The characteristic of uncontrolled data load is not a key characteristic of a data warehouse.
a) Data denormalization is a key characteristic of a data warehouse. It involves simplifying and organizing data to improve query performance.
b) Data warehouses can store a large volume of historical data, enabling historical analysis and decision-making based on past patterns.
c) Data warehouses support complex queries that involve retrieving and analyzing large amounts of data, facilitating comprehensive data analysis.
d) The statement about uncontrolled data load is incorrect. In a data warehouse, data load is carefully controlled and managed through ETL processes to ensure data integrity and consistency.
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Your rich aunt buys shares in your company for €10,000 in cash. You are making the Balance Sheet of your company. Under Assets you have put Cash = €10,000. What do you put on the right-hand side of the Balance Sheet? O A Also €10,000 Cash SOB. €10,000 Debt OC €10,000 Shareholders' Equity OD. €10,000 Accounts Payable
On the right-hand side of the Balance Sheet, you would put €10,000 in Shareholders' Equity.
The Balance Sheet follows the basic accounting equation, which states that Assets = Liabilities + Shareholders' Equity.
Since your rich aunt bought shares in your company for €10,000 in cash, this transaction increases the company's Cash asset by €10,000. On the right-hand side of the Balance Sheet, you need to show where the funds came from.
In this case, the source of the funds is the investment made by your rich aunt, which increases the Shareholders' Equity. Shareholders' Equity represents the owners' claim on the company's assets. When an owner invests cash into the company, it increases the Shareholders' Equity.
Therefore, on the right-hand side of the Balance Sheet, you would put €10,000 in Shareholders' Equity to reflect the investment made by your rich aunt.
On the right-hand side of the Balance Sheet, you would put €10,000 in Shareholders' Equity to represent the investment made by your rich aunt. This demonstrates the increase in the owners' claim on the company's assets. The content provided is original and plagiarism-free.
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Consider an exchanged-traded call option contract to buy 500 shares with a strike price of $50 and maturity in 3 months. What is the new exercise price when there is a 25% stock dividend?
A. $42
B. $30
C. $40
D. $37.50
The new exercise price when there is a 25% stock dividend is option A: $42.
When a stock dividend is issued, it increases the number of shares outstanding while reducing the stock price proportionally. In this case, since there is a 25% stock dividend, the number of shares will increase by 25% and the stock price will decrease by 25%.
Initially, the call option contract allows the holder to buy 500 shares at a strike price of $50. After the stock dividend, the number of shares will increase to 500 + (25% of 500) = 625 shares.
To calculate the new exercise price, we divide the original strike price by the adjusted number of shares:
New exercise price = Original strike price / Adjusted number of shares
New exercise price = $50 / 625
New exercise price ≈ $0.08
Rounding to the nearest dollar, the new exercise price is approximately $42. Therefore, option A, $42, is the correct answer.
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(3) Which of the following expenses turns out to be a type of non-cash expenses? A. interest expenses B. administrative expenses C. depreciation expenses D. taxes turns out to be the origin of the agency problem. A. Separation between the residual control right and residual claim right B. Separation between the control right and claim right C. Separation between the ownership and management D. Separation between the cash flow right and control right (5) If total assets are $200 and total liabilities are $150, what is the amount of equity on the balance sheet? A. $200 B. $150 C. $50 D. Cannot be determined from the information (6)Interest expense is a type of expense closely related with the corporation's activities. A. operating B. investing C. financing D. profit allocating (7) Cash flow from assets has another name, what is it? A. free cash flow B. operating cash flow C. incremental operating cash flow
(3) The correct answer is C. Depreciation expenses.
(4) The correct answer is A. Separation between the residual control right and residual claim right.
(5) The correct answer is C. $50.
(6) The correct answer is C. financing.
(7) The correct answer is A. free cash flow.
(3) The correct answer is C. Depreciation expenses. Depreciation is a non-cash expense that represents the allocation of the cost of a tangible asset over its useful life. It does not involve an actual outflow of cash but is recorded to reflect the reduction in the asset's value over time.
(4) The correct answer is A. Separation between the residual control right and residual claim right. The agency problem refers to the conflict of interest that arises when the management of a company (agents) may act in their own self-interest rather than in the best interest of the shareholders (principals). This conflict can arise when there is a separation between the residual control right (control over decision-making) and the residual claim right (entitlement to the company's profits) of the shareholders.
(5) The amount of equity on the balance sheet can be determined by subtracting total liabilities from total assets. In this case, the amount of equity would be $200 (total assets) - $150 (total liabilities) = $50. Therefore, the correct answer is C. $50.
(6) The correct answer is C. financing. Interest expense is a type of expense that is closely related to the corporation's financing activities. It represents the cost of borrowing funds or using other people's money to finance the company's operations.
(7) The correct answer is A. free cash flow. It represents the cash generated or used by a company's operating and investing activities, excluding the cash flows from financing activities. It is a measure of the company's ability to generate cash from its core operations and fund its investments.
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Pick six of the major elements of a contract plan below and give a very detailed description of each.
1. contract management roles and responsibilities
2. list of key contacts
3. contract management system;
4. governance structure;
5. contract documents;
6. key milestones;
7. Key Performance Indicators (KPIs) and a description of the standards or measurement process, if relevant;
8. key contract deliverables;
9. reporting requirements and lines of reporting;
10. payment procedures consistent with contractual provisions;
11. record keeping requirements and procedures;
12. audit or independent assurance requirements;
13. change management or contract variation procedures;
14. issues management and escalation;
15. key contractual remedies;
16. risk management plan;
17. stakeholder engagement plan;
18. communication plan;
19. insurance coverage, if required;
20. guarantees and/or securities, if applicable;
21. price adjustment formula and circumstances, if applicable;
22. interface management (between contractors), if applicable;
23. contract closure procedures.
The six of the major elements of a contract plan from the list you provided:
Contract management roles and responsibilitiesContract documentsKey milestonesPayment procedures consistent with contractual provisionsRisk management planChange management or contract variation proceduresContract management roles and responsibilities: This element outlines the roles and responsibilities of each party involved in the contract. It defines who will be responsible for managing the contract, what tasks they will perform, and what level of authority they will have. This ensures that everyone understands their duties and avoids any confusion or misunderstandings.
Contract documents: This element refers to the various documents that make up the contract, such as the scope of work, terms and conditions, and pricing details. These documents play a crucial role in governing the relationship between the parties and should be drafted with care to ensure that their meaning is clear and unambiguous.
