The Engel Curve for a good is derived by tracing the optimal allocation as income changes.
The Engel Curve shows the relationship between the quantity of a good consumed and the level of income. It illustrates how the demand for a particular good varies with changes in income while holding other factors constant, such as prices.
By tracing the optimal allocation of the good as income changes, economists can observe how individuals adjust their consumption patterns in response to changes in their income levels. As income increases, individuals may choose to allocate more of their budget towards certain goods, resulting in an upward shift in the Engel Curve. Conversely, as income decreases, individuals may allocate less of their budget towards certain goods, leading to a downward shift in the Engel Curve.
The Engel Curve provides insights into the income elasticity of demand for a good and helps economists understand how changes in income affect consumer behavior and consumption patterns. By examining the relationship between income and the quantity consumed, economists can gain valuable insights into consumer preferences and the income sensitivity of different goods
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Exercise 1: FCF - Constant Growth Assume the following: FCF 0
=$24 million WACC =11% FCF is expected to grow at a constant rate of gL=5% Short-term investments =$100 million Debt =$200 million Preferred stock =$50 million Number of shares =n=10 million Calculate 1. Value of Operations 2. Total Value of Company 3. Estimated Intrinsic Value of Equity 4. Estimated Intrinsic Stock Price per Share
1) Value of Operations: $420 million
2) Total Value of the Company: $520 million
3) Estimated Intrinsic Value of Equity: $270 million
4) Estimated Intrinsic Stock Price per Share: $27 per share
To calculate the value of operations, total value of the company, estimated intrinsic value of equity, and estimated intrinsic stock price per share, we need to follow these steps:
1) Value of Operations:
The value of operations can be calculated using the Free Cash Flow to Firm (FCFF) formula:
Value of Operations = FCF1 / (WACC - gL)
Where:
FCF1 = Free Cash Flow in the first year = FCF0 * (1 + gL) = $24 million * (1 + 0.05) = $25.2 million
WACC = Weighted Average Cost of Capital = 11%
gL = Growth rate of FCF = 5%
Plugging in the values:
Value of Operations = $25.2 million / (0.11 - 0.05) = $25.2 million / 0.06 = $420 million
2) Total Value of Company:
The total value of the company is the sum of the value of operations and the value of non-operating assets, such as short-term investments. In this case, short-term investments are given as $100 million.
Total Value of Company = Value of Operations + Short-term Investments = $420 million + $100 million = $520 million
3) Estimated Intrinsic Value of Equity:
To calculate the estimated intrinsic value of equity, we need to deduct the value of debt and preferred stock from the total value of the company.
Estimated Intrinsic Value of Equity = Total Value of Company - Debt - Preferred Stock
= $520 million - $200 million - $50 million
= $270 million
4) Estimated Intrinsic Stock Price per Share:
To calculate the estimated intrinsic stock price per share, we divide the estimated intrinsic value of equity by the number of shares.
Estimated Intrinsic Stock Price per Share = Estimated Intrinsic Value of Equity / Number of Shares
= $270 million / 10 million
= $27 per share
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which of the following sentences avoids buzzwords and slang? a. The company decided a new paradigm shift was needed to increase sales.
b. Our stock prices tanked last quarter.
c. All companies must follow the guidelines outlined in the Sarbanes-Oxley Act.
d. The architects blew the budget for the design of the new energy center.
C, All companies must follow the guidelines outlined in the Sarbanes-Oxley Act.
A includes the phrase "paradigm shift," which is considered a buzzword. B and D include "tanked" and "blew the budget," respectively, which are slang terms. Therefore, the only answer left is C. Happy to help, have a great day! :)
Assume the real rate of interest is \( 2.00 \% \) and the inflation rate is \( 6.00 \% \). What is the value today of receiving \( 10,141.00 \) in \( 14.00 \) years?
Given: Real rate of interest = 2%Inflation rate = 6%Amount received after 14 years = $10,141.00We have to calculate the present value of this amount.
Present Value = Future Value / (1+r)^n where r = real rate of interest n = number of years Future value = Amount received after 14 years. We know that, Real rate of interest = [(1+nominal rate)/(1+inflation rate)] - 1 Thus, Nominal rate = [(1+real rate of interest)/(1+inflation rate)] - 1Putting values in the above equation, we get Nominal rate = [(1+2%)/(1+6%)] - 1= -3.7%Now, we can calculate the present value as follows: Present Value = Future Value / (1+r)^n Present Value = $10,141 / (1-0.037)^14Present Value = $5,026.56Thus, the value today of receiving $10,141.00 in 14 years is $5,026.56.
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Which of the following is typically included in a psychographic or lifestyle study?
attitudes
values
activities and interests
demographics
all of the above
Psychographic or lifestyle studies typically include attitudes, values, activities and interests, and demographics.
All of the above.
A psychographic or lifestyle study aims to understand and analyze the psychological and behavioral characteristics of individuals or groups. It typically includes various aspects such as attitudes, values, activities and interests, and demographics. Psychographic research goes beyond traditional demographic data (such as age, gender, and income) and focuses on understanding people's motivations, beliefs, preferences, and lifestyle choices. By examining these factors, marketers and researchers can gain insights into consumer behavior, target specific audiences, and tailor their marketing strategies accordingly. Therefore, all the options mentioned (attitudes, values, activities and interests, and demographics) are typically included in a psychographic or lifestyle study.
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Please provide answer for the following questions
4. The difference between an ordinary annuity and an annuity due is the:
a. timing of the annuity payments.
b. interest rate applied to the annuity payments.
c. number of annuity payments.
d. amount of each annuity payment.
5. Which one of the following is an annuity due?
a. $225 paid at the end of each monthly period for an infinite period of time
b. $100 paid at the end of each monthly period for one-year
c. $225 paid forever
d. $600 paid at the beginning of every quarter for five years, starting today
6.What is the present value of $150 received at the beginning of each year for 16 years? The first payment is received today. Use a discount rate of 9%.
7. What is the present value of $250 received at the beginning of each year for 21 years? Assume that the first payment is received today. Use a discount rate of 12%
8. What is the future value of semi-annual payments of $6,500 for eight years at 12 percent?
9. You are considering an investment that would entail $5,000 payments each year for 20 years. The investment will pay 7 percent interest. How much will this investment be worth at the end of the 20 years?
