Option d, "When the NPV equals 3, the cost of capital is 3%, and the IRR must be 0%," is the incorrect response. The internal rate of return (IRR) is the discount rate at which an investment project's net present value (NPV) equals zero.
It represents the anticipated rate of return for the project. As a result, even though the cost of capital is 3% and the NPV is equal to 3, the IRR need not be 0%. Depending on the cash flows and their timing during the course of the project, the IRR could be either positive or negative. IRR and NPV are related but distinct measurements of investment profitability, and they can offer varying perspectives on financial feasibility of the project.
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which three are the three fundamental roles that characterize discretionary benefits? 1. Paid time-off, accommodation and enhancement programs, retirement programs
2. Protection programs, paid time off, retirement benefits
3. retirement programs, protection programs, accommodation and enhancement programs
4. Protection programs, paid time off, accommodation and enhancement programs
The three fundamental roles that characterize discretionary benefits are retirement programs, protection programs, paid time off, and accommodation and enhancement programs.
The discretionary benefits are characterized by three fundamental roles: protection programs, paid time off, and accommodation and enhancement programs. Discretionary benefits are a type of employee benefits that are not required by law and are not part of an employee's compensation package. These benefits are provided voluntarily by the employer as a way to attract and retain employees. The three fundamental roles of discretionary benefits are: Protection programs:
This type of discretionary benefit is designed to protect employees against unexpected events such as illness, disability, and death. Examples of protection programs include health insurance, life insurance, and disability insurance. Paid time off: This type of discretionary benefit is designed to provide employees with time off from work for various reasons. Examples of paid time off include vacation days, sick days, and personal days.
Accommodation and enhancement programs: This type of discretionary benefit is designed to enhance the employee's job performance by providing assistance with work-related issues. Examples of accommodation and enhancement programs include tuition reimbursement, child care, and wellness programs.
In conclusion, the three fundamental roles that characterize discretionary benefits are protection programs, paid time off, and accommodation and enhancement programs. Employers provide these benefits voluntarily to attract and retain employees.
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Assume that you are determining how much time to study and how much time to party while you are in university, and that your preferences at are described by the following utility function: U1(s,p)=sp, where s is the time you dedicate to studying, and p the one you dedicate to partying. To keep things simple, assume that you have one unit of time while you are at university, and that you split it between studying and partying. You do not spend this unit of time doing anything else. However, assume that you also care about the future. In the future, you will work and earn an income which you will spend on goods. To keep things simple, assume that you will spend all your future income on a single good, call it x, and assume it will have a price px>0. In the future, your preferences over goodx will be given by U2(x)=x. Importantly, your income in the future will depend on how much you study at university. In other words, your income will be a function of s, denoted by I(s). For simplicity, assume I(s)=s. Finally, assume that increasing your utility today in u~ units is equivalent to increasing it in δuˉ units in the future, where δ>0. In other words, your overall utility function is given by:
U(u1,u2)=u1+δu2,
where u1 denotes your utility in the present (which depends on how much you study and how much you party in university), and u2 denotes your utility in the future (which depends on how much of good x you consume).
(a) (5 points) Write down your utility maximization problem. (Hint: your problem has three decision variables: s,p, and x, and two budget constraints, one for the present and one for the future.)
(b) (10 points) Simplify the problem as follows: solve for x from your future budget constraint and replace this value in the objective function. Since we've gotten rid of x, your objective function should be a utility function over bundles (s,p). Plot the indifference curves for this utility function on the (s,p) plane. What is the MRS of these preferences?
(a) The utility maximization problem is to maximize U(s, p, x) = sp + δx, subject to the present budget constraint s + p = 1 and the future budget constraint x = s. (b) When the objective function has a future budget constraint, the simplified utility function is U(s, p) = sp + s/px. For this utility function's indifference curves on the (s, p) plane, the marginal rate of substitution (MRS) is p / (px) = 1 / x = (px) / s.
(a) The utility maximization problem can be stated as follows:
Maximize U(u1, u2) = u1 + δu2
Subject to:
Budget constraint in the present: s + p = 1 (since you have one unit of time)
Budget constraint in the future: px = I(s) = s
Decision variables:
s: Time dedicated to studying
p: Time dedicated to partying
x: Consumption of good x in the future
The objective is to find the values of s and p that maximize the overall utility U(u1, u2) while satisfying the budget constraints.
(b) To simplify the problem, we can solve for x from the future budget constraint and replace it in the objective function.
From the future budget constraint: px = s
Solving for x: x = s/px = s/(px)
Replacing x in the objective function:
U(u1, u2) = u1 + δu2 = sp + δ(s/(px))
Now, the objective function becomes a utility function over bundles (s, p).
To plot the indifference curves for this utility function on the (s, p) plane, we need to express the utility function solely in terms of s and p. We can achieve this by substituting the value of x back into the utility function:
U(s, p) = sp + δ(s/(px))
The indifference curves can be plotted by assigning different levels of utility (constant values of U) and solving for the corresponding combinations of s and p that satisfy the equation.
The marginal rate of substitution (MRS) of these preferences represents the rate at which the individual is willing to trade off studying time (s) for partying time (p) while keeping utility constant. The MRS is given by the ratio of the partial derivatives of U with respect to s and p:
MRS = (∂U/∂s) / (∂U/∂p) = p / (px)
Simplifying further, we get:
MRS = 1 / x = (px) / s
Therefore, the MRS of these preferences is (px) / s.
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Whiskey Grogagain acted as barman at a local hotel while its regular barman was on leave. The agreement was that he would provide this service from 1 February 2021 to 15 March 2021 , and that he would be paid at the rate of R24 000 a month (that is R36 000 for the full period). It was a condition of his agreement that should a stock shortage occur during this period of service, his total pay would be a lesser amount as the hotel's management may determine after deducting an amount towards the turnover lost, resulting from the shortage. His total pay (or a reduced amount), was payable only on 16 March 2021. During his period of service, no shortages occurred, and R36 000 was paid to him on 16 March 2021. You are required to indicate in which year, or years, of assessment the R36 000 accrued to Whiskey Grogagain (whether actually or deemed).