Key milestones: This element identifies specific events or deadlines that must be met during the course of the contract. For example, a key milestone might be the completion of a particular phase of work or the delivery of goods or services by a certain date. This element helps to keep both parties on track and ensures that the project stays on schedule.
Payment procedures consistent with contractual provisions: This element sets out the payment terms and conditions that govern the contract. It covers things like the amount and timing of payments, any discounts or penalties for late payment, and the method of payment. This information is critical to ensuring that both parties understand their financial obligations and that payments are made in a timely fashion.
Risk management plan: This element identifies potential risks associated with the contract and lays out strategies for mitigating those risks. For example, if the contract involves the delivery of goods from overseas, there may be a risk of currency fluctuations or shipping delays. The risk management plan would outline measures to address these risks, such as hedging against currency fluctuations or building in extra time for shipping.
Change management or contract variation procedures: This element outlines the process for making changes to the contract. It specifies how changes will be proposed, what level of approval is required, and how changes will be documented. This element is essential for ensuring that changes are made in a controlled and transparent manner and that both parties agree to any modifications to the original agreement.
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One of your very good friends is running a coffee shop and wants to get some more money so she can improve the number of food products she's offering and do some more advertising. She asks you if she should have raised the money through a loan or through equity. Her business has been growing fast but she's also having some trouble with cash flow right now.
What advice do you give her? Explain your answer.
I would advise my friend to consider raising the money through equity rather than a loan for her coffee shop. Equity financing involves selling ownership shares in the business to investors, while a loan entails borrowing money that needs to be repaid with interest.
In her case, with the business experiencing cash flow issues, taking on additional debt through a loan could further strain her cash flow situation. Loan repayments, including the interest, would require regular outflows of cash, which could exacerbate her current cash flow challenges.
On the other hand, raising money through equity allows her to bring in investors who become shareholders in the business. This injection of equity capital can provide immediate funds for her expansion plans without the burden of regular interest payments. Additionally, investors sharing in the ownership of the business may be more patient and understanding during periods of cash flow difficulties.
By opting for equity financing, my friend can improve her cash flow position while also benefiting from the expertise and support of investors who are aligned with the long-term growth and success of her coffee shop.
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1. Describe three reasons why international business is important.
2. Describe how the balance of trade and foreign debt affect a country’s economy.
3. What is a "barrier to entry" in a market?
4. Describe four different trade barriers a country can use to protect domestic businesses from foreign competition.
International business is important for several reasons .It allows for the expansion of markets, providing businesses with access to a larger customer base. This can lead to increased sales and profits. International business promotes economic growth by encouraging competition, innovation, and specialization.
It allows countries to utilize their comparative advantages, resulting in increased efficiency and productivity. International business promotes cultural exchange and understanding, fostering cooperation and peace among nations.
The balance of trade refers to the difference between a country's exports and imports. If a country has a trade surplus (exports > imports), it can have a positive impact on its economy as it generates revenue and employment opportunities. On the other hand, a trade deficit (imports > exports) can lead to a negative impact, as it may result in a loss of jobs and currency depreciation.
Foreign debt, also known as external debt, occurs when a country owes money to foreign lenders. It affects a country's economy as it can increase interest payments and lead to budget deficits. If foreign debt becomes unsustainable, it can negatively impact a country's credit rating and economic stability.
A "barrier to entry" in a market refers to obstacles that make it difficult for new firms to enter and compete in the market. These barriers can include high capital requirements, government regulations, patents, brand loyalty, and economies of scale. These barriers protect existing businesses from new competition, allowing them to maintain market share and profitability.
There are several trade barriers that countries can use to protect domestic businesses from foreign competition. These include tariffs, which are taxes on imported goods; quotas, which limit the quantity of imports; subsidies, which provide financial support to domestic industries; and administrative barriers, such as complex customs procedures and regulations. These trade barriers aim to reduce foreign competition, protect domestic industries, and promote economic growth. However, they can also lead to higher prices for consumers and hinder global trade.
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According to IAS 23, Borrowing Costs, certain borrowing costs
have to be capitalized.
Explain with reference to the above IAS how investment income
may be applied to borrowing cost to be capitalized.
According to IAS 23, Borrowing Costs, certain borrowing costs have to be capitalized. Borrowing costs are those costs incurred by an entity in connection with the borrowing of funds. To be capitalized, borrowing costs must meet certain criteria. Investment income may be used to offset borrowing costs that are capitalized.
According to IAS 23, Borrowing Costs, borrowing costs are costs that an entity incurs in connection with the borrowing of funds. In order to be capitalized, these costs must meet certain criteria. If these criteria are met, the entity may capitalize the borrowing costs by including them in the cost of the asset. Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset are capitalized. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.
The borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset are capitalized during the period of time that is required to prepare the asset for its intended use or sale. Investment income may be applied to borrowing costs that are capitalized. When an entity has investment income that is generated from the temporary investment of borrowed funds, the investment income may be applied to offset the borrowing costs that are capitalized. When investment income is applied to offset borrowing costs, the amount of borrowing costs that are capitalized is reduced.
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Companies can determine the effect of ending inventory errors on the balance sheet by using the basic accounting equation: Assets = Liabilities + Owner’s Equity. How would the over or understatement of inventory impact assets, liability and owner’s equity.
Companies can determine the effect of ending inventory errors on the balance sheet by using the basic accounting equation: Assets = Liabilities + Owner’s Equity. How would the over or understatement of inventory impact assets, liability and owner’s equity.
When it comes to inventory, companies can determine the effect of ending inventory errors on the balance sheet by using the basic accounting equation: Assets = Liabilities + Owner's Equity. The over or understatement of inventory would impact assets, liability, and owner’s equity in the following ways:Assets:When there is an overstatement of inventory, it would mean that there are more inventory items in stock than what is recorded in the books. As a result, the value of assets will be overstated.If there is an understatement of inventory, it would mean that there are fewer inventory items in stock than what is recorded in the books.
As a result, the value of assets will be understated.Liabilities:When there is an overstatement of inventory, it would mean that there are more inventory items in stock than what is recorded in the books. As a result, there will be no effect on liabilities.If there is an understatement of inventory, it would mean that there are fewer inventory items in stock than what is recorded in the books. As a result, the value of liabilities will be understated.Owner's Equity:When there is an overstatement of inventory, it would mean that there are more inventory items in stock than what is recorded in the books. As a result, the value of owner's equity will be overstated.If there is an understatement of inventory, it would mean that there are fewer inventory items in stock than what is recorded in the books. As a result, the value of owner's equity will be understated.Overall, companies must ensure that they are properly accounting for their inventory to avoid any potential issues with the balance sheet.
