The percentage margin is defined as the ratio of the net worth , or the " equity value", of the account to the market value of the securities . If the stock value fall , owners ' equity would become negative , meaning the value of the stock is no longer sufficient collateral to cover the loan from the broker . To guard against this possibility , the broker sets a maintenance margin . If the percentage margin falls below the maintenance level , the broker will issue a margin call , which requires the investor to add new cash or securities to the margin account .Although margins are effective in reducing counterparty default risk, they also impose a friction that limits investors from supplying liquidity to the market. Explain the effect of margin as trading frictions in trading strategy

Answers

Answer 1

Margins act as trading frictions by restricting market liquidity and imposing barriers to trade. They limit the ability of investors to sell securities quickly due to borrowing restrictions, reducing market liquidity. While margin accounts are necessary for trading, the use of margins imposes costs that hinder investors from providing liquidity to the market, requiring them to balance the benefits and drawbacks of using margins in their trading strategies.

Trading friction is a market price-related impediment to trade in financial markets. Margins are used in finance to limit counterparty default risk, but they also act as trading frictions that restrict market liquidity. The trading friction effect of margins in a trading strategy is described below:

A margin account is a trading account that allows an investor to buy securities with borrowed money from a broker. The percentage margin, which is the ratio of the account's net worth to the market value of the securities, is used to calculate the amount of margin that can be extended. Brokers establish a maintenance margin to prevent stock owners' equity from becoming negative if the stock value falls, making the stock's worth insufficient collateral to cover the loan from the broker. The broker may issue a margin call if the percentage margin falls below the maintenance level, requiring the investor to add new cash or securities to the margin account to maintain the margin level. If the investor is unable to do so, the broker has the right to liquidate the investor's position in the securities.

The margins act as a trading friction in the sense that they restrict market liquidity by imposing barriers to trade. When margin is used, securities are less liquid since it limits the ability of an investor to sell their securities quickly, given the restrictions on borrowing. Since investors can't easily trade securities without a broker, a margin account is required. However, trading frictions, such as those imposed by margins, prevent investors from supplying liquidity to the market. As a result, investors must strike a balance between the benefits and costs of using margins in their trading strategies to meet their objectives.

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Related Questions

What makes you incredible enough to want to work at our company.

Answers

Talk about your genuine passion for the work you'll be doing and how you can contribute to the company's success. Let your personality shine through.

during a job interview:

Focus on your skills: This is an opportunity to showcase your talents and how they could be beneficial to the organization. Talk about your relevant technical and soft skills that are suitable for the job and could contribute to the company's success.

Highlight your achievements: Discuss your previous accomplishments that demonstrate your expertise, ability to work in a team, and leadership skills. This is a chance to showcase how your past experiences have prepared you for this role.

Show enthusiasm: Express your interest in the company and the position. Discuss how you've been following the organization and its progress, and why you're excited to join the team. A positive attitude and eagerness to learn can go a long way.

Research the company: Do some research on the company, its mission, and values. Discuss how you share these values and how you can contribute to the company's culture. It shows that you're interested in the company and are serious about the position.

Be yourself: Most importantly, be authentic and honest. Avoid using cliches and buzzwords

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Why was Jim Hackett replaced by Jim Farley? What was the main strategies of Bill Hackett? Bill Farley? How did they differ?

Answers

Jim Hackett was replaced by Jim Farley because Hackett had completed his three-year plan and had decided to retire. The main strategy of Bill Hackett was to focus on mobility services, autonomous vehicles, and electric powertrains, which aimed to make Ford a leader in the industry.

In contrast, Bill Farley's main strategy is to focus on Ford's core business of making cars and trucks and making them more profitable.The biggest difference between the two strategies is the focus on new mobility technologies.

Hackett's strategy focused on expanding into mobility services and developing new technologies like electric powertrains and autonomous vehicles, while Farley's strategy focuses more on improving the profitability of Ford's core business of making cars and trucks.

The other key difference is that Farley is more focused on building Ford's brand and increasing its market share, while Hackett was more focused on cutting costs and improving efficiency. Overall, both strategies are designed to help Ford compete more effectively in a rapidly changing industry and position the company for long-term success.

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ANSWER BOTH QUESTIONS PLEASE
1) what is the price of a $1000 par value, semi annual coupon bond with three years to maturity, a coupon rate of 7.1% and yield to maturity of 3%?
2) you bought a 18 year, nine. 4% semi annual coupon bond today and the current market rate of return is eight. 6%. The bond is callable in four years with a $87 call premium. What price did you pay for your bond?

Answers

To calculate the price of a bond, we can use the present value formula. The formula for the price of a bond with semi-annual coupons is as follows:

Price = (C / 2) * (1 - (1 + YTM/2)^(-2 * N)) / (YTM/2) + (Par / (1 + YTM/2)^(2 * N))

Where:

C = Coupon payment

YTM = Yield to maturity

N = Number of periods until maturity (in this case, semi-annual periods)

Par = Par value

Let's calculate the price for each of the given scenarios:

1) The price of the bond is approximately $1049.81.

$1000 par value, semi-annual coupon bond with three years to maturity, a coupon rate of 7.1%, and yield to maturity of 3%:

Par value = $1000

Coupon rate = 7.1% = 0.071

Coupon payment = (0.071 * Par value) / 2 = $35.5 (since it's a semi-annual coupon bond)

Yield to maturity = 3% = 0.03

Number of periods until maturity = 3 years = 3 * 2 = 6 (since it's semi-annual)

Using the formula, we can calculate the price:

Price = (35.5 / 2) * (1 - (1 + 0.03/2)^(-2 * 6)) / (0.03/2) + (1000 / (1 + 0.03/2)^(2 * 6))

Calculating this expression, we find:

Price ≈ $1049.81

2) You paid approximately $1356.17 for the bond.

18-year, 9.4% semi-annual coupon bond with a current market rate of return of 8.6% and callable in four years with a $87 call premium:

Number of periods until maturity = 18 years = 18 * 2 = 36 (since it's semi-annual)

Coupon rate = 9.4% = 0.094

Coupon payment = (0.094 * Par value) / 2

Yield to maturity = 8.6% = 0.086

Call premium = $87

We need to calculate the price without considering the call premium first:

Price = (C / 2) * (1 - (1 + YTM/2)^(-2 * N)) / (YTM/2) + (Par / (1 + YTM/2)^(2 * N))

Price = (Coupon payment / 2) * (1 - (1 + YTM/2)^(-2 * N)) / (YTM/2) + (Par / (1 + YTM/2)^(2 * N))

Price = (Coupon payment / 2) * (1 - (1 + 0.086/2)^(-2 * 36)) / (0.086/2) + (Par / (1 + 0.086/2)^(2 * 36))

Calculating this expression, we find:

Price ≈ $1443.17

To calculate the price considering the call premium, we subtract the call premium from the price we just calculated:

Price with call premium = $1443.17 - $87 = $1356.17

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Transcribed image text: Question 5 - Cost of Capital (10 marks) Given the following information for Hung & Wong Transport, find the cost of capital. Assume the company's tax rate is 35 percent. Debt: 7,500, 8.4 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for 103 percent of par, the bonds make semiannual payments. Common stock: 195,000 shares outstanding, selling for $78 per share, beta is 1.21. Preferred stock: 11,000 shares of 6.35 percent preferred stock outstanding, currently selling for $76 per share. Market: 8 percent market risk premium and 5.1 percent risk-free rate. i) Calculate the market value of common stock, preferred stock, bond and the total market value of the firm. (2 marks) ii) Calculate the cost of common stock. (1 mark) iii) Calculate the cost of preferred stock. (1 mark) iv) Calculate the (i) before tax cost of the debt and (ii) after tax cost of debt. (2 marks) v) Calculate the weight of common stock (we), weight of preferred stock (w₂) and the weight of the debt (wo) in the total capital. (3 marks) vi) Calculate the weighted average of cost of capital (WACC). (1 mark)

Answers

i) The market value of common stock is $15,210,000, preferred stock is $836,000, and the bond is $7,725,000. The total market value of the firm is $23,771,000.

ii) The cost of common stock is approximately 13.01%.

iii) The cost of preferred stock is approximately 8.35%.

iv) The before-tax cost of debt is 8.4%, and the after-tax cost of debt is approximately 5.46%.

v) The weight of common stock (we) is 64.07%, the weight of preferred stock (w₂) is 2.80%, and the weight of debt (wo) is 33.13% in the total capital.

vi) The weighted average cost of capital (WACC) is approximately 8.20%.