The R36,000 accrued to Whiskey Grogagain in the year of assessment 2021.
According to the information provided, Whiskey Grogagain acted as a barman at a local hotel from 1 February 2021 to 15 March 2021 and was paid a total of R36,000 on 16 March 2021. The agreement between Whiskey Grogagain and the hotel specified that his pay, or a reduced amount, would be payable on 16 March 2021, depending on any stock shortages that occurred during his service period.
Since no stock shortages occurred during Whiskey Grogagain's period of service, the full amount of R36,000 was paid to him on 16 March 2021. Therefore, the entire amount accrued to him in the year of assessment 2021. This means that for tax purposes, the income of R36,000 should be included in his taxable income for the 2021 year of assessment.
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if the price elasticity of demand is 1.0 and a firm raises its price by 15 percent, then total revenue will:
If the price elasticity of demand is 1.0 and a firm raises its price by 15 percent, the total revenue will remain unchanged.
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price.
When the price elasticity of demand is 1.0, it means that a 1 percent increase in price will result in a 1 percent decrease in quantity demanded, keeping total revenue constant.
In this case, if the firm raises its price by 15 percent, the quantity demanded will decrease by 15 percent, offsetting the price increase. As a result, the decrease in quantity demanded will exactly offset the increase in price, leaving total revenue unchanged.
This suggests that the firm is operating at the unitary elastic range, where changes in price and quantity have an equal effect on total revenue.
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If the price elasticity of demand is 1.0 and a firm raises its price by 15 percent, then total revenue will stay the same.
Explanation:If the price elasticity of demand is 1.0 and a firm raises its price by 15 percent, then total revenue will stay the same. Price elasticity of demand measures the responsiveness of quantity demanded to a change in price. A price elasticity of 1.0 indicates unitary elasticity, meaning that a percentage change in price will result in an equal percentage change in quantity demanded, therefore keeping total revenue constant.
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the cyclone golfs resorts is redoing its golf course at a cost of $2744320. it expects to generate cash flows of $1223445, $2007812, and $3147890 over the next three years. if the appropiate discount rate for the firm is 13 percent, what is the NPV of the project?
The npv of the project is -$157,825.92.
the npv of the project can be calculated by discounting the cash flows at the appropriate discount rate. using the given cash flows and discount rate, the npv of the project is $530,814.08.
to calculate the npv (net present value) of the project, we need to discount the expected cash flows by the appropriate discount rate. the formula for calculating npv is:
npv = (cf1 / (1 + r)¹) + (cf2 / (1 + r)²) + (cf3 / (1 + r)³) - initial investmen
cf1 represents the cash flow in year 1, cf2 represents the cash flow in year 2, cf3 represents the cash flow in year 3, and r is the discount rate.
given:
initial investment (cost of redoing the golf course) = $2,744,320
cash flow in year 1 = $1,223,445
cash flow in year 2 = $2,007,812
cash flow in year 3 = $3,147,890
discount rate (r) = 13%
plugging in the values into the npv formula:
npv = ($1,223,445 / (1 + 0.13)¹) + ($2,007,812 / (1 + 0.13)²) + ($3,147,890 / (1 + 0.13)³) - $2,744,320
calculating the discounted cash flows:
npv = $1,080,911.95 + $1,526,839.08 + $2,079,063.05 - $2,744,320
npv = $2,586,494.08 - $2,744,320
npv = -$157,825.92 since the npv is negative, it indicates that the project's expected cash flows are not sufficient to cover the initial investment and provide a return greater than the discount rate. this suggests that the project may not be financially viable and may not be advisable to pursue.
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Which of the following is NOT among the factors that weaken purchasing power parity? Group of answer choices
significant trade barriers
domination by few multinationals
standardized products
transportation costs
standardized products. Purchasing power parity (PPP) is the theory that the exchange rate between two currencies will adjust in the long run so that the prices of identical goods in each country are equal.
However, there are a number of factors that can weaken PPP, including:
Significant trade barriers. If there are high tariffs or other trade barriers between two countries, it will be more expensive to import goods from one country to the other, which will distort the price of goods and weaken PPP.
Domination by few multinationals. If a few multinational companies control the production of a particular good in a number of countries, they may be able to charge different prices for the same good in different countries, which will also weaken PPP.
Transportation costs. If the transportation costs of goods are high, this will also distort the price of goods and weaken PPP.
Standardized products do not weaken PPP. In fact, they can actually strengthen PPP because they make it easier to compare prices between countries. For example, if the price of a Coca-Cola is the same in the United States and China, this will provide a good indication that PPP is holding in these two countries.
The answer standardized products is the correct answer because it is the only factor listed that does not weaken PPP. The other three factors listed (significant trade barriers, domination by few multinationals, and transportation costs) all have the potential to distort the price of goods and weaken PPP.
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At the end of the current year, Accounts Receivable has a balance of $157,300; Allowance for Doubtful Accounts has a debit balance of $3,728; and sales for the year
total $1,099,000. Bad debt expense is estimated at 1/2 of 3% of sales.
a. Determine the amount of the adjusting entry for bad debt expense.
b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.
Adjusted Balance
Accounts Receivable
Allowance for Doubtful Accounts
Bad Debt Expense
C. Determine the net realizable value of accounts receivable.
a. The adjusting entry for bad debt expense can be calculated by multiplying sales by the estimated bad debt expense rate (1/2 of 3%).
b. The adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense can be determined by adding or subtracting the appropriate amounts from the given balances.
c. The net realizable value of accounts receivable can be calculated by subtracting the balance of Allowance for Doubtful Accounts from the balance of Accounts Receivable.
a. To calculate the amount of the adjusting entry for bad debt expense, we multiply the sales for the year ($1,099,000) by the estimated bad debt expense rate (1/2 of 3%). This gives us an adjusting entry of $16,485.
b. To determine the adjusted balances, we add the adjusting entry for bad debt expense to the debit balance of Allowance for Doubtful Accounts and subtract the adjusting entry from the balance of Accounts Receivable. This gives us the following adjusted balances:
- Accounts Receivable: $157,300 - $16,485 = $140,815
- Allowance for Doubtful Accounts: $3,728 + $16,485 = $20,213
- Bad Debt Expense: $16,485
c. The net realizable value of accounts receivable is calculated by subtracting the balance of Allowance for Doubtful Accounts ($20,213) from the balance of Accounts Receivable ($140,815), which gives us a net realizable value of $120,602. This represents the estimated amount of accounts receivable that the company expects to collect.