10. Kelly started setting aside funds six years ago to buy some new equipment for her firm. She has saved $2,000 each quarter and earned an average rate of return of 7.5 percent. How much money does she currently have saved for this purpose?
11. Today, you are purchasing an $85,000 20-year car loan at 6 percent. You will pay annually at the end of each year. What is the amount of each payment?
12. You just won a lottery that will pay you $2,500 a year for twenty years. You will receive your first payment today. If you can earn 8 percent on your money, what are your winnings worth to you today? (Note that since you will receive your first payment today, it is an annuity due problem).
Correct option is a. The difference between an ordinary annuity and an annuity due is the a. timing of the annuity payments. An annuity is a series of payments made or received at a certain date in the future. It may either be an ordinary annuity or an annuity due.
An ordinary annuity is a payment or receipt series at the end of each period, while an annuity due is a payment or receipt series at the beginning of each period.
5. The annuity due is d. $600 paid at the beginning of every quarter for five years, starting today.
6. The first payment is received today. Use a discount rate of 9%.
The present value can be calculated using the formula for the present value of an annuity due:
Present value = Payment amount *[tex][(1 - (1 + r)^(-n))[/tex] / r] * (1 + r)
Present value = $150 * [tex][(1 - (1 + 0.09)^(-16)) / 0.09] * (1 + 0.09)[/tex]
Present value ≈ $1,558.70 (rounded to two decimal places)
7. Assume that the first payment is received today. Use a discount rate of 12%. Similarly, using the formula for the present value of an annuity due:
Present value = Payment amount *[tex][(1 - (1 + r)^(-n)) / r] * (1 + r)[/tex]
Present value = $250 * [tex][(1 - (1 + 0.12)^(-21)) / 0.12] * (1 + 0.12)[/tex]
Present value ≈ $2,099.39 (rounded to two decimal places)
8. The future value can be calculated using the formula for the future value of an ordinary annuity:
Future value = Payment amount * [tex][(1 + r)^n - 1][/tex] / r
Future value = $6,500 * [[tex](1 + 0.12)^(8*2)[/tex]- 1] / 0.12
Future value ≈ $119,704.75 (rounded to two decimal places)
9. The future value can be calculated using the formula for the future value of an ordinary annuity:
Future value =[tex]Payment amount * [(1 + r)^n - 1] / r[/tex]
Future value = [tex]$5,000 * [(1 + 0.07)^20 - 1] / 0.07[/tex]
Future value ≈ $198,646.75 (rounded to two decimal places)
10. The current savings can be calculated using the formula for the future value of an ordinary annuity:
Future value = [tex]Payment amount * [(1 + r)^n - 1] / r[/tex]
Future value =[tex]$2,000 * [(1 + 0.075)^(6*4) - 1] / 0.075[/tex]
Future value ≈ $67,402.34 (rounded to two decimal places).
11. The amount of each payment can be calculated using the formula for the present value of an ordinary annuity:
Payment amount = Present value * [tex](r / (1 - (1 + r)^(-n)))[/tex]
Payment amount = $85,000 * [tex](0.06 / (1 - (1 + 0.06)^(-20)))[/tex]
Payment amount ≈ $7,804.91 (rounded to two decimal places)
12.The present value of the winnings can be calculated using the formula for the present value of an annuity due:
Present value = Payment amount *[tex][(1 - (1 + r)^(-n)) / r] * (1 + r)[/tex]
Present value = $2,500 *[tex][(1 - (1 + 0.08)^(-20)) / 0.08] * (1 + 0.08)[/tex]
Present value ≈ $30,623.18 (rounded to two decimal places).
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Supersonic Technologies, Inc. ("SuperTech") is developing a supersonic business jet, and the first flight test aircraft is nearing completion. SuperTech wants to operate its flight test program out of the Grant County International Airport near Moses Lake, Washington, and needs a high-altitude supersonic flight corridor in the nearby airspace to enable safe flight testing without risk to other air traffic.
How should the company go about obtaining the needed airspace designation?
To obtain the needed airspace designation for conducting high-altitude supersonic flight tests, SuperTech should follow a regulatory process involving coordination with the appropriate aviation authorities. This process typically includes submitting a formal request, providing necessary documentation and safety assurances, engaging in consultations with relevant stakeholders, and obtaining approvals from the Federal Aviation Administration (FAA) or the designated aviation authority in the jurisdiction where the flight testing will take place.
SuperTech should begin by preparing a comprehensive proposal outlining the specific requirements for the high-altitude supersonic flight corridor and the intended flight test program. The proposal should include details such as the geographic boundaries of the corridor, altitude restrictions, duration of the airspace designation, and safety protocols to mitigate any potential risks. The company should then submit the proposal to the FAA or the relevant aviation authority responsible for managing airspace operations in the area where Grant County International Airport is located. The aviation authority will evaluate the proposal based on safety considerations, impact on existing air traffic, and compliance with applicable regulations. It may involve consultations with air traffic control, aviation industry experts, and other stakeholders to assess the feasibility and potential impacts of the requested airspace designation. Once all necessary reviews and assessments are completed, the aviation authority will make a determination and issue the required airspace designation if the proposal meets the necessary criteria and safety standards.
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Let's assume that tuna and salmon are substitute for one another. Suppose the price of tuna increases. What would you expect to happen to the demand for salmon? Not enough information The demand for saimon would stay the same. The demand for salmon would decrease. The demand for salmon would increase.
If tuna and salmon are substitute goods and the price of tuna increases, it is expected that the demand for salmon will increase as a result of the increase in the price of tuna.
What are substitute goods Substitute goods refer to two different types of goods that can be used in place of each other for specific purposes. Substitute goods are items that are considered equivalent to each other. For example, Pepsi and Coca-Cola are substitute goods because they are similar products that can be used interchangeably.
If the price of one substitute good goes up, demand for the other substitute good will rise. Suppose the price of tuna increases. What would happen to the demand for salmon?If tuna and salmon are substitute goods and the price of tuna increases, it is expected that the demand for salmon will increase as a result of the increase in the price of tuna. This is because consumers will switch to buying salmon since it is relatively cheaper than tuna. Therefore, the demand for salmon would increase.I hope this helps.
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We are evaluating a project that costs $744,000, has a life of 6 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 29,000 units per year. Price per unit is $60, variable cost per unit is $20, and fixed costs are $740,000 per year. The tax rate is 23 percent and we require a return of 11 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within #15 percent. Calculate the best-case and worst-case NPV figures. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
The best-case net present value (NPV) for the project is $288,661.53, indicating a positive return on investment. The worst-case NPV is -$57,282.21, indicating a negative return on investment.
