The combination of a high saving rate and a high real interest rate will result in the largest accumulation of wealth over time.
Saving rate and real interest rate are two key factors that determine the growth of wealth over time. When both these factors are high, it leads to the largest accumulation of wealth.
A high saving rate implies that a significant portion of income is saved rather than spent. This means that more money is available to be invested, which can generate additional income and contribute to the growth of wealth. By saving a larger proportion of their income, individuals can allocate more funds towards investments, such as stocks, bonds, or real estate, which have the potential to generate returns over time
On the other hand, a high real interest rate signifies that the return on investments is substantial. It indicates that the investments are earning a higher rate of return after accounting for inflation. When the real interest rate is high, the growth of wealth accelerates due to the compounding effect. The returns earned on investments are reinvested, leading to exponential growth over time.
The combination of a high saving rate and a high real interest rate creates a powerful wealth-building environment. A high saving rate provides a solid foundation by increasing the amount of money available for investment. The high real interest rate enhances this growth by ensuring that the investments generate significant returns. Together, these factors contribute to the largest accumulation of wealth over time.
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Help Save & E An investor buys a newly issued annual bond that pays its coupons once a year. The bonds coupon rate is 7.5%, Its time to maturity is 4 years, and the yield to maturity is 11.5%. The investor will hold the bond until its maturity date. Calculate the Bond Price, the current yield, capital gains, and the annual return for each year. Time 0 3 4 Price 1,000 Current Yield Capital Gains Holding Period Return
The bond price at Time 0 is $1,000. At Time 3, the price is $930.33, and at Time 4 (maturity), it returns to $1,000. Current yield ranges from 7.5% to 7.575%.
To calculate the bond price, we can use the present value formula:
Bond Price = Coupon Payment * (1 - (1 + Yield to Maturity)^(-Time to Maturity)) / Yield to Maturity + Par Value / (1 + Yield to Maturity)^Time to Maturity
Let's calculate the bond price, current yield, capital gains, and annual return for each year:
Time 0:
Since this is the initial purchase, the bond price will be the purchase price of $1,000.
Price: $1,000
Current Yield: Coupon Payment / Bond Price = 7.5% of $1,000 = $75
Capital Gains: None in the first year
Holding Period Return: Current Yield = 7.5%
Time 3 (3 years remaining):
To calculate the bond price after 3 years, we need to discount the remaining coupon payments and the par value to their present value.
Remaining Coupon Payments: $75 * [tex](1 - (1 + 11.5\%)^{(-3)})[/tex] / 11.5% = $215.27
Present Value of Par Value: $1,000 / [tex](1 + 11.5\%)^3[/tex] = $715.06
Bond Price = Remaining Coupon Payments + Present Value of Par Value = $215.27 + $715.06 = $930.33
Price: $930.33
Current Yield: Coupon Payment / Bond Price = 7.5% of $930.33 = $69.77
Capital Gains: Bond Price at Time 3 - Bond Price at Time 0 = $930.33 - $1,000 = -$69.67 (negative because the bond price decreased)
Holding Period Return: Current Yield + (Capital Gains / Bond Price at Time 0) = 7.5% + (-$69.67 / $1,000) = -0.0023 or -0.23%
Time 4 (maturity):
The bond price at maturity will be the par value of $1,000.
Price: $1,000
Current Yield: Coupon Payment / Bond Price = 7.5% of $1,000 = $75
Capital Gains: Bond Price at Time 4 - Bond Price at Time 3 = $1,000 - $930.33 = $69.67
Holding Period Return: Current Yield + (Capital Gains / Bond Price at Time 3) = 7.5% + ($69.67 / $930.33) = 0.07575 or 7.575%
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if the market federal funds rate were below/above the target rate, what would be the appropriate fed response in each case?
Prestige Medical company is considering replacing its existing computer system that was purchased two years ago at a cost of R328,000. the system can be sold today for R190,000. It has wear and tear over a five-year straight-line period. A new computer system will cost R497,000 to purchase and install. Replacement of the computer system would not involve any change in net working capital. Assume a 30% tax rate.
Calculate the tax value of the existing computer system.
Calculate the after-tax proceeds of its sales for R190,000.
Calculate the initial investment associated with the replacement project
The initial investment associated with the replacement project is the cost of the new computer system: R497,000. This cost includes the purchase and installation expenses.
To calculate the tax value of the existing computer system, we need to determine the net book value (NBV) of the system. The NBV is the original cost minus the accumulated depreciation. Since the system was purchased two years ago, it has been subject to wear and tear over a five-year period. Therefore, the annual depreciation expense can be calculated as (328,000/5) = R65,600.
The accumulated depreciation over the two-year period is 2 * R65,600 = R131,200.
The NBV of the existing computer system is the original cost minus accumulated depreciation: 328,000 - 131,200 = R196,800.
To calculate the after-tax proceeds of its sale for R190,000, we need to consider the tax implications. The taxable gain on the sale of the computer system is the difference between the sales price (R190,000) and the tax value (NBV) of the system (R196,800).
The taxable gain is therefore R190,000 - R196,800 = -R6,800, indicating a loss.
Since the gain is negative, there will be no tax liability on the sale. Therefore, the after-tax proceeds of the sale will be equal to the sales price: R190,000.
The initial investment associated with the replacement project is the cost of the new computer system: R497,000. This cost includes the purchase and installation expenses.