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In 2022, the enacted tax rate is 25% for all current and future years, and Hynde Corp., in its first year of operations, reports $502,000 of pretax financial income and $469,000 of taxable income.
In 2023, an enacted law changes the tax rate for all current and future years to 20%, and Hynde has $520,000 of pretax financial income and $567,500 of taxable income. All book-tax differences are due to one temporary difference for depreciation.
What deferred tax asset (enter as a positive number) or deferred tax liability (enter as a negative number) will Hynde report on its December 31, 2023 balance sheet?
The deferred tax asset or deferred tax liability that Hynde Corporation will report on its December 31, 2023 balance sheet is $0.
A deferred tax liability occurs when a company's tax payable is reduced in the current financial year due to the use of tax loss carryforwards or accelerated tax depreciation, but the resulting tax payable will be higher in the future as a result of these changes.
A deferred tax asset is an item that is carried as an asset on a company's balance sheet and reflects a future tax deduction that will be allowed due to the use of existing tax losses or other tax credits.
Hynde Corporation's deferred tax liability/asset is computed by the formula:
Temporary Difference = Tax Basis – Book Basis.
Temporary Difference × Tax Rate = Deferred Tax Liability/Asset.
Book Income = Tax Income – Temporary Difference.
Hynde's book and tax depreciation expense are identical. So, there is no temporary difference that will generate a deferred tax liability or asset.
Therefore, the deferred tax asset or deferred tax liability that Hynde Corporation will report on its December 31, 2023 balance sheet is $0.
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write a brief note on the corporate model of calvert investment and
show how it impacted performance
Calvert Investment, a prominent sustainable investment firm, adopted a corporate model to guide its operations, which had a significant impact on its performance.
The corporate model implemented by Calvert Investment emphasized integrating environmental, social, and governance (ESG) factors into its investment decisions. This approach involved considering the impact of a company's operations on the environment, its social responsibility, and its governance practices. By prioritizing ESG factors, Calvert aimed to align its investments with sustainability objectives while also seeking financial returns.
The corporate model had a notable impact on Calvert Investment's performance. By incorporating ESG analysis into their investment process, Calvert was able to identify companies with strong sustainability practices and avoid those with questionable track records. This approach helped Calvert generate positive financial returns while supporting sustainable business practices. Additionally, the corporate model allowed Calvert to attract socially conscious investors who were seeking to align their investments with their values.
Overall, the corporate model adopted by Calvert Investment proved beneficial in terms of performance. It enabled the firm to pursue both financial and sustainability goals simultaneously, demonstrating that incorporating ESG factors into investment decisions can lead to positive outcomes for both investors and the broader society.
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You need to ask a co-worker about the dates for an upcoming project. You need a response from the co-worker quickly. What is the best tool for communicating this information? A) Direct messaging B) Spreadsheet C) Email D) Slides
The best tool for quickly communicating the dates for an upcoming project to a co-worker would be A) Direct messaging.
Direct messaging, such as instant messaging or chat applications, provides a quick and efficient way to communicate with a co-worker in real-time. It allows for immediate back-and-forth conversation, making it ideal for obtaining a prompt response when time is of the essence. By using direct messaging, you can directly ask your co-worker about the project dates and receive a quick reply without the need for formalities or delays associated with other communication methods.
Direct messaging is the most suitable tool for quickly communicating the project dates to a co-worker when you need a prompt response.
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which of the following is true of informal groups?
The statement "Informal groups can advance or undercut the plans of formal groups" is true. Informal groups, which are formed naturally among individuals within an organization and actions of formal groups.
Informal groups are social structures that form naturally within an organization based on common interests, social interactions, or personal relationships among its members. Unlike formal groups, which are created and structured by the organization itself for specific purposes, informal groups emerge spontaneously.
One characteristic of informal groups is that they do not have appointed leaders in the same way that formal groups do. Leadership within informal groups is often based on influence, expertise, or personal qualities rather than formal authority. Members may naturally gravitate towards individuals who exhibit leadership traits or possess certain skills, but these leaders are not officially designated by the organization.
A temporary committee can indeed be an example of an informal group. Temporary committees are often formed to address specific tasks or projects within an organization. While they may have a defined purpose and specific members assigned to them, they can also exhibit the characteristics of informal groups, such as the development of relationships, shared interests, and informal dynamics among their members.
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The complete question is:
Which of the following is true of informal groups? Informal groups have appointed leaders. A temporary committee is an example of an informal group. Members of an informal group are assigned to it by the skills they possess. Intormal groups can advance or undercut the plans of formal groups
Novak Company issued $528,000 of 10%,20-year bonds on January 1,2020 , at 102 . Interest is payable semiannually on July 1 and January 1. Novak Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.
Prepare the journal entries to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(a) The issuance of the bonds.
(b) The payment of interest and related amortization on July 1, 2020.
(c) The accrual of interest and the related amortization on December 31, 2020.
(a) The issuance of the bonds:
Cash (528,000 * 102%) 538,560
Bonds Payable 528,000
Premium on Bonds Payable 10,560
(b) The payment of interest and related amortization on July 1, 2020:
Interest Expense 25,818
Premium on Bonds Payable 1,818
Cash 24,000
(c) The accrual of interest and the related amortization on December 31, 2020:
Interest Expense 26,055
Premium on Bonds Payable 1,455
Cash 24,600
(a) The issuance of the bonds: Novak Company issued $528,000 of bonds at a premium of 102%, which means the selling price of the bonds is 102% of their face value. The cash received is calculated by multiplying the face value of the bonds ($528,000) by 102%, resulting in $538,560. The entry records the increase in cash, the liability created by the bonds payable, and the premium on bonds payable.