To find the cost of capital for Hung & Wong Transport, we need to calculate various components:

i) Market value of common stock:

Market value of common stock = Number of shares * Share price = 195,000 * $78 = $15,210,000

Market value of preferred stock:

Market value of preferred stock = Number of shares * Share price = 11,000 * $76 = $836,000

Market value of bonds:

Market value of bonds = Number of bonds * Bond price = 7,500 * $1,000 * 1.03 = $7,725,000

Total market value of the firm:

Total market value of the firm = Market value of common stock + Market value of preferred stock + Market value of bonds

= $15,210,000 + $836,000 + $7,725,000 = $23,771,000

ii) Cost of common stock:

Using the capital asset pricing model (CAPM):

Cost of common stock = Risk-free rate + Beta * Market risk premium

= 5.1% + 1.21 * 8% = 14.32%

iii) Cost of preferred stock:

Cost of preferred stock = Preferred stock dividend / Market price of preferred stock

= 6.35% / $76 = 8.36%

iv) Before-tax cost of debt:

The coupon rate of the debt is 8.4%. Therefore, the before-tax cost of debt is 8.4%.

After-tax cost of debt:

After-tax cost of debt = Before-tax cost of debt * (1 - Tax rate)

= 8.4% * (1 - 0.35) = 5.46%

v) Weight of common stock (wₑ), weight of preferred stock (w₂), and weight of debt (w₀):

Weight of common stock = Market value of common stock / Total market value of the firm

= $15,210,000 / $23,771,000 ≈ 0.6408

Weight of preferred stock = Market value of preferred stock / Total market value of the firm

= $836,000 / $23,771,000 ≈ 0.0352

Weight of debt = Market value of bonds / Total market value of the firm

= $7,725,000 / $23,771,000 ≈ 0.3240

vi) Weighted average cost of capital (WACC):

WACC = (Weight of common stock * Cost of common stock) + (Weight of preferred stock * Cost of preferred stock) + (Weight of debt * After-tax cost of debt)

= (0.6408 * 14.32%) + (0.0352 * 8.36%) + (0.3240 * 5.46%)

= 9.17%

Therefore, the weighted average cost of capital (WACC) for Hung & Wong Transport is approximately 9.17%.

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Julio receives utility from consuming food (F) and clothing (C) as given by the utility function U(F,C)=FC. In addition, the price of food is $2 per unit, the price of clothing is $10 per unit, and Julio's weekly income is $50. What is Julio's marginal rate of substitution of food for clothing when utility is maximized? Suppose instead that Julio is consuming a bundle with more food and less clothing than his utility maximizing bundle. Where would this point lie on the graph?

Answers

C/F = 1/5, represents Julio's marginal rate of substitution of food for clothing.On the graph, this point would lie below tangency point between budget line and highest attainable indifference curve.

Julio's marginal rate of substitution (MRS) of food for clothing when utility is maximized: To find Julio's MRS, we need to calculate the ratio of the marginal utility of food (MUf) to the marginal utility of clothing (MUc) at the utility-maximizing bundle. In this case, the utility function U(F,C) = FC implies that the marginal utility of food is given by MUf = C, and the marginal utility of clothing is MUc = F. To maximize utility, Julio should allocate his budget in a way that equates the marginal utilities of food and clothing with their respective prices. Since the price of food (Pf) is $2 and the price of clothing (Pc) is $10, the condition for maximizing utility becomes MUf/Pf = MUc/Pc, or C/2 = F/10. Simplifying this equation, we can rearrange it to obtain C/F = 1/5, which represents Julio's marginal rate of substitution of food for clothing when utility is maximized.

The position of a bundle with more food and less clothing on the graph:In the graph representing Julio's consumption choices, the horizontal axis represents the quantity of food (F), and the vertical axis represents the quantity of clothing (C). The utility-maximizing bundle lies at the point where the budget line (representing the combination of food and clothing that can be purchased with Julio's income) is tangent to the highest attainable indifference curve (representing the level of utility that can be achieved). If Julio is consuming a bundle with more food and less clothing than his utility-maximizing bundle, it means he is located inside the budget line and below the highest attainable indifference curve. This implies that he is not maximizing his utility given his budget constraint.

On the graph, this point would lie below the tangency point between the budget line and the highest attainable indifference curve. It would represent a suboptimal consumption bundle where Julio is not fully utilizing his income to achieve the highest possible level of utility. To reach the utility-maximizing point, Julio would need to adjust his consumption towards the combination of food and clothing that satisfies the condition of MUf/Pf = MUc/Pc, as mentioned in Part 1.

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Final answer:

The marginal rate of substitution (MRS) is calculated by dividing the marginal utility of food by the marginal utility of clothing. This is equalized when utility is maximized. If Julio consumes more food and less clothing than his utility maximizing bundle, this combination would lie within his budget constraint.

Explanation:

In economic theory, the marginal rate of substitution (MRS) is the rate at which a consumer is ready to give up one good to get an extra unit of another good, while keeping the utility unchanged. For Julio, based on his utility function U(F,C)=FC, the MRS is -F/C. The negative sign implies a trade-off between food and clothing.

To find the maximum utility, we need to compare the marginal utility per dollar for both goods. This is the additional utility received per dollar spent on each good. We obtain this by dividing the marginal utility of a good by its price. At the optimal bundle, or utility maximizing bundle, the marginal utility per dollar of food should be equal to that of clothing.

If Julio consumes a bundle with more food and less clothing than his utility maximizing bundle, this combination would lie below his budget line, representing combinations of food and clothing that he can afford, given his income and the prices of the goods. This point would be inside the budget constraint, meaning he is not fully utilizing his budget.

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Critically evaluate the role taxation could play in the UK’s move towards the EU Green deal 2050 zero net emissions goal.

Answers

Taxation has the potential to play a significant role in the UK's transition to the EU Green Deal's zero net emissions target by 2050. The goal of the Green Deal is to make the European Union (EU) climate-neutral by 2050, which means that its net greenhouse gas emissions should be reduced to zero.

Taxes may be used to discourage carbon-intensive activities and encourage low-carbon ones, as well as to raise funds for green investment. Carbon pricing, carbon taxes, and subsidies, and tax incentives for low-carbon and energy-efficient goods and services are all examples of possible tax measures to support the green transition. Carbon pricing is one of the most well-known tax measures for climate action. It involves putting a price on carbon emissions, either through a tax or a cap-and-trade scheme. The goal of carbon pricing is to discourage carbon-intensive activities and encourage low-carbon ones by increasing the cost of carbon-intensive activities.

Carbon taxes, on the other hand, are taxes on carbon dioxide and other greenhouse gas emissions. The aim of a carbon tax is to reduce carbon emissions by increasing the cost of carbon-intensive activities. Carbon pricing, carbon taxes, and subsidies, and tax incentives for low-carbon and energy-efficient goods and services are all examples of possible tax measures to support the green transition. Tax incentives may be used to promote investment in green infrastructure, renewable energy, and energy efficiency, among other things. For example, businesses may be granted tax incentives for investing in low-carbon activities.