To calculate the best-case NPV, we need to consider the highest projected values for sales, price per unit, and the lowest projected values for variable costs and fixed costs. The annual cash inflow can be calculated as the sales quantity multiplied by the price per unit, resulting in $1,740,000.
The annual cash outflow can be calculated by subtracting the variable costs per unit from the sales quantity, and then multiplying by the variable cost per unit and adding the fixed costs, resulting in $1,160,000. The annual cash flow is then the difference between the cash inflow and cash outflow, which is $580,000.
Using the NPV formula, with a discount rate of 11% and a project life of 6 years, the best-case NPV is calculated as $288,661.53.
For the worst-case NPV, we consider the lowest projected values for sales, price per unit, and the highest projected values for variable costs and fixed costs.
Following the same calculations as above, the annual cash inflow is $435,000, the annual cash outflow is $755,000, and the annual cash flow is -$320,000. Applying the NPV formula, the worst-case NPV is calculated as -$57,282.21.
This indicates a negative return on investment, suggesting that the project may not be financially viable in the worst-case scenario.
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8 unique features of e-commerce Woolworths
Here are 8 unique features of e-commerce Woolworths: online shopping services, option of choosing, website is user-friendly, delivery options, range of payment options, option of saving their shopping list, regular updates, range of special offers and deals.
E-commerce Woolworths offers its customers a wide range of services and benefits, here are the 8 unique features that it offers:
1. Woolworths provides online shopping services that are convenient and accessible. Customers can shop from anywhere and at any time, making it a convenient shopping experience.
2. Woolworths provides its customers with the option of choosing from a wide range of products online, including groceries, household items, and more.
3. The Woolworths website is user-friendly and easy to navigate. It is easy to search for items and compare prices.
4. Woolworths provides customers with a range of delivery options, including home delivery and click and collect. Customers can choose the option that is most convenient for them.
5. Woolworths provides its customers with a range of payment options, including credit card and more.
6. Woolworths offers its customers the option of saving their shopping list for future purchases. This makes it easier to shop in the future and ensures that customers do not forget anything.
7. Woolworths provides its customers with regular updates on their order status, including delivery time and tracking information.
8. Woolworths offers its customers a range of special offers and deals, making it easier to save money while shopping online.
Overall, Woolworths e-commerce provides its customers with a convenient and user-friendly shopping experience, making it easier to buy groceries and household items online.
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Find the present values of these ordinary annuities. Discounting occurs once a year. Round your answers to the nearest cent.
Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent.
$600 per year for 10 years at 12%.
$
$300 per year for 5 years at 6%.
$
$700 per year for 10 years at 0%.
$
$600 per year for 10 years at 12%.
$
$300 per year for 5 years at 6%.
$
$700 per year for 10 years at 0%.
$
The present values of the annuities are:
$600 per year for 10 years at 12%: $3,950.39 (ordinary), $4,424.43 (annuity due)
$300 per year for 5 years at 6%: $1,360.79 (ordinary), $1,443.53 (annuity due)
$700 per year for 10 years at 0%: $7,000 (ordinary and annuity due)
To calculate the present value of ordinary annuities, we can use the formula:
[tex]PV = PMT * (1 - (1 + r)^{(-n)}) / r[/tex]
Where:
PV = Present Value
PMT = Payment per period
r = Interest rate per period
n = Number of periods
$600 per year for 10 years at 12%:
PMT = $600
r = 0.12
n = 10
Using the formula:
PV = $600 * (1 - (1 + 0.12)^(-10)) / 0.12
PV ≈ $3,950.39
$300 per year for 5 years at 6%:
PMT = $300
r = 0.06
n = 5
Using the formula:
[tex]PV = $300 * (1 - (1 + 0.06)^{(-5)}) / 0.06[/tex]
PV ≈ $1,360.79
$700 per year for 10 years at 0%:
PMT = $700
r = 0
n = 10
Since the interest rate is 0%, the present value of the annuity is simply the total payments over the period:
PV = $700 * 10
PV = $7,000
Now, let's calculate the present value of annuities due by multiplying the present value of ordinary annuities by (1 + r):
$600 per year for 10 years at 12% (annuity due):
PV = $3,950.39 * (1 + 0.12)
PV ≈ $4,424.43
$300 per year for 5 years at 6% (annuity due):
PV = $1,360.79 * (1 + 0.06)
PV ≈ $1,443.53
$700 per year for 10 years at 0% (annuity due):
PV = $7,000 * (1 + 0)
PV = $7,000
Therefore, the present values of the annuities are:
$600 per year for 10 years at 12%: $3,950.39 (ordinary), $4,424.43 (annuity due)
$300 per year for 5 years at 6%: $1,360.79 (ordinary), $1,443.53 (annuity due)
$700 per year for 10 years at 0%: $7,000 (ordinary and annuity due)
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The risk-rerum trade off concept staies that. (a) Higher risk should accompeny higher retum (b) Higher risk should only be assumed when thene are prospects for results (c) Higher retums should only be espected from hou-risk nujeets (d) None of the above
The correct answer is (a) Higher risk should accompany higher return.
The risk-return tradeoff concept is a fundamental concept in finance that states that higher returns come with higher risks. This means that investors who want to earn higher returns must be willing to accept a higher level of risk, which can include the possibility of losing some or all of their investment. Conversely, investments with lower risks generally offer lower returns.
Option (b) suggests that risk should only be assumed when there are prospects for results, but this is not necessarily true. Even if an investment has prospects for results, it may still carry a relatively high level of risk and potential for loss.
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Explain what is the Implementation with the Sustainable Supply
Chain (SSC)-Scorecard? Choose a company in Saudi Arabia which does
practice it.
The Implementation with the Sustainable Supply Chain (SSC) Scorecard refers to the utilization of a structured framework to assess and measure the sustainability performance of supply chains. The SSC Scorecard provides a systematic approach to evaluate and improve sustainability practices within the supply chain, taking into account environmental, social, and economic aspects.
In Saudi Arabia, one company that practices the SSC Scorecard is Saudi Aramco, the national oil and gas company. Saudi Aramco has implemented sustainability initiatives throughout its supply chain to address environmental impact, social responsibility, and economic factors. The company emphasizes sustainability across its operations, including procurement, logistics, and distribution.
