movement of actual economic production. It is characterized by the alternating periods of economic expansion and economic recession. It is often described as the tendency of tren _._ (Real GDP, Potential GDP) to fluctuate about (Real GDP, Potential GDP). Part 2: Complete the statement below. A(n) (recessionary, expansionary) period of the business cycle is characterized by declining total economic production and rising unemployment. Part 3: Complete the statement below. A(n) tan ( recessionary, expansionary) period of the business cycle is characterized by increasing total economic production and declining unemployment Port 4. Complete the statement below. A(n) Teat (recessionary, expansionary) gap exists when Real GDP is greater than Potential GDP. Port 5: Complete the statement below. A(n)Ten (recessionary, expansionary) gap exists when Real GDP is less than Potential GDP. (1) 2018 Pearson Education, Inc.
The business cycle refers to the periodic up-and-down movement of actual economic production, characterized by alternating periods of economic expansion and economic recession. It reflects the tendency of real GDP to fluctuate around potential GDP.
An expansionary period of the business cycle is characterized by increasing total economic production and declining unemployment, while a recessionary period is characterized by declining total economic production and rising unemployment. An expansionary gap exists when real GDP exceeds potential GDP, indicating an overheating economy, and a recessionary gap exists when real GDP falls below potential GDP, indicating an underperforming economy. These fluctuations in the business cycle are important factors to consider in understanding the overall health and performance of an economy.
Part 1: Complete the statement below. The business cycle is defined as the periodic cycle up-and-down movement of actual economic production. It is characterized by the alternating periods of economic expansion and economic recession. It is often described as the tendency of trend (Real GDP) to fluctuate about (Potential GDP).The business cycle is a term used to describe the trend of expansion and contraction in an economy. The economy is always moving in one of two directions: either toward expansion or toward contraction. The two phases of the business cycle are expansion and contraction.
Part 2: Complete the statement below. A recessionary period of the business cycle is characterized by declining total economic production and rising unemployment. The recessionary period of the business cycle is characterized by declining economic growth and rising unemployment. This is a period in which the economy is shrinking and there is less demand for goods and services.
Part 3: Complete the statement below. An expansionary period of the business cycle is characterized by increasing total economic production and declining unemployment. The expansionary period of the business cycle is characterized by increasing economic growth and declining unemployment. This is a period in which the economy is growing and there is more demand for goods and services.
Port 4: Complete the statement below. An expansionary gap exists when Real GDP is greater than Potential GDP. An expansionary gap exists when Real GDP is greater than Potential GDP. This means that the economy is growing faster than it can sustain. This can lead to inflation and other problems.
Port 5: Complete the statement below. A recessionary gap exists when Real GDP is less than Potential GDP. A recessionary gap exists when Real GDP is less than Potential GDP. This means that the economy is not growing fast enough to keep up with demand, which can lead to unemployment and other problems.
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The expected AUD return on an Australian equity is 12%, and its volatility is 20%. The volatility of the NZD/AUD exchange rate is 15%. Suppose the correlation between the Australian equity return in AUD and the exchange rate change is 0.5. Assume that the risk-free rate is 2% for a New Zealand investor. What expected exchange rate change would you expect if the Australian equity investment is to have a Sharpe ratio of 0.9?
To achieve a Sharpe ratio of 0.9, an expected exchange rate change of approximately 5% is required for the Australian equity investment, considering the excess return and correlation factors.
To determine the expected exchange rate change for the Australian equity investment to achieve a Sharpe ratio of 0.9, we need to calculate the excess return and divide it by the volatility.
The excess return is the difference between the expected return on the Australian equity (12%) and the risk-free rate (2%). Therefore, the excess return is 10%.
To calculate the expected exchange rate change, we multiply the excess return by the correlation between the Australian equity return and the exchange rate change. In this case, the correlation is 0.5.
Expected exchange rate change = Excess return * Correlation = 10% * 0.5 = 5%.
Therefore, we would expect an exchange rate change of 5% for the Australian equity investment to achieve a Sharpe ratio of 0.9.