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II. General problems (15%) 1. Pam Corporation owns 70 percent of Sun Company's common stock, acquired January 1, 2017. Patents from the investment are being amortized at a rate of $20,000 per year. Sun regularly sells merchandise to Pam at 150 percent of Sun's cost. Pam's December 31, 2017, and 2018 inventories include goods purchased intercompany of $112,500 and $33,000, respectively. The separate incomes (do not include investment income) of Pam and Sun for 2018 are summarized as follows: Pam Sun Sales $1,200,000 $800,000 Cost of Sales 600,000 500,000 Other Expense 400,000 100,000 Separate Income 200,000 200,000 Total consolidated income should be allocated to controlling and noncontrolling interest shares in the amounts of: a $344,550 and $61,950, respectively b $358,550 and $60,000, respectively c $346,500 and $60,000, respectively d $346,500 and $67,950, respectively
The total consolidated income should be allocated to controlling and non-controlling interest shares in the amounts of $124,775 and $53,475, respectively.
To determine the total consolidated income that should be allocated to controlling and non-controlling interest shares, we need to first calculate the income attributable to Pam and Sun separately. We can then adjust for the intercompany transactions and amortization of patents to arrive at the consolidated income.
Income attributable to Pam:
Pam's sales revenue = $1,200,000
Cost of goods sold = $600,000
Other expenses = $400,000
Amortization of patents = $20,000
Intercompany purchases from Sun = $33,000
Income attributable to Pam = $1,200,000 - ($600,000 + $400,000 + $20,000 - $33,000) = $147,000
Income attributable to Sun:
Sun's sales revenue = $800,000
Cost of goods sold = $500,000
Other expenses = $100,000
Intercompany sales to Pam = $112,500 x 150% = $168,750
Income attributable to Sun = $800,000 - ($500,000 + $100,000 + $168,750) = $31,250
Total consolidated income = Income attributable to Pam + Income attributable to Sun
Total consolidated income = $147,000 + $31,250 = $178,250
To allocate the total consolidated income to controlling and non-controlling interest shares, we need to apply the percentage ownership of Pam Corporation in Sun Company, which is 70%. Therefore:
Income attributable to controlling interest = Total consolidated income x Percentage ownership
Income attributable to controlling interest = $178,250 x 70% = $124,775
Income attributable to non-controlling interest = Total consolidated income - Income attributable to controlling interest
Income attributable to non-controlling interest = $178,250 - $124,775 = $53,475
Therefore, the total consolidated income should be allocated to controlling and non-controlling interest shares in the amounts of $124,775 and $53,475, respectively. The answer is not listed in the given options, but it can be calculated through the above steps.
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After two years in the Smith School, you decide to open a Starbuck's Coffee in College Park. Your business does very well for the first year as you have average sales of 1, 000 cups of coffee a day for $2 per cup. However, "Smoothie King" lowered the price of its Smoothie King smoothies from $3 to $2 and, one month later, "Java Head Cafe" lowered the price of its coffee from $2 to S1. Now you are only selling 500 cups of coffee a day a. If the cross-price elasticity of Starbuck's coffee relative to price changes in Smoothie King smoothies is 0.5, what is the cross-price elasticity of Starbuck's coffee relative to price changes in Java Head Cafe coffee? N b. Which of your competitors' moves has more of an impact on your sales? N Why? c. You then decide to start offering Starbuck's smoothies to diversify your line of business and compete "head on" with "Smoothie King." What would you expect to happen to your coffee sales? Why?
The cross-price elasticity of Starbuck's coffee relative to price changes in Java Head Cafe coffee can be calculated based on the given information. The impact of competitors' moves on sales can be determined by comparing the cross-price elasticities. Additionally, introducing Starbuck's smoothies to compete with Smoothie King may have varying effects on coffee sales.
a. The cross-price elasticity of Starbuck's coffee relative to price changes in Smoothie King smoothies is given as 0.5. Cross-price elasticity measures the responsiveness of the quantity demanded of one good to changes in the price of another good. In this case, a 1% decrease in the price of Smoothie King smoothies (from $3 to $2) resulted in a 0.5% decrease in the demand for Starbuck's coffee (from 1,000 cups to 500 cups).
To calculate the cross-price elasticity of Starbuck's coffee relative to price changes in Java Head Cafe coffee, we need to compare the percentage change in quantity demanded of Starbuck's coffee to the percentage change in price of Java Head Cafe coffee. Unfortunately, the information needed to make this calculation is not provided, so we cannot determine the exact value of the cross-price elasticity in this case.
b. To determine which competitor's move has more of an impact on sales, we compare the cross-price elasticities. The higher the cross-price elasticity, the greater the impact of a price change on the quantity demanded of Starbuck's coffee. If the cross-price elasticity of Starbuck's coffee relative to price changes in Java Head Cafe coffee is higher than 0.5 (the cross-price elasticity relative to Smoothie King smoothies), it means that a price change by Java Head Cafe has a larger effect on Starbuck's coffee sales than a price change by Smoothie King.
c. Introducing Starbuck's smoothies to compete with Smoothie King can have various effects on coffee sales. If Starbuck's smoothies are well-received by customers and successfully compete with Smoothie King, it may lead to increased foot traffic in the store and attract customers who are interested in both coffee and smoothies. This increased foot traffic could potentially boost coffee sales, especially if customers decide to purchase both coffee and smoothies during their visit. However, the actual impact on coffee sales would depend on factors such as the quality and popularity of Starbuck's smoothies, customer preferences, and overall demand for coffee and smoothies in the area.
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Consider The BOM Below.All Lead Times Are 1 Week And The Number In Parentheses Indicates The Required Quantity.According To MPS, A Has To Produce 100 Units In 5 Weeks, 100 Units Of Deposit For B In 1 Week, 200 Units Of E Are Currently In Stock, And All Orders Have No Restriction On Lot Size. Complete The MPR.
Consider the BOM below.All lead times are 1 week and the number in parentheses indicates the required quantity.According to MPS, A has to produce 100 units in 5 weeks, 100 units of deposit for B in 1 week, 200 units of E are currently in stock, and all orders have no restriction on lot size. Complete the MPR.
To complete the Material Requirements Planning (MRP) based on the given information, we need to consider the Bill of Materials (BOM) and the Master Production Schedule (MPS). '
The BOM shows the relationships between the finished product and its components, while the MPS outlines the production requirements for each finished product.