Saudi Aramco utilizes the SSC Scorecard to evaluate the performance of its suppliers and partners, ensuring they adhere to sustainable practices. The scorecard assesses factors such as carbon emissions, waste management, labor rights, and community engagement. By using the SSC Scorecard, Saudi Aramco aims to enhance transparency, reduce environmental impact, promote social well-being, and foster long-term economic viability in its supply chain.
Through its commitment to the SSC Scorecard, Saudi Aramco demonstrates its dedication to sustainable practices, setting an example for other companies in Saudi Arabia and beyond. By implementing the SSC Scorecard, companies can effectively measure, monitor, and improve their sustainability performance, contributing to a more sustainable future.
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Following is an extract of account balances of Aztec Moving Services as of December 31, after the first year of operation.
Accounts Receivable
$6,000
Accounts Payable
5,000
Salaries Expense
7,000
Repairs Expense
900
Truck
10,000
Equipment
11,000
Notes Payable
8,500
Cash
7,200
Supplies Expense
1,000
Service Revenue
31,000
Gasoline Expense
3,800
Salaries Payable
200
What is the amount of total assets at the end of the year?
The total assets at the end of the year can be calculated by adding the current asset with the fixed asset. As given below Total assets at the end of the year= Current assets + Fixed assetsGiven data Accounts Receivable $6,000Cash $7,200Supplies Expense $1,000Truck $10,000 Equipment $11,000.
Total current asset = Accounts Receivable + Cash + Supplies Expense= $6,000 + $7,200 + $1,000= $14,200.
Total fixed asset= Truck + Equipment= $10,000 + $11,000= $21,000Now, the total asset at the end of the year will be Total assets at the end of the year= Current assets + Fixed assets= $14,200 + $21,000= $35,200Therefore, the amount of total assets at the end of the year is $35,200.
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Define governance and the role of a board of directors in a non
for profit setting (4 - 6 sentences)
Governance refers a non-profit setting, the board of directors plays a crucial role in governance by providing strategic guidance, oversight, and accountability.
Governance encompasses the framework and mechanisms that guide an organization's operations, decision-making processes, and relationships with stakeholders. It involves defining the organization's mission, setting strategic objectives, and ensuring compliance with legal and ethical standards. In a non-profit setting, governance is particularly important as these organizations operate with a social or charitable purpose and often rely on public trust and support.
The board of directors is a key component of governance in a non-profit organization. The board is responsible for overseeing the organization's activities, making strategic decisions, and safeguarding its mission and values. Board members typically have diverse expertise and backgrounds, bringing a range of skills and perspectives to the organization. They provide strategic guidance, set policies, and monitor the organization's performance. The board also ensures accountability by overseeing financial management, reviewing operational results, and evaluating the organization's impact.
Moreover, the board of directors acts as a fiduciary, representing the interests of stakeholders and ensuring the organization's resources are used effectively and responsibly. They may participate in fundraising efforts, engage with key stakeholders, and advocate for the organization's mission. Overall, the board of directors in a non-profit setting plays a vital role in providing governance, strategic direction, and accountability to ensure the organization fulfills its mission and serves its beneficiaries effectively.
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A company has the option of purchasing or manufacturing an item. If the item is purchased, the company will be charged $100 per unit plus a cost of $12 per order. If the company manufactures the item, it has a production capacity of 50,000 units per year. It costs $150 to set up a production run, and annual demand is 30,000 units per year. If the annual holding cost is 10% and the cost of manufacturing one unit is $112, determine whether the company should purchase or manufacture the item.
The company should purchase the item. To determine the Economic Order Quantity (EOQ), which is the quantity that minimizes total inventory costs, we can use the formula EOQ = sqrt(2DS / H), where D represents the annual demand in units, S is the cost of placing an order, and H is the holding cost per unit per year.
Given the values:
D = 30,000 (annual demand)
H = 0.1 (holding cost, which is 10%)
S = $12 (cost of placing an order)
By plugging these values into the formula, we can calculate the EOQ:
EOQ = sqrt((2 x 30,000 x 12) / 0.1) = 1732.05 ≈ 1733 units
Now, let's consider the cost aspect. The cost of purchasing an item can be determined using the equation CP = 100x + 12(D/x), where x represents the order quantity. On the other hand, the cost of manufacturing an item is given by CM = 150(A/50000) + 112A, where A represents the order quantity.
Based on the given formulas, we have the following equations:
CP = 100x + 12(D/x)
CM = 150(A/50000) + 112A
Considering the annual demand of 30,000 units and the production capacity of 50,000 units per year, it is more cost-effective for the company to purchase the item rather than manufacturing it. The calculated EOQ of approximately 1733 units supports this decision.
Therefore, given the parameters and calculations, the company should purchase the item rather than manufacturing it.
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Tinsley, Incorporated, wishes to maintain a growth rate of 14 percent per year and a debt-equity ratio of .4. The profit margin is 7.2 percent, and the ratio of total assets to sales is constant at 1.69.
What dividend payout ratio is necessary to achieve this growth rate under these constraints? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What is the maximum growth rate possible? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Is a growth rate of 14 percent possible?
multiple choice
Possible
Impossible
To achieve a growth rate of 14%, Tinsley, Incorporated needs a dividend payout ratio of approximately 36%. The maximum possible growth rate under the given constraints is approximately 17.62%.
To determine the dividend payout ratio necessary to achieve a growth rate of 14 percent per year for Tinsley, Incorporated, we need to consider the sustainable growth rate formula:Growth Rate = Profit Margin * Retention Ratio * Asset Turnover * Equity Multiplier.
Given the information provided, we can calculate the growth rate as follows:14% = 7.2% * (1 - Dividend Payout Ratio) * 1.69 * (1 + 0.4).
Simplifying the equation, we have:
0.14 = 0.072 * (1 - Dividend Payout Ratio) * 1.69 * 1.4.
By rearranging the equation and solving for the dividend payout ratio, we get:Dividend Payout Ratio = 1 - (0.14 / (0.072 * 1.69 * 1.4)).Calculating the value, the dividend payout ratio is approximately 35.99%.
To determine the maximum growth rate possible, we need to find the highest value the growth rate can reach under the given constraints. This occurs when the dividend payout ratio is 0, resulting in the maximum retention of earnings for growth. Using the same formula as above, but with Dividend Payout Ratio = 0, we find the maximum growth rate to be:
Maximum Growth Rate = 0.072 * 1.69 * 1.4.