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During its first month of operation, the Flower Landscaping Corporation, which specializes in residential landscaping, completed the following transactions. March 1 Owner invested $72000 cash in the business. March 2 Paid the current month's rent, $4,500. March 3 Paid the premium on a 1-year insurance policy, $3,300. March 7 Purchased supplies on account from Parkview Company, $900.
March 10 Paid employee salaries, $2,200. March 14 was placed on account. Purchased equipment from Hammond Company, $9,000. Paid $1,500 down and the balance Note: Use accounts payable for the balance due. March 15 Received cash for landscaping revenue for the first half of March, $4,896. March 19 Made payment on account to Parkview Company, $450. March 31 Received cash for landscaping revenue for the last half of March, $5,304. Other data: a) One month's insurance has expired. b) The remaining inventory of supplies is $475. c) The estimated depreciation on equipment is $150. Requirements: 5. Prepare appropriate adjusting entries on March 31. 6. Prepare an adjusted trial balance on March 31. 7. Enter the adjusted trial balance on the worksheet and complete the worksheet
To prepare appropriate adjusting entries on March 31, we need to consider the following: 1. One month's insurance has expired: Since the insurance policy was for one year, one month has passed, and we need to record the expired portion.
- Debit Insurance Expense for $275 ($3,300 / 12)
- Credit Prepaid Insurance for $275
2. Depreciation on equipment: We need to record the estimated depreciation on the equipment.
- Debit Depreciation Expense for $150
- Credit Accumulated Depreciation for $150
3. Supplies inventory: We need to adjust the supplies inventory to reflect the remaining balance.
- Debit Supplies Expense for $425 ($900 - $475)
- Credit Supplies Inventory for $425
Now, let's prepare an adjusted trial balance on March 31:
Accounts | Debit ($) | Credit ($)
----------------------------------------------
Cash | 10,200 |
Accounts Receivable | | 10,200
Supplies Inventory | 425 |
Prepaid Insurance | 275 |
Equipment | | 9,000
Accumulated Depreciation | 150 |
Accounts Payable | 450 |
Insurance Expense | 275 |
Supplies Expense | 425 |
Depreciation Expense | 150 |
Owner's Capital | 72,000 |
Landscaping Revenue | | 10,200
Salaries Expense | 2,200 |
----------------------------------------------
Total | 83,100 | 83,100
Finally, you will enter the adjusted trial balance onto the worksheet and complete it according to the format and instructions provided.
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What is the price of Thera corpn zero coupon bond with five years
to maturity the bond was originally sold with a yield to maturity
equal to 10% but the market rate today is 11%
The price of the Thera Corp. zero-coupon bond with five years to maturity, given a yield to maturity of 10% at issuance and a current market rate of 11%, is approximately $614.47.
To calculate the price of a zero-coupon bond, we can use the present value formula. The formula is as follows:
Price = Face Value / (1 + Market Rate)^Years to Maturity
Given: Face Value = $1,000 (assuming a par value of $1,000)
Years to Maturity = 5 years
Yield to Maturity at issuance = 10% = 0.10
Market Rate today = 11% = 0.11
Using the present value formula, we can calculate the price of the zero-coupon bond:
Price = $1,000 / (1 + 0.11)^5
Price = $1,000 / (1.11)^5
Price ≈ $614.47
Therefore, the price of the Thera Corp. zero-coupon bond with five years to maturity, given a yield to maturity of 10% at issuance and a current market rate of 11%, is approximately $614.47.
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4) An example of a perfectly competitive firm i
A a wheat farmer in Morocco
Bi the local cable TV company
C)a U.S, automobile producer
1Dy a bie city newspaper
Perfectly competitive firms are those that have many competitors and sell a standardized product, making it hard to influence market prices. It is an industry that is composed of a large number of companies that sell homogenous products.
The following is an example of a perfectly competitive firm.i. A wheat farmer in Morocco.A farmer is an excellent example of a perfectly competitive firm. The industry of farming has many competitors, and the products are standardized. A farmer can't influence the market price of wheat; the cost is determined by the market.ii. The local cable TV company.A cable TV company is an example of an imperfectly competitive firm.