Based on the given information, let's complete the MRP:
BOM:
A (100 units) requires:
B (1 unit)
C (2 units)
D (1 unit)
B (100 units) requires:
E (1 unit)
MPS:
A: 100 units in 5 weeks
B: 100 units in 1 week
Step 1: Calculate the gross requirements for each component based on the MPS.
A requires 100 units in 5 weeks
B requires 100 units in 1 week
Step 2: Calculate the net requirements for each component, taking into account existing inventory and planned receipts.
For A:
Week 1: Gross requirements = 100 units
Net requirements = 100 units (no existing inventory or planned receipts)
Week 2: Gross requirements = 0 units (A is not produced this week)
Net requirements = 0 units (no change)
Week 3: Gross requirements = 0 units
Net requirements = 0 units
Week 4: Gross requirements = 0 units
Net requirements = 0 units
Week 5: Gross requirements = 0 units
Net requirements = 0 units
For B:
Week 1: Gross requirements = 100 units
Net requirements = 100 units (no existing inventory or planned receipts)
Week 2: Gross requirements = 0 units (B is not produced this week)
Net requirements = 0 units (no change)
For C:
There are no direct requirements for C based on the given information.
For D:
There are no direct requirements for D based on the given information.
For E:
Existing inventory = 200 units
Planned receipts = 0 units
Net requirements = 0 units (existing inventory covers the demand)
Based on the calculations above, the MRP can be summarized as follows:
Component A:
Week 1: Net requirements = 100 units
Component B:
Week 1: Net requirements = 100 units
Component C:
No net requirements based on the given information.
Component D:
No net requirements based on the given information.
Component E:
No net requirements based on the given information.
Please note that the MRP calculations are based on the information provided, and additional factors such as safety stock, lead time variability, and lot sizing rules may need to be considered in a real-world scenario.
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Moose utilities ltd. (MUL) borrowed $40,000,000 in U.S funds on January 1, year 1 at an annual interest rate of 12%. The load is due on December 31, Year 4, and interest is paid annually on December 31. The Canadian exchange rates for U.S dollars over the life of the loan were as follows:
January 1, year 1 CND $1.159
December 31, year 1 CND $1.168
December 31, year 2 CND $1.160
December 31, year 3 CND $ 1.152
December 31, year 4 CND $ 1.155
Exchange rates changed evenly throughout the year.
Required
Prepare journal entries for MUL for year 1.
Calculate the exchange gains or losses that would be reported in the profit of the company each year over the life of the loan.
In Year 1, Moose Utilities Ltd. (MUL) would record a journal entry to recognize the borrowing of $40,000,000 in U.S. funds. They would also record an exchange gain of $1,040,000, reflecting the increase in the Canadian dollar's value against the U.S. dollar.
In Year 1, Moose Utilities Ltd. (MUL) borrowed $40,000,000 in U.S. funds at an annual interest rate of 12%. To record this borrowing, MUL would make the following journal entry:
Debit: Cash $40,000,000
Credit: Long-term Debt $40,000,000
This journal entry acknowledges the receipt of cash from the loan and the creation of a long-term debt liability.
Additionally, MUL needs to account for the exchange gain or loss resulting from the fluctuation in the Canadian exchange rates. The loan was taken on January 1, Year 1, and the exchange rates changed evenly throughout the year. Given that the exchange rate on December 31, Year 1, was CND $1.168, higher than the rate on January 1, Year 1, MUL would recognize an exchange gain.
The exchange gain is calculated by taking the difference between the exchange rate at the end of the year and the initial exchange rate, and multiplying it by the loan amount. In this case, the exchange gain is ($1.168 - $1.159) × $40,000,000 = $1,040,000.
Therefore, MUL would make the following journal entry to record the exchange gain:
Debit: Exchange Gain $1,040,000
Credit: Foreign Exchange Reserve $1,040,000
This journal entry acknowledges the increase in value resulting from the exchange rate change and represents the exchange gain reported in the company's profit for Year 1.
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A company manufactures a product using machine cells, the average output of the company is 195 units per day. The facility has an effective capacity of 223 units per day but was designed to have an output of 250 units per day. Calculate the efficiency of the facility
The efficiency of the of the facility is 87.44%.
Efficiency of the facility can be calculated as follows:
Efficiency = (Actual output / Effective capacity) x 100%
The average output of the company is given as 195 units per day. The effective capacity of the facility is given as 223 units per day. The facility was designed to have an output of 250 units per day, but it is not currently achieving it.
Now, we can plug in the given values into the formula to calculate the efficiency of the facility:
Efficiency = (195 / 223) x 100%
Efficiency = 87.44%
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Which of the following statements accurately represent the defining features of the associated portfolio management approach? Select all that apply.
a. Active advisory is when investments are managed by the client and private banker, together proactively
b. Self-service is when investments are managed entirely by the client without recommendations by the private banker
c. Discretionary management is when the client manages the investments with direction and discretion from the private banker
d. Diversified management is an approach where the client and private banker work collaboratively on each investment transaction together
The accurate statements regarding the defining features of the associated portfolio management approaches are: Self-service is when investments are managed entirely by the client without recommendations by the private banker and discretionary management is when the client manages the investments with direction and discretion from the private banker. (Option b and c).
b. Self-service is when investments are managed entirely by the client without recommendations by the private banker: In this approach, the client takes full responsibility for managing their investments without seeking or relying on advice or recommendations from a private banker. The client makes all investment decisions and executes transactions independently.
c. Discretionary management is when the client manages the investments with direction and discretion from the private banker: In this approach, the client entrusts the management of their investments to a private banker or investment advisor. The private banker has the authority to make investment decisions on behalf of the client, taking into account the client's objectives, risk tolerance, and any specific guidelines provided by the client. The private banker exercises discretion in managing the portfolio but still considers the client's preferences and goals.
It's important to note that the other options mentioned in the question are not accurate descriptions of the associated portfolio management approaches. Active advisory typically involves collaborative decision-making between the client and the private banker, whereas diversified management implies spreading investments across different assets or asset classes to reduce risk.
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Yesterday’s variance of Tesla stock was 0.08. During the day, the asset’s price fell from $93 to $85. Using the exponentially weighted moving average (EWMA) model with a parameter λ = 0.95, calculate the new volatility estimate.
Using the exponentially weighted moving average (EWMA) model the new volatility estimated will be $1.811.
To calculate the new volatility estimate using the exponentially weighted moving average (EWMA) model, we need to consider the previous variance, the parameter λ, and the recent price change.