(b) The payment of interest and related amortization on July 1, 2020: On July 1, 2020, Novak Company pays the semiannual interest on the bonds. The interest expense is calculated using the effective yield of 9.7705% applied to the carrying value of the bonds ($528,000 + $10,560 premium), resulting in $25,818. The premium on bonds payable is amortized by deducting $24,000 (cash interest payment) from the interest expense, leaving a remaining amount of $1,818. The entry records the interest expense, the reduction of the premium on bonds payable, and the cash payment.
(c) The accrual of interest and the related amortization on December 31, 2020: On December 31, 2020, Novak Company accrues the semiannual interest on the bonds. The interest expense is calculated using the effective yield of 9.7705% applied to the carrying value of the bonds ($528,000 + $9,702 premium amortization), resulting in $26,055. The premium on bonds payable is further amortized by deducting $24,600 (cash interest payment) from the interest expense, leaving a remaining amount of $1,455. The entry records the interest expense, the reduction of the premium on bonds payable, and the cash payment.
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Which of the following activities is not part of the management planning and control cycle:
A) data collection and performance feedback.
B) implementation of plans.
C) providing information to investors and creditors.
D) revisiting plans.
The activity that is not part of the management planning and control cycle is providing information to investors and creditors.The correct answer is option (C).
The management planning and control cycle typically involves several key activities.
Data collection and performance feedback (option A) are essential components of the cycle. This involves gathering relevant data and information about the organization's performance, comparing it to established goals and benchmarks, and providing feedback to management.Implementation of plans (option B) is another crucial activity in the cycle. Once plans have been developed, they need to be effectively executed and implemented throughout the organization.
Revisiting plans (option D) is also an important step. As circumstances change and new information becomes available, it is necessary to review and adjust plans accordingly to ensure their continued relevance and effectiveness. However, providing information to investors and creditors (option C) is not typically considered part of the management planning and control cycle. Hence, option (C) is the correct answer.
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The invisible hand refers to
A
the link between the "fingers" of government: federal, state, and local.
B
the coordination of activities through prices in a decentralized competitive economy
C
) the safety net ready to catch people who fall under the poverty line.
D government intrusion in private affairs.
The invisible hand refers to B) the coordination of activities through prices in a decentralized competitive economy.
The concept of the invisible hand was introduced by economist Adam Smith in his book "The Wealth of Nations." It suggests that in a decentralized market economy, the self-interested actions of individuals and firms, driven by the pursuit of profit and personal gain, lead to desirable outcomes for the society as a whole. In a decentralized competitive economy, prices serve as signals that convey information about supply and demand conditions. When individuals and firms make decisions based on these price signals, they unknowingly contribute to the overall coordination of economic activities.
Through their self-interested actions, they are guided by market forces and incentives, which ultimately result in the efficient allocation of resources and the production of goods and services that meet consumers' demands. The invisible hand implies that market mechanisms, such as competition and the pursuit of profit, can drive economic coordination and efficiency without the need for central planning or government intervention. It suggests that individual self-interest, when operating within a framework of competitive markets, can lead to desirable outcomes for the society as a whole, as if guided by an invisible hand.
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1/ Gail can receive one of the following two payment streams
a/ 100 at time 0,200 at time n years, and 300 at time 2n years
b/ 604.42 at time (n+2) years
At an annual effective interest rate of i, the present values of the two payment stream are equal
If vn =0.7. calculate i , the annual effective rate of interest.
2/ The simple discount rate is 7% per year. Kevin makes a deposit of X now, which accumulates to 10,000 at the end of 8 years. Determine X
b Redo question 3 using an annual effective discount rate ( compound discount) ]of 7%
3/ Bonnie deposit 1,800 into a saving account at time 0. the savings account pay simple interest at an annual rate of i
Clyde deposits 1,000 into different savings accounts at time 0. Clyde's saving account pays interest at an annual effective rate of i.
Bonnie and Clyde earn the same amount of interest during the 7th year
Calculate i.
1/ To calculate the annual effective rate of interest (i), we need to equate the present values of the two payment streams.
For payment stream a, the present value can be calculated as:
PV(a) = 100/(1+i)^0 + 200/(1+i)^n + 300/(1+i)^(2n)
For payment stream b, the present value is given as 604.42/(1+i)^(n+2).
Setting PV(a) equal to PV(b), we have:
100/(1+i)^0 + 200/(1+i)^n + 300/(1+i)^(2n) = 604.42/(1+i)^(n+2)
Simplifying and rearranging the equation, we can solve for i.
2/ The present value (PV) of the deposit made by Kevin is $X, which accumulates to $10,000 at the end of 8 years. Using the simple discount rate of 7% per year, we can set up the equation:
PV = 10,000/(1+0.07)^8 = X
Solving for X, we can find the value of the deposit made by Kevin.
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East Company's shares are selling right now for $35. They expect that the dividend one year from now will be $2.22 and the required return is 12%. What is East Company's dividend growth rate assuming that the constant dividend growth model is appropriate?
a 5.00%
b 6.34%
c 6.13%
d 4.78%
e 5.66%
A growth rate assuming that the constant dividend growth model is appropriate is( (b) 6.34%.)
To calculate the dividend growth rate using the constant dividend growth model the formula:
Dividend Growth Rate = Dividend / Stock Price
Given that the dividend one year from now is $2.22 and the current stock price is $35, substitute these values into the formula:
Dividend Growth Rate = $2.22 / $35 = 0.0634
Converting this to a percentage that the dividend growth rate is approximately 6.34%.
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checklists for documentation should include all of the following except
The item that should be excluded from checklists for documentation is the inclusion of personal opinions. Here option E is the correct answer.
Checklists for documentation serve as a guide to ensure the quality, accuracy, and effectiveness of written materials. They help maintain consistency and professionalism in the documentation process.
Comprehensive information coverage: The documentation should provide all the necessary and relevant information to fulfill its purpose. It should be complete and cover all important aspects.
Proper grammar and spelling: Documentation should be free from grammatical errors, typos, and spelling mistakes to enhance readability and credibility.
Clear organization and structure: The information should be logically organized and presented in a clear and structured manner. This aids in comprehension and makes the document easier to navigate. Therefore option E is the correct answer.
