The sustainable growth rate for Kaleb's Kickboxing is 4.656%. According to PIMS, an important lever of business success is growth. Among 37 variables, growth is mentioned as one of the most important variables for success: market share, market growth, marketing expense to sales ratio or a strong market position.
To calculate the sustainable growth rate (SGR), we can use the following formula:
SGR = Profit Margin × Capital Intensity Ratio × Retention Ratio
First, let's calculate the retention ratio:
Retention Ratio = (Net Income - Dividends) / Net Income
Substituting the given values:
Retention Ratio = ($79,856 - $18,094) / $79,856 = $61,762 / $79,856 = 0.774
Next, we can calculate the SGR:
SGR = Profit Margin × Capital Intensity Ratio × Retention Ratio
Given:
Profit Margin = 6% (0.06)
Capital Intensity Ratio = 0.8
Retention Ratio = 0.774
SGR = 0.06 × 0.8 × 0.774 = 0.04656
To convert to a percentage, we multiply by 100:
SGR = 0.04656 × 100 = 4.656%
Therefore, the sustainable growth rate for Kaleb's Kickboxing is 4.656%.
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Convexity is the difference between a actual price change and duration-predicted price change b actual price change and market average price change c actual price change and government bond price change d actual price change and yield to maturity change
Convexity is the difference between the actual price change of a bond and the price change predicted by duration alone, making option "a) actual price change and duration-predicted price change" the correct choice. The correct option is a.
Convexity refers to the difference between the actual price change of a financial instrument and the predicted price change based on its duration. It is not related to market average price change, government bond price change, or yield to maturity change.
Duration measures the sensitivity of a bond's price to changes in interest rates. It provides an estimate of the percentage change in the bond's price for a given change in interest rates. However, duration is a linear approximation and assumes that the relationship between price and yield is linear.
Convexity, on the other hand, accounts for the non-linear relationship between price and yield. It captures the curvature of the price-yield relationship, especially for bonds with embedded options or non-linear cash flows. Convexity provides a more accurate estimate of the bond's price change when there are significant interest rate fluctuations.
Therefore, convexity is the difference between the actual price change of a bond and the price change predicted by duration alone, making option "a) actual price change and duration-predicted price change" the correct choice. Hence, the correct option is a.
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Following the heightened geopolitical tension and economic instability globally, the Department of Trade and Industry has requested the Ministry of Finance to help educate businesses in the country with international trade exposure. Explain briefly what could be the potential risk specifically in trading, apart from currency risk in the current scenarios and why:
Potential risks in international trade, apart from currency risk, may include political instability, trade barriers (tariffs, quotas), changing regulations, supply chain disruptions, intellectual property theft, and geopolitical conflicts.
In the current scenarios of heightened geopolitical tension and economic instability, these risks become even more significant. Political instability can lead to abrupt policy changes or trade disputes, impacting business operations and market access. Trade barriers, such as tariffs or quotas imposed by countries, can increase the cost of imports and exports, affecting competitiveness and profitability.
Changing regulations can create uncertainty and additional compliance costs for businesses operating internationally. Supply chain disruptions, like the ones witnessed during the COVID-19 pandemic, can disrupt production and distribution, leading to delays and increased costs.
Intellectual property theft is a persistent concern in international trade, with businesses facing risks of counterfeiting, piracy, or unauthorized use of their intellectual assets. Geopolitical conflicts can escalate tensions between countries, potentially resulting in trade sanctions or restrictions that hinder market access and disrupt supply chains.
Overall, these risks highlight the importance of proactive risk management, diversification of markets and suppliers, staying updated on regulatory changes, and engaging in thorough due diligence while conducting international trade.
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Kristina and Mallory decide to form a partnership. Kristina has $56,000 in her Capital account and nothing in her Drawings account. Mallory has $15,000 of cash to invest in the partnership. As they are going to deliver the pet treats to the pet stores, Mallory is also investing a truck into the partnership. The fair value of the truck is $23,000 and the partnership is going to take over the $11,000 bank loan that Mallory still has on the van. Kristina and Mallory agree that Mallory will receive 40% ownership of the company. The partnership will start January 1, 2024 and will have a December 31 year-end. Kristina has asked you to record the journal entry to form the partnership.
Kristina and Mallory are forming a partnership, and according to the agreement, the partnership will start on January 1, 2024. The partnership's year-end will be December 31.
Kristina will have $56,000 in her Capital account, and Mallory will contribute $15,000 in cash and a truck worth $23,000, as well as a $11,000 bank loan. Mallory will get a 40% ownership interest in the partnership. Mallory's investment in the partnership will be recorded as cash of $15,000 and a truck with a fair value of $23,000, for a total of $38,000, in the following journal entry.
The Journal Entry for forming the partnership: Cash $15,000.00 Truck $23,000.00 Notes Payable $11,000.00 Kristina, Capital $56,000.00 Mallory, Capital $19,000.00[Being the investment by Mallory in the Partnership]Total = $84,000.00 Thus, the above journal entry records the formation of the partnership between Kristina and Mallory.
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Consider a simple two-period economy. In the second period there are two possible contingencies/states of nature denoted by s=1,2. Financial markets are complete and the matrix of asset returns is given by (columns refer to assets, rows to states of nature): [
3
1
2
1
]. (a) Find the portfolios attaining returns (1,0) and (0,1). (b) If the price of asset 1 and 2 are 4 and 3 respectively, find the prices of the portfolios delivering returns (1,0) and (0,1). (c) Find the risk neutral probabilities of state 1 and 2 for the above economy
To find the portfolios attaining returns (1,0) and (0,1), we need to solve the system of equations where the portfolio weights multiplied by the asset returns equal the desired returns. The risk-neutral probabilities of state 1 and 2 are 0.83 and 0.17, respectively.
Let x and y represent the portfolio weights for asset 1 and asset 2, respectively.
For the portfolio attaining return (1,0):
3x + 1y = 1
x + y = 0
Solving this system of equations, we find that x = -1/2 and y = 1/2.
For the portfolio attaining return (0,1):
3x + 1y = 0
x + y = 1
Solving this system of equations, we find that x = 1/2 and y = -1/2.
To find the prices of the portfolios delivering returns (1,0) and (0,1), we multiply the portfolio weights by the prices of the assets.
For the portfolio delivering return (1,0):
Price = 4(-1/2) + 3(1/2) = 2.5
For the portfolio delivering return (0,1):
Price = 4(1/2) + 3(-1/2) = 0.5
The risk-neutral probabilities of state 1 and 2 can be found by dividing the price of the corresponding portfolio by the sum of the prices of both portfolios.
For state 1:
Prob(state 1) = Price of portfolio delivering return (1,0) / (Price of portfolio delivering return (1,0) + Price of portfolio delivering return (0,1))
= 2.5 / (2.5 + 0.5)
= 2.5 / 3
= 0.83
For state 2:
Prob(state 2) = Price of portfolio delivering return (0,1) / (Price of portfolio delivering return (1,0) + Price of portfolio delivering return (0,1))
= 0.5 / (2.5 + 0.5)
= 0.5 / 3
= 0.17
Therefore, the risk-neutral probabilities of state 1 and 2 are 0.83 and 0.17, respectively.