Subsidies may also be used to encourage green investment. A subsidy is a financial incentive that reduces the cost of a specific action. Tax incentives and subsidies for renewable energy, low-carbon transportation, and energy-efficient construction are all examples of green subsidies. In conclusion, taxation can play a significant role in the UK's transition to a low-carbon economy and zero net emissions by 2050. Tax measures like carbon pricing, carbon taxes, tax incentives, and subsidies can be used to support the transition. The UK government may use taxation as a tool to encourage the necessary behavioural changes to reduce carbon emissions and promote green investment, among other things. In the UK, taxes and other financial incentives are frequently used to encourage people to adopt environmentally friendly practices.

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Land costing $75,000 was sold for $92,200 cash. The gain on the sale was reported on the income statement as other revenue. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?
a.$75,000
b.$167,200
c.$92,200
d.$17,200

Answers

On the statement of cash flows, the amount that should be reported as an investing activity from the sale of land is $17,200.

When land costing $75,000 was sold for $92,200 cash, the gain on the sale was reported on the income statement as other revenue.

A cash flow is the actual or hypothetical movement of money; by definition, it specifically relates to payments made from one central bank account to another.

The profit from selling the property was $92,200 less $75,000, or $17,200. On the statement of cash flows, however, only the profit from the sale of land should be noted as an investment activity.

Therefore, $17,200 from the sale of land should be listed as an investing activity in the statement of cash flows.

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Assume the assets of a firm will be worth either $100 million or $200 million in 1 year with equal (50%) probability. The firm owes debt holders a payment of $100 million in 1 year. (For convenience assume a discount rate of 0% throughout for all valuations. Absolute priority rules hold, i.e., the debt gets paid first. Hint: Think DCF!)
a.What is the value of the firm today?
b.What are the values of the debt and equity today?
c.Imagine the firm pays stockholders a dividend of $10 million in 1 year (in both states of the world), just before the debt comes due. This dividend payment reduces the value of the assets in 1 year to $90 million and $190 million in the two states. What are the values of the debt and equity today, where the dividend should be included in the equity value?

Answers

a. The value of the firm today can be determined using discounted cash flow (DCF) analysis. Since the discount rate is 0%, the present value of the firm's assets is simply the average of the potential asset values in 1 year: ($100 million + $200 million) / 2 = $150 million.

b. Given the debt payment of $100 million in 1 year, the value of the debt today is $100 million. The equity value is the difference between the firm's value and the debt value: $150 million - $100 million = $50 million.

c. With the dividend payment reducing the asset values to $90 million and $190 million, the debt value remains unchanged at $100 million. The equity value is now the difference between the new asset values and the debt value: $90 million - $100 million = -$10 million and $190 million - $100 million = $90 million, respectively. The dividend of $10 million is deducted from the equity value.

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The statement of realization and liquidation of ABC Corp are as follows:
Assets to be realized P1,800,000
Assets acquired 300,000
Assets realized 1,100,000
Assets not realized 1,200,000
Liabilities liquidated 1,600,000
Liabilities not liquidated P1,400,000
Liabilities assumed 1,500,000
Liabilities to be liquidated 2,000,000
Supplementary credits 1,950,000
Supplementary charges 2,500,000
Additional ordinary shares issued for cash during the year totaled P500,000. What is the ending balance of cash account assuming that Ordinary Share, beginning is P1,500,000 and deficit, ending is P400,000?

Answers

Ordinary Shares Outstanding = (Beginning Ordinary Share + Additional Ordinary Shares Issued) - Ordinary Share Ending Deficit= (P1,500,000 + P500,000) - P 400,000= P1,600,000 Therefore, the Ordinary Shares Outstanding is P1,600,000. So the amount raised by issuing these additional shares is equal to P 500,000.

The Supplementary Credits is P1,950,000 and the Supplementary Charges is P2,500,000. Therefore, Supplementary Charges are higher by P550,000 (P2,500,000 - P1,950,000).The assets to be realized are P1,800,000, of which only P1,100,000 were realized. Therefore, the assets not realized are P1,200,000 (P1,800,000 - P1,100,000).The liabilities that are not liquidated are P1,400,000 while the liabilities assumed is P1,500,000. Therefore, the liabilities to be liquidated is P2,000,000 (P1,400,000 + P1,500,000). Total cash available is:Cash = P300,000 + P1,100,000 = P1,400,000 Since the total liabilities to be liquidated are P2,000,000, which is greater than the total cash available, only a proportionate payment can be made to the liabilities. So the payments made to liabilities will be a ratio of cash available to the liabilities to be liquidated.Let's calculate the ratio:Ratio of cash available to total liabilities to be liquidated = P1,400,000/P2,000,000 = 0.7.

Therefore, the ending balance of the cash account would be:P 1,400,000 (Total Cash Available) - P1,050,000 (Amount to be paid to liabilities) = P 350,000.

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1. ABC bonds were issued 20 years ago and carry a 5% coupon. These bonds mature in 5 years and currently sell for $878.34. Find the yield to maturity. Round intermediate steps and your final answer to four decimals and enter your answer in decimal format (EX: .XXXX).

2. Echo fund has $80 million in assets and $5 million in liabilities. Shares of the fund currently sell for $100, which represents a 20% discount below NAV. Find the number of shares outstanding. Round intermediate steps to four decimals and your final answer to the nearest whole share.

Answers

1) The yield to maturity of ABC bond is 5.6158%. 2)The number of shares outstanding is 50,012.

1. Yield to maturity is the anticipated rate of return on a bond investment if it is held until its maturity date. We'll use the formula to find the yield to maturity (YTM) in this scenario:

PV = ($25 x (1 - 1 / (1 + YTM) ^ (5 x 2))) / YTM + ($1,000 / (1 + YTM) ^ (5 x 2))

PV = $878.34, FV = $1,000, PMT = $25

n = 5 x 2 = 10

YTM = 5.6158%

Therefore, the yield to maturity of ABC bond is 5.6158%.

2. The Net Asset Value (NAV) of the Echo fund per share is $125. Since shares sell at a 20% discount, the current share price is $100 per share.

To find the number of outstanding shares, we can use the following equation:

NAV = Total value of assets - Total value of liabilities

Total value of assets = Number of shares outstanding × Share price = $100 × Number of shares outstanding

Total value of liabilities = $5 million

Net Asset Value = Total value of assets - Total value of liabilities

$125 = ($100 × Number of shares outstanding) - $5,000,000

$5,000,000 = $100 × Number of shares outstanding - $125

$5,000,125 = $100 × Number of shares outstanding

Number of shares outstanding = $5,000,125 / $100 = 50,0012 shares

Thus, the number of shares outstanding is 50,012.

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When will you not consider using Key Quantities as part of your
Project control Philosophy?

Answers

Key Quantities are only considered as part of the project control philosophy when the size and scope of the project are large, the project has enough budget and ample time for tracking and analyzing Key Quantities, and when the project involves unique work with no historical data to draw from.

There are instances when Key Quantities may not be considered as part of the project control philosophy. Key Quantities are often used in the management of large and complex projects in order to aid in tracking progress and forecasting the future. However, when the size and scope of the project is small, Key Quantities may not be necessary. When the budget for the project is very limited, Key Quantities may also be unnecessary because they can be expensive to track and analyze.

Similarly, if the project has a very tight schedule, tracking Key Quantities may be a luxury that is too expensive in terms of time. If the project involves work that has already been done many times in the past, Key Quantities may not be necessary because there will be a great deal of historical data that can be used to estimate time and cost.

Generally, the use of Key Quantities will depend on the specific needs of the project and the resources available to the project team. If the use of Key Quantities is deemed unnecessary, other tools and techniques can be used to help manage the project to a successful conclusion.

In conclusion, Key Quantities are only considered as part of the project control philosophy when the size and scope of the project are large, the project has enough budget and ample time for tracking and analyzing Key Quantities, and when the project involves unique work with no historical data to draw from.