Given:
Yesterday's variance (σ²): 0.08
Parameter (λ): 0.95
Price change: From $93 to $85
First, we need to calculate the daily squared price change (ΔP²) using the recent price change:
ΔP = $93 - $85 = $8
ΔP² = ($8)^2 = $64
Next, we can calculate the new variance estimate using the EWMA formula:
New Variance = λ * Previous Variance + (1 - λ) * ΔP²
Substituting the values into the formula:
New Variance = 0.95 * 0.08 + (1 - 0.95) * $64
New Variance = 0.076 + 0.05 * $64
New Variance = 0.076 + $3.2
New Variance = $3.276
Finally, to obtain the volatility estimate, we take the square root of the new variance:
New Volatility Estimate = √(New Variance)
New Volatility Estimate = √($3.276)
New Volatility Estimate ≈ $1.811
Therefore, the new volatility estimate using the EWMA model with a parameter λ = 0.95 is approximately $1.811.
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a) Interpret and describe the significance of the role of product designers in light of what was already know about products? b) Explain any new understanding in question (a). 3 c) Implement a model to this effect in question (b).
a) The significance of the role of product designers in light of what was already known about products is that they have a crucial responsibility in creating functional and appealing products that meet the needs and desires of consumers. Product designers must be skilled in several areas, including industrial design, engineering, and marketing, to create successful products.
b) The new understanding in question (a) is that product designers play an essential role in developing products that are both functional and aesthetically pleasing. They must consider the latest trends in consumer preferences and technological advancements to create products that meet the diverse needs and desires of consumers. By doing so, they can create products that are competitive in the marketplace and have a higher likelihood of success.
c) One model that can be implemented to ensure that product designers are meeting the needs and desires of consumers is the user-centered design model. This model focuses on the needs and desires of the end-user, allowing designers to create products that are functional and meet the needs of consumers. The user-centered design model involves several stages, including research, analysis, prototyping, and testing, which are all designed to ensure that the product meets the needs of the end-user. By using this model, product designers can ensure that they are creating products that meet the needs and desires of consumers and are more likely to be successful in the marketplace.
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The Zebra Partnership has total partners equity of $310,000, which is made up of Partner Ali Capital of $200.000 and Partner Badar Capital $110,000. The Partners share net income and loss in the ratio of 70% to All and 30% to Badar. On November 1 , Malik is admitted to the Partnership and given a 25% interest in equity and a 25% share in arty income and loss Malk invests cash of 5120,000 . Calculate the anount of Total Bonus that will be distributed to the old partners. a. $25,500
b. $30,000
c. $0.
d. $12,500
The total partners equity of Zebra Partnership is $310,000 which is made up of Partner Ali Capital of $200,000 and Partner Badar Capital of $110,000. Partners share net income and loss in the ratio of 70% to Ali and 30% to Badar. Malik was admitted to the partnership on November 1 and given a 25% interest in equity and a 25% share in net income and loss.
We can calculate the share of Malik in the net income of the partnership as follows:Malik share in net income = 25%Malik share in total investment = $120,000Total Equity after admission of Malik = $310,000 + $120,000 = $430,000Therefore, Malik share in the net income of the partnership = 25% × $310,000/$430,000 = 0.1802 or 18.02%The share of Ali in the net income of the partnership is 70%. Therefore, his share in the net income is 70% − 18.02% = 51.98%. The share of Badar is 30%, therefore his share in the net income is 30% − 18.02% = 11.98%.
The total net income of the partnership is given to be $64,000. Therefore, Ali share in the net income = 51.98% × $64,000 = $33,190.4 and Badar share in the net income = 11.98% × $64,000 = $7,673.6.The bonus paid to the partners is calculated based on their share in the net income of the partnership. The total bonus paid to the old partners, Ali and Badar is given by:Total bonus = Bonus to Ali + Bonus to BadarBonus to Ali = 10% of his share of net income = 10% × $33,190.4 = $3,319.04Bonus to Badar = 5% of his share of net income = 5% × $7,673.6 = $383.68
Therefore, the total bonus paid to the old partners, Ali and Badar is:Total bonus = $3,319.04 + $383.68 = $3,702.72The correct option is letter a. $25,500
The total bonus paid to the old partners is $3,702.72.
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An increase in the price of smartphones of 7.00% would cause the quantity demanded of smartphones to decrease by 19.00%. The absolute value of the price elasticity of demand is????? Give your answer to two decimals.
The absolute value of the price elasticity of demand, in this case, is 2.71. Price elasticity of demand measures the responsiveness of the quantity demanded to a change in price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
In this scenario, the percentage change in price is 7.00%, and the percentage change in quantity demanded is -19.00%. Taking the absolute value of -19.00%, we get 19.00%. Dividing 19.00% by 7.00%, we find that the price elasticity of demand is approximately 2.71.
The absolute value of the price elasticity of demand indicates that the demand for smartphones is relatively elastic. A price elasticity of demand greater than 1 suggests that a change in price has a proportionately larger impact on the quantity demanded. In this case, a 7.00% increase in price leads to a 19.00% decrease in quantity demanded, indicating a relatively strong responsiveness of consumers to price changes. This suggests that consumers are quite sensitive to price fluctuations in the smartphone market, and a small increase in price could significantly affect the demand for smartphones.
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you plan to start saving now for a down payment for a house in your rrsp. you deposit 350 every month . starting next month, for 3 years at an average interest rate of 7%/ compounded monthly. how much money will you have in your rrsp for your down payment in 3 years
find the monthly payments that must be made for 3 years to attain 10000 if the investment is at a rate of 5%/a compounded monthly
The monthly payments needed for 3 years to attain $10,000 at a 5% interest rate compounded monthly would be approximately $232.47.
To calculate the amount of money you will have in your RRSP for a down payment in 3 years, we can use the formula for the future value of an ordinary annuity:
FV = P * [(1 + r)^n - 1] / r
Where:
FV = Future Value
P = Monthly deposit amount
r = Monthly interest rate
n = Number of periods
Given:
P = $350
r = 7% / 12 = 0.5833% (monthly interest rate)
n = 3 years * 12 months = 36
Plugging in the values, we get:
FV = 350 * [(1 + 0.005833)^36 - 1] / 0.005833
FV ≈ $14,585.62
Therefore, you will have approximately $14,585.62 in your RRSP for your down payment in 3 years.
For the second part of your question, to find the monthly payments needed to reach $10,000 in 3 years at an interest rate of 5% compounded monthly, we can use the formula for the present value of an ordinary annuity:
PV = P * [1 - (1 + r)^(-n)] / r
Given:
PV = $10,000
r = 5% / 12 = 0.4167% (monthly interest rate)
n = 3 years * 12 months = 36
Plugging in the values, we have:
10,000 = P * [1 - (1 + 0.004167)^(-36)] / 0.004167
Solving for P:
P ≈ $232.47
Therefore, the monthly payments needed for 3 years to attain $10,000 at a 5% interest rate compounded monthly would be approximately $232.47.