Cable TV companies have to invest a significant amount of money to expand their infrastructure and services, giving them control over pricing.iii. A U.S automobile producer.The automobile industry is oligopolistic, with just a few competitors. The goods are not standardized. Automakers' success is determined by product differentiation, branding, and marketing, among other factors.iv. A big city newspaper.
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You are evaluating purchasing the rights to a project that will generate after tax expected cash flows of $90k at the end of each of the next five years, plus an additional $1,000k at the end of the fifth year as the final cash flow. You can purchase this project for $950k. Note: All dollar values are given in units of $1k = $1000. At this price, what rate of return would you earn on the investment (aka what is the internal rate of return)?
At a purchase price of $950k, the rate of return (IRR) on the investment is approximately 10.7%.The IRR (internal rate of return) of the project is the rate at which NPV (Net Present Value) is zero.
The present value of the expected cash flows must be computed and compared to the cost of purchasing the project to calculate the IRR in this case. To calculate the internal rate of return (IRR) of the investment, we need to find the discount rate that makes the present value of the expected cash flows equal to the purchase price. Let's perform the calculations:
Expected Cash Flows: Year 1: $90k,Year 2: $90k,Year 3: $90k,Year 4: $90k,Year 5: $90k,Year 5 (Final Cash Flow): $1,000k,Purchase Price: $950k.
We can set up the equation:
$950k =[tex]($90k / (1 + r)^1) + ($90k / (1 + r)^2) + ($90k / (1 + r)^3) + ($90k / (1 + r)^4) + ($90k / (1 + r)^5) + ($1,000k / (1 + r)^5)[/tex]
where r represents the rate of return (IRR). Solving this equation for r will give us the IRR. It's a complex equation to solve manually, but using numerical methods or financial software, we can find the approximate IRR to be around 10.7%.
Therefore, at a purchase price of $950k, the rate of return (IRR) on the investment is approximately 10.7%.
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OQ6.1. What is CAPM? How is it defined? What does the CAPM provide and what is it based on? How is the CAPM conceptually related to the "risk – return story"?
OQ6.2. Can a security have a negative beta? How would the security’s expected return compare to the expected return on the riskless asset? What does this mean?
OQ6.3. What is generally used as a proxy for the expected return on the riskless asset?
The yield on Treasury bills is commonly used as a proxy for the expected return on the riskless asset in financial models like the CAPM.
OQ6.1: CAPM stands for Capital Asset Pricing Model. It is a financial model used to determine the expected return on an investment based on its systematic risk.
The CAPM provides an estimate of the expected return on an asset or portfolio by considering the asset's beta, the risk-free rate, and the expected market return. The model assumes that investors are risk-averse and seek to maximize their returns for a given level of risk. The CAPM is based on the idea that the expected return of an asset should be equal to the risk-free rate plus a risk premium that is proportional to the asset's beta.
The CAPM is conceptually related to the "risk – return story" because it quantifies the relationship between risk and return. According to the CAPM, higher-risk assets are expected to have higher returns, while lower-risk assets are expected to have lower returns. This relationship is essential in helping investors make informed decisions about the trade-off between risk and potential returns.
OQ6.2: In theory, a security can have a negative beta. A negative beta means that the security moves in the opposite direction of the overall market. If a security has a negative beta, its expected return would be lower than the expected return on the riskless asset. This means that the security is expected to have a lower return than an investment in a riskless asset, such as a Treasury bill.
OQ6.3: The riskless asset is typically represented by the risk-free rate, which is often approximated by the yield on Treasury bills. Treasury bills are considered to be virtually risk-free because they are backed by the government and have a low probability of default.
Therefore, the yield on Treasury bills is commonly used as a proxy for the expected return on the riskless asset in financial models like the CAPM.
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Your brother left you $ 3000 in her will . If you invest this money
and leave it in an account that return 4 % per year , how much will
you have in 20 years ?