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part 1. Given the following information: Borrower Fixed rate Floating rate AAA 8.50% p.a. LIBOR BBB 9.20% p.a. LIBOR + 0.50% p.a. The notional principal of the swap agreement is USD 1million. Explain the concept of notional principal. Under the assumption of no intermediation/no intermediation fees and an equal split of savings (if any), determine whether a profitable interest rate swap could be arranged between AAA Limited and BBB Limited. Explain your reasoning. If a profitable swap is possible, construct a swap that would advantage both parties. Indicate which party should borrow at a fixed rate using a bond issue and which party should borrow at a floating rate via a bank loan. Discuss whether the two parties have to share any savings equally and what is the impact of considering the presence of an investment bank intermediating this contract on their costs. Under the assumption that the swap is intermediated by an investment bank that requests a 0.10% fee to each of the two parties, determine if a swap can produce cost savings and, if that is true, redesign the swap with these new data.
part 2. Explain the concept of green bonds and their main features, and provide an example of a green bond. What do we mean by greenwashing? How can this practice be related to ethical or unethical, and in certain cases even criminal, behaviour?

Answers

Part 1:Notional principal refers to the amount used to calculate interest rate payments made between the two parties to the interest rate swap agreement.

It does not represent the actual amount of money being exchanged, but it is the amount on which the interest rates are applied. In this particular case, the notional principal is USD 1million.The fixed rate for AAA Limited is 8.50% p.a., while the floating rate for BBB Limited is LIBOR + 0.50% p.a. which is 9.20% p.a.

We can find out the estimated floating rate for BBB Limited as 9.20% p.a. - LIBOR = 9.20% p.a. - 0.50% p.a. = 8.70% p.a. It is observed that AAA Limited is paying a lower rate of interest than the market rate, while BBB Limited is paying a higher rate of interest than the market rate.

Hence, a profitable interest rate swap could be arranged between AAA Limited and BBB Limited. Both parties should benefit from this swap agreement.To take advantage of the swap, AAA Limited should issue a fixed-rate bond at 8.50% p.a., while BBB Limited should take out a bank loan at the floating rate of LIBOR.

Greenwashing can be considered unethical or even criminal if it involves intentional deception or fraud. For example, if a company claims that its product is made from recycled materials when it is not, or if it claims that its product has been certified as environmentally friendly when it has not, this could be considered greenwashing.

Consumers and investors can protect themselves from greenwashing by doing their research and looking for independent verification of environmental claims.

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With a continuous Y and a continuous X, which Hypothesis Test should be performed?
Select one:
a. 2-Sample t Test
b. ANOVA
c. Regression
d. Chi-Square

Answers

The appropriate hypothesis test to perform with a continuous Y and a continuous X is regression analysis (option c).

Regression analysis is used to examine the relationship between a dependent variable (Y) and one or more independent variables (X). In this case, since both Y and X are continuous variables, regression analysis allows us to model and quantify the relationship between them. It helps determine how changes in X impact the values of Y and allows for prediction and inference. Regression analysis involves fitting a regression model to the data and estimating the coefficients that represent the relationship between the variables. The model aims to minimize the differences between the observed Y values and the predicted Y values based on the X values. The significance of the relationship between Y and X is assessed through hypothesis testing, where the null hypothesis states that there is no significant relationship (slope coefficient is zero) and the alternative hypothesis suggests a significant relationship.

By analyzing the regression output, we can examine the estimated coefficients, their significance (p-values), and the goodness of fit measures to assess the strength and significance of the relationship between Y and X. Additionally, regression analysis allows for the examination of other important aspects such as the variability explained by the model (R-squared), the overall significance of the model, and the presence of any influential observations or violations of assumptions.

In summary, when dealing with continuous variables Y and X, regression analysis is the appropriate hypothesis test. It provides a comprehensive framework to analyze and interpret the relationship between the variables, allowing for prediction, inference, and assessment of the model's goodness of fit.

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Locate an article covering the technology environment of the hospitality industry. Provide the link/name/etc. to the article and write a synopsis of the article information. The article should be no more than five years old.

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An article covering the technology environment of the hospitality industry is The Future of Hospitality Technology.

What does the article talk about ?

The hospitality industry is constantly evolving, and technology is playing a major role in this change. From self-service kiosks to mobile apps, technology is making it easier for guests to book, plan, and enjoy their stay.

Key Trends in Hospitality Technology:

Mobile apps: Mobile apps are becoming increasingly popular with guests. These apps can be used to book rooms, make reservations, and access information about a hotel or restaurant.Big data: Big data is being used to better understand guest behavior and preferences. This information can be used to improve the guest experience and increase revenue.

Despite the challenges, the benefits of using technology in the hospitality industry are significant. As technology continues to evolve, it is likely that we will see even more businesses in this industry adopt new technologies to improve their operations and provide a better customer experience.

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What amount will be accumulated in five years if $4,000 is invested every six months beginning in six months and ending five years from today? Interest will accumulate at an annual rate of four percent compounded semiannually.

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The amount accumulated in five years with $4,000 invested every six months at an annual interest rate of 4% compounded semiannually will be $40,800.

To calculate the accumulated amount, we can use the formula for compound interest:

A = P [tex](1 + r/n)^{nt}[/tex]

Where:

A = Accumulated amount

P = Principal amount (initial investment)

r = Annual interest rate (as a decimal)

n = Number of times interest is compounded per year

t = Number of years

In this case, the principal amount is $4,000 and it is invested every six months. So, in five years, there will be 10 investment periods (5 years * 2 investments per year). The annual interest rate is 4% (0.04) and it is compounded semiannually (twice a year).

Let's calculate the accumulated amount:

First investment period:

P = $4,000

t = 5 years / 10 = 0.5 years (since there are 10 investment periods in total)

n = 2 (compounded semiannually)

r = 0.04 (4% annual interest rate)

A1 = $4,000 [tex](1 + 0.04/2)^{(2*0.5)}[/tex]

A1 = $4,000 [tex](1 + 0.02)^{1}[/tex]

A1 = $4,000 (1.02)

A1 = $4,080

Second investment period:

P = $4,000

t = 0.5 years

n = 2

r = 0.04

A2 = $4,000 [tex](1 + 0.04/2)^{(2*0.5)}[/tex]

A2 = $4,000 [tex](1 + 0.02)^{1}[/tex]

A2 = $4,000 (1.02)

A2 = $4,080

We can see that the accumulated amount is the same for each investment period because the principal amount and the interest rate are the same.

Now, let's calculate the total accumulated amount over the five years by summing up the accumulated amounts for each investment period:

Total Accumulated Amount = A1 + A2 + A3 + A4 + A5 + A6 + A7 + A8 + A9 + A10

Total Accumulated Amount = 10 * $4,080

Total Accumulated Amount = $40,800

Therefore, the amount accumulated in five years with $4,000 invested every six months at an annual interest rate of 4% compounded semiannually will be $40,800.

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SUPERVALU, one of the largest grocery retailers in the United States, is headquartered in Minneapolis. Suppose the following financial information (in millions) was taken from the company's 2022 annual report net sales $40,500, net income $380, beginning common stockholders' equity $2,580, and ending common stockholders' equity $2.850. Compute the return on common stockholders' equity. (Round answer to 1 decimal place, eg 10.5% ) Return on common stockholders' equity _______%

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Return on common stockholders' equity: 13.6%.

Return on common stockholders' equity: 13.6%.Return on common stockholders' equity is a financial metric that calculates how much return investors get on their investment in a company. It's usually expressed as a percentage and is calculated by dividing net income by common stockholders' equity.Suppose the following financial information (in millions) was taken from the company's 2022 annual report, net sales $40,500, net income $380, beginning common stockholders' equity $2,580, and ending common stockholders' equity $2.850. So, the formula for computing the return on common stockholders' equity is:Net Income/ Average Common Stockholders' EquityNet Income = $380Average Common Stockholders' Equity = (Beginning Common Stockholders' Equity + Ending Common Stockholders' Equity)/2= ($2,580+$2.850)/2= $2,715Return on Common Stockholders' Equity= $380/$2,715= 13.6%.