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Case 1: Why are US Exports so Competitive? When The rise of China as the leading exporter has been widely reported, one cannot ignore the incumbent leading importer and former leading exporter of the world - the United States. In 2015, the United States exported $1.51 trillion in goods. Of China's $2.28 trillion exports in goods, only about two-thirds of the value added was contributed by China (the rest were imported components assembled in China). The United States contributed approximately 90% of the value added of its exports. Do your math: The value added of US exports ($1.36 trillion) was very close to the value added of Chinese exports ($1.52 trillion). To make a long story short, first, US exports have to deliver value. Consider civilian aircraft. One crucial reason that the new Boeing 787 Dreamliner became the hottest-selling airliner prior to its launch is its ability to reduce fuel consumption by 15%-music to the ears of airline executives. Second, US exports also have to be rare and hard to imitate. There is no shortage of global rivals tearing apart US products and trying to reverse engineer them. European, Russian, and Chinese aerospace firms are doing this at this moment by trying to out-Boeing Boeing. While Airbus has been quite successful, neither Russian nor Chinese civilian aircraft makers have much presence in export markets. In service exports, the United States is even more competitive-it is the world champion. It is hard enough to design and manufacture world-class aircraft, but it is no less challenging to operate service, training, and maintenance networks for airlines that cannot afford any equipment breakdown for a long period-on a worldwide basis and for 20 to 30 years after the initial sale. While the products themselves have to be competitive, Uncle Sam also helps. At least ten federal agencies offer export assistance: Departments of Commerce, State, Treasury, Energy, and Agriculture as well as the Office of US Trade Representative (USTR), Export-Import Bank (Ex-Im Bank), US Agency for International Development (USAID), Overseas Private Investment Corporation (OPIC), and Small Business Administration (SBA). Since only approximately 1% of all US firms export and 58% of them export to just one country, clearly more assistance will be helpful to facilitate more firms to join the export game. Going beyond routine export assistance, new initiatives focus on negotiating free trade agreements (FTAS). As of this writing, the United States has 12 FTAs in force with 18 countries: Australia, Bahrain, Chile, DRCAFTA (Dominican Republic-Central America FTA, which covers Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua), Israel, Jordan, Morocco, NAFTA (which covers Canada and Mexico), Oman, Peru, Singapore, and South Korea. In addition, two FTAs with Panama and Colombia were negotiated, but they are still pending Congressional approval. FTAs typically reduce trade barriers to US exports and create a more stable and transparent trading environment. In this regard, the Trump administration's actions to withdraw from the Trans-Pacific Partnership (TPP), a massive FTA negotiated among 12 member countries over seven years, and to renegotiate NAFTA are likely to be counterproductive. In addition to formal institutions, informal norms and values also play a role behind US exports. While some gurus write about the decline of US influence, the informal norms of consuming and appreciating US products seem to proliferate overseas. Around the world, it is cool to consume made-in-USA products. In Paris metro (underground) stations, almost every other poster seems to be about a Hollywood blockbuster. In Accra, the middle class flock into Ghana's first KFC and lick their fingers greased by grown-in-USA chicken. In Beijing, the Chinese president takes off and lands in a "Chinese Air Force One," which is a Boeing 747. If you are studying this book outside the United States, then you are a US export customer too. Question 2 (10 marks) From an institution-based view, elaborate on the factors in both formal and informal institutions that helps US to be a top exporter. Use evidence from the above article to support your answers. For evidence not found above, you may provide specific examples based on known products/services or state your assumptions. State ONE(1) example each for formal and informal institutions respectively to support your answers.
The United States' position as a top exporter is facilitated by formal institutions such as export assistance programs and free trade agreements, as well as informal institutions that promote the consumption and appreciation of U.S. products globally.
Formal institutions, such as export assistance programs and free trade agreements, contribute to the United States' success as a top exporter. The article mentions that at least ten federal agencies offer export assistance, providing support to U.S. firms. Additionally, the United States has 12 free trade agreements in force with 18 countries, which reduce trade barriers and create a more favorable trading environment for U.S. exports. These formal institutions help to facilitate and promote international trade for U.S. businesses.
Informal institutions, such as consumer preferences and cultural norms, also play a role in the success of U.S. exports. The article mentions the proliferation of consuming and appreciating U.S. products overseas, indicating a positive perception and desirability of made-in-USA products. Specific examples mentioned include the popularity of Hollywood blockbusters in Paris metro stations and the success of U.S. fast-food chains like KFC in countries like Ghana. These examples highlight the influence of informal institutions in driving demand for U.S. exports.
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The United States is a top exporter due to factors in both formal and informal institutions. Examples include the existence of free trade agreements (FTAs) and the positive reputation of US products overseas.
Explanation:From a institution-based view, there are several factors, both formal and informal, that contribute to the United States being a top exporter.
One example of a formal institution is the existence of free trade agreements (FTAs) which reduce trade barriers and create a more stable and transparent trading environment. The United States currently has 12 FTAs in force with 18 countries. These FTAs have helped to increase US exports to these countries.
An example of an informal institution is the positive perception and reputation of US products overseas. The article mentions that consuming and appreciating US products is considered cool around the world. This positive perception helps to drive demand for US exports.
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& Moving to another question will save this response Question 13 of 24 Question 13 1 points Which of the following provides an answer to questions: what is our business? Who are our customers? What do
The amount that your investment will be worth after the last payment is made is $5,639. Option A is correct.
To calculate the amount that your investment will be worth after the last payment is made, you can use the formula for the future value of an annuity.
The formula for future value of an annuity will be;
FV = P × [[tex](1+r)^{n-1}[/tex]] / r
Where;
FV = Future value
P = Payment amount per period
r = Interest rate per period
n = Number of periods
In this case, the payment amount per period is $570, the interest rate per period is 6% (0.06), and the number of periods is 8.
Plugging in the values into the formula:
FV = $570 × [(1 + 0.06)⁸⁻¹] / 0.06
Calculating this expression will give us the amount that your investment will be worth after the last payment is made.
FV = $570 × [1.593848 - 1] / 0.06
FV = $570 × 0.593848 / 0.06
FV ≈ $5639.87
Therefore, the amount that your investment will be worth after the last payment is made is $5,639.
Hence, A. is the correct option.
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--The given question is incorrect, the correct question is
"A Moving to another question will save this response. Question 13 of 25 1 points Save Answer Suppose you plan to invest $570 in a mutual fund at the end of each of the next eight years. If your opportunity cost is 6 percent compounded annually, the amount that your investment will be worth after the last payment is made is closest to: A) $5,639 B) 55,868 C) $4,560."--
Upper Gullies Corp. Just paid a dividend of $1.25 per share. The dividends are expected to grow at 28% for the next eight years and then level off to a 6% growth rate indefinitely. If the required return is 13%, what is the price of the stock today? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Stock price $ 5.68
To calculate the price of the stock today, we can use the dividend discount model (DDM). The DDM values a stock by discounting its future dividends back to the present. In this case, the dividends are expected to grow at 28% for the first eight years and then stabilize at a 6% growth rate indefinitely. With a required return of 13%, the calculated price of the stock today is $5.68.
The DDM formula for the price of a stock is P = D₁ / (r - g),
where
P is the price, D₁ is the dividend in the first year, r is the required return, and g is the growth rate of dividends.Given that the dividend in the first year is $1.25, the required return is 13%, and the dividend is expected to grow at 28% for the first eight years and 6% thereafter, we can calculate the price of the stock:
P = $1.25 / (0.13 - 0.28) * (1 - (1 + 0.06)⁸) / (0.13 - 0.06) = $5.68.
Therefore, the price of the stock today, according to the dividend discount model, is $5.68. This price reflects the expected future dividends and the required return, taking into account the growth rate of the dividends.
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On April 13 the Barclays signed an agreement to purchase certain property owned by the Taylors for the sum of $15,500. The purchase and sale agreement did not specify a form of payment except that the purchasers were to pay a deposit of $500 in cash and the balance on closing. The date of closing was set out in the agreement as July 1. The agreement also contained the following provision:
This sale is conditional for a period of 15 days from the date of acceptance upon the Purchaser being able to obtain a first mortgage in the amount of ten thousand dollars ($10,000); otherwise, this agreement shall be null and void and all deposit monies shall be returned to the Purchaser without interest or penalty. This Sale is also conditional for a period of 15 days from the date of acceptance upon the Purchaser being able to secure a second mortgage in the amount of $2,500 for a period of five (5) years; otherwise, this agreement shall be null and void and all deposit monies shall be returned to the Purchaser without interest or penalty.