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Complete question:
Which of the following should be excluded from checklists for documentation?
A) Comprehensive information coverage
B) Proper grammar and spelling
C) Clear organization and structure
D) Timely updates and revisions
E) Inclusion of personal opinions
AAA's inventory turnover ratio is 16.72 based on sales of $21,900,000. The firm's current ratio equals 6.64 with current liabilities equal to $450,000. If the firm's cash and marketable securities equal $369,202, what is the firm's days sales outstanding? (Round your answer to two decimal places.)
a 43.65
b 21.82
c 49.80
d 27.97
e 19.93
The firm's days sales outstanding is 21.82.
The firm's days sales outstanding (DSO), we need to divide the average accounts receivable by the average daily sales. The formula for DSO is:
DSO = (Accounts Receivable / Average Daily Sales) * Number of Days
First, we need to find the average daily sales. We can calculate this by dividing the total sales by 365 days:
Average Daily Sales = $21,900,000 / 365 = $60,000
Next, we calculate the average accounts receivable using the inventory turnover ratio:
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
16.72 = Cost of Goods Sold / Average Inventory
We don't have the Cost of Goods Sold or the Average Inventory, but we know that the Average Inventory is the same as the Average Accounts Receivable. Therefore, we can rearrange the equation:
16.72 = Cost of Goods Sold / Average Accounts Receivable
Average Accounts Receivable = Cost of Goods Sold / 16.72
Now, we can substitute the Average Accounts Receivable into the DSO formula:
DSO = (Accounts Receivable / Average Daily Sales) * Number of Days
DSO = (Cost of Goods Sold / 16.72 / $60,000) * 365
However, we are missing the Cost of Goods Sold. To find it, we can use the inventory turnover ratio:
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
16.72 = Cost of Goods Sold / Average Accounts Receivable
Cost of Goods Sold = 16.72 * Average Accounts Receivable
Now, we can substitute the values into the DSO formula:
DSO = (16.72 * Average Accounts Receivable / $60,000) * 365
Given that the firm's current ratio equals 6.64 with current liabilities of $450,000 and cash and marketable securities equal $369,202, we can assume that the Average Accounts Receivable is equal to the current liabilities. Therefore:
DSO = (16.72 * $450,000 / $60,000) * 365
DSO = 124.32 * 365
DSO ≈ 45,315.48
Rounded to two decimal places, the firm's days sales outstanding is approximately 21.82. Therefore, the correct answer is option b.
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Compute ending inventory using FIFO BE6.3 (1.02) 1AP In its first month of operations, Weatherall Company made three purchases of mer and L/FO chandise in the following sequence: (1) 300 units at $6, (2) 400 units at $7, and (3) 200 units at \$8. Assuming there are 380 units on hand, compute the cost of the ending inventory under the (a) FIFO method and (b) L.1FO method, Weatherall uses a periodic inventory sysfem.
Using the FIFO method, the ending inventory cost would be 380 units * $8 = $3,040. Using the LIFO method, the ending inventory cost would be 380 units * $6 = $2,280.
In this scenario, Weatherall Company made three purchases of merchandise and needs to compute the cost of the ending inventory using the FIFO and LIFO methods.
The purchases were made in the following sequence: 300 units at $6, 400 units at $7, and 200 units at $8. There are 380 units on hand. Weatherall Company uses a periodic inventory system.
To compute the cost of the ending inventory using the FIFO method, we assume that the units purchased first are sold first. Therefore, the cost of the ending inventory will be calculated based on the most recent purchases.
In this case, the cost of the ending inventory under the FIFO method would be calculated using the cost of the most recent purchase, which is 200 units at $8, as there are 380 units on hand.
For the LIFO method, we assume that the units purchased last are sold first. Therefore, the cost of the ending inventory will be calculated based on the oldest purchases.
In this case, the cost of the ending inventory under the LIFO method would be calculated using the cost of the first purchase, which is 300 units at $6, as there are 380 units on hand.
To determine the exact dollar amount for the ending inventory, you would multiply the number of units on hand by the respective unit cost.
Using the FIFO method, the ending inventory cost would be 380 units * $8 = $3,040. Using the LIFO method, the ending inventory cost would be 380 units * $6 = $2,280.
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1. Implications of IS curve (20 points). Consider the following changes in the macroeconomy. Show how to think about them using the U.S. IS curve, and explain how and why U.S. GDP is affected in the short run. Hint: use the national income accounting identity.
(a) A temporary housing boom increases the construction of residential real estate.
(b) A booming economy in Europe leads to an unexpected increase in the demand by European consumers for U.S. goods.
(c) U.S. consumers develop an infatuation with all things made in the UK and increase their imports from that country.
(d) The government launches a large scale investment project to improve the bridges along the Mississippi.
(a) A temporary housing boom increases the construction of residential real estate: In the short run, a temporary housing boom would increase investment in the construction sector.
This increase in investment would result in higher demand for goods and services, including labor, which leads to an increase in GDP. The increased construction activity would shift the aggregate demand (AD) curve to the right, resulting in higher output and GDP.
From the perspective of the IS curve, an increase in investment would lead to an increase in aggregate demand. The IS curve represents the combinations of interest rates and output levels at which the goods market is in equilibrium. An increase in investment would increase the level of output demanded, causing a rightward shift of the IS curve.
(b) A booming economy in Europe leads to an unexpected increase in the demand by European consumers for U.S. goods:
If there is an unexpected increase in the demand for U.S. goods from European consumers due to a booming European economy, it would lead to an increase in U.S. exports. Higher exports result in an increase in net exports (X-M) and an increase in aggregate demand. The increase in aggregate demand would lead to an increase in output and GDP in the short run.
In terms of the IS curve, an increase in exports would increase aggregate demand and shift the IS curve to the right, reflecting the higher level of output demanded.
(c) U.S. consumers develop an infatuation with all things made in the UK and increase their imports from that country:
If U.S. consumers develop a strong preference for UK-made goods and increase their imports from the UK, it would lead to an increase in imports. Higher imports would result in an increase in the trade deficit (X-M) and a decrease in net exports. This decrease in net exports would lead to a decrease in aggregate demand, causing a decrease in output and GDP in the short run.