Calculating the value, the maximum growth rate is approximately 17.62%.
Therefore, a growth rate of 14 percent is possible for Tinsley, Incorporated.
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General Advice: Consider each series as the limit of a sequence of partial sums. 1. Please prove that the series ∑k=0[infinity]ak=1−1+21−21+31−31+41−41+… converges to zero. 2. Consider the function f(x)=∑k=0[infinity]xk=1+x+x2+… What is the domain (as a subset of R ) for this function? That is, for which x∈R does this series converge? Prove/explain your answer. 3. Suppose that {an} is a sequence of real numbers and bn=an−an−1∀n∈Z+. (a) Prove that the series ∑k=1[infinity]bk converges iff the sequence {an} converges. (b) Suppose that the series ∑k=1[infinity]bk converges; what is its value?
1. the value of the series by using the formula for the sum of an infinite geometric series:
∑k=1[infinity]xk=1/(1−x)
∴ ∑k=1[infinity]bk=limn→∞an−a0=limn→∞(b1+b2+…+bn)=1/2
We know that a series is convergent when its sequence of partial sums converges. Let's call the sum of the first n terms of the series Sn. So, we have:
S0=1
S1=1−1
S2=1−1+21
S3=1−1+21−21
S4=1−1+21−21+31
S5=1−1+21−21+31−31
S6=1−1+21−21+31−31+41
∴ Generalizing, we have:
S0=1
Sn=∑k=0[n](−1)ka(k+1)=1−1+21−21+31−31+41−41+…
∴ We have to show that limn→∞Sn=0.
We can rewrite the above expression of Sn as:
Sn=∑k=0[n/2][(−1)2kak+1+ak+2−(−1)2k+1ak+2−ak+3]+(−1)n+1an+1
(For odd n)Sn=
∑k=0[(n−1)/2][(−1)2kak+1+ak+2−(−1)2k+1ak+2−ak+3]
(For even n)
We will use the fact that, for a given ε>0, there exists a natural number N such that |ak+2|+|ak+3|<ε for k≥N.
Let's suppose that |a1|+|a2|+|a3|+|a4|+…+|aN−1|<ε/2.
Then, we can break down Sn in the following way:|Sn|≤∑k=0[N/2][|ak+2|+|ak+3|]+|an+1|
∴ |Sn|<ε/2+Nε+ε/2
=(2N+1)ε/2
Thus, we have shown that |Sn|→0 as n→∞.
So, we have proved that the series converges to zero.
2. Finding the domain of f(x)We know that the series converges when |x|<1. So, the domain of f(x) is the open interval (-1, 1).We can prove this by the ratio test:
limn→∞(an+1/an)=limn→∞(x(n+1)/xn)=x<1
∴ The series converges for |x|<1. Hence, the domain of f(x) is (-1, 1).
3. Proving that ∑k=1[infinity]bk converges
ff {an} converges(a) If {an} converges, then we know that the limit of the sequence of differences, bn=an−an−1, is zero.
Thus,
∑k=1[infinity]bk converges by the limit comparison test with the series
∑k=1[infinity]1/k(b) Suppose that the series
∑k=1[infinity]bk converges.
Then, we know that its sequence of partial sums converges. We can find the value of the series by using the formula for the sum of an infinite geometric series:
∑k=1[infinity]xk=1/(1−x)
∴ ∑k=1[infinity]bk=limn→∞an−a0=limn→∞(b1+b2+…+bn)=1/2
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Future value (with changing years). Dive Bark offers a cerffcate of deposit with an opton to seiect your own investment period. Jonathan has 56.000 for his CD investment. If the bank is oflering a 3 \% interest rate, compounded annusly, how much will the CD be worth at maturily it Jonathan picks a a. twoyear imvestment period? b. fivo-year investment period? c. eighlyear investment period? d. tfteenyoar investment period? a. How much wilt the 36.000 CD westrent at 3s interest fate be worth at maturity 1 Jonathan picks a 2 year investment poriod? (Round to the nearest cent) (Round to the nearest cent) e. How much wil the 18.000CD inestment at 3\% interest tate be werts at maturity f Jonathan picks a 8-year invostment period? (Hound to the nearest cent) (Round to the rearest cert)
The [tex]$18,000[/tex]CD will be worth [tex]$25,650.40[/tex] at maturity if Jonathan picks an eight-year investment period.
a. Two-year investment period:Using the formula for the future value of the investment.FV = P(1 + r/n)^ntFV = Future valueP = Principalr = rate of interestn = number of times interest is compoundedt = time in yearsNow,
Jonathan has 56.000 for his CD investment, so we will use P = 56,000r = 3% = 0.03n = 1 (compounded annually)Firstly, we need to calculate the Future Value of the investment for 2 years.FV = 56,000(1 + 0.03/1)^(1 x 2)FV = 56,000(1 + 0.03)^2FV = 56,000(1.0609)FV = $59,710.40
Therefore, the CD will be worth $59,710.40 at maturity if Jonathan picks a two-year investment period.b. Five-year investment period:r = 3% = 0.03n = 1 (compounded annually)Firstly, we need to calculate the Future Value of the investment for 5 years.
[tex]FV = 56,000(1 + 0.03/1)^(1 x 5)FV = 56,000(1 + 0.03)^5FV = 56,000(1.1593)FV = $64,984.80[/tex]
at maturity if Jonathan picks a five-year investment period.c. Eight-year investment period:r = 3% = 0.03n = 1 (compounded annually)Firstly, we need to calculate the Future Value of the investment for 8 years
.FV = 56,000(1 + 0.03/1)^(1 x 8)FV = 56,000(1 + 0.03)^8FV = 56,000(1.2708)FV = $71,251.60Therefore, the CD will be worth $71,251.60 at maturity if Jonathan picks an eight-year
. $18,000 CD investment at a 3% interest rate for 8 years:r = 3% = 0.03n = 1 (compounded annually)
Firstly, we need to calculate the Future Value of the investment for 8 years.
FV = 18,000(1 + 0.03/1)^(1 x 8)FV = 18,000(1 + 0.03)^8FV = 18,000(1.2708)FV = $25,650.40
Therefore, the $18,000 CD will be worth $25,650.40 at maturity if Jonathan picks an eight-year investment period.
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Give examples of two countries and a law in each country
that might be problematic for American Businesses doing business
there.