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Balance Sheet \& Income Statement Eastern Ltd., which has just started trading on 1 January 2019, has the following account balances prior to the recording of the final month of the year: Account Balances as at 30 November 2019 In December 2019, the following transactions took place: 1. Credit purchases of goods $12,000. 2. Credit sales $30,000 (cost of goods sold $16,000 ). 3. Paid wages of $1,000. 4. At the end of December, sold off an equipment that has costed $10,000 at the price of $9,000. The yearly depreciation expense of this equipment was $2,000. 5. Paid rental of $600. 6. Paid an amount of interest. 7. Bank loan repayment of $1,500. 8. Paid creditors $5,000. Additional information as below: 1. Operating expenses above include rent and wages but exclude depreciation. As at 31 December 2019, there is an accrued wages of $400. The interest rate of the bank loan of $15,000 is 10% per annum. The bank loan was acquired on 1 January 2019. 2. Annual depreciation expense for the property, plant \& equipment before the disposal of the equipment at transaction 4 was $3,200,
Eastern Ltd. recorded several transactions in December 2019, including credit purchases and sales, wage payments, equipment sale, rental payment, bank loan repayment, and creditor payment.
To calculate the net income for December 2019, we need to consider the revenue from credit sales, cost of goods sold, operating expenses (excluding depreciation), and other relevant expenses. The credit sales were $30,000, and the cost of goods sold was $16,000. Therefore, the gross profit from sales is $30,000 - $16,000 = $14,000.
Next, we need to calculate the operating expenses, which include wages, rent, and other expenses (excluding depreciation). The paid wages were $1,000, and there is an accrued wages expense of $400. So, the total wages expense is $1,000 + $400 = $1,400. The rental payment was $600. Other operating expenses can be determined based on the available information.
After calculating the operating expenses, we can determine the net income by subtracting the operating expenses from the gross profit. We also need to consider the depreciation expense for the property, plant, and equipment. The annual depreciation expense before the equipment sale was $3,200, and the equipment sale resulted in a depreciation expense of $2,000. Therefore, the total depreciation expense is $3,200 + $2,000 = $5,200. To calculate the net income, we deduct the total operating expenses and depreciation expense from the gross profit: $14,000 - (operating expenses + depreciation expense).
Additionally, we need to calculate the interest expense on the bank loan based on the given interest rate. The bank loan amount is $15,000, and the interest rate is 10% per annum. However, we need information on the time period to determine the interest expense accurately. By considering all the transactions, expenses, and additional information, we can calculate the net income for December 2019 and assess the financial performance of Eastern Ltd.
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As an individual and student, how do you obtain money to pay on your daily expenses and how do you allocate your daily money at hand? Describe the goal of the firm, and explain why maximizing the value of the firm is an appropriate goal for a business.
As an AI language model, I don't have personal experiences or physical existence, so I don't have personal finances or daily expenses to manage. However, I can provide you with some general information.
As a student or individual, there are several ways to obtain money to pay for daily expenses:
Personal Savings: If you have saved money over time, you can allocate a portion of your savings for daily expenses.
Part-time Jobs: Many students and individuals work part-time to earn money. This can include jobs such as tutoring, retail, food service, freelancing, or other types of temporary employment.
Scholarships/Grants: Students can apply for scholarships or grants based on their academic performance, financial need, or other criteria. These funds can help cover educational expenses as well as daily living costs.
Student Loans: Some students may choose to take out student loans to finance their education and living expenses. However, it's important to carefully consider the terms and repayment options before taking on debt.
To allocate the money at hand effectively, it's generally advisable to create a budget. A budget helps you track your income and expenses, allowing you to prioritize your spending. Start by identifying your essential expenses like rent, utilities, transportation, and food. Then allocate funds for other categories like entertainment, leisure activities, and savings. It's important to strike a balance between meeting your needs and wants while saving for future goals.
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5. Briefly describe how the global calendar and competition
schedule works. What are the challenges facing today’s sport world
in this area? In your opinion, how will things change in the
future?
The global calendar and competition schedule in the sport world is a system that organizes and coordinates various sporting events around the world. It ensures that events do not clash and allows athletes and fans to plan and participate in different competitions.
This system takes into account factors such as geography, weather conditions, and the availability of venues and resources. It also considers the significance and popularity of events, ensuring that major competitions do not overlap. However, there are challenges facing today's sport world in this area. Conflicts between different sporting organizations can arise due to differing priorities and interests.
For example, two major competitions may want to take place on the same day, resulting in a clash. This can cause confusion for athletes, fans, and even broadcasters. Another challenge is the logistical issues that athletes face. Traveling to different parts of the world for competitions can be tiring and expensive. Athletes need time to rest and recover, but a packed calendar can make this difficult.
Furthermore, the overcrowding of the calendar with too many events can lead to fatigue and reduced interest from fans. With so many competitions happening at the same time, it can be overwhelming for fans to keep track of all the events. In the future, there may be changes to address these challenges.
Improved coordination between sporting organizations can help minimize scheduling conflicts. The use of technology can also play a role in managing the calendar more effectively. For example, advanced scheduling software can identify potential clashes and suggest alternative dates or venues. Furthermore, a more streamlined calendar that prioritizes the most important events can help reduce overcrowding. This would mean that only the most prestigious and significant competitions are included in the global calendar, ensuring that athletes and fans have sufficient time to rest and prepare.
Overall, these changes will help create a more efficient and balanced global calendar and competition schedule.
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Which of the following can be described as indirect finance? Select one:
You borrow $100 from your neighbor.
You buy a share of stock in the primary market.
You take out a mortgage from a bank.