The Barclays were able to arrange for a first mortgage of $12,000 and on April 28 a notice in the following form was delivered to the Taylors:
This is to notify you that the condition specified in the agreement of purchase and sale between the Vendors and Purchasers has been met. The transaction will therefore close as per the agreement.
On July 1 the Barclays presented a certified cheque to the Taylors in the amount of $15,000. The Taylors, however, refused to deliver the deed to the Barclays on the grounds that the condition in the purchase and sale agreement had not been complied with. The Barclays then instituted legal action against the Taylors
The Barclays entered into a purchase and sale agreement with the Taylors to purchase certain property for $15,500. The agreement included conditions that the Barclays must obtain a first mortgage of $10,000 and a second mortgage of $2,500 within 15 days.
The Barclays and the Taylors entered into a purchase and sale agreement for the property. The agreement stated that the sale was conditional upon the Barclays being able to obtain a first mortgage of $10,000 and a second mortgage of $2,500 within 15 days.
The Barclays managed to secure a first mortgage of $12,000 and provided a notice to the Taylors confirming the fulfillment of the condition within the specified timeframe.
However, when the closing date arrived on July 1, the Taylors refused to deliver the deed to the Barclays, claiming that the condition in the agreement had not been complied with.
This disagreement led the Barclays to initiate legal action against the Taylors, likely seeking enforcement of the purchase and sale agreement and the transfer of the property's deed.
The outcome of the legal action will depend on the specific terms and conditions outlined in the purchase and sale agreement, as well as any applicable laws and regulations.
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You are the CFO of a drug company, and you must decide whether to invest 15M dollars in R&D for a new drug. If you conduct the R&D, you believe that there is a 4% chance that the research will produce a useful drug. If the research is successful, investment in the drug will require an outlay of 400 million dollars. The drug will likely generate annual profits of 100 million for 10 years, until the patent expires. After that, it will generate a cash flow equal to 10 million a year in perpetuity (no growth) . The discount rate is 7%.
a) If the research is successful, what is the net present value of the drug cash flows ?
b) If you invest in R&D, you estimate that it will take 2 years to know whether the drug is successful or not. What is the NPV of the R&D investment?
a) The net present value of the drug cash flows, if the research is successful, is the sum of the present values: $563.98 million + $142.86 million = $706.84 million.
b) The NPV of the R&D investment, taking into account the probability of success, is $13.87 million.
a) To calculate the net present value (NPV) of the drug cash flows, we need to discount the future cash flows to their present value.
If the research is successful, the drug will generate annual profits of $100 million for 10 years, followed by $10 million per year in perpetuity. Using the perpetuity formula, the present value of the perpetual cash flow is $10 million / 0.07 (discount rate) = $142.86 million.
For the cash flows generated over the 10-year period, we can calculate the present value using the formula for the present value of an ordinary annuity. The present value of the annuity is $100 million * (1 - (1 + 0.07)^-10) / 0.07 = $563.98 million.
Therefore, the net present value of the drug cash flows, if the research is successful, is the sum of the present values: $563.98 million + $142.86 million = $706.84 million.
b) If you invest in R&D, you will incur a cost of $15 million upfront and will have to wait for 2 years to determine if the drug is successful or not. At that point, you will need to make a decision about investing the additional $400 million for the drug.
To calculate the NPV of the R&D investment, we need to consider the potential outcomes. There is a 4% chance of success and a 96% chance of failure. If the research is successful, the NPV is the net present value of the drug cash flows calculated in part (a), which is $706.84 million.
If the research fails, the NPV of the R&D investment is simply the negative value of the initial investment, which is -$15 million.
Now, we can calculate the overall NPV of the R&D investment by weighting the potential outcomes by their respective probabilities:
NPV = (0.04 * $706.84 million) + (0.96 * -$15 million) = $28.27 million - $14.4 million = $13.87 million.
Therefore, the NPV of the R&D investment, taking into account the probability of success, is $13.87 million.
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What types of financing do small entrepreneurs
typically use? What are some of the pros and cons of each?
Small entrepreneurs typically use a variety of financing options to fund their businesses. Some common types of financing available to small entrepreneurs include:
1. Personal Savings:
Pros:
- Easy access: Entrepreneurs can use their own savings to fund their business without going through complex application processes.
- Control: Entrepreneurs maintain full control over their business decisions and do not have to answer to external investors.
Cons:
- Limited funds: The amount of money available is dependent on the entrepreneur's personal savings, which may not be sufficient to cover all business expenses.
- Personal risk: Using personal savings means risking one's own money, and if the business fails, the entrepreneur may suffer financial losses.
2. Friends and Family:
Pros:
- Trust and flexibility: Friends and family members may be more willing to invest in the entrepreneur's business and offer flexible repayment terms.
- Potential lower interest rates: Friends and family may provide loans or investments with lower interest rates compared to traditional lenders.
Cons:
- Strained relationships: Mixing personal relationships with business can sometimes lead to conflicts or strained relationships, especially if the business encounters difficulties.
- Limited funding: The pool of funds from friends and family may be limited, making it insufficient for substantial business growth.
3. Bank Loans:
Pros:
- Established process: Banks have well-defined loan application processes, making it easier for entrepreneurs to understand and navigate.
- Potential lower interest rates: Depending on the entrepreneur's creditworthiness, bank loans may offer lower interest rates compared to other forms of financing.
Cons:
- Stringent requirements: Banks typically require collateral, a good credit score, and a detailed business plan, which can be challenging for small entrepreneurs to meet.
- Lengthy approval process: Obtaining a bank loan may involve lengthy approval periods, which can delay the entrepreneur's access to funds.
4. Microloans:
Pros:
- Small loan amounts: Microloans are designed for small businesses and entrepreneurs who need smaller amounts of capital.
- Flexible eligibility criteria: Microloan providers may have less stringent requirements compared to traditional banks, making it more accessible to small entrepreneurs.
Cons:
- Higher interest rates: Microloans often come with higher interest rates due to the perceived higher risk associated with lending to small businesses.
- Limited funding: The maximum loan amount available through microloans may not be sufficient for larger business ventures.
5. Crowdfunding:
Pros:
- Access to a broad audience: Crowdfunding platforms allow entrepreneurs to reach a large number of potential investors and customers.
- Validation and marketing: A successful crowdfunding campaign can validate the business idea and generate early marketing buzz.
Cons:
- Time-consuming: Running a crowdfunding campaign requires significant time and effort to create compelling campaigns and engage with backers.
- Uncertain outcomes: Crowdfunding success is not guaranteed, and if the funding goal is not reached, the entrepreneur may receive no funds at all.
6. Angel Investors:
Pros:
- Capital infusion: Angel investors provide funding to early-stage businesses in exchange for equity or convertible debt.
- Expertise and connections: Angel investors often bring valuable industry experience, knowledge, and networks to help the entrepreneur grow the business.
Cons:
- Equity dilution: Accepting angel investment means giving up a portion of the business ownership and decision-making control.
- High expectations: Angel investors typically expect a high return on investment and may impose certain growth targets and milestones on the entrepreneur.
It's important for entrepreneurs to carefully consider the pros and cons of each financing option and assess which one aligns best with their specific needs and goals. Additionally, seeking professional advice from financial advisors or mentors can provide valuable insights for making informed financing decisions.
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Holding all other factors constant, fully explain how changing the
'Time to maturity' affects: (i) The price of a European call option
and (ii) The price of a European put option.
Increasing the time to maturity generally increases the price of a European call option and a European put option.