As there are many countries and laws that might be problematic for American Businesses doing business, given below are two examples of countries and a law in each country that might be problematic for American Businesses doing business there:
1. China: China is a rapidly growing country and its market is important for many US companies. However, there are several laws in China that can make it difficult for American Businesses to operate in the country. One of the laws that might be problematic for American Businesses doing business in China is the cybersecurity law passed in 2017.This law makes it mandatory for companies to store all user data in China and provide the Chinese government access to their network if requested. The law also requires companies to get approval from the Chinese government before transferring any data outside of China.
2. Russia: Another country that can be problematic for American Businesses doing business there is Russia. The country has several laws that can make it difficult for American Businesses to operate in the country. One of the laws that might be problematic for American Businesses doing business in Russia is the Data Localization Law passed in 2014. This law makes it mandatory for all companies that collect personal data of Russian citizens to store that data within the country. This law can be problematic for American businesses, as it can be expensive and time-consuming to set up data centers in Russia to store user data.
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You need to accumulate $84,951 for your son's education. You have decided to place equal year-end deposits in a savings account for the next 11 years. The savings account pays 7.94 percent per year, compounded annually. How much will each annual payment be?
Each annual payment made in the savings account should be [tex]$4,578.85[/tex](rounded to two decimal places).
To determine how much the annual payment will be, we need to use the formula for future value of an ordinary annuity. Here's how to approach this problem:
The future value of an ordinary annuity formula is given as:FV = PMT × (((1 + r)n - 1) / r)Where:FV is the future value of the annuityPMT is the payment made each yearr is the interest rate per yearn is the number of yearsFor this problem,
the future value of the annuity is[tex]$84,951[/tex], the payment made each year is what we want to determine,
the interest rate per year is 7.94%, and the number of years is 11. Plugging these values into the formula,
[tex]we get:84,951 = PMT × (((1 + 0.0794)11 - 1) / 0.0794)Simplifying this equation, we get:PMT = 84,951 / (((1 + 0.0794)11 - 1) / 0.0794)PMT = $4,578.85[/tex]
Therefore, each annual payment made in the savings account should be $4,578.85 (rounded to two decimal places).
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Maximum 600 words Sandhy borrowed a bicycle from Zuko's bicycles, a self-serviced operation, for the first time. The bicycles can be found at various stations around town and locked in a park while not in use. A sign on a pillar next to the bicycles listed the various charges and conditions. It also stated that users needed to download their app to use a bicycle and included a QR code for quick reference. Once he found a bicycle he wanted to use, Sandhy was issued a ticket through the associated app. Sandhy was injured later when he returned the bicycle to the locking mechanism. Sandhy claimed damages from Zuko's bicycles. The company attempted to rely on a condition exempting it from liability. On each ticket, in small print, were the words 'Issued subject to conditions displayed at the bicycle station'. On the pillar next to the bicycles were printed eight conditions, the second of which exempted Zuko's Bicycles from liability for any injury to a customer whilst parking the bicycle Required: Could Zuko's Bicycles successfully rely on the exemption clause to protect it from any action by Sandhy?
Zuko's Bicycles may not be able to successfully rely on the exemption clause to protect itself from any action by Sandhy. The enforceability of exemption clauses depends on various factors, including the clarity and fairness of the terms, the notice given to the customer, and the nature of the liability being excluded.
In this case, there are a few key factors to consider:
Clarity of the Exemption Clause: The exemption clause exempting Zuko's Bicycles from liability for any injury to a customer while parking the bicycle is explicitly stated in the conditions displayed at the bicycle station. However, the issue of clarity arises as the clause is included in small print on the tickets issued through the associated app. The enforceability of such clauses can be challenged if they are not brought to the customer's attention in a reasonable and prominent manner.
Notice Given to the Customer: Sandhy borrowed the bicycle for the first time and was issued a ticket through the associated app. The tickets contained a reference to the conditions displayed at the bicycle station, but it is essential to assess whether Sandhy had reasonable notice of the exemption clause. If the clause was not adequately brought to Sandhy's attention, it may not be enforceable against him.
Unfair Contract Terms: In some jurisdictions, exemption clauses that attempt to exclude liability for personal injury may be subject to greater scrutiny. Courts may consider such clauses to be unfair if they disproportionately shift the risk onto the customer, especially in situations where the customer has little bargaining power or control over the terms.
The enforceability of the exemption clause in this case will depend on the specific legal framework and jurisdiction in which the dispute is being considered. However, based on the factors mentioned above, Zuko's Bicycles may face challenges in successfully relying on the exemption clause to protect itself from any action by Sandhy.
The clarity of the clause, the notice given to the customer, and the fairness of the terms will play crucial roles in determining the validity and enforceability of the exemption clause. It is recommended that Sandhy seeks legal advice to assess the specific circumstances and applicable laws to determine the strength of his claim against Zuko's Bicycles.
Hence The enforceability of exemption clauses depends on various factors, including the clarity and fairness of the terms, the notice given to the customer, and the nature of the liability being excluded.
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1. Madsen Motors's bonds have 18 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 11%; and the yield to maturity is 10%. What is the bond's current market price? Round your answer to the nearest cent.
2. A bond has a $1,000 par value, 12 years to maturity, and an 8% annual coupon and sells for $980.
What is its yield to maturity (YTM)? Round your answer to two decimal places.
Assume that the yield to maturity remains constant for the next 2 years. What will the price be 2 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.
1) The current market price of the bond is $1,134.21. 2) The yield to maturity (YTM) of the bond is 8.26%. 3) The price of the bond after 2 years will be $1,045.05.
1. The current market price of the bond is $1,134.21Madsen Motors's bonds have a $1,000 par value, an annual interest rate of 11%, and 18 years until maturity. Since interest is paid annually, the bonds will receive $110 (11% * $1,000) per year. The bond's yield to maturity is 10%. As a result, the bond's present value will be greater than $1,000.The formula for determining the price of a bond is:P = (C / r) * [1 - (1 / (1 + r)n)] + (M / (1 + r)n)Where:P = Price of the bondC = Yearly coupon payment r = Discount rate (yield to maturity)M = Face value or par value of the bondn = Number of years to maturity Putting the values in the formula, we get:P = ($110 / 0.10) * [1 - (1 / (1 + 0.10)18)] + ($1,000 / (1 + 0.10)18)= $1,134.21 Therefore, the current market price of the bond is $1,134.21.