You buy a U.S. Treasury bill from the U.S. Treasury.
An example of indirect finance is taking out a mortgage from a bank, where funds flow through financial intermediaries before reaching the borrower.
Indirect finance refers to a situation where funds flow through financial intermediaries before reaching the ultimate borrower or investor. Out of the given options, the correct answer for an example of indirect finance is "You take out a mortgage from a bank."
When you take out a mortgage from a bank, you are obtaining funds from a financial intermediary (the bank) to finance the purchase of a property. The bank acts as an intermediary between the borrower and the ultimate lenders, such as depositors or investors in the financial markets. The bank collects funds from depositors and uses them to provide loans to borrowers, allowing funds to be indirectly channeled from savers to borrowers. This is a classic example of indirect finance.
On the other hand, the other options do not involve financial intermediaries. Borrowing money from your neighbor or buying a share of stock in the primary market involves direct finance, as the funds are obtained directly from the lender or investor without any intermediary involvement. Buying a U.S. Treasury bill from the U.S. Treasury is also considered direct finance, as the funds are lent directly to the government without the involvement of financial intermediaries.
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They has and Sandla ale equal patness in thers Lors for Montgag forchased an office buildng whth a 200,000 estimaled for 15 years. Then tax Habilites are in now Worth 2000, 000 and is continury to inclease in Value, which of the following is the bost recommentation for Darwin and sandra to fund a buy-Sell ageement? Ah (A) Joint 10-year Renewedle and Convertible term pelicey WHth a death Benefit of 2150,000. (B) Joint Univeral Life 1105 policey with a Death Benefit of 1000,000 and a−15 year term Rider of 200,000 (C) Joint to-100 ins palicy with a Death Benfit of 4000,00 (D) Joint Now participating whale Ufe Policy with a Death Benefit of 2000,000 on the Lives.
Based on the information provided, the best recommendation for Darwin and Sandra to fund a buy-sell agreement would be option (D) - Joint Non-participating Whole Life Policy with a Death Benefit of $2,000,000 on the lives.
This option offers a fixed death benefit amount that will not change over time, which is important since the value of the office building is expected to continue increasing. Additionally, a non-participating policy means that the policyholders will not receive any dividends from the insurance company.
This may be preferred if Darwin and Sandra are looking for a straightforward and predictable insurance solution. However, it's important to consult with a financial advisor or insurance professional to determine the most suitable option for their specific needs and circumstances.
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Unida Systems has 40 million shares outstanding trading for $10 per share. In addition, Unida has $100 million in outstanding debt. Suppose Unida❝s equity cost of capital is 15%, its debt cost of capital is 8%, and the corporate tax rate is 40%.
Show work
Unida Systems has 40 million shares outstanding trading for $10 per share. The weighted average cost of capital (WACC) for Unida Systems is 12.96%.
To calculate the weighted average cost of capital (WACC) for Unida Systems, we need to consider the proportion of equity and debt in the company's capital structure and the respective costs of capital for each.
First, let's calculate the value of equity:
Equity value = Number of shares outstanding * Trading price per share
Equity value = 40 million * $10 = $400 million
Next, we calculate the value of debt, which is already given as $100 million.
Now, we can calculate the weight of equity:
Weight of equity = Equity value / (Equity value + Debt value)
Weight of equity = $400 million / ($400 million + $100 million) = 0.8
Similarly, we can calculate the weight of debt:
Weight of debt = Debt value / (Equity value + Debt value)
Weight of debt = $100 million / ($400 million + $100 million) = 0.2
Now, we can calculate the cost of equity using the equity cost of capital:
Cost of equity = Equity cost of capital = 15%
The cost of debt is given as 8%.
Next, we calculate the weighted average cost of capital (WACC):
WACC = (Weight of equity * Cost of equity) + (Weight of debt * Cost of debt * (1 - Tax rate))
WACC = (0.8 * 0.15) + (0.2 * 0.08 * (1 - 0.4))
WACC = 0.12 + 0.0096
WACC = 0.1296 or 12.96%
Therefore, the weighted average cost of capital (WACC) for Unida Systems is 12.96%.
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Bestseller Book's binding department has beginning inventory of 5,000 units and $20,000. consisting of $10,000 of direct materials and $10,000 of conversion costs. During the period, the department completed 88,000 units and had ending inventory of 15,000 units. Ending Inventory is 20% complete with respect to Direct Materials and 65% complete with respect to conversion. During the period, the department added direct materials costing $172,000 and conversion costs of $283,250. Assign and reconcile the costs for the period.
The costs for the period in the binding department of Bestseller Book are as follows:
Cost of completed units: $440,000Cost of ending inventory (Direct Materials): $6,000Cost of ending inventory (Conversion): $29,250To assign and reconcile the costs for the period in the binding department of Bestseller Book, we'll need to calculate the total costs incurred, allocate the costs to the completed units and ending inventory, and determine the cost per unit.