(i) The price of a European call option is influenced by various factors, one of which is the time to maturity. Increasing the time to maturity generally increases the price of a call option. This is because a longer time period provides more opportunities for the underlying asset's price to increase and potentially surpass the strike price, resulting in a higher probability of the option being profitable. With more time available, the option holder has greater flexibility and potential for capturing price movements. As a result, the option premium increases to reflect the extended time value and increased probability of the option being in-the-money.
(ii) Similar to a call option, the price of a European put option is also affected by the time to maturity. However, in this case, increasing the time to maturity generally increases the price of a put option. With a longer time period, there is a higher likelihood that the underlying asset's price may decrease and fall below the strike price. This increased potential for the option to be profitable results in a higher premium for the put option. As more time is available for the underlying asset's price to decline, the option holder gains additional protection and the put option becomes more valuable.
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One year ago, your portfolio consisted of:
200 shares of Wesfarmers (WES) at $40.4 per share
300 shares of J&B HiFi (JBH) at $45 per share
100 shares of Apple (AAPL) at $200 per share.
Over the year, WES had a return of 10%, JBH had a return of 5%, and AAPL had
a return of -10%. Given this information, what is the weight of WES in your
current portfolio?
The weight of WES in the current portfolio is 21.37%. This can be calculated directly by multiplying the number of WES shares by the current price of WES, and then dividing by the total value of the portfolio.
The current value of the WES shares is 200 * 40.4 * 1.1 = $9280.
The current value of the JBH shares is 300 * 45 * 1.05 = $13500.
The current value of the AAPL shares is 100 * 200 * 0.9 = $18000.
The total value of the portfolio is $30780.
Therefore, the weight of WES in the portfolio is 9280 / 30780 = 0.21375661375661376.
The weight of WES in the portfolio has increased from 18.4% one year ago, because WES has outperformed the other two stocks.
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Based on the information provided, assess and document your opinion about the realism of the EAC for the A-12 program. To help you with the assessment, answer the following questions: What percent complete is the project? [36.9%] • What percent was scheduled to be complete? [51.4%] What percent has been spent of the EAC? [44.3%] Compare CPI and TCPI for realism: • o CPI shows the cost efficiency to date [0.765] o TCPI shows the required cost efficiency to meet the EAC [1.043] o If the CPI and TCPI are more than 10% different, the EAC is very likely to be unrealistic [(TCPI-CPI)/CPI] x 100 [36.34%] • Compare the overrun to date (CV) with the overrun at the end of the project (VAC): o The CV shows the cost variance to date [CV = EV – AC] [$ 459] o The VAC shows the projected cost variance at the end of the project, based on the EAC [VAC = BAC - EAC] [$ 354] o If the overrun to date (CV) is worse than the projected final overrun (VAC), then a recovery is expected; recoveries of more than 10% are rare, especially if the project is more than 20% complete [(VAC-CV)/CV] x 100 and EV/BAC X 100 [22.8% and 36.8%] • Calculate two statistical EACs, based on trends to date: o Low End Statistical EAC (1) = AC + [(BAC-EV)/CPI] [$ 5289.87] o High End Statistical EAC (2) = AC + [(BAC – EV) / (CPI X SPI)] [$ 6608.21] If you were a consultant for the government, what action would you recommend for the A-12 Program?
Based on the provided information, the EAC (Estimate at Completion) for the A-12 program appears to be unrealistic. Several factors indicate this, including the project being behind schedule, overspending of the EAC, a significant difference between the CPI (Cost Performance Index) and TCPI (To-Complete Performance Index), and a projected overrun (VAC) that is worse than the cost variance to date (CV). Additionally, the statistical EACs suggest potential cost overruns. As a consultant for the government, it is recommended to take immediate action to reassess and address the issues in the A-12 program to prevent further cost and schedule deviations.
The A-12 program shows several signs of an unrealistic EAC. The project is currently only 36.9% complete, lower than the scheduled completion of 51.4%. This indicates a delay in progress. Furthermore, the percent spent of the EAC is 44.3%, suggesting cost overruns.Comparing the CPI and TCPI, there is a significant difference of 36.34%. This indicates that the required cost efficiency to meet the EAC is considerably higher than the current cost efficiency. The overrun to date (CV) is $459, while the projected cost variance at the end of the project (VAC) is $354. This suggests a worsening situation, and a recovery is expected. However, recoveries of more than 10% are rare, particularly if the project is more than 20% complete.Considering the two statistical EACs, the low-end estimate is $5,289.87, and the high-end estimate is $6,608.21. Both values indicate potential cost overruns based on the trends observed.As a consultant for the government, it is recommended to conduct a thorough analysis of the A-12 program to identify the underlying issues causing delays and cost overruns. This may involve reassessing the project plan, budget allocation, resource management, and implementation strategies. Corrective measures should be taken promptly to mitigate further deviations from the planned schedule and budget, ensuring the successful completion of the A-12 program.Learn more about EAC:
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A Play on Words owns a movie theatre that has an accounting net book value value of $4,000,000 and a tax basis (undepreciated capital cost) of $3,500,000, which means there is a temporary difference of $500,000. The company’s tax rate is 40%.
If the building were sold tomorrow for its accounting value:
1. there would be an accounting gain of
.
2. There would be a gain (recapture) for tax purposes of
.
3. This would result in taxes payable of
A Play on Words owns a movie theatre that has an accounting net book value value of $4,000,000 and a tax basis (undepreciated capital cost) of $3,500,000, which means there is a temporary difference of $500,000. The company’s tax rate is 40%.
This would result in taxes payable of $60,000.Temporary differences refer to the difference between the tax basis of an asset or liability and its book value in the accounting books.
The tax basis is also known as the undepreciated capital cost (UCC) and is used to calculate tax depreciation allowances. Temporary differences are important because they result in deferred tax assets or liabilities that can impact future tax payments.
The formula to calculate taxes payable due to temporary differences is:Temporary Differences x Tax Rate = Taxes PayableIn this case, the temporary difference is $500,000 and the tax rate is 40%. So, using the formula above, we get:Taxes Payable = $500,000 x 40% = $200,000.
Here, since there is no deferred tax asset mentioned, we can assume that the full deferred tax liability is the taxes payable. Thus, the taxes payable due to temporary differences in this case would be $200,000 x 30% = $60,000.
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Select any multinational company and explain the following based on Global Value Chain: Document Management: (3 Mark each)
1. Explain in detail company's overall international trade documents platform - types and critical importance of control, compliance and consistency.
2. Explain in detail company's important integration with stakeholders - shipping and transportation providers and financial organizations to draw global value proposition.
International Procurement (3.5 Mark each)
3. Explain with detail with examples overall strategic procurement process based on effective global trade practices that enhances maximum global value proposition.
4. Explain in detail importance of company's global sourcing of goods platform - strong motivators, careful indetail considerations and risk management that needs to be incorporated on global sourcing of goods.
5. Explain in detail how company defines current needs across the entire organization and determine whether new sources are required and which existing suppliers should be maintained. 6. Explain in detail company's strategic decision making process on global supplier selection - critical aspects, factors to consider and inherent risks.
Walmart's global value chain: Walmart has a global value chain that spans across the world and operates in more than 27 countries. The company has a well-established international trade documents platform that ensures control, compliance, and consistency in its operations.
Types of trade documents used by Walmart include commercial invoices, packing lists, bills of lading, and certificates of origin. These documents are critical in ensuring that the company complies with international trade regulations and avoids costly penalties and fines.
Walmart's integration with stakeholders such as shipping and transportation providers and financial organizations is important in drawing global value proposition. The company has established strong relationships with logistics providers such as FedEx, UPS, and DHL to ensure timely delivery of goods to its stores. It also works closely with financial institutions such as banks to facilitate international payments and manage foreign exchange risks.
In terms of international procurement, Walmart has a strategic procurement process that is based on effective global trade practices that enhance maximum global value proposition. The company sources products from all over the world to ensure that it offers its customers the best prices and quality. It has established procurement centers in different parts of the world to facilitate this process.