2. The yield to maturity (YTM) of the bond is 8.26%.A bond with a $1,000 par value, 12 years to maturity, and an 8% annual coupon will sell for $980. The bond's yield to maturity (YTM) is the discount rate that makes the present value of the bond's cash flows equal to its current market price. We can use the following formula to determine the yield to maturity (YTM) of the bond:P = (C / r) * [1 - (1 / (1 + r)n)] + (M / (1 + r)n)Where:P = Current market price of the bondC = Yearly coupon paymentr = Yield to maturity (discount rate)M = Par value of the bondn = Years to maturityPutting the values in the formula, we get:$980 = ($80 / r) * [1 - (1 / (1 + r)12)] + ($1,000 / (1 + r)12)Solving for r, we get r = 8.26%.Therefore, the yield to maturity (YTM) of the bond is 8.26%.
3. The price of the bond after 2 years will be $1,045.05.The bond's price after 2 years can be calculated using the following formula:P = [C / (1 + r)n+1] + [C / (1 + r)n+2] + ... + [C + M / (1 + r)n+T]Where:P = Current market price of the bondC = Yearly coupon payment r = Yield to maturity (discount rate)n = Number of years until maturityM = Par value of the bondT = Years from now that the bond will maturePutting the values in the formula, we get:P = [$80 / (1 + 0.0826)12+1] + [$80 / (1 + 0.0826)12+2] + ... + [$80 + $1,000 / (1 + 0.0826)12+12]P = $1,045.05Therefore, the price of the bond after 2 years will be $1,045.05 (rounded to the nearest cent).
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by definition, imports are goods produced domestically and sold abroad. false true
By definition, imports are goods produced domestically and sold abroad false.
By definition, imports are goods or services that are produced abroad and brought into a country for sale or use domestically. Imports are the opposite of exports, which are goods or services produced domestically and sold abroad.
When a country imports goods, it means that those goods are being purchased from foreign producers and brought into the country's domestic market. These imported goods can include various products such as raw materials, finished goods, machinery, consumer goods, or services.
Imports play a crucial role in international trade, allowing countries to access goods or services that may not be readily available or economically viable to produce domestically. They contribute to the diversity and availability of products in domestic markets, promote competition, and facilitate economic interdependence between countries.
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Which of the following factors has led to a shift toward open innovation?
a. the exponential growth of venture capital
b. the decreasing availability of external options to commercialize ideas
c. the decreasing supply and mobility of skilled workers
d. the increasing capability of internal suppliers
The following factor has led to a shift toward open innovation is: The increasing capability of internal suppliers.
Explanation:Open innovation is the practice of bringing in external ideas, knowledge, and resources to accelerate innovation within a company. It has shifted the way innovation works in many companies, especially those that are interested in implementing new ideas quickly and effectively.The increasing capability of internal suppliers has led to a shift toward open innovation. This is because internal suppliers are better equipped to understand the needs and goals of the company, and they can develop ideas and solutions that are tailored to those needs. This also helps to create a culture of innovation within the company, where employees are encouraged to think creatively and share their ideas openly.Other factors that have led to a shift toward open innovation include:• The exponential growth of venture capital: This has made it easier for startups to access funding and resources that can help them bring new ideas to market.• The decreasing availability of external options to commercialize ideas: As more companies become interested in innovation, it can be harder to find external partners who are willing to collaborate.• The decreasing supply and mobility of skilled workers: As the job market becomes more competitive, companies are looking for ways to retain their best employees and keep them engaged in the company's innovation efforts.
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we have talked about transactional, consultative, and
strategic alliance selling. Define each of these three types and
provide an example of each type. You must use an example to explain
each type of
Transactional selling, consultative selling, and strategic alliance selling are three distinct types of sales approaches.
Transactional selling is a short-term, transaction-focused approach where the primary goal is to close a sale quickly. The emphasis is on product features, price, and convenience rather than building long-term relationships. An example of transactional selling is a customer purchasing a laptop from a retail store. The salesperson focuses on providing information about the laptop's specifications, highlighting current promotions, and facilitating a quick transaction.
Consultative selling is a more customer-centric approach that focuses on understanding the customer's needs and providing tailored solutions. It involves building relationships and trust by acting as a consultant or advisor to the customer. For example, a financial advisor engaging in consultative selling would spend time understanding a client's financial goals, risk tolerance, and investment preferences before recommending suitable investment options.
Strategic alliance selling involves collaborating with another company to create mutual value and expand market reach. It goes beyond individual transactions and aims to establish long-term partnerships. An example of strategic alliance selling is a software company partnering with a hardware manufacturer to offer bundled solutions. By combining their products and expertise, they can provide integrated solutions to customers, leveraging each other's strengths and creating a competitive advantage.
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Apple paid out $26,000 common dividends during 2020. At the end the year it had $150,000 of retained earnings. Retained earnings in 2019 totaled $140,000. What was their 2020 net income?
The 2020 net income for Apple was $36,000. This represents the earnings generated by the company during that year after accounting for dividends and changes in retained earnings.
To calculate the net income for 2020, we need to consider the changes in retained earnings. Net income can be derived by subtracting the change in retained earnings from the dividends paid out. Retained earnings at the end of 2019 were $140,000. Dividends paid out during 2020 were $26,000. Retained earnings at the end of 2020 were $150,000.
The change in retained earnings from 2019 to 2020 can be calculated as follows:
Change in retained earnings = Retained earnings at the end of 2020 - Retained earnings at the end of 2019
Change in retained earnings = $150,000 - $140,000 = $10,000
Net income can be determined by subtracting the change in retained earnings from the dividends paid out:
Net income = Dividends paid out - Change in retained earnings
Net income = $26,000 - $10,000 = $36,000
Apple's net income for 2020 was $36,000 based on the information provided. This represents the earnings generated by the company during that year after accounting for dividends and changes in retained earnings.
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Bristol Electronics produces wide range of electronic products. The company has a labour based costing system that was introduced in the 1970 s and is now considering implementing an activity based
Bristol Electronics, a manufacturer of electronic products, currently uses a labor-based costing system introduced in the 1970s.
1970s. However, the company is now contemplating the implementation of an activity-based costing (ABC) system.
Activity-based costing (ABC) is a costing methodology that assigns costs to specific activities or processes rather than relying solely on labor or direct material costs. It provides a more accurate and detailed understanding of how costs are incurred in different activities within an organization.