1. Calculate the total costs incurred:
- Direct materials cost: $10,000 (beginning inventory) + $172,000 (added during the period) = $182,000
- Conversion costs: $10,000 (beginning inventory) + $283,250 (added during the period) = $293,250
- Total costs incurred = Direct materials cost + Conversion costs = $182,000 + $293,250 = $475,250
2. Calculate the equivalent units of production:
- Completed units = 88,000 units
- Ending inventory (Direct Materials) = 15,000 units * 20% = 3,000 units
- Ending inventory (Conversion) = 15,000 units * 65% = 9,750 units
- Equivalent units of production (Direct Materials) = Completed units + Ending inventory (Direct Materials) = 88,000 + 3,000 = 91,000 units
- Equivalent units of production (Conversion) = Completed units + Ending inventory (Conversion) = 88,000 + 9,750 = 97,750 units
3. Calculate the cost per equivalent unit:
- Cost per equivalent unit (Direct Materials) = Direct materials cost / Equivalent units of production (Direct Materials) = $182,000 / 91,000 units = $2 per unit
- Cost per equivalent unit (Conversion) = Conversion costs / Equivalent units of production (Conversion) = $293,250 / 97,750 units = $3 per unit
4. Assign the costs to the completed units and ending inventory:
- Cost of completed units = Completed units * (Cost per equivalent unit (Direct Materials) + Cost per equivalent unit (Conversion))
= 88,000 units * ($2 + $3) = $440,000
- Cost of ending inventory (Direct Materials) = Ending inventory (Direct Materials) * Cost per equivalent unit (Direct Materials)
= 3,000 units * $2 = $6,000
- Cost of ending inventory (Conversion) = Ending inventory (Conversion) * Cost per equivalent unit (Conversion)
= 9,750 units * $3 = $29,250
5. Reconcile the costs:
- Total costs assigned = Cost of completed units + Cost of ending inventory (Direct Materials) + Cost of ending inventory (Conversion)
= $440,000 + $6,000 + $29,250 = $475,250 (matches the total costs incurred)
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Each variable in the expenditure approach of GDP represents one of the four main sectors. Which sector is represented by the (X-M) in the equation for GDP? Households Government Businesses Rest of the world
The sector represented by (X-M) in the equation for GDP is the "Rest of the world" sector.
In the expenditure approach of GDP, the equation for GDP is given as:
GDP = C + I + G + (X-M)
Here, C represents household consumption, I represents business investment, G represents government spending, and (X-M) represents net exports, which is the difference between exports (X) and imports (M).
The sector represented by (X-M) is the "Rest of the world" sector because it takes into account the economic transactions between a country and the rest of the world. It captures the difference between the value of goods and services exported by the country (X) and the value of goods and services imported by the country (M). A positive value of (X-M) indicates a trade surplus, where exports exceed imports, while a negative value indicates a trade deficit, where imports exceed exports.
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Question 4 (20 Marks) Evaluate how Samsung Electronics manages such a diverse supply chain.
Digital technologies such artificial intelligence, blockchain, and the Internet of Things, as well as sophisticated analytics The supply chain that Samsung Electronics controls is so varied.
Blockchain is a decentralised, immutable record that allows many parties to exchange encrypted data instantly, transparently, and concurrently as they start and finish transactions. Throughout the whole supply chain, from production to distribution to final consumers, blockchain technology can offer real-time visibility and product tracking of commodities and products. As a result, there is more openness and trust among the various supply chain participants. AI is being utilised to enhance every part of the logistics network, from demand forecasting to route optimisation and inventory management.
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Your company is exploring the market potential of expanding from a regional to a national brand. You are interested in learning some of the basic demographic information (household income, average age, etc.) in various states. Which of the following is the best method to gather this data? Gather external secondary data Gather primary survey data Gather primary field test data Gather primary observational data Gather qualitative data
The best method to gather basic demographic information in various states for the purpose of exploring market potential for expanding from a regional to a national brand would be to gather external secondary data.
External secondary data refers to information that has already been collected by sources external to the company, such as government agencies, research organizations, or industry reports. This data is readily available and can provide a comprehensive overview of demographic information at a state level, including household income, average age, and other relevant factors.
By utilizing external secondary data, you can access a wide range of information quickly and cost-effectively. It allows you to gather data from multiple sources, ensuring a comprehensive analysis. Moreover, the data is likely to be reliable and consistent as it has been collected by established organizations with expertise in data collection and analysis.
Other methods such as gathering primary survey data, primary field test data, or primary observational data could be time-consuming, expensive, and require significant resources. These methods involve collecting data directly from individuals, conducting field tests, or observing consumer behavior, which can be more complex and may not provide a broad view of demographic information across various states.
While qualitative data can provide valuable insights into consumer behavior and preferences, it may not be the most suitable method for gathering basic demographic information. Qualitative data typically focuses on gathering in-depth insights and opinions rather than specific demographic details.
In conclusion, gathering external secondary data is the best method to gather basic demographic information in various states when exploring the market potential of expanding from a regional to a national brand. It allows for a comprehensive analysis quickly and cost-effectively.
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You paid $99,500 for a $100,000 T-bill maturing in 60 days. If you hold it until maturity, what is the T-bill yield? What is the T-bill discount?
The T-bill yield is approximately 3.04%. The T-bill discount is 0.5%.
To calculate the T-bill yield and T-bill discount, we can use the following formulas:
T-bill Yield = (Face Value - Purchase Price) / Purchase Price * (365 / Days to Maturity)
T-bill Discount = (Face Value - Purchase Price) / Face Value
Purchase Price = $99,500
Face Value = $100,000
Days to Maturity = 60
Let's calculate the T-bill yield:
T-bill Yield = ($100,000 - $99,500) / $99,500 * (365 / 60)
= $500 / $99,500 * 6.0833
≈ 0.0304 or 3.04%
The T-bill yield is approximately 3.04%.