The return on common stockholders' equity is 13.6%.

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Exercise 8-1 1 ints Rook Hve Print D neces Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below: April $ 380,000 Saved Budgeted sales (all on ccount) $ 200,000 From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 20% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $310,000, and March sales totaled $340,000. February sales March sales April sales May $ 580,000 Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th? Complete this question by entering your answers in the tabs below. May sales June sales Total cash collections Required 1 Required 2 Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. Schedule of Expected Cash Collections Apell May June Total $ 1.160,000 Total Help Save & Exit Submit Check my work Exercise 8-1 1 10 poets Block O Hit Print References Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below: April 380.000 Required 1 Required 2 Seved Budgeted sales (all on eccount) From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 20% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $310,000, and March sales totaled $340,000. What is the accounts receivable balance on June 30th? Total accounts receivable at June 30 HAY $500,000 Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th? Complete this question by entering your answers in the tabs below. < Required 1 June $200,000 Total $1,160,000 Required 23 Help Save & Ext Submit Check my work upoate

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The given problem requires us to prepare a schedule of expected cash collections from sales and determine the accounts receivable balance on June 30th for Silver Company.

From the given information, we know that peak sales occur in May, which is a popular time for Mother's Day gifts. We have been provided with the budgeted sales for each month in Q2 – April, May, and June – as well as the collection percentages based on past experience.

To prepare the schedule of expected cash collections, we need to calculate the cash collections for each month of Q2 by applying the relevant collection percentages to each month's sales. Based on the given information, 20% of sales are collected in the month of sale, 60% in the following month, and the remaining 20% in the second month following sale. Once we have calculated the cash collections for each month, we can add them up to get the total cash collections for the quarter.

To determine the accounts receivable balance on June 30th, we need to consider the portion of May sales that will still be outstanding at the end of the quarter. Since May sales have a collection period of two months, 20% of May sales will still be outstanding at the end of June. We can add this amount to the 60% of April sales that will still be outstanding at the end of June to arrive at the accounts receivable balance on June 30th.

In conclusion, preparing a schedule of expected cash collections from sales and determining the accounts receivable balance on June 30th requires an understanding of the collection percentages and the timing of sales for Silver Company. By using this information, we can accurately forecast the cash collections for Q2 and the accounts receivable balance on June 30th, which is useful for managing company finances.

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Explain your attitude toward your college/university based on the tri-component attribute model.

Make sure you separate and explain the cognitive, affective, and conative elements.
List at least 5 points each under cognition and affect and 3 under conative.
You can use bullet points, but each one needs an explanation; in sufficient detail so that everyone else understands what you mean.

Answers

The tri-component model of attitudes is a theory created by psychologist Martin Fishbein and Icek Ajzen. The model explains the three components that affect an individual's attitude toward a particular object, like a university. These components are cognitive, affective, and conative.

I have a positive attitude towards my university, and I will explain why in the following paragraphs .Cognitive elementCognitive elements are all about beliefs and ideas, and this includes knowledge and information that one has acquired about a particular object or situation. Below are some of the reasons why I have a positive attitude toward my university.I believe that my university offers high-quality education, which will help me to achieve my goals.I think the professors are experienced and knowledgeable in their fields, and they have the ability to pass this knowledge on to their students.The curriculum at my university is designed to be comprehensive, which means I can gain a wide range of knowledge from different areas.I believe that the university has an excellent reputation, which will increase my chances of getting a job after graduation.I trust the university to provide me with the necessary tools and resources that will help me succeed.Affective element: Affective elements are all about feelings, and this includes emotions, values, and attitudes. Below are some of the reasons why I have a positive attitude toward my university.I feel proud to be part of this university, which has a rich history and has produced many successful graduates.I enjoy the campus environment, and I find it conducive to learning.I appreciate the support I receive from the university's staff and faculty, which has helped me to overcome challenges and achieve my goals.I feel a sense of belonging to this university, and I appreciate the diversity of the student body.I am grateful for the opportunities that my university has provided, which have helped me to develop as a person.Conative elementConative elements are all about behavior, and this includes actions and intentions. Below are some of the reasons why I have a positive attitude toward my university.I actively participate in class and take advantage of all the resources that the university has to offer.I make an effort to maintain good grades, which will increase my chances of being successful in the future.I engage in extracurricular activities, which allow me to connect with other students who share my interests.I am committed to graduating from this university, and I plan to use the knowledge and skills I have acquired to make a positive impact in my community and the world as a whole.

In conclusion, the tri-component model of attitudes explains the cognitive, affective, and conative elements that affect an individual's attitude toward a particular object, such as a university. My positive attitude toward my university is based on several factors, including my belief that the university offers high-quality education, the professors' experience and knowledge, the comprehensive curriculum, and the university's excellent reputation. I also have positive feelings toward the university, including pride, appreciation for the campus environment and the support I receive from staff and faculty, and a sense of belonging to the university. My positive conative elements include actively participating in class, maintaining good grades, engaging in extracurricular activities, and committing to graduating from the university.

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Alysha has to choose between two investments that have the same cost today. Both investments will ultimately pay $1,200 but at different times, as shown in the table below. If Alysha does not choose one of these investments, she could leave the funds in a bank account paying 3 percent per year.
Which investment should Alysha choose?(Round answer to 2 decimal places, e.g. 125.12. Do not round your intermediate calculations.)
Year Investment A Investment B
1 $0 $200
2 $300 $500
3 $900 $500

Present value of investment A $_____
Present value of investment B $_____

Answers

The present value of investment A is approximately $1,110.93, and the present value of investment B is approximately $1,136.92.

Since investment B has a higher present value, Alysha should choose investment

To determine which investment Alysha should choose, we need to calculate the present value of both investments and compare them. The present value is the current worth of future cash flows, taking into account the time value of money.

Using a discount rate of 3%, we can calculate the present value of each investment as follows:

Present value of investment A:

Year 1: $0 / (1 + 0.03)^1 = $0

Year 2: $300 / (1 + 0.03)^2 ≈ $291.26

Year 3: $900 / (1 + 0.03)^3 ≈ $819.67

Present value of investment B:

Year 1: $200 / (1 + 0.03)^1 ≈ $194.17

Year 2: $500 / (1 + 0.03)^2 ≈ $485.44

Year 3: $500 / (1 + 0.03)^3 ≈ $457.31

Therefore, the present value of investment A is approximately $1,110.93, and the present value of investment B is approximately $1,136.92.

Since investment B has a higher present value, Alysha should choose investment

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. State whether the statement is TRUE/FALSE:

1. Capital structure represents the mix of equity and interest-bearing debt used by a firm.

2. Business risk reflects the added variability in earnings available to a firm's shareholders.

3. A firm can estimate its cost of debt by finding the yield on bonds issued by other firms with similar ratings and maturities.

4. If before tax cost of debt is 9% and the firm has a 34% marginal tax rate, after the tax cost of debt is 5.94%.

5. No adjustments are made in the cost of preferred stock for taxes since preferred stock dividends are not tax-deductible.

Answers

The statements about capital structure and cost of debt stated are:

1. True 2. false 3. true 4. false 5. true

What is True about Capital Stricture?

1. Capital structure represents the combination of equity and interest-bearing debt used by a firm.

2. Business risk does not specifically reflect variability in earnings available to shareholders.

3. A firm can estimate its cost of debt by analyzing yields on bonds issued by similar-rated firms.

4. If the before-tax cost of debt is 9% and the marginal tax rate is 34%, the after-tax cost of debt would be 5.94%.

5. The cost of preferred stock does not require adjustments for taxes since preferred stock dividends are not tax-deductible.