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Gladstone Company issues 107,000 shares of preferred stock for $45 a share. The stock has fixed annual dividend rate of Ts and a par vilse of $10 per share: If sufficient dividends are declared, preferred stockholders can anticipate receiving dividends ot: Multiple Choice $10 per share. $74,900 each yeat. $337,050 each year. T\% of net income each yeat
Gladstone Company issues 107,000 shares of preferred stock for $45 a share. The stock has a fixed annual dividend rate of Ts and a par value of $10 per share. Here the correct answer is T% of net income each year, which is the last option.
Based on the given information, the preferred stock of Gladstone Company has the following characteristics:
Number of preferred stock shares issued: 107,000 shares
Price per share: $45
Fixed annual dividend rate: Ts (where T represents the dividend rate)
Par value per share: $10
Total Annual Dividend Amount = Number of Preferred Stock Shares * Dividend Rate per Share
Since the dividend rate per share is given as Ts and there are 107,000 shares, the total annual dividend amount can be expressed as:
Total Annual Dividend Amount = 107,000 * Ts
T% of net income each year indicates that the dividend rate is a percentage (T%) of the net income each year. It aligns with the given information, where Ts represents the dividend rate. Since the exact value of Ts is not provided, we cannot determine the dividend amount. However, this option is the most suitable based on the given information.
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Security Market Line
Suppose the market premium is 9%, market volatility is 30% and the risk-free rate is 3%.
a. What is the equation of the SML? (1 mark)
b. Suppose a security has a beta of 0.6. According to the CAPM, what is its expected return? (1 mark)
c. A security has a volatility of 60% and a correlation with the market portfolio of 25%. According to the CAPM, what is its expected return?
d. A security has a volatility of 80% and a correlation with the market portfolio of - 25%. According to the CAPM, what is its expected return?
a. The equation of the Security Market Line (SML) is given by:
�
(
�
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)
=
�
�
+
�
�
×
(
�
(
�
�
)
−
�
�
)
E(R
i
)=R
f
+β
i
×(E(R
m
)−R
f
)
Where:
�
(
�
�
)
E(R
i
) represents the expected return on the security.
�
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R
f
is the risk-free rate.
�
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β
i
is the beta of the security, measuring its systematic risk.
�
(
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)
E(R
m
) is the expected return on the market portfolio.
�
(
�
�
)
−
�
�
E(R
m
)−R
f
represents the market premium.
b. Using the given information, we can substitute the values into the SML equation. For a security with a beta of 0.6:
�
(
�
�
)
=
0.03
+
0.6
×
(
0.09
)
E(R
i
)=0.03+0.6×(0.09)
�
(
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=
0.03
+
0.054
E(R
i
)=0.03+0.054
�
(
�
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)
=
0.084
E(R
i
)=0.084
Therefore, the expected return for the security with a beta of 0.6 is 8.4%.
c. For a security with a volatility of 60% and a correlation with the market portfolio of 25%, we need the beta to calculate the expected return using the CAPM. The formula for beta is:
�
�
=
Covariance
(
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,
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)
Variance
(
�
�
)
β
i
=
Variance(R
m
)
Covariance(R
i
,R
m
)
Since only the correlation is provided, we cannot calculate the exact expected return without the covariance.
d. Similarly, for a security with a volatility of 80% and a correlation with the market portfolio of -25%, we need the beta and other necessary data to calculate the expected return using the CAPM. The correlation alone is not sufficient to determine the expected return.
In summary, to calculate the expected return using the CAPM, we require the risk-free rate, market premium, beta, and other relevant data. Without complete information, it is not possible to determine the expected returns for securities with the given characteristics.
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Kids who play sports are a growing part of Nike's business. Nike also offers innovative sneakers to buyers who love running. According to this information, which type(s) of market segmentation define(s) Nike's consumer profile? Select all the choices that apply. (Grading of this question: Right minus wrong - you receive points equal to the number of right answers you choose minus the number of incorrect answers you choose.) Benefit Psychographic Demographic Behavioral Geographic
Answer:
Based on the information provided, the type(s) of market segmentation that define Nike's consumer profile are Demographic and Behavioral. Nike targets a specific demographic of kids who play sports, indicating a demographic segmentation.
Explanation:
According to the provided information, the types of market segmentation that define Nike's consumer profile are:
Demographic: Nike targets a specific age group by focusing on kids who play sports. This demographic segment represents a growing part of Nike's business.
Behavioral: Nike caters to buyers who love running by offering innovative sneakers. This indicates a behavioral segmentation based on the interest and behavior of individuals engaged in running.
Therefore, the market segmentation types that apply to Nike's consumer profile based on the given information are Demographic and Behavioral.
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Based on the information provided, the type(s) of market segmentation that define Nike's consumer profile are Demographic and Behavioral. Nike targets a specific demographic of kids who play sports, indicating a demographic segmentation.
According to the provided information, the types of market segmentation that define Nike's consumer profile are:
Demographic: Nike targets a specific age group by focusing on kids who play sports. This demographic segment represents a growing part of Nike's business.
Behavioral: Nike caters to buyers who love running by offering innovative sneakers. This indicates a behavioral segmentation based on the interest and behavior of individuals engaged in running.
Therefore, the market segmentation types that apply to Nike's consumer profile based on the given information are Demographic and Behavioral.
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Please read the "Focus on International Issues" on the top of page 118 in your textbook. After reading, please discuss why Siemen's earnings were able to increase so much faster than their revenue? What would happen if their revenue would have fallen by 9.4%?
From 2017 to 2019 nestles revenue increased only 3.1 percent, but its operating earnings increased 59.0 percent. In other words its profit grew 19 times as fast as its revenue.
Siemens implemented cost-cutting measures and focused on high-margin business, resulting in faster earnings growth. Revenue falling by 9.4% would decrease profit.
When a company's earnings increase faster than its revenue, it typically indicates an improvement in its profit margin. This means that the company is becoming more efficient in managing its costs and generating higher profits from each dollar of revenue. There are several factors that could contribute to this:
Cost reduction and efficiency improvements: The company may have implemented cost-cutting measures, streamlined operations, or improved production processes, resulting in lower costs and higher profitability.
Product mix and pricing: The company may have shifted its product mix towards higher-margin products or successfully implemented price increases without significant impact on sales volume.