Now, let's calculate the T-bill discount:
T-bill Discount = ($100,000 - $99,500) / $100,000
= $500 / $100,000
= 0.005 or 0.5%
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In 21 years you would like to receive $25,000 income annually to perpetuity. You will receive the first payment in exactly 21 years. What equal annual deposits are required to guarantee that income if you make your first deposit in one year and you make your last deposit in 20 years. The annual interest rate is 9%. 277,777,78 1.250 5.429.58 13,251
$6,329.24 To calculate the equal annual deposits required, we can use the formula for the present value of a perpetuity. The formula is:
PV = C / r
where PV is the present value, C is the annual cash flow, and r is the interest rate.
In this case, we want to find the equal annual deposits required to guarantee a future cash flow of $25,000 per year in perpetuity. The cash flow will start in 21 years, so we need to discount it back to the present value.
Using the formula, we have:
PV = $25,000 / (1 + 0.09)^21
PV = $25,000 / 3.947897
PV = $6,329.24
Therefore, the equal annual deposits required to guarantee the desired income are $6,329.24.
Note: The answer provided in the options, "13,251," is incorrect. The correct answer is $6,329.24.
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To receive a $25,000 income annually starting in 21 years, you would need to deposit $13,251 annually for 20 years in an account with a 9% annual interest rate.
Explanation:This question is asking you to calculate the equal annual deposit needed to secure a guaranteed income per year (perpetuity) 21 years into the future. The calculation is related to understanding the concept of future value and the time value of money, utilizing the value of simple interest.
Using a formula to calculate the present value (PV) of a perpetuity, which is the income divided by the interest rate (PV = Income/Interest Rate), you can find the amount of money that needs to be in your account 21 years from now. Given that this value must be $25,000 and the interest rate is 9%, the needed present value is 25,000/0.09 = $277,777.78.
Next, calculate the equal annual payment (PMT) that will amount to this future value using the annuity formula (FV = PMT/Interest Rate * (1- ((1+Interest Rate)^-years)). Solving, this calculation for PMT, you determine that the equal annual deposit needed every year for 20 years is $13,251. This amount deposited annually at a 9% interest rate would yield a PV of $277,777.78 in 21 years, giving the required $25,000 income for perpetuity.
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Nonconstant Growth valuation
A company currently pays a dividend of $2.6 per share (D0=2.6). It is estimated that the company’s dividend will grow at a rate of 20% per year for the next two years and then a constant growth rate of 6% thereafter. The company’s stock has a beta of 1.2, the risk free rate is 7.5%, and the market risk premium is 3.5%. What is your estimate of the stocks current price?
The estimated current price of the stock is $5.45.
To estimate the stock's current price, we can use the dividend discount model (DDM) with non constant growth.
The formula for the DDM with non constant growth is:
P0 = D0(1 + g1) / (r - g1) + D1(1 + g2) / (r - g2) + D2(1 + g3) / (r - g3) + …
Where:
P0 = Current price of the stock
D0 = Current dividend per share
g1, g2, g3, ... = Growth rates for each period
r = Required rate of return
Given:
D0 = $2.6 (dividend per share)
g1 = 20% (growth rate for the first two years)
g2 = 6% (constant growth rate thereafter)
r = Risk-free rate + Beta * Market risk premium
= 7.5% + 1.2 * 3.5%
= 7.5% + 4.2%
= 11.7%
Now, let's calculate the stock's current price:
P0 = 2.6(1 + 0.20) / (0.117 - 0.20) + [2.6(1 + 0.20)^2 / (0.117 - 0.20)] / (1 + 0.06)^2
P0 = 2.6(1.20) / (-0.083) + [2.6(1.20)^2 / (-0.083)] / 1.1236
P0 = -31.20 + 36.65
P0 = $5.45
Therefore, the estimated current price of the stock is $5.45.
Based on the given information and using the dividend discount model with non constant growth, the estimated current price of the stock is $5.45.
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You want to have $59,000 in your savings account 8 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 6.9 percent interest, what amount must you deposit each year? Multiple Choice $7,375.00 $9,881.03 $5,771.34 $4,071.01 $4,070.98
You need to deposit approximately $7,375.00 at the end of each year to accumulate $59,000 in your savings account after 8 years.
To determine the amount you need to deposit each year, we can use the formula for the future value of an ordinary annuity:
FV = P * [(1 + r)^n - 1] / r
Where:
FV = Future value (desired amount in the savings account)
P = Annual deposit
r = Interest rate per period
n = Number of periods (in this case, 8 years)
We need to solve for P, so we rearrange the formula:
P = FV * (r / [(1 + r)^n - 1])
Substituting the given values:
FV = $59,000
r = 6.9% = 0.069
n = 8
P = $59,000 * (0.069 / [(1 + 0.069)^8 - 1])
P ≈ $7,375.00
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Conservative investors are attracted to Blue Chip stocks.
6. A bear market occurs when investors are pessimistic about the economy.
Conservative investors are attracted to Blue Chip stocks due to their perceived stability and reliability. In a bear market, when investors are pessimistic about the economy, conservative investors may exercise caution and adopt defensive strategies to protect their investments from potential losses.
Conservative investors are indeed often attracted to Blue Chip stocks. Blue Chip stocks are shares of large, well-established, financially stable companies with a history of consistent earnings and dividend payments. These companies are often leaders in their respective industries and have a reputation for stability and reliability. Conservative investors prefer Blue Chip stocks because they are considered to have a lower risk compared to smaller, less-established companies. These stocks are often considered to be more resilient during economic downturns and tend to provide steady returns over the long term.