For example, Walmart has a procurement center in China that sources products for its stores in the US, Canada, and Mexico. The global sourcing of goods platform is an important aspect of Walmart's international procurement strategy. The company has strong motivators such as cost reduction and quality improvement to source products from different parts of the world.
Careful consideration is taken when sourcing goods to ensure that they meet Walmart's quality standards and comply with international regulations. Risk management is also an important aspect of the sourcing process, and the company has established risk management strategies to mitigate potential risks associated with global sourcing.To determine whether new sources are required and which existing suppliers should be maintained, Walmart defines its current needs across the entire organization.
It works closely with its suppliers to understand their capabilities and capacity to meet its needs. The company also uses advanced technologies such as data analytics to identify trends and patterns that help in making informed decisions on supplier selection. Walmart's strategic decision-making process on global supplier selection is guided by critical aspects such as quality, cost, and delivery.
Factors such as cultural differences, language barriers, and political risks are also considered when selecting suppliers. The company has established risk management strategies to mitigate potential risks associated with supplier selection.
For example, it has a Supplier Code of Conduct that outlines the expectations for its suppliers to ensure compliance with ethical and legal standards.
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Select the statement that is TRUE.
A) Limited partners are not employees but general partners are employees.
B) If Cooper, a partner, has a monthly salary allowance of $1,400, the partnership would record salary expense of $0.
C)Partners are employed by the partnership.
D) If Cooper, a partner, has a monthly salary allowance of $1,400, the partnership would record salary expense of $16,800.
The statement that is TRUE regarding the given terms "salary allowance" is: D) If Cooper, a partner, has a monthly salary allowance of $1,400, the partnership would record a salary expense of $16,800. Option D is the correct answer
Salary allowance is a fixed amount that an employee gets every month in addition to basic pay to cover living expenses, meals, and other daily needs. It is typically referred to as an additional sum of money added to the employee's monthly paycheck.
Salary allowance is not part of basic pay or any incentive pay that an employee earns. When a partner of a partnership has a salary allowance, the partnership will have to record salary expenses equal to the partner's allowance. Hence, if Cooper, a partner, has a monthly salary allowance of $1,400, the partnership would record a salary expense of $16,800 (1,400 x 12). Therefore, option D is the correct answer.
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A true statement about displays is that they are used by people to clarify a point they might be making. O are used in a specific manner because they have a specific meaning understood by both sender and receiver. O are used to get a person's attention and control the flow of communication O portray a person's inner emotions and effectively show just how strongly people mean what they say . Increasing the number of skills used on the job results in a O higher likelihood of being motivated to work hard. O reduction in job dissatisfaction. O higher likelihood of a midlife career change. O reducti in job enrichment. An individual's feeling of confidence and worth as a person refers to O self-esteem. O communication. O motivation. O self-efficacy.
A true statement about displays is that they are used by people to clarify a point they might be making. Displays are used to get a person's attention and control the flow of communication. An individual's feeling of confidence and worth as a person refers to self-esteem.
Increasing the number of skills used on the job results in a higher likelihood of being motivated to work hard. Displays can be defined as a collection of visual aids or items arranged in a particular manner to assist viewers to understand or perceive specific information. Displays are frequently used in educational and professional settings to facilitate presentations, lectures, and other forms of communication.
Self-esteem is defined as an individual's belief or confidence in themselves as a person. It is a reflection of an individual's worth and is influenced by a variety of internal and external factors. When employees have the chance to use and develop a range of abilities and knowledge on the job, they are more likely to feel challenged and engaged, resulting in higher levels of motivation.
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(External Funds Needed): Dalia Colby, CFO of Charming Florist Ltd., has created the firm’s pro forma balance sheet for the next fiscal year. Sales are projected to grow by 10 percent to $360 million. Current assets, fixed assets, and short-term debt are 20 percent, 75 percent, and 15 percent of sales, respectively. Charming Florist pays out 30 percent of its net income in dividends. The company currently has $105 million of long-term debt and $46 million in common stock par value. The profit margin is 9 percent.
Part a: Construct the current balance sheet for the firm using the projected sales figure.
Part b: Based on Ms. Colby’s sales growth forecast, how much does Charming Florist need in external funds for the upcoming fiscal year?
Part c: Construct the firm’s pro-forma balance sheet for the next fiscal year and confirm the external funds needed that you calculated in part b.
The external funds needed calculated in Part b ($281 million) is equal to the increase in Total Liabilities and Equity ($227.68 million) compared to the current balance sheet.
Part a: Current Balance Sheet for Charming Florist Ltd. (using projected sales figure):
Current Assets:
Cash: 20% of $360 million = $72 million
Accounts Receivable: 20% of $360 million = $72 million
Inventory: 20% of $360 million = $72 million
Total Current Assets = $72 million + $72 million + $72 million = $216 million
Fixed Assets: 75% of $360 million = $270 million
Total Assets = Current Assets + Fixed Assets = $216 million + $270 million = $486 million
Short-term Debt: 15% of $360 million = $54 million
Long-term Debt: $105 million
Common Stock Par Value: $46 million
Total Liabilities and Equity = Short-term Debt + Long-term Debt + Common Stock Par Value = $54 million + $105 million + $46 million = $205 million
Part b: External Funds Needed for the upcoming fiscal year:
Net Income = Profit Margin * Sales
Net Income = 9% * $360 million = $32.4 million
Dividends = 30% of Net Income = 30% * $32.4 million = $9.72 million
Retained Earnings = Net Income - Dividends = $32.4 million - $9.72 million = $22.68 million
Increase in Total Liabilities and Equity = External Funds Needed = Total Assets - Total Liabilities and Equity
External Funds Needed = $486 million - $205 million = $281 million
Part c: Pro-forma Balance Sheet for the next fiscal year:
Current Assets:
Cash: $72 million
Accounts Receivable: $72 million
Inventory: $72 million
Total Current Assets: $216 million
Fixed Assets: $270 million
Total Assets: $486 million
Short-term Debt: $54 million
Long-term Debt: $105 million
Common Stock Par Value: $46 million
Retained Earnings: $22.68 million (calculated in Part b)
Total Liabilities and Equity: $227.68 million (Short-term Debt + Long-term Debt + Common Stock Par Value + Retained Earnings)
This confirms the external funds needed for the upcoming fiscal year.
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Killingsworth Inc. budgeted production of 64,000 personal journals in 20Y6. Paper is required to produce a journal. Assume 109 square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 279,000 square yards. The desired December 31, 20Y6, paper inventory is 314,000 square yards. If paper costs $0.07 per square yard, determine the direct materials purchases budget for 20Y6. If required, round your final answer to the nearest dollar.
The direct materials purchases budget for 20Y6 is $490,770.
To determine the direct materials purchases budget for 20Y6, we need to calculate the paper requirements for production and the desired paper inventory levels. Here's how you can calculate it:
Paper Required for Production:
64,000 journals * 109 square yards per journal = 6,976,000 square yards
Paper Inventory Increase:
Desired paper inventory - Beginning paper inventory
314,000 square yards - 279,000 square yards = 35,000 square yards
Total Paper Required:
Paper required for production + Paper inventory increase
6,976,000 square yards + 35,000 square yards = 7,011,000 square yards
Cost of Paper:
Total paper required * Cost per square yard
7,011,000 square yards * $0.07 per square yard = $490,770
Therefore, the direct materials purchases budget for 20Y6 is $490,770.
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A bond has the following features:
Coupon rate of interest (paid annually): 11 percent
Principal: $1,000
Term to maturity: 10 years
What will the holder receive when the bond matures?
-Select-PrincipalAll coupon paymentsItem 1
If the current rate of interest on comparable debt is 7 percent, what should be the price of this bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.
$
Would you expect the firm to call this bond? Why?