Thus, the answers are:

1. True 2. false 3. true 4. false 5. true

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1. Capital structure represents the mix of equity and interest-bearing debt used by a firm. The answer is True.

2. Business risk did not reflects the added variability in earnings available to a firm's shareholders.The answer is false.

3. . A firm can estimate its cost of debt by finding the yield on bonds issued by other firms with similar ratings and maturities. The answer is True.

4. If before tax cost of debt is 9% and the firm has a 34% marginal tax rate, after the tax cost of debt is 5.94%. It is True.

5. No adjustments are made in the cost of preferred stock for taxes since preferred stock dividends are not tax-deductible. The answer is True.

Determining whether True or False

Capital structure represents the mix of equity and interest-bearing debt used by a firm. A company's capital structure includes its debt and equity financing used to fund its operations and growth. Hence, capital structure decision involves finding the balance of debt and equity financing that maximizes the value of the firm while minimizing the cost of capital.

Business risk reflects the variability in a firm's earnings before interest and taxes (EBIT), which affects both shareholders and creditors. Shareholders are exposed to the business risk of the firm, but they also face financial risk because debt financing is being used.

The cost of debt is the interest rate that a company pays on its debt financing. One of the ways to estimate the cost of debt is to look at the yield on bonds issued by other firms with similar credit ratings and maturities. The cost of debt is a before-tax cost, and it represents the cost of debt financing to the company.

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Discuss different types of Foreign Aid in Bangladesh. Discuss how a country might be benefitted by Foreign Aid.

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There are several types of foreign aid provided to Bangladesh, including bilateral aid, multilateral aid, humanitarian aid, technical assistance, and concessional loans.

Bilateral aid refers to assistance provided directly from one country to another. Donor countries may provide financial aid, grants, or technical expertise to Bangladesh.

Multilateral aid is assistance provided through international organizations such as the World Bank, International Monetary Fund (IMF), and United Nations agencies. These organizations pool resources from multiple countries to support development projects and programs in Bangladesh.

Multilateral aid often focuses on infrastructure development, poverty alleviation, and capacity building. It offers economies of scale and expertise through collaboration among donor countries.

Humanitarian aid: Humanitarian aid is provided during emergencies, including natural disasters, conflicts, or other crises. It aims to address immediate needs such as food, water, shelter, and healthcare. Humanitarian aid organizations, both governmental and non-governmental, provide support to affected populations in Bangladesh.


Foreign aid can bring several benefits to recipient countries like Bangladesh:

Foreign aid can contribute to economic growth by financing infrastructure projects, improving human capital, and promoting trade and investment.

Aid programs targeted at poverty reduction can enhance access to basic services, such as education, healthcare, and clean water. This helps improve living standards, reduce inequality, and uplift the most vulnerable populations.

Technical assistance and knowledge transfer through foreign aid can enhance the skills and capabilities of local institutions, professionals, and policymakers.

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Parson Company acquired an 80 percent interest in Syber Company on January 1, 2017. Any portion of Syber's business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asset has subsequently undergone annual amortization based on a 15-year life. Over the past two years, regular intra-entity inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. All dividends are paid in the same period as declared. The individual financial statements for the two companies as well as consolidated totals for 2018 follow:

Answers

Parson Company acquired an 80 percent interest in Syber Company on January 1, 2017. Any portion of Syber's business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asset has subsequently undergone annual amortization based on a 15-year life.

Over the past two years, regular intra-entity inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. All dividends are paid in the same period as declared. The individual financial statements for the two companies as well as consolidated totals for 2018

Sales150,000120,000---270,000Cost of goods sold100,00080,000---180,000Operating expenses20,00015,000---35,000Net income30,00025,000---55,000

Elimination entry in respect of inventories: (120,000 × 25%)30,000-30,000-Consolidated net income for 201855,000As we see above that consolidated net income for 2018 is $55,000.

The consolidation process eliminated intra-entity transactions such as the inventory transfers.

Since the inventory had not been sold by the end of 2018, eliminating the intra-entity sale decreased the consolidated cost of goods sold and consolidated sales by $30,000 which resulted in a $55,000 consolidated net income. Therefore, the answer is, the consolidated net income for 2018 is $55,000.

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How does government regulation ensure free markets are working efficiently?
When a business controls competition by monopolizing the market, how does this impact competitors and consumers?
What issue could arise if a seller sells a product below cost?

Answers

Government regulation ensures free markets function efficiently by promoting fair competition, preventing monopolies, protecting consumers, addressing market failures, and discouraging anti-competitive practices like predatory pricing.



Government regulation plays a crucial role in ensuring free markets work efficiently. Firstly, regulations promote fair competition by preventing anti-competitive practices such as monopolies and collusion. By enforcing antitrust laws, the government prevents businesses from stifling competition, thereby allowing other players to enter the market and offer better choices for consumers. Secondly, regulations protect consumers by ensuring product safety, accurate labeling, and fair pricing. They also establish standards for quality and service, fostering trust and confidence in the market. Additionally, regulations can address externalities and market failures, such as environmental pollution or information asymmetry.

When a business controls competition through a monopoly, it negatively impacts competitors and consumers. Competitors may face barriers to entry and struggle to compete on a level playing field. This stifles innovation, limits consumer choices, and potentially leads to higher prices or lower-quality products. Consumers suffer from limited options and potentially higher prices due to the lack of competitive pressure on the monopolistic business.

If a seller sells a product below cost, it can create various issues. This practice, known as predatory pricing, can be anti-competitive. It may drive competitors out of the market, leading to reduced competition and ultimately harming consumers. Predatory pricing can also hinder new entrants from establishing themselves in the market, limiting innovation and stifling economic growth. To address this issue, regulations can be implemented to prevent predatory pricing practices, ensuring fair competition and protecting the interests of both competitors and consumers.

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Please explain why money has a time value. Please explain the present value of a series of future cash flows, such as a business or a power plant and provide the equation for it. What is the present value of the following cash stream: A consulting firm that is for sale has an annual operating cash flow of $2,000,000 assuming no future growth in cash flow, what is the value of this business at a 50% cost of capital. What would be the maximum price that you would pay for that firm as an acquisition with no growth? What would be the valuation if you assumed that the sellers put into place strategies that would generate a 10% growth rate in cash flow? Please describe the effective rate of return? What are the effective rates of return on a 5% annual rate of return if compounded daily, weekly, monthly and, annually? Would you prefer more frequent compounding or less if you are lending money and why?

Answers

From a practical standpoint, the difference between daily, weekly, or monthly compounding is minimal, so the choice may depend on convenience or contractual terms.

Money has a time value because of several factors:

Opportunity Cost: When you have money today, you have the opportunity to invest it and earn a return. By deferring consumption and investing the money, you can potentially generate additional income or returns over time. Therefore, money has a time value because you can use it to earn more money.

Inflation: Inflation erodes the purchasing power of money over time. The value of money decreases as prices for goods and services increase. To maintain the same purchasing power, you need more money in the future.

Therefore, money has a time value because it is worth less in the future due to inflation.

Risk and Uncertainty: Future cash flows are uncertain, and there is a risk associated with receiving money in the future. There are risks such as default risk, market risk, and business risk that make future cash flows less certain compared to cash flows received today.

Therefore, money has a time value because the further into the future the cash flows are, the greater the risk and uncertainty associated with them.

The present value of a series of future cash flows, such as a business or a power plant, can be calculated using the present value formula. The general formula for the present value (PV) of a future cash flow (CF) is:

PV = CF / (1 + r)^n

Where:

PV = Present value

CF = Future cash flow

r = Discount rate or cost of capital

n = Number of periods or years into the future

Now, let's calculate the present value of the given cash stream for the consulting firm:

Annual operating cash flow = $2,000,000

Assuming no growth in cash flow:

Cost of capital (discount rate) = 50%

Number of periods (years) = 1

PV = $2,000,000 / (1 + 0.50)^1

PV = $2,000,000 / 1.50

PV ≈ $1,333,333.33

Therefore, the value of the business with no growth in cash flow at a 50% cost of capital is approximately $1,333,333.33.