A bear market, on the other hand, refers to a period of declining stock prices in the financial markets. It is characterized by widespread pessimism and negative sentiment among investors, leading to a downward trend in the overall market. During a bear market, stock prices tend to fall, and investors may experience losses on their investments.
The occurrence of a bear market is influenced by various factors such as economic conditions, geopolitical events, investor sentiment, and market dynamics. When investors have a negative outlook on the economy, they may sell off their investments, leading to a downward spiral in stock prices.
In a bear market, conservative investors may become more cautious and risk-averse. They may seek to protect their investments by shifting towards more defensive strategies, such as reducing exposure to equities and increasing investments in assets considered less volatile, such as bonds or cash.
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ow Hospitality prepares adjustments monthly and showed the following at September 30, 20 Additional information available for the month ended September 30, 2023: a. Interest of $156 had accrued on the notes payable for the month of September. b. The office furniture was acquired on September 1, 2023, and has an estimated four-year life. The $1,800 at the end of its four-year life. c. A count of the Repair Supplies revealed a balance on hand of $680. d. A review of the Prepaid Rent account showed that $10,000 had been used during September. e. Accrued wages of $2,700 had not been recorded at month-end. f. The September Internet bill for $100 had been received and must be paid by October 14. g. Accrued revenues of $6,000 were not recorded at September 30.
To prepare adjustments, Hospitality needs to consider the following information:
a. Accrued interest on the notes payable: $156 should be recorded as an expense.
b. Depreciation for the office furniture: Since it has a four-year life, divide the cost of $1,800 by four to get $450. Record $450 as depreciation expense.
c. Adjust the balance of Repair Supplies: The count reveals $680 on hand, so adjust the balance to $680.
d. Adjust Prepaid Rent: $10,000 has been used during September, so reduce the Prepaid Rent account by $10,000 and record it as rent expense.
e. Accrued wages: Record the accrued wages of $2,700 as an expense.
f. Record the September Internet bill: The bill of $100 needs to be recorded as an expense.
g. Accrued revenues: Record the accrued revenues of $6,000 as income.
Remember, adjustments are necessary to ensure accurate financial reporting and reflect the current financial position of the company.
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You borrowed $17,000 from your friend and promised to pay her simple interest at 8.15%, with interest paid at the end of every month. Your agreement specifies a 360-day year. How much interest would you pay in any given month? $115.46 $692.75 $3.85 $346.38 $1,385.50
If you borrowed $17,000 from your friend at an 8.15% annual interest rate with monthly compounding, you would pay approximately $115.46 in interest each month.
To calculate the monthly interest payment, we first need to convert the annual interest rate to a monthly rate. Since there are 12 months in a year, we divide the annual interest rate by 12:
Monthly interest rate = 8.15% / 12 = 0.68083%
Next, we calculate the interest payment using the formula:
Interest payment = Loan amount × Monthly interest rate
Interest payment = $17,000 × 0.68083% = $115.46 (rounded to the nearest cent)
Therefore, the correct answer is option a. $115.46. This represents the amount of interest you would pay in any given month on the $17,000 loan, based on the specified interest rate and monthly compounding.
It's important to note that this calculation assumes simple interest and does not consider any additional fees or charges that may be specified in your agreement with your friend.
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A security can exist in the absence of a formal certificate evidencing the investment and in the absence of an interest taken in the tangible assets of the company being invested in.
A. True
B. False
The answer to your question is: A. True. A security can indeed exist without a formal certificate or an interest in the tangible assets of the company.
Securities can take various forms, including stocks, bonds, or derivatives, and they represent a financial interest or ownership in a company or entity. While some securities may have a formal certificate, others can exist without one, such as electronic securities or digital assets. Additionally, not all securities involve a direct claim on the tangible assets of the company being invested in. Instead, they typically represent a share in the company's profits or a promise of repayment. Therefore, it is true that a security can exist in the absence of a formal certificate and without an interest in the tangible assets of the company.
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Labor costs account for a greater share of the value of U.S.
A) imports than of U.S. exports, because skill and pay are higher on the import side.
B) exports than of U.S. domestic production because exports are declining as a share of the U.S. Gross Domestic Product (GDP).
C) imports than of U.S. domestic production because U.S. imports are larger than U.S. domestic production.
D) exports than of U.S. imports, because skill and pay are higher on the export side of U.S. tradE
According to the Bureau of Labor Statistics, labor costs account for a greater share of the value of U.S. imports than of U.S. domestic production because U.S. imports are larger than U.S. domestic production. This is option (C).
The Bureau of Labor Statistics tracks import and export prices and how they are affected by the cost of labor, among other factors. In 2017, labor costs accounted for roughly 13% of the value of U.S. imports, while they accounted for just 5% of the value of U.S. domestic production.
Labor-intensive products such as clothing and footwear, are more likely to be imported, as labor costs are lower in other countries than in the United States. Therefore, it is unsurprising that labor costs account for a larger share of the value of U.S. imports than of U.S. domestic production.
Alternatively, high-tech products, such as computers, are more likely to be produced domestically, and labor costs account for a much smaller share of their value. Thus, this means that labor costs account for a greater share of the value of U.S. imports than of U.S. domestic production because U.S. imports are larger than U.S. domestic production.
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The bank charges a nominal rate of 15%. If the bank compounds their interest quarterly, calculate the effective interest rate charged by the bank. Round your answer to two decimal places.
To calculate the effective interest rate charged by the bank, we need to use the formula for compound interest. The formula for compound interest is A = P(1 + r/n)^(nt), where A is the future value of the investment, P is the principal amount, r is the nominal annual interest rate.