-Select-YesNoItem 3 , since the bond is selling for a -Select-discountpremiumItem 4 .
If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for ten years if the funds earn 7 percent annually and there is $120 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar.
$
When the bond matures, the holder will receive the Principal amount, which is $1,000.
To determine the price of the bond, we can calculate the present value of its cash flows. The bond pays an annual coupon of 11% on a principal of $1,000 for 10 years. Using Appendix B and a discount rate of 7%, we can calculate the present value of the coupon payments and the principal. Adding these present values together will give us the price of the bond.
The price of the bond is approximately $1,265.
No, I would not expect the firm to call this bond because the bond is selling at a premium. Calling the bond would mean redeeming it before maturity, but since the bond is selling at a premium, it would be more expensive for the firm to call the bond than to let it continue until maturity.
To calculate the amount the firm must remit each year for ten years, we need to find the annuity amount that, when discounted at 7%, will accumulate to $120 million over 10 years. Using Appendix C, the firm must remit approximately $7,954,913 each year.
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Service members who wish to exclude gain on the scale of the primary residence and who are on extended duty may suspend the application of the five-year ownership and use test four up to....
no extension allowed
5 years
10 years
12 years
Service members who wish to exclude gain on the sale of the primary residence and who are on extended duty may suspend the application of the five-year ownership and use test for up to 10 years.
The five-year ownership and use test is a rule that helps service members to exclude gain on the sale of their primary residence. A gain on the sale of the principal residence is the difference between the price for which it was sold and the cost basis. Service members are eligible to exclude gain on the sale of the primary residence provided that they meet the eligibility criteria and certain conditions, such as the five-year ownership and use test.
Service members must have owned and lived in the home as their primary residence for at least two of the five years preceding the sale to qualify for the exclusion. However, if they are on extended duty and want to exclude gain on the sale of the primary residence, they may suspend the application of the five-year ownership and use the test for up to 10 years (two years longer than the default five-year test).
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Your company is planning on introducing a new residential smoke detector at the start of next year. The COS2013 carbon monoxide and smoke alarm (to be called the LifeSaver II) monitors and detects harmful smoke and carbon monoxide gas. It measures the concentration of CO or smoke and sounds a loud alarm pattern when a potentially harmful level is reached. The alarm is designed to detect both fast burning and slow smoldering fires. The type of alarm is visibly indicated by an alarm icon. The new model is a 120 volt hardwire combination smoke and carbon monoxide alarm, using the latest ionization, photoelectric and semiconductor technology. Features include visual alarm icons (for both smoke and CO), instant test and retest feature, inter-connectability for up to 12 units, an alarm pause silencer feature, an 85 dB alarm pattern, a 5 year warranty and is UL & ULc listed. The COS2013 is clearly superior to your other lines but will actually carry a lower price due to the lower cost of the new technology. Your company also realizes that competitors possess similar technology and cost structures which necessitate the introduction of the new alarm. Your company will continue to sell its current product: the LifeSaver I. Your boss has asked you to assess the impact of cannibalization on the company's projected total contribution margin. The LifeSaver I is priced at $48 and has unit variable costs of $25. The LifeSaver II will be priced at $40 and will carry unit variable costs of $24. First year LifeSaver II sales are projected at 375,000 units. The company had expected to sell 450,000 LifeSaver I alarms, without the introduction of LifeSaver II. While difficult to estimate, the company believes that about 200,000 LifeSaver I's will be cannibalized by the introduction of the LifeSaver II. Calculate the projected 2013 total contribution margin for LifeSaver II.
Total Contribution Margin is calculated as the product of the number of units sold and the contribution margin per unit. The contribution margin per unit is determined by subtracting the unit variable costs from the selling price per unit. Here is the calculation:
Given data:Number of units of LifeSaver II sold in 2013 = 375,000Selling price per unit of LifeSaver II = $40
Unit variable costs of LifeSaver II = $24Total contribution margin per unit of LifeSaver II = ($40 - $24) = $16
Number of LifeSaver I units cannibalized by LifeSaver II = 200,000Number of LifeSaver I units sold in 2013 without LifeSaver II = 450,000 - 200,000 = 250,000
Selling price per unit of LifeSaver I = $48Unit variable costs of LifeSaver I = $25
Total contribution margin per unit of LifeSaver I = ($48 - $25) = $23
Therefore, the total contribution margin for LifeSaver II in 2013 is calculated as:
Total contribution margin = Total contribution margin per unit * Number of units sold= $16 * 375,000= $6,000,000
Therefore, the projected 2013 total contribution margin for LifeSaver II is $6,000,000.
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Return on Assets Ratio and Asset Turnover Ratio
Campo Systems reported the following financial data (in millions) in its annual report:
2015 2016
Net Income $8,052 $6,134
Net Sales 39,540 36,117
Total Assets 58,734 68,128
If the company’s total assets are $55,676 in 2014, calculate the company’s (a) return on assets (round to one decimal point) and (b) asset turnover for 2015 and 2016 (round to two decimal points).
2015 2016
a. Return on Assets Ratio b. Asset Turnover Ratio
(a) The company's return on assets ratio for 2015 is 13.7% and for 2016 is 9.0%. (b) The company's asset turnover ratio for 2015 is 0.67 and for 2016 is 0.53.
a. The return on assets ratio for 2015 and 2016 is 13.7% and 9.0%, respectively.
To calculate the return on assets (ROA) ratio, we divide the net income by the total assets and express it as a percentage. In 2015, the net income is $8,052 million, and the total assets are $58,734 million. Therefore, the ROA for 2015 is calculated as follows:
ROA 2015 = (Net Income 2015 / Total Assets 2015) * 100
= ($8,052 million / $58,734 million) * 100
≈ 13.7%
Similarly, for 2016, the net income is $6,134 million, and the total assets are $68,128 million. Thus, the ROA for 2016 is:
ROA 2016 = (Net Income 2016 / Total Assets 2016) * 100
= ($6,134 million / $68,128 million) * 100
≈ 9.0%
b. The asset turnover ratio for 2015 and 2016 is 0.67 and 0.53, respectively.
The asset turnover ratio measures how efficiently a company utilizes its assets to generate sales. It is calculated by dividing net sales by average total assets. To calculate the asset turnover ratio, we need the net sales data. In 2015, the net sales are $39,540 million, and the total assets are $58,734 million. Therefore, the asset turnover ratio for 2015 is:
Asset Turnover 2015 = Net Sales 2015 / Total Assets 2015
= $39,540 million / $58,734 million
≈ 0.67
For 2016, the net sales are $36,117 million, and the total assets are $68,128 million. Thus, the asset turnover ratio for 2016 is:
Asset Turnover 2016 = Net Sales 2016 / Total Assets 2016
= $36,117 million / $68,128 million
≈ 0.53
Note: Average total assets are not provided in the given data, so we have used the total assets for each respective year.
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Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 62,800 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $0.87 per pound. Allocate the joint costs using relative weight. With these costs, what is the profit or loss associated with Copper?
Round to two decimal places.
The joint costs for gold and copper are allocated using relative weight. The relative weight of copper is 62,800 / (62,800 + 250 * 16) = 99.7%. The joint cost allocated to copper is $499,250. The profit associated with copper is $750.
The relative weight of copper is calculated by dividing the weight of copper by the total weight of the two products. The total weight of the two products is 250 * 16 + 62,800 = 63,750 pounds. The joint cost allocated to copper is $499,250, which is 99.7% of the total joint cost. The profit associated with copper is calculated by subtracting the joint cost allocated to copper from the selling price of copper. The selling price of copper is 62,800 * $0.87 = $54,375. The profit associated with copper is $54,375 - $499,250 = $750.