From the perspective of the IS curve, a decrease in net exports would reduce aggregate demand and shift the IS curve to the left, reflecting the lower level of output demanded.
(d) The government launches a large-scale investment project to improve the bridges along the Mississippi:
A large-scale government investment project would increase government spending and aggregate demand. The increase in government spending would lead to higher demand for goods and services, resulting in an increase in output and GDP in the short run.
In terms of the IS curve, an increase in government spending would increase aggregate demand and shift the IS curve to the right, reflecting the higher level of output demanded.
Overall, changes in the macroeconomy that affect aggregate demand, such as changes in investment, exports, imports, or government spending, have implications for the level of output and GDP in the short run. These changes are captured by shifts in the IS curve, which represents the equilibrium in the goods market.
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Barnaby wants to buy a car from a trustworthy German company and has €100,000 to do so. Barnaby likes having money, but hates destroying the environment. A car that causes 0% destruction of the environment costs €100,000 (leaving Barnaby with no money.) It is also possible to buy cheaper cars, but for every €1000 saved, the environment is destroyed by 2 percentage points. Draw a graph with increasing money on the vertical-axis and increasing environmental destruction on the horizontal-axis. (a) Represent Barnaby's budget set on this graph. [5 marks] (b) Barnaby's preferences are strictly concave. (i.e. the indifference curves are curvy.) Represent Barnaby's preferences in the money / environmental destruction graph. Draw three utility curves, indicating which is the highest
Barnaby's budget set, along with his preferences represented by the indifference curves, showcases the trade-off he faces between his desire for money and his concern for environmental destruction when choosing a car.
(a) Barnaby's budget set can be represented on the graph as a downward-sloping straight line starting from the point (€100,000, 0) on the vertical axis and intersecting the horizontal axis at (0, 50). This line represents all the combinations of money and environmental destruction that Barnaby can choose from within his budget constraint. As Barnaby spends more money on a car, the level of environmental destruction increases proportionally. Conversely, if he chooses a cheaper car, he can save money but at the expense of higher environmental destruction.
(b) Barnaby's preferences, being strictly concave, can be represented by curved indifference curves on the money/environmental destruction graph. These indifference curves show the combinations of money and environmental destruction that provide the same level of utility or satisfaction for Barnaby. Since Barnaby hates destroying the environment, his indifference curves will be downward-sloping and convex to the origin.
To illustrate Barnaby's preferences, three utility curves can be drawn on the graph. The highest utility curve would be the farthest from the origin, indicating the most preferred combination of money and environmental destruction for Barnaby. The other two utility curves would be drawn closer to the origin, representing lower levels of utility.
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Vandelay Industries processes and pays payroll semimonthly. The company processed their payroll for the second half of March 2022 using the data shown below. The pay period is for the dates 3/16/22 – 3/31/22, and the paychecks are dated Thursday, 3/31/22. • Gross payroll for salaries and wages is $375,000 • Federal income tax is withheld at a rate of 15% for all employees • State income tax is withheld at a rate of 3% for all employees • Social Security (OASDI) is taxed at 6.2% for EE and ER • Medicare is taxed at 1.45% for EE and ER • FUTA is taxed at 0.6% • SUI is taxed at 3.2% • No employees have reached the OASDI, FUTA, or SUI taxable wage limits for the year • 401(k) withholdings are $35,000 • Benefits (i.e., health, dental, vision, etc.) withholdings are $20,000 Prepare two journal entries: 1) The payroll journal entry to record the salaries and wages expense of the company and net pay to employees 2) The journal entry Vandelay should record for ER payroll tax expense
Vandelay Industries processes and pays payroll semimonthly. The company processed their payroll for the second half of March 2022 using the data shown below: Payroll Journal Entry: Date: 3/31/22
Debit: Salaries and Wages Expense - $375,000
Credit: Cash - Net Pay to Employees - $XXX (Amount after all withholdings and deductions)
Debit: Federal Income Tax Withholding - $56,250 (15% of $375,000)
Debit: State Income Tax Withholding - $11,250 (3% of $375,000)
Debit: Social Security (OASDI) Tax Payable - Employee Portion - $23,250 (6.2% of $375,000)
Debit: Medicare Tax Payable - Employee Portion - $5,437.50 (1.45% of $375,000)
Debit: 401(k) Withholdings - $35,000
Debit: Benefits Withholdings - $20,000
Credit: Cash - Gross Payroll - $XXX (Total gross payroll of $375,000)
Employer Payroll Tax Expense Journal Entry: Date: 3/31/22
Debit: Payroll Tax Expense - Employer's Portion of Social Security (OASDI) Tax - $23,250 (6.2% of $375,000)
Debit: Payroll Tax Expense - Employer's Portion of Medicare Tax - $5,437.50 (1.45% of $375,000)
Debit: FUTA Tax Payable - $2,250 (0.6% of $375,000)
Debit: SUI Tax Payable - $12,000 (3.2% of $375,000)
Credit: Social Security (OASDI) Tax Payable - Employer Portion - $23,250
Credit: Medicare Tax Payable - Employer Portion - $5,437.50
Credit: FUTA Tax Expense - $2,250
Credit: SUI Tax Expense - $12,000
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what role does "The
Strategic Sourcing Process," and what role does it play in Supply Management?
The Strategic Sourcing Process is a systematic and structured approach to procurement and supply chain management.
It involves the identification, evaluation, and selection of suppliers to meet the organization's needs effectively and efficiently. The process aims to optimize the acquisition of goods and services while considering factors such as cost, quality, reliability, and risk.
In the field of Supply Management, the Strategic Sourcing Process plays a critical role. Here are some key aspects:
1. Supplier Selection: The process helps in identifying and evaluating potential suppliers based on various criteria such as their capabilities, financial stability, reputation, quality standards, and capacity to meet the organization's requirements.
It involves assessing multiple suppliers and choosing the most suitable ones.
2. Negotiation and Contracting: Strategic sourcing involves negotiating favorable terms and conditions with selected suppliers, including pricing, delivery schedules, payment terms, and other contractual obligations.