In this case, the principal amount is 1, the nominal annual interest rate is 15% (0.15 as a decimal), and interest is compounded quarterly, so n = 4. We want to find the effective interest rate after 1 year, so t = 1. Plugging these values into the formula, we have
A = 1(1 + 0.15/4)^(4*1).
To find the effective interest rate, we need to find the rate that would give us the same future value if the interest were compounded annually. We can solve this by rearranging the formula:
r = (A/P)^(1/(n*t)) - 1.
Plugging in the values, we have r = (1.1576/1)^(1/(4*1)) - 1.
Simplifying, we get r = 1.1576^(1/4) - 1.
Using a calculator, we find that r ≈ 0.0369.
Therefore, the effective interest rate charged by the bank, when compounding interest quarterly at a nominal rate of 15%, is approximately 3.69%.
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Giving practical examples, discuss HR analytics tools and their relevance in business today.
HR analytics tools provide organizations with data-driven insights to optimize HR processes, improve employee engagement, and align talent strategies with business goals.
HR analytics tools are essential in today's business environment as they enable organizations to leverage data to make informed decisions about their workforce. These tools collect, analyze, and interpret HR-related data to provide valuable insights. By utilizing HR analytics, organizations can optimize their HR processes, such as recruitment, performance management, and learning and development. For example, by analyzing employee turnover data, organizations can identify factors contributing to attrition and implement strategies to improve retention. Similarly, workforce planning analytics help forecast future talent needs and ensure a sustainable talent pipeline. Overall, HR analytics tools empower organizations to make data-driven decisions, improve employee engagement and performance, and align HR strategies with broader business objectives.
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Calculate the future value of $5,000 earning 9 percent after one year, assuming annual compounding. Now, calculate the future value of $5,000 earning 9 percent after 22 years. Click on the table icon to view the FVIF table The future value after one year is? (Round to the nearest cent.)
The future value of $5,000 earning 9 percent after one year, assuming annual compounding, is $5,450. And, the future value of $5,000 earning 9 percent after 22 years is $14,860.
To calculate the future value of $5,000 earning 9 percent after one year, assuming annual compounding, you can use the formula for compound interest: Future Value = Principal * (1 + Interest Rate)^Time
In this case, the Principal is $5,000, the Interest Rate is 9 percent (or 0.09), and the Time is one year.
Future Value = $5,000 * (1 + 0.09)^1
Future Value = $5,000 * 1.09
Future Value = $5,450
Therefore, the future value after one year is $5,450 (rounded to the nearest cent).
For the second part of your question, to calculate the future value of $5,000 earning 9 percent after 22 years, you can use the same formula: Future Value = Principal * (1 + Interest Rate)^Time
In this case, the Principal is still $5,000, the Interest Rate is still 9 percent (or 0.09), and the Time is now 22 years.
Future Value = $5,000 * (1 + 0.09)^22
Future Value = $5,000 * 2.972
Future Value = $14,860
Therefore, the future value after 22 years is $14,860 (rounded to the nearest cent).
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Which of the following will cause the quantity demanded of kerosene heaters to increase?
A.
An increase in the price of kerosene.
B.
A decrease in the price of kerosene heaters.
C.
An increase in the price of kerosene heaters.
D.
A decrease in the price of kerosene
An increase in the price of kerosene heaters will cause the quantity demanded of kerosene heaters to decrease. Kerosene heaters are a type of heating equipment that uses kerosene fuel to generate heat. The price of kerosene heaters, as well as the price of kerosene, can have an impact on the quantity demanded of kerosene heaters.
A decrease in the price of kerosene heaters, as stated in option B, will cause the quantity demanded of kerosene heaters to increase because more consumers will be able to afford them and the demand for them will grow as a result. An increase in the price of kerosene heaters, as stated in option C, will cause the quantity demanded of kerosene heaters to decrease because fewer people will be able to afford them and the demand for them will drop as a result.
An increase in the price of kerosene, as stated in option A, will cause the quantity demanded of kerosene heaters to decrease. This is because kerosene is the fuel used in kerosene heaters, and as the price of kerosene increases, the cost of running a kerosene heater becomes more expensive and people will choose not to use them. On the other hand, a decrease in the price of kerosene, as stated in option D, will cause the quantity demanded of kerosene heaters to increase.
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Nick Inc. sponsors a defined-benefit pension plan. The corporation's actuary provides the following information about the plan.
Projected benefit obligation
Plan assets
Prior service cost (plan amended)
Accumulated OCl (G/L)-Cr.