If you invest the $3000 in an account that returns 4% per year and leave it for 20 years, you will have approximately $6535.97.
To calculate the future value of an investment with compound interest, we can use the formula:
FV = PV * (1 + r)^n
Where:
FV = Future Value
PV = Present value (initial investment)
r = Interest rate per period
n = Number of periods
In this case, the present value (PV) is $3000, the interest rate (r) is 4% (or 0.04 as a decimal), and the number of periods (n) is 20 years.
Plugging in the values into the formula:
FV = $3000 * (1 + 0.04)^20
Calculating the exponential part first:
(1 + 0.04)^20 ≈ 2.191
Now, we can calculate the future value:
FV ≈ $3000 * 2.191
FV ≈ $6573.02
Therefore, after 20 years, the investment of $3000 with a 4% annual interest rate will grow to approximately $6535.97.
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One-third of U.S. households have no life insurance at all. Fewer than half of America’s households hold individual life insurance policies. People tend to put off the decision to purchase life insurance. They might argue that they cannot afford it or they are not willing to sacrifice other types of spending so that they can afford to pay for life insurance. Discuss whether you need life insurance now and/or in the future, why and why not? What questions do you need to ask yourself and life insurance agent when you purchase life insurance? What are the most important feature you are looking for when buying life insurance?\
Life insurance is a financial instrument that provides financial protection for your loved ones in the event of your unexpected death. Here are some things to consider when purchasing life insurance:
Do you have dependents who rely on your income?
Do you have significant debt?
What is your future health and the future health of your family?
What type of life insurance policy is right for you?
Work with an insurance agent or financial planner to determine your needs.
Choose a policy that meets your needs at a cost you can afford.
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(a) How long does it take to recover the investment? (b) If the firm's interest rate is 15% after taxes, what would be the discounted payback period for this project? 5.2 Camptown Togs, Inc., a children's clothing manufacturer, has always found payroll processing to be costly because it must be done by a clerk. The number of piece-goods coupons received by each employee is collected and the types of tasks performed by each employee are calculated. Not long ago, an industrial engineer designed a system that partially automates the process by means of a scanner that reads the piece-goods coupons. Management is enthusiastic about this system, because it utilizes some personal computer systems that were purchased recently. It is expected that this new automated system will save $45,000 per year in labor. The new system will cost about $30,000 to build and test prior to operation. It is expected that operating costs, including income taxes, will be about $5,000 per year. The system will have a five-year useful life. The expected net salvage value of the system is estimated to be $3,000.
(a) The payback period for the investment in the automated system is 1.33 years. The initial cost is $30,000, and the annual savings are $45,000. Subtracting the annual operating costs of $5,000, the net cash inflow per year is $40,000.
Dividing the initial cost by the net cash inflow gives a payback period of 0.75 years. However, since the net salvage value of $3,000 is expected at the end, the payback period is extended to 1.33 years. The investment in the automated system will be recovered in approximately 1.33 years, taking into account the net cash inflow and the expected salvage value. It will take approximately 2.67 years to recover the investment in the new automated system for payroll processing. The discounted payback period, considering a 15% after-tax interest rate, is 2.38 years.
Using the same net cash inflow of $40,000 per year, we calculate the discounted payback period by discounting the cash flows to present value. Using a 15% after-tax interest rate, the discounted cash flows for each year are: Year 1 - $34,782, Year 2 - $30,227, Year 3 - $26,290, Year 4 - $22,956, Year 5 - $20,114. The cumulative discounted cash flows are: Year 1 - $34,782, Year 2 - $64,009, Year 3 - $90,299, Year 4 - $113,255, Year 5 - $133,369.
Considering a 15% after-tax interest rate, the investment in the automated system will be recovered in approximately 2.38 years, based on the discounted cash flows.
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The required answer is the -
(a) 0.75 years
(b) discounted payback period is approximately 4.47 years.
To calculate the time it takes to recover the investment
(a) to divide the initial investment by the annual cash flows generated by the project.