This helps in establishing mutually beneficial agreements and mitigating risks associated with the supply of goods and services.
3. Cost Reduction and Value Enhancement: The process focuses on driving cost efficiencies and optimizing the total cost of ownership.
By leveraging economies of scale, consolidating purchases, exploring alternative sourcing options, and implementing competitive bidding processes, organizations can achieve cost savings. Strategic sourcing also emphasizes value creation by considering factors beyond price, such as quality, innovation, and sustainability.
4. Risk Management: The process helps in identifying and managing risks associated with the supply chain. This includes assessing the financial stability of suppliers, evaluating their ability to handle disruptions, diversifying the supplier base to reduce dependence, and implementing contingency plans to ensure continuity of supply.
5. Supplier Relationship Management: Strategic sourcing establishes a framework for building and maintaining strategic relationships with suppliers.
Collaboration, communication, and continuous improvement are fostered through regular performance monitoring, feedback mechanisms, and supplier development initiatives. Strong supplier relationships contribute to long-term value creation and competitiveness.
Overall, the Strategic Sourcing Process in Supply Management plays a crucial role in ensuring the right suppliers are selected, negotiated with, and managed effectively to optimize costs, mitigate risks, and drive value for the organization.
It helps in aligning procurement strategies with organizational goals and improving overall supply chain performance.
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You work for an exporter in Ontario who has been selling goods to a very large US company for over 5 years and has always been paid by letters of credit. Your company President has said that he is very comfortable with this US client and has asked your advice on how the company might better serve this customer. Describe the advice you would give the President and justify your response.
1. Strengthen the Relationship: Despite the long-standing business relationship, it's important to continuously foster a strong connection with the US client. Regular communication, both formal and informal, can help maintain a positive rapport. Consider organizing periodic meetings or conference calls to discuss business updates, challenges, and opportunities. Building a personal relationship with key stakeholders within the client's organization can also be beneficial.
2. Understand Their Needs: Take the time to deeply understand your US client's requirements, preferences, and pain points. By gaining insights into their business operations, you can align your products and services to better cater to their specific needs. This could involve customizing your offerings, adjusting production or delivery schedules, or providing additional value-added services that differentiate your company from competitors.
3. Streamline Documentation Process: Since your company has been receiving payments through letters of credit, it's essential to ensure a smooth and efficient documentation process. Review your internal procedures to minimize errors or delays in preparing the required paperwork. Consider leveraging technology solutions, such as document management systems or electronic signature platforms, to automate and streamline the process, reducing the administrative burden for both parties.
4. Offer Competitive Pricing and Terms: Conduct a thorough analysis of the market and your competition to ensure that your pricing and terms remain competitive. Consider providing discounts or incentives for long-term contracts or larger volumes to encourage continued business with the US client. Additionally, explore options for flexible payment terms or financing arrangements, which can enhance your client's cash flow and strengthen your relationship.
5. Enhance Customer Support: Provide excellent customer support to your US client at all stages of the sales process. Promptly respond to inquiries, address concerns, and provide timely updates on order status and shipping details. Additionally, consider implementing a dedicated account management team to serve as a single point of contact for the client, offering personalized assistance and ensuring their satisfaction.
6. Continuously Improve Quality and Reliability: Maintain a strong focus on product quality and reliability. Regularly assess your manufacturing processes, quality control measures, and supply chain to identify areas for improvement. By consistently delivering high-quality goods that meet or exceed expectations, you can strengthen your client's trust and confidence in your company's offerings.
7. Explore New Opportunities: While it's important to nurture the existing relationship, don't limit your efforts to just one client. Encourage your sales and marketing team to explore new opportunities within the US market and identify potential customers who may benefit from your products or services. Diversifying your client base can help reduce dependence on a single customer and mitigate potential risks.
It's crucial to note that the specific advice and strategies would depend on the unique dynamics of your business and the preferences of your US client. Therefore, it's recommended to conduct a thorough analysis, engage in open discussions with your client, and tailor your approach accordingly.
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The following group of costs are most likely have payment terms of 30−60 days:
a Contract Negotiations, Packing, Export Commissions
b Labelling, Packing, Export Commissions
c Business Development, Manufacturing, Customs and Clearance
d Forwarding Agent's Fees, Export Commissions, Shipping and Storage
e Labelling, Packing, Shipping and Storage
The group of costs that are most likely to have payment terms of 30-60 days are (D) Forwarding Agent's Fees, Export Commissions, Shipping, and Storage.
Payment terms refer to the terms and conditions that a buyer and a seller agree to accept when conducting a financial transaction.
These conditions can differ depending on the nature of the goods or services being purchased, the payment method used, and other factors that could influence the transaction's outcome.
These terms usually specify when and how payment will be made, as well as the consequences if the buyer fails to pay on time.
Common payment terms include cash on delivery (COD), net 30 (full payment due within 30 days), and payment in advance.
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Firms typically provide employees with a list of all possible
forms of unethical behavior. True/ false??
False, firms typically provide employees with ethical guidelines and codes of conduct rather than a list of all possible forms of unethical behavior.
False. Firms typically provide employees with a list of ethical guidelines and codes of conduct rather than a list of all possible forms of unethical behavior. Here's a step-by-step explanation:
1. Firms prioritize promoting ethical behavior: Companies recognize the importance of maintaining ethical standards in their operations to foster a positive work environment, build trust with stakeholders, and mitigate legal and reputational risks.
2. Establishing ethical guidelines: Firms develop codes of conduct and ethical guidelines that outline the expected behavior and values for employees. These guidelines often cover areas such as honesty, integrity, respect, confidentiality, conflict of interest, and compliance with laws and regulations.
3. Focusing on positive behavior: The emphasis is typically on providing employees with a clear understanding of what constitutes ethical behavior rather than presenting an exhaustive list of unethical behaviors. The goal is to create a culture that promotes ethical decision-making and encourages employees to act in line with the company's values.
4. Promoting ethical awareness: Companies may offer training programs, workshops, and resources to enhance employees' understanding of ethical issues they may encounter in the workplace. These initiatives aim to raise awareness, facilitate discussions, and provide guidance on how to address ethical dilemmas.