By implementing ABC, Bristol Electronics can gain insights into the cost drivers of its various activities and products. This allows for a more precise allocation of indirect costs, such as overhead, based on the activities that actually consume resources.
ABC provides a more comprehensive view of cost structures, enabling better decision-making in pricing, product mix, and process improvement. It identifies activities that may be inefficient or redundant, allowing for targeted cost reduction efforts.
While labor-based costing systems have their merits, they may not capture the full complexity of modern manufacturing processes. ABC offers a more sophisticated approach that aligns costs with activities and provides a clearer picture of the true cost drivers.
Implementing ABC will require data collection and analysis, as well as potential adjustments to the company's existing cost accounting systems. It is a strategic decision that can enhance cost management and improve profitability for Bristol Electronics.
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One of the advantages of procuring materials is: It most always provides a better product. It enables the firm to focus on their core competencies. It gives firms more control because they always have the power to buy from other firms. It is always cheaper than producing it in-house. In global procurement of business, what is it called when the supplier agrees to buy products from the party to whom it is selling, in order to win the buyer as a customer? Just-in-time (JIT) Sourcing agreements Offset agreements Offshoring Oftentimes, data analytics will give a conditional solution to a supply chain question, why is that? The environmental inputs change such as fuel prices, tariffs, taxes, and traffic go up and down over time, which can change the solution. Technology and equipment become quickly outdated. Inflation changes prices constantly. The computer models are artificially intelligent, so it is unclear why they change the solutions.
In global procurement of business, when the supplier agrees to buy products from the party to whom it is selling, in order to win the buyer as a customer, it is called Offset agreements.
What informs the conditional solutions provided by data analytics?Regarding the conditional solutions provided by data analytics in supply chain questions, the reason for this is that environmental inputs such as fuel prices, tariffs, taxes, and traffic can fluctuate over time, leading to changes in the optimal solution.
Additionally, technology and equipment can quickly become outdated, and inflation can cause constant changes in prices.
Therefore, the conditional nature of the solutions provided by data analytics accounts for these dynamic factors and adjusts the recommendations accordingly. The changing solutions are not attributed to the artificial intelligence of the computer models but rather to the varying external conditions impacting the supply chain.
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Sigma Company makes car covers that sell for $80 ench. For the coming year, management expects fixed costs to be $60,000, Variable costs are $40 per unit. finstructions (a) Compure the contribution margin per unit, (b) Compute the contribution margin ratio. (c) Compute break-even point in unit using the contribution margin method. (d) Compute the break-even point in $ using the contribution margin method. (e) Compute the required sales units if target income $20.000 using the contribution margin method.
Calculation of Contribution Margin per unit:Given, the selling price of car cover= $80/unitVariable Cost per unit = $40/unitContribution Margin per unit = Selling Price per unit - Variable cost per unit$80 - $40 = $40Thus, the contribution margin per unit is $40/unit.(b) Calculation of Contribution Margin Ratio.
The formula to calculate the contribution margin ratio is given below Contribution Margin Ratio = (Contribution Margin / Sales)*100%Contribution Margin = Selling price per unit – Variable cost per unit= $80 - $40 = $40 Contribution Margin Ratio = (Contribution Margin / Sales)*100%= ($40/$80)*100%= 50%.
Thus, the Contribution Margin Ratio is 50%.(c) Calculation of Break-even point in unit using the contribution margin method Contribution Margin Ratio = (Contribution Margin / Sales)*100%50% = ($40 / $80)*100%Thus, the break-even point in units can be calculated as follows Break-even Point in Units = Fixed costs / Contribution Margin per unit= $60,000 / $40= 1500 units.
Therefore, the break-even point in unit using the contribution margin method is 1500 units. Calculation of Break-even point in $ using the contribution margin method The formula to calculate the break-even point in $ using the contribution margin method is given below Break-even Point in Dollars = Fixed Costs / Contribution Margin Ratio Contribution Margin Ratio = 50% Fixed Costs = $60,000Thus, the Break-even point in Dollars can be calculated as follows Break-even Point in Dollars = Fixed Costs / Contribution Margin Ratio= $60,000 / 50%= $120,000.
Therefore, the Break-even point in Dollars using the contribution margin method is $120,000.(e) Calculation of Required Sales Units if target income $20,000 using the contribution margin method The formula to calculate the Required Sales Units if target income is given below Target Sales Units = (Fixed Costs + Target Income) / Contribution Margin per unitFixed Costs = $60,000Target Income = $20,000 Contribution Margin per unit = $40
Therefore, the Required Sales Units can be calculated as follows Target Sales Units = (Fixed Costs + Target Income) / Contribution Margin per unit= ($60,000 + $20,000) / $40= 2000 units.
Thus, the Required Sales Units if target income is $20,000 using the contribution margin method is 2000 units.
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Osprey sports stocks everything that a musky fisherman could want in the great north woods. A particular musky lure has been very popular with local fisherman as well as those who buy lures on the internet from osprey sports. The cost to place orders with the supplier is $30/order; the demand averages 3 lures per day, with a standart deviation pf 1 lure; and the inventory holding cost is $1,00/year. The lead time form the supplier is 10 days, with a standart deviation of 3 days. It is important to maintain a 95% percent sycle-service level to properly balance service with inventory holding costs. Osprey sports is open 350 days a year to allow the owners the opportunity to fish for muskles during the prime season. The owners want to use a continous review inventory system for this item. Refer to the standart normal table for z-values.
a. What order quantity should be used? ___ lures (Enter your response rounded to the nearest whole number)
The order quantity that should be used is approximately 14 lures. This quantity represents the number of lures that should be ordered each time to balance the cost of ordering and holding inventory.
To determine the order quantity in the continuous review inventory system, we can use the Economic Order Quantity (EOQ) formula. The EOQ formula is given by:
EOQ = √((2DS)/(H)),
where D is the average demand per day, S is the ordering cost per order, and H is the inventory holding cost per unit per year.
In this case, the average demand per day is 3 lures, the ordering cost is $30/order, and the inventory holding cost is $1.00/year.
Plugging in the values, we have:
EOQ = √((2 * 3 * $30) / $1.00) ≈ √(180) ≈ 13.42.
Since we cannot order a fractional quantity of lures, we would round up to the nearest whole number.
Therefore, the order quantity that should be used is approximately 14 lures.
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