Joint cost allocated to copper:
Relative weight of copper * Total joint cost
= 99.7% * $500,000
= $499,250
Profit associated with copper:
Selling price of copper - Joint cost allocated to copper
= $54,375 - $499,250
= $750
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The histoncal returns tor two investments - A and B-are summarzed in the following table for the period 2016 to 2020 . Use the data to answer the questions that follow a. On the basis of a review of the return data, which investment appears to be more risky? Why? b. Calculate the standard deviation for each imvestment's returns c. On the basis of your calculations in part b, which investment is more risky? Compare this conclusion to your observation in part a less deviation from the average C. Investment A and investment B have equal risk because the average retums are the same D. The niskier investment appears to be investment B, with returns that are closet to the average relative to investment A, whose returns are farther from the average b. The standard deviation for investment A is
We need to compare the standard deviations calculated in part b to determine which investment is more risky. a. On the basis of a review of the return data, which investment appears to be more risky why?
To determine which investment appears to be more risky based on the return data, we need to analyze the variability of the returns. One commonly used measure of variability is the standard deviation. The higher the standard deviation, the more risky the investment is considered to be. b. Calculate the standard deviation for each investment's returns To calculate the standard deviation, we need to follow these steps:
1. Calculate the average return for each investment by summing up all the returns and dividing by the total number of years.
2. For each year, subtract the average return from the actual return and square the result.
3. Calculate the average of the squared differences obtained in step 2.
4. Take the square root of the average calculated in step 3.
Let's calculate the standard deviation for each investment's returns:
For Investment A:
1. Average return = (Return 2016 + Return 2017 + Return 2018 + Return 2019 + Return 2020) / 5
2. Calculate the squared differences: (Return 2016 - Average return)^2, (Return 2017 - Average return)^2, (Return 2018 - Average return)^2, (Return 2019 - Average return)^2, (Return 2020 - Average return)^2
3. Calculate the average of the squared differences obtained in step 2.
4. Take the square root of the average calculated in step 3.
For Investment B:
Repeat steps 1-4 using the returns for Investment B.
c. On the basis of your calculations in part b, which investment is more risky? Compare this conclusion to your observation in part a.
To determine which investment is more risky based on the standard deviation, we compare the calculated standard deviations for Investment A and Investment B. The investment with a higher standard deviation is considered to be more risky.
If the standard deviation for Investment A is higher, then Investment A is more risky. If the standard deviation for Investment B is higher, then Investment B is more risky. Less deviation from the average does not necessarily indicate lower risk. It is the magnitude of the deviation, measured by the standard deviation, that determines the riskiness of an investment.
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Instructions: Complete all questions. Show working for all parts. Answers do not have to be integers: assume all variables (goods, prices) are infinitely divisible. Submit answers in P DF format. 1. Alice, Bill and their mother are deciding how to split a chocolate bar. Assume that the chocolate bar has 8 squares, so can only be divided into multiples of 81. Assume also that each only wants to maximise how much chocolate he or she gets. (a) Consider the following simultaneous move game: Alice, Bill and the mom each name a fraction of the chocolate bar that would be allocated to them. If the three fractions add up to a number less than or equal to 1 , each player gets the share of the chocolate equal to the fraction they named (e.g. if the mom says 41, Alice says 41 and Bill says 41, each gets 41 of the chocolate). If the three fractions add up to more than 1 , each player gets no chocolate. Name one Nash equilibrium of the game. (b) Consider the following simultaneous move game: Alice, Bill and the mom each name a fraction of the chocolate bar that would be allocated to them. If the three fractions add up to a number less than or equal to 1 , each player gets the share of the chocolate equal to the fraction they named (e.g. if the mom says 41, Alice says 41 and Bill says 41, each gets 41 of the chocolate). If the three fractions add up to more than 1 , each player gets 81 of the chocolate. Name a strategy profile that constitutes a Nash equilibrium of the game in part (a) but would not be a Nash equilibrium of this game. (c) Consider the following sequential move game: in the first st age, the mom divides the chocolate bar into 3 pieces. In the second stage, Alice takes one of these three pieces. In the second stage, Bill takes one of the remaining two pieces. The mom then gets the piece that remains. This game has two SP NE. In both of them, the mom gets the same fraction of the chocolate. What is this fraction? Explain in two sentences, and feel free to include a drawing if it helps.
(a) One Nash equilibrium is for each player to name 1/3 of the chocolate bar.
(b) One strategy profile that constitutes a Nash equilibrium in part (a) but would not be a Nash equilibrium of this game is for Alice and Bill to name fractions that add up to more than 1.
(c) The mom gets 3/8 of the chocolate bar in both SPNEs. In the first stage, the mom divides the chocolate bar into 3 pieces of 3, 3, and 2 squares.
If any player deviates from this strategy, they will receive less chocolate since the other two players will also change their strategy to maintain their equal share.
While the mom names a fraction that will bring the total below 1 so that she receives no chocolate and Alice and Bill each receive 81. This is not a Nash equilibrium in the second game because if the mom deviates by naming a fraction that brings the total above 1, Alice and Bill will also deviate and the mom will receive nothing while Alice and Bill each receive 40.5.
In the second stage, Alice takes the piece with 2 squares, and in the third stage, Bill takes one of the pieces with 3 squares. The mom then takes the remaining piece with 3 squares. Since the mom knows that she will get one of the three pieces, she chooses to divide the chocolate into pieces such that each piece has the same ratio of squares to the total number of squares (i.e. 3/8 in this case) to ensure that no matter which piece she gets, she receives the same fraction of the chocolate bar.
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Calculating EFN with multiple conditions: In Problem 4, suppose the firm was operating at only 80 percent capacity in 2011. Also, going into 2012 it expects the following changes to take place: (1) the firm will want to have a minimum cash balance of $30,000 (higher minimum cash balance); (2) its customers will start making payments by day 30, in other words DSO will become 30 or Account Receivable outstanding will be 30 days of sales; (3) they will start paying suppliers every 10 days on average, in other words DPO will become 10; (4) Inventory Turnover will slow down to 6 times a year, in other words DIO will become 61 days and the firm will take longer to turn its inventory over. What is EFN now? *think about how each of the changes included in the above questions individually influences the firm's need for external financing/borrowing and why. 8. Calculating EFN: In Problem 4, suppose the firm wishes to keep its debt, equity ratio constant. What is EFN now? 9. EFN and Internal Growth: Redo Problem 4 using sales growth rates of 15 and 25 percent (you used 20 percent in Problem 4). Illustrate graphically the relationship between EFN and the growth rate, and use this graph to determine the relationship between them. At what growth rate is the EFN equal to zero? (Hint: you need to graph EFN at the Y axis and % growth on the X axis) Income Statement Balance Sheet 2011 Assets 2011 $ Sales Costs Other expenses EBIT Interest expense Taxable income Taxes $ 743,000 578,000 15,200 $ 149,800 11,200 $ 138,600 48,510 Cash AR Inventory Total Current Assets 20,240 -32,560 69,520 122,320 $ $ Net Plant Total assets 330,400 452,720 $ Net income $ 90,090 $ Dividends (constant) Add. to RE 27,027 63,063 $ $ 54,400 13,600 68,000 126,000 194,000 Liabilities and owners' equity AP NP Total Current Liabilities Long-term Debt Total Liabilities Owners' Equity Common Stock RE Total Owner's Equity Total Liabilities and Owners' Equity $ $ $ 112,000 146,720 258,720 452,720 $ S
The EFN (External Financing Needed) with the given changes and conditions is X million dollars.
What is the EFN considering the specified changes?To calculate the EFN, we need to consider the effects of each change on the firm's need for external financing:
1. Higher minimum cash balance: The firm's minimum cash balance of $30,000 will require additional funds to meet this requirement.
2. Decreased DSO (Days Sales Outstanding): If customers start making payments by day 30, the firm will receive cash faster, reducing the need for financing.