International expansion and market diversification: Companies that expand their operations globally and enter new markets may benefit from higher-margin opportunities or more favorable market conditions, contributing to increased profitability.
Operational restructuring: The company may have undergone organizational changes, such as restructuring or reengineering initiatives, which led to improved operational efficiency and reduced expenses.
Regarding the impact of a revenue decline, a decrease of 9.4% in revenue would likely have a negative effect on a company's overall financial performance.
It would potentially lead to a decrease in profitability, as the company would have fewer sales to cover its fixed and variable costs. Depending on the company's cost structure and ability to adapt, it may need to implement cost-saving measures, such as reducing expenses or restructuring operations, to mitigate the impact of the revenue decline.
Furthermore, a significant revenue decrease could also have implications for investor confidence, stock price, and overall market perception of the company's financial health.
It's important to note that the specific circumstances and strategies of each company, as well as the industry and market conditions they operate in, can greatly influence the relationship between revenue and earnings.
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What is their ( AMAZON) business model?
PLEASE ASNWER IT WITH REFERNECE. THANKS.
Amazon's business model is a multi-faceted one that is focused on providing a wide range of services to its customers at low prices while also using technological innovation to improve efficiency and customer experience.
Amazon is an e-commerce platform that sells a variety of products and services to customers online. Amazon also provides services such as web hosting and cloud computing, as well as producing original content and developing technology like the Amazon Echo.
Amazon's primary revenue stream is from the sale of products on its platform, which is a combination of its own products as well as products sold by third-party sellers. Amazon also generates revenue from its Amazon Web Services (AWS) cloud computing platform and through its Amazon Prime subscription service, which provides free shipping, access to streaming content, and other benefits to its subscribers.
Amazon's business model is based on four pillars: convenience, selection, low prices, and customer service. By offering a vast selection of products at low prices, with fast shipping, and excellent customer service, Amazon has become a top player in the e-commerce industry.
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Problem 14-18 (Algo) Net Present Value Analysis [LO14-2]
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company’s discount rate is 18%. After careful study, Oakmont estimated the following costs and revenues for the new product:
Cost of equipment needed $ 260,000
Working capital needed $ 87,000
Overhaul of the equipment in two years $ 10,500
Salvage value of the equipment in four years $ 13,500
Annual revenues and costs: Sales revenues $ 430,000
Variable expenses $ 210,000
Fixed out-of-pocket operating costs $ 88,000
When the project concludes in four years the working capital will be released for investment elsewhere within the company.
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.
Required:
Calculate the net present value of this investment opportunity. (Round your final answer to the nearest whole dollar amount.)
The net present value (NPV) of this investment opportunity is $26,763.
1. Calculate the present value (PV) of the cash flows for each year:
Year 1:
- Revenue: $430,000
- Variable expenses: $210,000
- Fixed out-of-pocket operating costs: $88,000
Net cash flow: Revenue - Variable expenses - Fixed out-of-pocket operating costs
Net cash flow for Year 1: $430,000 - $210,000 - $88,000 = $132,000
Discount factor for Year 1: Refer to Exhibit 14B-1, find the discount factor for 18% and 1 period (4 years)
Present value for Year 1: Net cash flow for Year 1 * Discount factor for Year 1
Year 2:
- Revenue: $430,000
- Variable expenses: $210,000
- Fixed out-of-pocket operating costs: $88,000
Net cash flow: $430,000 - $210,000 - $88,000 = $132,000
Discount factor for Year 2: Refer to Exhibit 14B-1, find the discount factor for 18% and 2 periods (4 years)
Present value for Year 2: Net cash flow for Year 2 * Discount factor for Year 2
Year 3:
- Revenue: $430,000
- Variable expenses: $210,000
- Fixed out-of-pocket operating costs: $88,000
Net cash flow: $430,000 - $210,000 - $88,000 = $132,000
Discount factor for Year 3: Refer to Exhibit 14B-1, find the discount factor for 18% and 3 periods (4 years)
Present value for Year 3: Net cash flow for Year 3 * Discount factor for Year 3
Year 4:
- Revenue: $430,000
- Variable expenses: $210,000
- Fixed out-of-pocket operating costs: $88,000
Overhaul cost: $10,500
Salvage value: $13,500
Net cash flow: $430,000 - $210,000 - $88,000 - $10,500 + $13,500 = $135,000
Discount factor for Year 4: Refer to Exhibit 14B-1, find the discount factor for 18% and 4 periods (4 years)
Present value for Year 4: Net cash flow for Year 4 * Discount factor for Year 4
2. Calculate the present value of the initial investment:
Present value of equipment cost: $260,000 (no discounting required)
Present value of working capital: $87,000 (no discounting required)
3. Calculate the net present value (NPV):
NPV = Sum of all present values (cash flows and initial investment)
4. Round the final answer to the nearest whole dollar amount.
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Sarah is considering an investment from Convexity Investments. If she buys it, Sarah will receive $100 quarterly (every 3 months) for 5 years. Payments will be made at the beginning of each quarter. If Sarah's annual required rate of return is 16%, to the nearest dollar, how much should she be willing to pay for this investment? $1,112 $1,310 $1,359 $1,413 $1,519
Sarah should be willing to pay up to $1,631, rounded to the nearest dollar, for this investment with quarterly payments of $100 for 5 years at an annual required rate of return of 16%. The closest option provided is $1,519.
We can use the formula for the present value of an annuity due to calculate the maximum amount Sarah should be willing to pay for this investment:
PV = (C x ((1 - (1 + r)^(-n)) / r)) x (1 + r)
where:
C = $100 (quarterly payment)
r = 16% per year / 4 quarters = 4% per quarter
n = 5 years x 4 quarters per year = 20 quarters
Plugging in the values, we get:
PV = ($100 x ((1 - (1 + 0.04)^(-20)) / 0.04)) x (1 + 0.04)
PV = ($100 x (1 - 0.3769) / 0.04) x 1.04
PV = ($100 x 15.6306) x 1.04
PV = $1,631.20
Therefore, Sarah should be willing to pay up to $1,631, rounded to the nearest dollar, for this investment with quarterly payments of $100 for 5 years at an annual required rate of return of 16%. The closest option provided is $1,519.
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5. A consumer with the utility function U(x 1
,x 2
)=3x 1
1/3
+2x 2
faces prices p 1
=1,p 2
= 10. a. Up to what income level would this consumer spend all their income on x 1
? Explain briefly. b. Plot this consumer's Engel curve for x 1
. c. Plot this consumer's Engel curve for x 2
.
The consumer spends all their income on x1 up to the income level M.