Assuming a 10% growth rate in cash flow:

Number of periods (years) = 1

PV = $2,000,000 / (1 + 0.50)^1

PV = $2,000,000 / 1.50

PV ≈ $1,333,333.33

PV with 10% growth = $1,333,333.33 * (1 + 0.10)^1

PV with 10% growth ≈ $1,466,666.67

Therefore, if the sellers put into place strategies that would generate a 10% growth rate in cash flow, the valuation of the business would be approximately $1,466,666.67.

The effective rate of return is the actual rate of return taking into account compounding over a specific period. It represents the growth rate of an investment considering both the initial investment and the compounded returns.

The effective rate of return on a 5% annual rate of return if compounded:

Daily: [(1 + 0.05/365)^365] - 1 ≈ 5.1267%

Weekly: [(1 + 0.05/52)^52] - 1 ≈ 5.1271%

Monthly: [(1 + 0.05/12)^12] - 1 ≈ 5.1167%

Annually: 5%

The choice of more frequent compounding or less depends on the specific circumstances and preferences. In general, more frequent compounding results in slightly higher effective rates of return.

If you are lending money, more frequent compounding would be preferred as it allows you to earn more interest over time.

However, from a practical standpoint, the difference between daily, weekly, or monthly compounding is minimal, so the choice may depend on convenience or contractual terms.

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SUBJECT: Management Science (Operations Research)
TOPIC: Assignment Method
Miss Manabat, a successful businesswoman decided to hire 4 accountants
Who are also graduates of FEU to be assigned as auditors in her four different businesses? The table shows the professional fees per auditor on each type of business.
ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A B C D
TEJERERO 140,000 130,000 130,000 120,000
LACAP 130,000 120,000 100,000 110,000
LIRIO 120,000 140,000 140,000 130,000
MAGPANTAY 140,000 150,000 110,000 120,000
Determine the job assignment which will minimize the cost?

Answers

The Assignment method is one of the most popular ways to solve transportation problems. The Assignment method can be used to solve problems that are represented by matrices in which the cost of each operation is given.

The assignment problem involves assigning jobs to employees so that the cost is minimal. The objective of this assignment method is to match a number of employees with an equal number of jobs in the most efficient manner possible.To minimize the cost, follow these steps:

1: Draw the matrix for the given information.The given information is presented in the form of a matrix as shown below:ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A 140,000 130,000 130,000 120,000
B 130,000 120,000 100,000 110,000
C 120,000 140,000 140,000 130,000
D 140,000 150,000 110,000 120,000

2: Make the matrix balanced.This can be done by subtracting the smallest number in each row from all the elements in the respective row. Similarly, the smallest number in each column should be subtracted from all the elements in the respective column. The result will be a new matrix with the same optimal solution as the original matrix. The modified matrix is shown below:ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A 20,000 10,000 10,000 0
B 20,000 10,000 0 10,000
C 0 20,000 20,000 10,000
D 20,000 30,000 0 10,000

3: Apply the assignment method.To find the minimum cost assignment, we need to first mark the zeros in each row and column. In this case, the marked zeros are shown below:ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A 20,000 10,000 10,000 0
B 20,000 10,000 0 10,000
C 0 20,000 20,000 10,000
D 20,000 30,000 0 10,000Next, we start by selecting a marked zero in the first row. If there is only one marked zero in the row, it is assigned to the corresponding column. If there are more than one marked zero in the row, then we consider the column of each marked zero and select the one with the smallest value. This process is repeated until all the rows are exhausted. The results are shown below:ACCOUNTANT BUSINESS BUSINESS BUSINESS BUSINESS
A 20,000 10,000 10,000 0
B 20,000 10,000 0 10,000
C 0 20,000 20,000 10,000
D 20,000 30,000 0 10,000

4: Calculate the cost of the optimal solution.To calculate the cost of the optimal solution, we add the costs of the assignments that were made. In this case, the assignments that were made are: Accountant A is assigned to Business D with a cost of 0.Accountant B is assigned to Business C with a cost of 0.Accountant C is assigned to Business A with a cost of 0.Accountant D is assigned to Business B with a cost of 30,000. Therefore, the total cost of the optimal solution is 0 + 0 + 0 + 30,000 = 30,000.The job assignment that will minimize the cost is:Accountant A is assigned to Business D.Accountant B is assigned to Business C.Accountant C is assigned to Business A.Accountant D is assigned to Business B.

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You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug's profits will be $3 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 12% per year? The present value of the new drug is $ million. (Round to three decimal places.)

Answers

The present value of the new drug is approximately -$6.8777 million.

To calculate the present value of the new drug, we need to discount the expected future cash flows associated with the drug's profits. We can use the formula for the present value of a growing perpetuity:

PV = C / (r - g),

where PV is the present value, C is the cash flow in the first year ($3 million), r is the discount rate (12% or 0.12), and g is the growth rate (5% or 0.05).

Since the cash flows are expected to grow for 17 years, we can use the formula for the sum of a geometric series to calculate the present value of the cash flows over the 17-year period:

PV = C * (1 - (1 + g)^n) / (r - g),

where n is the number of years (17).

Plugging in the values, we have:

PV = $3 million * (1 - (1 + 0.05)^17) / (0.12 - 0.05),

PV = $3 million * (1 - 1.05^17) / 0.07.

Using a calculator, we find:

PV ≈ $3 million * (1 - 1.1459) / 0.07,

PV ≈ $3 million * (-0.1459) / 0.07,

PV ≈ -$6.8777 million.

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- The firm's tax rate is 35%6. - The current price of Harry Davis'12.5\% coupon, semiannual payment, noncallable bonds with 15 years remaining to maturity is 5 . Harry Davis does not use short-term interestbearing debt on a permanent basis. New bonds would be privately placed with no flotation cost. - The current price of the firm's 10\%, \$100 par value, quarterly dividend, perpetual preferred stock is \$. Harry Davis would incur flotation costs equal to 6% of the proceeds on a new issue. - Harry Davis' common stock is currently selling at $70 per share. Its last dividend (D0) was 5 , and dividends are expected to grow at a constant rate of 5.8% in the foreseeable future. Harry Davis' beta is 1.4, the yield on T-bonds is 5.6%, and the market risk premium is estimated to be 6%. For the own-bond-yield-plus-judgmental-risk-premium approach, the firm uses a 3.2% risk premium. - Harry Davis' target capital structure is 30% long-term debt, 10\% preferred stock, and 60% common equity. Group 3: Bond price=1150.25 -Preferred stock=107.54 - D0= 3.12 14. What is Harry. Davis' weiphted wererage cost of capital (WNACC)? 15. What factars influence a coempany's WACC: 16. Should the compuny ase its averall WACC as the hardle rate for rach of lis divisieas?

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The company should not use its overall WACC as the hurdle rate for each of its divisions, as each division has its risk. Each division should use its risk-adjusted WACC as the hurdle rate for its projects.

14. Calculation of Weighted average cost of capital (WACC) is as follows:Given: Tax rate=35%, Bond Price= 1150.25, Preferred Stock=107.54, D0=3.12, Current Market price of common stock= $70, Growth rate (g)=5.8%, beta (β) =1.4, yield on T-Bonds(rf) =5.6%, Market Risk Premium(MRP) =6%, Judgmental Risk Premium(JRP) =3.2%.