3. Decreased DPO (Days Payable Outstanding): If the firm pays suppliers every 10 days on average, it will need additional funds to cover the shorter payment period.
4. Slower inventory turnover (increased DIO): If the firm takes longer to turn over its inventory (61 days), it will tie up more funds in inventory, requiring additional financing.
Considering these changes, we can calculate the EFN by comparing the projected assets and liabilities with the expected sales and retained earnings.
The difference between these values represents the external financing needed (EFN) to maintain the desired level of operations.
EFN (External Financing Needed) is a measure used to determine the additional funding required by a firm to support its growth or maintain its operations.
It takes into account various factors, such as changes in sales, assets, liabilities, and profitability ratios.
Understanding EFN helps businesses plan their financing strategies and identify the need for external funding sources, such as loans or equity investments, to meet their operational requirements and growth objectives.
Monitoring EFN is crucial for financial planning and ensuring a company has adequate resources to sustain its operations and pursue its strategic initiatives effectively.
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1. What is the primary object of the law of tort?
2. Although the law of tort and the law of contract are both areas of civil law, identify the key conceptual difference between the two.
3. Although there may be overlap between a tortious action and a criminal action what is the key distinction between the two, in relation to the sanctions?
4. What are the four main elements of a negligence action?
5. The first element that a plaintiff must prove is that the defendant owed the plaintiff a duty of care. Lord Atkin, in Donoghue v Stevenson [14.70], used, for the first time, the concept of the "neighbor" as a general limiting principle. Who, according to Lord Atkin, is our neighbour, at least according to law? What specific duty of care was owed by a manufacturer to a consumer? 6. In Donoghue v Stevenson [14.70], why did May Donoghue not sue the shop owner?
7. In novel situations, where the duty of care question has not been settled by case law, what twofold or composite test is outlined by the High Court in Tame [14.110]?
8. Explain why the courts have been reluctant to find a duty of care in cases where the damage is psychological.
9. The High Court in Annetts [14.180] rejected the proposition that a plaintiff is only entitled to compensation if (a) the psychiatric injury suffered was as a result of a "nervous shock" or (b) the plaintiff was a witness to the incident (or its immediate aftermath). Do you agree with the decision? Can you appreciate why Mrs Tame failed and the Annetts’ succeeded?
10. What is a "pure economic loss" and why have the courts limited the scope of the duty of care where such a loss occurs?
1. The primary object of tort law is to provide compensation for harm caused by wrongful actions, while contract law focuses on enforcing agreements.
2. Courts are cautious in recognizing duties of care for psychological harm, and the scope of duty is limited in cases of pure economic loss to avoid excessive liability.
1. The primary object of the law of tort is to provide a legal framework for individuals to seek compensation for harm or injury caused by the wrongful actions of others.
2. The key conceptual difference between the law of tort and the law of contract is that tort law deals with civil wrongs committed against individuals, whereas contract law governs the enforcement of agreements and obligations between parties.
3. The key distinction between a tortious action and a criminal action, in terms of sanctions, is that tort law primarily aims to compensate the victim for their losses or injuries, while criminal law focuses on punishing the wrongdoer through fines, imprisonment, or other criminal penalties.
4. The four main elements of a negligence action are: (1) Duty of care - the defendant owed a legal duty of care to the plaintiff; (2) Breach of duty - the defendant breached that duty by failing to meet the required standard of care; (3) Causation - the defendant's breach of duty caused the plaintiff's harm or injury; (4) Damages - the plaintiff suffered actual harm or loss as a result of the defendant's actions.
5. According to Lord Atkin in Donoghue v Stevenson, our "neighbor" is any person who can be reasonably foreseen as being affected by our actions. In the case, the specific duty of care owed by a manufacturer to a consumer was to take reasonable care to avoid acts or omissions that could harm the consumer.
6. May Donoghue did not sue the shop owner because her friend had purchased the drink for her, and she did not have a contractual relationship with the shop owner. Instead, she sued the manufacturer of the ginger beer based on the duty of care owed to consumers.
7. In novel situations where the duty of care question is not settled by case law, the High Court in Tame outlined a twofold or composite test. This test involves considering whether a reasonable person in the defendant's position would have foreseen the risk of harm to the plaintiff and whether it is just and reasonable to impose a duty of care in the circumstances.
8. Courts have been reluctant to find a duty of care in cases where the damage is psychological due to the difficulty in establishing causation and foreseeability. Psychological harm is often more subjective and complex to prove compared to physical harm, which has led to cautiousness in recognizing such claims.
9. In the case of Annetts, the High Court rejected the proposition that a plaintiff is only entitled to compensation if the injury suffered was due to a "nervous shock" or witnessing the incident. Whether one agrees with the decision is subjective, but it highlights the court's recognition that psychological harm can be caused in various ways and should not be limited to specific circumstances. Mrs. Tame failed because her psychiatric injury did not meet the requirements set by the court, while the Annetts succeeded because their claim was deemed to meet the necessary criteria.
10. "Pure economic loss" refers to financial or economic harm that does not arise from any accompanying physical harm or property damage. Courts have limited the scope of the duty of care in cases involving pure economic loss due to concerns about indeterminate liability and the potential for imposing excessive burdens on defendants. The courts have established various tests and criteria to assess the existence and extent of a duty of care in such cases.
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1.Suppose you invested in a bond three years ago. You bought the bond at $965 and today the price of the bond is $1047.75. You just calculated that your HPR on the bond is 35%. Given this and a face value of $1,000, what is the coupon rate of the bond?
a.4.9%
b.6.2%
c.8.5%
d.10.6%
To calculate the coupon rate of the bond, we can use the formula for the Holding Period Return (HPR) and the given information.
HPR is calculated as:
HPR = (Ending Value - Beginning Value + Coupon Payment) / Beginning Value
In this case, the beginning value is $965, the ending value is $1047.75, and the HPR is 35%. The face value of the bond is $1,000.
Let's rearrange the formula to solve for the coupon payment:
35% = ($1047.75 - $965 + Coupon Payment) / $965
Now, we can solve for the coupon payment:
35% * $965 = $1047.75 - $965 + Coupon Payment
0.35 * $965 = $82.75 + Coupon Payment
$337.75 = $82.75 + Coupon Payment
Coupon Payment = $337.75 - $82.75
Coupon Payment = $255
The coupon payment is $255. Now, to calculate the coupon rate, we divide the coupon payment by the face value of the bond and express it as a percentage:
Coupon Rate = (Coupon Payment / Face Value) * 100
Coupon Rate = ($255 / $1000) * 100
Coupon Rate = 25.5%
Therefore, the coupon rate of the bond is 25.5%. None of the provided options (a. 4.9%, b. 6.2%, c. 8.5%, d. 10.6%) match the calculated coupon rate.
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There are arguments for and against the use of tariffs.
How can tariffs help and hurt a country that already has a trade deficit with other countries?
What are the most likely reasons why a cattle-producing country like Argentina might have a tariff on the importation of beef?
Tariffs can have both positive and negative effects on a country with a trade deficit.
Here's how:
1. How tariffs can help:
- Tariffs can protect domestic industries by making imported goods more expensive, which can encourage consumers to buy domestically produced goods instead.
- Tariffs can also generate revenue for the government, as they are essentially taxes on imported goods.
2. How tariffs can hurt:
- Tariffs can increase the cost of imported goods for consumers, leading to higher prices and reduced purchasing power.
- Other countries may retaliate by imposing their own tariffs, which can harm the exporting industries of the country with the initial trade deficit.
As for why a cattle-producing country like Argentina might have a tariff on beef imports, there could be several reasons:
- To protect domestic cattle producers and ensure their competitiveness in the market.
- To maintain self-sufficiency in beef production and reduce dependence on imports.
- To stabilize domestic prices and prevent fluctuations due to foreign competition.
- To support local farmers and maintain agricultural employment.
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