The initial investment is the cost to build and test the system, which is $30,000. The annual cash flow is the labor savings of $45,000 minus the operating costs, including income taxes, of $5,000 per year. So the annual cash flow is $40,000 ($45,000 - $5,000).
To calculate the payback period, we divide the initial investment of $30,000 by the annual cash flow of $40,000.
So the payback period is 0.75 years, which means it takes 0.75 years (or approximately 9 months) to recover the investment.
To calculate the discounted payback period
(b) the firm's interest rate of 15% after taxes. The discounted payback period is calculated by dividing the present value of the cash flows by the initial investment.
To calculate the present value of the cash flows, to discount each year's cash flow using the firm's interest rate of 15% after taxes.
Using a present value table or a financial calculator, find that the present value factor for a 15% interest rate after taxes for a 5-year period is 3.3522.
multiply the annual cash flow of $40,000 by the present value factor of 3.3522 to get the present value of the cash flows, which is $134,088 ($40,000 * 3.3522).
Then, divide the present value of the cash flows by the initial investment of $30,000 to get the discounted payback period.
So the discounted payback period is approximately 4.47 years.
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"U.S. consumer prices increased solidly in September as Americans paid more for food, rent and a range of other goods, putting pressure on the Biden administration to urgently resolve strained supply chains, which are hampering economic growth." Accessed: 14/10/21 By definition, demand is the quantity of goods... a. desired by consumers. b. ordered by consumers in a particular period. c. consumers are willing and able to buy at particular prices in a certain period. d. that consumers want to buy Question 11 (4 marks) "As the economy picks up, demand for many inputs is outstripping supply, driving up prices for things as diverse as construction materials, energy, food ingredients, and semiconductors. Soon, that list will include Office 365 subscriptions. You might not have heard about it from your sales rep yet, but Microsoft quietly announced that starting March 1, 2022, it will hike the price of many of its enterprise Office 365 and Microsoft 365 subscriptions. (Consumer and education subscription prices aren't changing for now.)" Accessed: 14/10/21 An increase in the price of Office 365 subscriptions above the equilibrium will.. a. Shift the Office 365 subscriptions' supply curve to the right. b. Shift the Office 365 subscriptions' demand curve to the right. c. Cause a surplus of Office 365 subscriptions. d. Cause a shortage of Office 365 subscriptions.
Previous question
U.S. consumer prices increased in September due to more payment for food, rent, and other goods. The article demands that the Biden administration needs to fix strained supply chains that are putting pressure on the economic growth of America.
By definition, demand refers to the quantity of goods that consumers are willing and able to buy at particular prices in a certain period. The correct option is c. This means that consumers want to buy goods, which they can afford at a particular time. It is determined by consumer preferences, income levels, and availability of goods and services in the market. The demand for various goods and services determines the market equilibrium price, which is where the supply and demand curves meet.
An increase in the price of Office 365 subscriptions above the equilibrium will cause a surplus of Office 365 subscriptions. The correct option is c. If the price of Office 365 subscriptions is above the equilibrium price, there will be more supply than demand, which means that the quantity supplied will exceed the quantity demanded. This will result in a surplus of Office 365 subscriptions. Therefore, to fix this issue, the supplier will have to lower the price to increase the demand for Office 365 subscriptions, which will restore the market equilibrium.
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1. jerry may invest up to $10,000. she can invest her money in stocks and bonds. each dollar invested in stock yields 12 cents profit, and each dollar invested in bonds yields 9 cents profit. at least 15% of all money invested must be in stocks, and at least $3,000 must be in bonds. formulate an LP (define decision variables, state objective function and specify constraints) that can be used to maximize total profit earned from jerry's investment. hint: putting all variables to the left hand side of your constraints.
The LP (Linear Programming) model is utilized to maximize the total profit earned from Jerry's investment in stocks and bonds.
Jerry may invest up to $10,000, with at least 15% of the money invested in stocks, and at least $3,000 invested in bonds.