Calculation: Cost of Debt(Kd)= (Coupon rate x (1 - Tax rate))Cost of Debt (Kd)= (12.5% x (1 - 35%))=8.12%Current yield(YTM) on Bond, Kd= = 8.47%Cost of Preferred Stock(Kps) =Dp/ NP*Kps (1-Flotation cost)Cost of Preferred Stock(Kps)= 3.12/107.54(1-.06)

Cost of Preferred Stock (Kps)= 2.87%Cost of Common Stock using CAPM(Ks) = Rf + β(MRP)Ks= 5.6% + 1.4(6%)Ks= 14.4%.Cost of Equity using own-bond-yield-plus-judgmental-risk-premium approach (Ks) =Kd (1 - Tax rate) + KjCost of Equity using own-bond-yield-plus-judgmental-risk-premium approach (Ks) =8.47%(1-.35) + 3.2%Cost of Equity using own-bond-yield-plus-judgmental-risk-premium approach (Ks)= 7.11%.

Therefore, WACC= (WdKd) + (WpsKps) + (WsKs)Where: Wd = Weight of Debt, Wps = Weight of Preferred Stock, Ws = Weight of Common Equity, Kd = Cost of Debt, Kps = Cost of Preferred Stock, Ks = Cost of Equity.Given, Target capital structure is 30% long-term debt, 10% preferred stock, and 60% common equity.

Substituting all the given values in the above equation, we get WACC= (0.3 x 7.11%) + (0.1 x 2.87%) + (0.6 x 14.4%)WACC= 2.133% + 0.287% + 8.64%WACC= 11.06%

Thus, the Weighted Average Cost of Capital (WACC) for Harry Davis is 11.06%.15. Factors that influence a company's WACC are as follows:

Market conditions, level of economic growth, rate of inflation, monetary and fiscal policies of the government, credit rating of the company, capital structure, financial leverage, business risks, financial risks, company size, company industry, and the stage of business growth.16.

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Identify and briefly describe the basic steps in performance appraisal.
What are the fundamental goals of performance appraisal?
Summarize the roles of the organization, the rater, and the ratee in the performance appraisal process.

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Performance appraisal is an essential activity that organizations use to evaluate employees' job performance. It involves setting clear goals and standards for employees, providing feedback, and assessing how well they have achieved their objectives.

The following are the basic steps in performance appraisal:Establish performance expectations: This involves defining the job responsibilities, setting performance goals, and providing employees with clear performance expectations.Ongoing feedback: Managers should provide employees with regular feedback on their performance throughout the year. This feedback should be timely, specific, and constructive.Performance evaluation: At the end of the performance period, managers should conduct a formal evaluation of each employee's performance using a performance evaluation form.

This form should provide a comprehensive review of the employee's strengths and weaknesses.Goal setting: After evaluating the employee's performance, the manager and the employee should discuss their goals for the next performance period. This process should be a collaborative effort, with both parties agreeing on the employee's job responsibilities and performance objectives.The fundamental goals of performance appraisal are to improve employee performance, enhance employee motivation and job satisfaction, identify training and development needs, and facilitate communication between employees and managers.

The organization plays a crucial role in performance appraisal by providing a clear understanding of the company's goals, values, and culture. The rater (manager) has the responsibility of evaluating employee performance, providing feedback, and developing performance goals and objectives. The ratee (employee) is responsible for meeting job expectations, participating in performance discussions, and setting personal goals and objectives.

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Substantiate your answer integrating management disciplines
applying best practice, workplace knowledge and appropriate
academic research results. (20)

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Effective management involves the integration of various management disciplines to improve organizational outcomes. The key management disciplines are finance, accounting, human resource management, marketing, and operations management, among others.

Management is not just about applying best practices, but also involves the application of workplace knowledge and academic research results to improve performance.Incorporating best practices is critical to ensure effective management. Best practices provide guidelines on how to effectively manage employees, finances, and other aspects of an organization. For example, best practices in finance provide guidelines on how to effectively allocate financial resources to achieve organizational objectives.

Workplace knowledge is essential in effective management as it provides information on how to manage employees in a manner that promotes productivity. For example, workplace knowledge provides information on how to train employees, how to motivate them, and how to effectively communicate with them. This knowledge helps managers to create a positive work environment, where employees can be motivated to be more productive.Research results from academic research provide valuable information on how to improve management practices. For example, academic research on leadership has provided valuable information on how to effectively lead teams and organizations. Similarly, academic research on organizational culture has provided valuable information on how to create a positive work environment that promotes productivity.

In conclusion, effective management requires the integration of various management disciplines to improve organizational outcomes. The integration of best practices, workplace knowledge, and academic research results is critical to ensure effective management.

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On the attached worksheet, you will find the UNADJUSTED trial balance of LADD AGENCIES for its year ended December 31, 2014. Ms. Ladd began her own detective agency in January 2013. She hired 2 other female detectives to work with her, along with a personal secretary named Mr. Spelling. In discussia with Ms. Ladd, you discover the following about LADD AGENCIES: 1. The office supplies were counted on December 31, 2013 with a cost value of $1,000.00. Duing 2014, the business purchased $3,250.00 of office supplies. The office supplies were counted on December 31, 2014 with a cost value of $1,200.00. 2. The bookkeeper is paid $2,000 every two weeks. She was last paid on December 24, 2014, so at December 31, 2014 she is owed one week's wages. She will be paid $2,000 on January 7, 2015 for the two-week period ended January 7, 2015. 3. Computer equipment was purchased on November 1, 2014 for $25,000. The business plans b use the computer equipment for 3 years, at which time its salvage/residual value is expected to be $7,000. In the year that a capital asset is purchased, depreciation is recorded to the nearest whole month. 4. Ms. Ladd has informed you that a billing from the Agency for services provided to Mr. Chaie in the amount of $4,000 has been mailed to him, but not recorded in the accounts of the business because the money was not received by December 31, 2014. Mr. Charlie has promised to pay in January2015. 5. The December 2014 telephone bill for $300 was received in the mail on January 5, 2015, so it was not paid before then, nor recorded in the unadjusted trial balance dated December 31, 2014. 6. Insurance costing $2,400 was purchased on September 1, 2014 for the period October 1, 2014 through September, 2015. 7. Ladd Agencies arranged a five-year note payable in order to purchase the equipment. Interest for December 2014 calculated at the rate of 1% per month on the loan balance will be paid on January 2, 2015. The loan calls for principle repayments of $5,000 per year each January 2 beginning January 2, 2015. 8. In reviewing the December 2014 deposits to the bank account, you find a cheque that was received from BAD Co. for $1,000. The money was credited to Detective Fees earned when it was received and the Agency had NOT completed the required work by December 31, 2014. 9. In December 2013, the business prepaid its rent through February 2014. Monthly rent is $1,000 per month. In December 2014, the company prepaid rent through March 2015. 10. SUBSEQUENT GENERAL JOURNAL ENTRY

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General Journal of LADD Agencies for the year ended December 31, 2014: Date Account Titles and Debit Credit December 31, 2014Office Supplies Expense3,250.00Office Supplies3,250.00(To record office supplies purchased and inventory adjusted for year-end) December 31, 2014Salaries Payable2,000.00Salaries Expense2,000.00(To record accrued salaries at the end of the year) November 1, 2014Computer Equipment25,000.00.

Cash25,000.00(To record purchase of computer equipment)Depreciation Expense ($25,000 - $7,000)/36= $545.45  Depreciation Expense 545.45  Accumulated Depreciation-Computer Equipment 545.45(To record depreciation for computer equipment)4. January 2015Accounts Receivable4,000.00Detective Fees Earned4,000.00(To record the billing of Mr. Charlie for services rendered in 2014)5. January 2015Telephone Expense300.00

Accounts Payable300.00(To record the telephone bill received after year-end)6. September 1, 2014Prepaid Insurance2,400.00Cash2,400.00) Note: Depreciation for 2014 is calculated as follows: ($25,000 - $7,000) / 36 months = $545.45 per month. Depreciation for November and December 2014 will be: $545.45 * 2 = $1,090.90.

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