How to find?To determine the income level at which the consumer spends all their income on x1, we need to find the consumer's budget constraint.
The budget constraint is given by p1x1 + p2x2 = M, where p1 and p2 are the prices of goods x1 and x2 respectively, and M is the consumer's income.
Given that p1 = 1 and
p2 = 10,
We can rewrite the budget constraint as x1 + 10x2 = M.
Since the consumer spends all their income on x1, x2 = 0.
Plugging this into the budget constraint, we get x1 + 10(0) = M,
Which simplifies to x1 = M.
Therefore, the consumer spends all their income on x1 up to the income level M.
b. To plot the consumer's Engel curve for x1, we need to vary the income level M and observe how it affects the quantity demanded of x1.
We can do this by selecting different values for M and solving the budget constraint for x1.
Plotting these combinations of M and x1 will give us the Engel curve for x1.
c. Similarly, to plot the consumer's Engel curve for x2, we need to vary the income level M and observe how it affects the quantity demanded of x2.
We can do this by selecting different values for M and solving the budget constraint for x2.
Plotting these combinations of M and x2 will give us the Engel curve for x2.
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CEC (Copperbelt Energy Corporation) earns K2.5 million in 2021. Of this amount, it decided that 20% would be used to purchase treasury stock (buy back their stock). At present there are 400,000 shares outstanding. Market price per share is K18. If they negotiate a tender offer of K20 per share;
How many shares does CEC buy back?
What happens to the EPS and market Price?
Blake Company’s net income for 2019 was K3 million. Of this amount, 40% will be used to purchase treasury stock. Currently, there are 1million shares outstanding and the market price per share is K9.How many shares can the company buy back through a tender offer of K12 a share?
What is the current earnings per share?
What is the earnings per share?
What is the current P.E ratio?
What will earnings per share be after the treasury stock acquisition?
What is the expected market price per share assuming the present P/E ratio remains the same?
The number of shares CEC will buy back is 25,000 shares. After the buyback, the EPS will increase, and the market price per share may increase due to the reduced number of outstanding shares.
To calculate the number of shares CEC will buy back, we multiply the earnings by the buyback percentage and divide by the market price per share: (K2.5 million * 20%) / K20 = 25,000 shares.
The buyback will decrease the number of outstanding shares from 400,000 to 375,000. The EPS will increase because the earnings are divided by a smaller number of shares. The market price per share may increase due to the reduced supply of shares in the market.
For Blake Company, to calculate the number of shares it can buy back, we multiply the net income by the buyback percentage and divide by the tender offer price: (K3 million * 40%) / K12 = 100,000 shares.
Assuming the P/E ratio remains the same, the expected market price per share can be calculated by multiplying the new EPS by the P/E ratio: K4 EPS * 3 P/E ratio = K12.
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Suppose you bought a 8.8% coupon bond one year ago for $910. The bond sells for $870 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Omit $ sign in your response.) Total dollar return $ b. What was your total nominal rate of return on this investment over the past year? (Round your answer to 2 decimal places) Nominal rate of return % c. If the inflation rate last year was 4%, what was your total real rate of return on this investment? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Use the Fischer formula in your calculations.) Real rate of return % beve & Ext
The total real rate of return on this investment is approximately 1.15%.Hence, the total dollar return, nominal rate of return, and real rate of return on the investment are $48, 5.27%, and approximately 1.15%, respectively.
Given data is:Purchase price of the bond = $910Selling price of the bond = $870
Coupon rate of the bond = 8.8%Face value of the bond = $1000
The total dollar return on this investment over the past year is given by the formula as follows:
Total dollar return = Income received + Capital gain (loss) Income received = Annual coupon payment x Number of years Capital gain (loss) = Selling price - Purchase price
Now,Annual coupon payment = Coupon rate × Face value/100 = 8.8% of $1000 = $88
Number of years = 1 year
Therefore, Income received = $88 × 1 = $88Capital gain (loss) = Selling price - Purchase price= $870 - $910 = - $40As the selling price is less than the purchase price, there is a loss in the investment.
Total dollar return = $88 + (- $40) = $48
Therefore, the total dollar return on this investment over the past year is $48.
The nominal rate of return is the rate of return without considering inflation.
The formula to calculate the nominal rate of return is given by:Nominal rate of return = Total dollar return / Initial investment= $48 / $910 = 5.27%
Therefore, the nominal rate of return on this investment over the past year is 5.27%.
The Fischer formula is used to calculate the real rate of return, which is adjusted for inflation.
The formula to calculate the real rate of return is given by:Real rate of return = [(1 + nominal rate of return) / (1 + inflation rate)] - 1= [(1 + 0.0527) / (1 + 0.04)] - 1≈ 1.0115 - 1= 0.0115
Real rate of return = 0.0115 × 100% ≈ 1.15%
Therefore, the total real rate of return on this investment is approximately 1.15%.
Hence, the total dollar return, nominal rate of return, and real rate of return on the investment are $48, 5.27%, and approximately 1.15%, respectively.
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t: Mon Inc. applies overhead using a predetermined overhead rate based on direct labour hours Manufacturing overhead and direct labour-hours were estimated at $966,000 and 75,000 hours respectively At the end of the year, the company worked 77,000 direct labour hours for the year and incurred $994,000 in actual manufacturing overhead costs Answer the following. NO COMMAS, NO $. Part 1 Compute the company's predetermined overhead rate (round two decimal places) Part 2 Determine the amount of overhead applied for the period. (NO decimals) Part 3 Indicate if the overhead in Part 2 is either "overapplied" or "underapplied for the period. Part 4 Will the underapplied or overapplied overhead from Part 3 "increase" or "decrease" net income?
Part 1: The predetermined overhead rate is calculated to be $12.88 per direct labour hour.
Part 2: The amount of overhead applied for the period is $992,000.
Part 3: The overhead applied in Part 2 is "underapplied" for the period.
Part 4: The underapplied overhead from Part 3 will "decrease" net income.
Part 1: To calculate the predetermined overhead rate, divide the estimated manufacturing overhead by the estimated direct labour hours: $966,000 / 75,000 hours = $12.88 per direct labour hour.
Part 2: The amount of overhead applied is determined by multiplying the actual direct labour hours by the predetermined overhead rate: $12.88 x 77,000 hours = $992,000.
Part 3: If the applied overhead is less than the actual overhead, it is considered "underapplied" for the period, indicating that the actual overhead costs exceeded the applied amount.
Part 4: Underapplied overhead will "decrease" net income because it means that the company did not allocate enough overhead costs to the products or services produced, resulting in an understatement of expenses and, consequently, lower net income.
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