Decision Variables:To decide the decision variables, let's use the following:Let S be the amount of money invested in stocks.Let B be the amount of money invested in bonds.
Objective Function:The objective function aims to maximize the total profit earned from the investment of Jerry's money. To compute it, we multiply the number of dollars invested in stocks (S) by 0.12, and we multiply the number of dollars invested in bonds (B) by 0.09.Total Profit = 0.12S + 0.09B
Constraints:There are two constraints to be considered in the model as mentioned below:Constraint 1: At least 15% of the total investment must be in stocks. It means that the amount of money invested in stocks should be at least 15% of the total investment. Mathematically, we can write it as: S ≥ 0.15 (S+B)
Constraint 2: At least $3,000 of the money invested must be in bonds. It means the amount of money invested in bonds should be at least $3,000. Mathematically, we can write it as: B ≥ 3,000 Putting all the variables on the left-hand side of the constraints, we get:S - 0.15 S - 0.15 B ≥ 0 B - 3,000 ≥ 0
Thus, the Linear Programming model is as follows:
Maximize Total Profit = 0.12S + 0.09B
Subject to Constraints :S - 0.15S - 0.15B ≥ 0B - 3,000 ≥ 0S + B ≤ 10,000S, B ≥ 0.
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Please Help With A And B. Answer C Is Correct. Eastman Publishing Company Is Considering Publishing An Electronic Textbook About Spreadsheet Applications For Business. The Fixed Cost Of Manuscript Preparation, Textbook Design, And Web Site Construction Is Estimated To Be $148,000. Variable Processing Costs Are Estimated To Be $5 Per Book. The Publisher
A. The breakeven point in units is 29,600 units.
B. The breakeven point in dollars is $178,000.
The breakeven point represents the point at which the total revenue equals the total cost, and it is crucial for assessing the profitability and viability of a business venture.
To determine the breakeven point for Eastman Publishing Company, we need to calculate the number of units or the dollar amount at which the total revenue equals the total cost.
Given:
Fixed costs: $148,000
Variable processing cost per book: $5
A. Breakeven Point in Units:
The breakeven point in units can be calculated using the following formula:
Breakeven Point (in units) = Fixed Costs / Contribution Margin per Unit
The contribution margin per unit is the selling price per unit minus the variable processing cost per unit.
Let's assume the selling price per unit is denoted by S. The contribution margin per unit would then be S - $5.
To find the breakeven point in units, we can substitute the values into the formula:
Breakeven Point (in units) = $148,000 / ($S - $5)
Since the selling price per unit is not given, we cannot calculate the exact breakeven point in units.
B. Breakeven Point in Dollars:
The breakeven point in dollars can be calculated by multiplying the breakeven point in units by the selling price per unit.
Breakeven Point (in dollars) = Breakeven Point (in units) * Selling Price per Unit
Again, without the selling price per unit, we cannot calculate the exact breakeven point in dollars.
In conclusion, we are unable to determine the exact breakeven point in units or dollars without knowing the selling price per unit. The breakeven point represents the point at which the total revenue equals the total cost, and it is crucial for assessing the profitability and viability of a business venture. For accurate calculations, it is necessary to have additional information, such as the selling price per unit or other relevant data.
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January 14.2001 Lone pine capital has purchased a credit default swap on $20 million worth of Spanish debt from Soldinan 5 actu (in Gofdman Sach is the seller of the CDS and must deliver payment upon a Spanish default). The contract requires that Lane Pine pan 460 basis points per year each year for 5 years on December 31 10
(l.e, the first annual payment is due December 31 ∘
2001 ). Onlunk 31,20002 . six months after Lone Pine's last payment to Goldman, the Spanish government defaults. The 5 panish debt is now worth 3.75 pir 51.00. How much must Goldman Sach's pay Lone Pine Capital? 4600000 5000000 4200000 4800000
Lone Pine Capital purchased a credit default swap on $20 million of Spanish debt. After a default, Goldman Sachs must pay Lone Pine $55 million.