Expected rate of return
Settlement rate
Service cost
Contributions (funding)
Actual return on plan assets
Benefits paid to retirees
Average service life of all covered employees in years
1/1/2021
625,000
550,000
228,000
92,500
6%
5%
85,000
120,000
44,000
110,000
10
12/31/2021
INSTRUCTIONS: Compute the following for 2021 (Use comma in numbers, one thousand is 1,000 , not 1000 . No $ sign. No positive or negative sign). (1) Interest cost (2) Unexpected gain/loss on plan assets (3) PSC amortization (4) G/L amortization (5) Total pension expense
The computed values for 2021 are as, Interest cost: $31,250, Unexpected gain/loss on plan assets: $77,000 PSC amortization: $22,800, G/L amortization: $9,250, Total pension expense: $72,300
To compute the requested information for 2021, we need to use the given data. Here are the calculations:
(1) Interest cost:
Interest cost = (Projected benefit obligation at the beginning of the year) × (Settlement rate)
Interest cost = $625,000 × 5% = $31,250
(2) Unexpected gain/loss on plan assets:
Unexpected gain/loss on plan assets = (Actual return on plan assets) - (Expected rate of return × Plan assets)
Unexpected gain/loss on plan assets = $110,000 - (6% × $550,000) = $110,000 - $33,000 = $77,000
(3) Prior service cost (PSC) amortization:
PSC amortization = (Prior service cost) / (Average service life of all covered employees in years)
PSC amortization = $228,000 / 10 = $22,800
(4) G/L amortization:
G/L amortization = (Accumulated OCI - Credit) / (Average service life of all covered employees in years)
G/L amortization = $92,500 / 10 = $9,250
(5) Total pension expense:
Total pension expense = (Service cost) + (Interest cost) - (Expected return on plan assets) + (PSC amortization) + (G/L amortization) - (Benefits paid to retirees)
Total pension expense = $85,000 + $31,250 - $33,000 + $22,800 + $9,250 - $44,000 = $72,300
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A company has sales of $5,417,000, a gross profit ratio of 35%, ending merchandise inventory of $201,425, and total current assets of $1,539,600. What is the days sales' in inventory ratio for the year?
The day's sales in inventory ratio for the year is 20.88. This indicates that, on average, it takes approximately 20.88 days for the company to sell its inventory.
To calculate the day's sales in inventory ratio, we need to determine the average daily cost of merchandise sold and divide the ending merchandise inventory by the average daily price.
First, we calculate the cost of goods sold (COGS) using the gross profit ratio:
Gross Profit = Sales - COGS
Let's calculate the COGS:
Gross Profit = 0.35 * $5,417,000
Gross Profit = $1,896,950
COGS = Sales - Gross Profit
COGS = $5,417,000 - $1,896,950
COGS = $3,520,050
Next, we calculate the average daily cost of merchandise sold:
Average Daily Cost of Merchandise Sold = COGS / 365 days
Average Daily Cost of Merchandise Sold = $3,520,050 / 365
Average Daily Cost of Merchandise Sold = $9,641.92 (approximately)
Finally, we calculate the day's sales in inventory ratio:
Days Sales' in Inventory Ratio = Ending Merchandise Inventory / Average Daily Cost of Merchandise Sold
Days Sales' in Inventory Ratio = $201,425 / $9,641.92
Days Sales' in Inventory Ratio = 20.88 (approximately)
Therefore, the day's sales in inventory ratio for the year is approximately 20.88.
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Your firm is considering a project with no start-up costs that will generate $1 million in FCF forever, starting in one year. Your debt-to-equity ratio is 1 , your equity-holders require a return of 12%, and your debt-holders require a return of 8%. The tax rate is 20%. Using the Adjusted Present Value method, compute the unlevered value of the project, the value of the tax shield (assuming you maintain your current leverage ratio), and the levered value of the project. V−u=$10 million, PV(Tax Shield )=$1.740 million, V−L=$11.740 million VLu=$10 million, PV( Tax Shield )=$0.870 million, VL=$10.870 million V−u=$11.740 million, PV(Tax Shield =$0,V⊥L=$11.740 million V−u=$12 million, PV( Tax Shield )=$0.080 million, V−L=$12.080 million
Using the Adjusted Present Value (APV) method, the unlevered value of the project is $10 million, the value of the tax shield (assuming the current leverage ratio is maintained) is $1.740 million, and the levered value of the project is $11.740 million.
The APV method calculates the value of a project by separately considering the unlevered value and the value of the tax shield.
The unlevered value (V-u) of the project is the present value of the expected cash flows, discounted at the unlevered cost of equity. In this case, the project generates $1 million in perpetuity starting in one year. Discounting this cash flow at the equityholders' required return of 12% yields an unlevered value of $10 million.
The value of the tax shield is the present value of the tax savings resulting from the deductibility of interest expenses. Since the firm has a debt-to-equity ratio of 1 and the debt-holders require a return of 8%, the tax shield is calculated as the tax rate (20%) multiplied by the interest expense (equal to the debt return rate multiplied by the debt amount). Discounting this tax shield at the unlevered cost of equity gives a value of $1.740 million.
To obtain the levered value (V-L) of the project, the unlevered value is added to the value of the tax shield. Thus, the levered value is $10 million + $1.740 million = $11.740 million.
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Alexia, who is 35 years oid, fakes out individual disability invurance, She has a return of premium nider odded. The riser ststes that, whien her belicy expires at age 65 , the insurer will refund her 75% of all the premiums she has paid lens any disability benefits she received, The total annual peeriuam for this policy is $2,000. Over the years, Alexia receives $12,000 in benefits for varions ahort periods of disability. At age s5, she deciains vo cancel tier polity since her work situation has changed significantly. How much will Alexia receive under her return of premlum rider? $30,000 $21,000. $18,000 Nothing, nince she cancelled her policy before the matirity date and has received benefits under it.
Alexia, who is 35 years old, had a disability insurance policy with a return of premium rider.
The rider states that when her policy expires at age 65, the insurer will refund her 75% of all the premiums she has paid, minus any disability benefits received. The total annual premium for the policy is $2,000. Alexia received $12,000 in disability benefits over the years. At age 55, she decides to cancel her policy due to changes in her work situation. Since she cancelled her policy before the maturity date and received benefits under it, she will not receive any refund under the return of premium rider. Therefore, Alexia will receive nothing from the return of premium rider.
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