5. Reporting unethical behavior: Companies often establish mechanisms for employees to report any observed or suspected unethical behavior. Whistleblower hotlines, anonymous reporting channels, or designated ethics officers are examples of such channels that allow employees to report concerns confidentially.
In summary, while firms provide employees with guidelines and codes of conduct that promote ethical behavior, they typically do not present an exhaustive list of all possible forms of unethical behavior. The focus is on establishing positive ethical standards and providing employees with the tools to navigate ethical challenges in the workplace.
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Shamrock Corp. owes Pharoah Corp. a $ 119,700, 10-year, 10% note issued at par plus $ 11,970 of accrued interest. The note is due today, December 31, 2020. Because Shamrock Corp. is in financial trouble, Pharoah Corp. agrees to forgive the accrued interest and $ 10,840 of the principal, and to extend the maturity date to December 31, 2023. Interest at 10% of the revised principal will continue to be due on December 31 of each year. Assume the market rate of interest is 10% at the date of refinancing. Shamrock and Pharoah prepare financial statements in accordance with IFRS.
A.) Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, determine if this is a settlement or a modification. (Hint: Refer to Chapter 3 for tips on calculating.)
B.) Prepare a schedule of the debt reduction and interest expense for the years 2020 through 2023. (Do not leave any answer field blank. Enter 0 for amounts.)
C.) Calculate the gain or loss for Pharoah Corp. and prepare a schedule of the receivable reduction and interest income for the years 2020 through 2023. (Round answers to 0 decimal places, e.g. 5,275. Do not leave any answer field blank. Enter 0 for amounts.)
D.) Prepare all the necessary journal entries on the books of Shamrock Corp. for the years 2020, 2021, and 2022. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
E.) Prepare all the necessary journal entries on the books of Pharoah Corp. for the years 2020, 2021, and 2022. Assume that Pharoah had not previously recognized any impairment. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
To determine if this is a settlement or a modification, calculations using factor tables, financial calculator, or Excel function PV should be employed."
In order to determine whether the agreement between Shamrock Corp. and Pharoah Corp. constitutes a settlement or a modification, calculations need to be performed using factor tables, a financial calculator, or Excel function PV. These calculations will help analyze the financial impact of forgiving accrued interest and reducing the principal, as well as extending the maturity date.
By comparing the revised terms with the original terms of the note, the nature of the agreement can be determined. It is important to consider the market rate of interest and follow the guidelines of IFRS in preparing the financial statements. Based on the calculations, a conclusion can be drawn regarding the appropriate classification of the transaction as a settlement or a modification.
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Wildhorse Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost $128,000 and have an estimated useful life of 5 years. The park will sell it for $68,700 at that time. (Amusement parks need to rotate rides to keep people interested.) The ride will be expected to increase net annual cash flows by $22,300. The company's borrowing rate is 8%. Its cost of capital is 10%. Click here to view the factor table. Calculate the net present value of this project to the company. (If the net present value is negative, use either a negutive sign preceding the number es. −45 or parentheses es. (45). For calculation pumpses, use 5 decimal places as displayed in the factor table provided, es. 1.25124. Round present value answer to 0 decimal places, e. 125J
The net present value (NPV) of the capital investment in the new ride for Wildhorse Corporation is approximately -$114,144.52.
To calculate the NPV, we need to discount the expected cash flows using the company's cost of capital. The formula for NPV is as follows:
NPV = PV of Cash Inflows - Initial Investment
The PV of Cash Inflows can be calculated by discounting the net annual cash flows using the cost of capital. In this case, the net annual cash flow is $22,300, and the cost of capital is 10%.
Using the factor table provided, the present value factor for 5 years at a discount rate of 10% is 0.62092.
PV of Cash Inflows = Net Annual Cash Flow * Present Value Factor
= $22,300 * 0.62092
≈ $13,855.48
Now, we can calculate the NPV:
NPV = PV of Cash Inflows - Initial Investment
= $13,855.48 - $128,000
≈ -$114,144.52
Since the NPV is negative, we conclude that the investment in the new ride would not be financially viable for Wildhorse Corporation.
Therefore, The net present value (NPV) of the capital investment in the new ride for Wildhorse Corporation is approximately -$114,144.52.
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12. The SloMo Co. has a return on equity of 8% and pays out 25% of earnings in dividends. The expected growth in dividends is: A) 2% B) 6% C) 8% D) 75% E) Insufficient Information
The expected growth in dividends for The SloMo Co. is 6% (Option B).
To calculate the expected growth in dividends for The SloMo Co., we can use the sustainable growth rate (SGR) formula, which incorporates the return on equity (ROE) and the dividend payout ratio.
The sustainable growth rate formula is:
SGR = ROE * (1 - Payout Ratio)
Given that The SloMo Co. has an ROE of 8% and pays out 25% of earnings in dividends, we can substitute these values into the formula:
SGR = 8% * (1 - 25%)
SGR = 8% * (1 - 0.25)
SGR = 8% * 0.75
SGR = 6%
Therefore, the expected growth in dividends for The SloMo Co. is 6% (Option B).
The sustainable growth rate represents the rate at which a company can grow its earnings and dividends while maintaining its current financial policies. In this case, The SloMo Co. is retaining 75% of its earnings to reinvest in the business (1 - 0.25), resulting in a growth rate of 6%.
Option B
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List of an entity's assets, liabilities and owners' equity as of a specific date. Also called the statement of financial position.
The list of an entity's assets, liabilities, and owners' equity as of a specific date is referred balance sheet. The balance sheet provides a statement.
snapshot of the financial position of a company at a given moment, typically the end of an accounting period. It presents a summary of what the entity owns (assets), what it owes (liabilities), and the residual interest of the owners (owners' equity). The balance sheet is a fundamental financial statement that helps stakeholders, such as investors, creditors, and management, assess the entity's financial health and evaluate its ability to meet its obligations, the level of its assets, and the equity or ownership value. It serves as an essential tool for financial analysis, decision-making, and providing transparency regarding an entity's financial position.
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