Based on the information provided, Lone Pine Capital purchased a credit default swap (CDS) on $20 million worth of Spanish debt from Goldman Sachs. The contract required Lone Pine to pay 460 basis points per year for 5 years, with the first payment due on December 31, 2001. On October 31, 2002, which is six months after the last payment to Goldman, the Spanish government defaults and the Spanish debt is now worth 3.75 per $1.00.
To calculate the amount that Goldman Sachs must pay Lone Pine Capital, we need to determine the difference between the face value of the debt and its current value. The face value of the debt is $20 million, and its current value is $3.75 per $1.00. Therefore, the current value of the debt is $20 million multiplied by 3.75, which equals $75 million.
Since Goldman Sachs is the seller of the CDS and must deliver payment upon default, they would need to compensate Lone Pine Capital for the difference between the face value and the current value of the debt. The difference is $75 million minus $20 million, which equals $55 million.
Therefore, Goldman Sachs must pay Lone Pine Capital $55 million.
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At Year-End 2019, Wallace Tandscaping's Total Assets Were $2.21 Million, And Its Accounts Payable Were $435,000. Sales, Which In 2019 Were $2.4 Million, Are Expected To Increase By 25% In 2020 . Total Assets And Accounts Payable Are Proportional To Sales, And That Reiationship Will Be Maintained. Wallace Typically Uses No Current Liabilities Other Than
At Year-End 2020, Wallace Landscaping's Total Assets are expected to be $2.76 million and its Accounts Payable are expected to be $543,000.
At Year-End 2019, Wallace Landscaping's Total Assets were $2.21 million and its Accounts Payable were $435,000. Sales, which were $2.4 million in 2019, are expected to increase by 25% in 2020. Total Assets and Accounts Payable are proportional to Sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than Accounts Payable.
To calculate the expected Total Assets and Accounts Payable for 2020, we can use the proportional relationship with Sales.
Step 1: Calculate the expected Sales for 2020:
Expected Sales for 2020 = 2019 Sales + (2019 Sales * Sales Growth Rate)
Expected Sales for 2020 = $2.4 million + ($2.4 million * 0.25)
Expected Sales for 2020 = $3 million
Step 2: Calculate the expected Total Assets for 2020:
Total Assets for 2020 = 2019 Total Assets * (2020 Sales / 2019 Sales)
Total Assets for 2020 = $2.21 million * ($3 million / $2.4 million)
Total Assets for 2020 = $2.7625 million or $2.76 million (rounded)
Step 3: Calculate the expected Accounts Payable for 2020:
Accounts Payable for 2020 = 2019 Accounts Payable * (2020 Sales / 2019 Sales)
Accounts Payable for 2020 = $435,000 * ($3 million / $2.4 million)
Accounts Payable for 2020 = $543,750 or $543,000 (rounded)
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Pisa Purza, a seler of froren pizm, is considering introducing a heathier version of ts pizza that will be low in cholesterol and contain no trans fats. The firm expects that saies of the new pizza will bo $25 milion per year. While many of these sales will be to new customers, Piso Piza estimatos that 48% wil corne from customers who switch to the new heathief pirra instead of buying the original version. a. Assume customen wil spend the same amount on either version. What level of inceremental sales is associaled with introducing the nerw pizra? noremental sajes is assocised with intoducing the new pizza in this case? a. Assume customers will spend the same amount on ester version. What level of incremental sules is associated with introducing the new piaza? The incremental sales are 5 milion. (Round to two decimw places)
The level of incremental sales associated with introducing the new pizza is $12 million.
To calculate the level of incremental sales associated with introducing the new pizza, we need to determine the sales generated from customers who switch to the healthier version instead of buying the original version.
Given that Pisa Purza estimates that 48% of sales will come from customers who switch to the new pizza,
we can calculate the incremental sales as follows:
Incremental sales = Total sales * Percentage of customers switching to the new pizza
Using the given information, the total sales of the new pizza are $25 million per year.
Incremental sales = $25 million * 0.48 = $12 million
Therefore, the level of incremental sales associated with introducing the new pizza is $12 million.
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