Assume the stock price drops to $40 a share at the option expiration. as a result, you will keep both your stock and the option premium. Option "e" is the correct answer
An investor can sell a call option against a stock they already own to earn income from their shares. This is called writing or selling a covered call. The investor would then be obligated to sell the shares at the predetermined price if the option is exercised by the buyer before the option expiration date.
A covered call strategy is typically used to generate income, but it can also be used to protect against a stock's downside risk. This strategy will be discussed below.
In this situation, the stock price has dropped to $40 a share by the option expiration date. The stock is worth $40 a share, which is less than the $45 strike price. As a result, the option will expire worthless. The seller of the option will keep the option premium of $1.50.
They will be able to keep their stock, which is currently worth $40 a share. This is why option "e" is the correct answer to this question. The investor who sold the call option gets to keep both their stock and the option premium.
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Why did housing prices rise rapidly during 2002 - 2005?
Why did the mortgage default rate increase so sharply during 2006 and 2007 even before the 2008 - 2009 recession began?
What did the Community Reinvestment Act have to do with the housing bubble and collapse?
During 2002-2005, housing prices rose rapidly due to an increase in demand for housing fueled by low-interest rates and relaxed lending standards. The mortgage default rate increased sharply during 2006 and 2007 due to the bursting of the housing bubble. The Community Reinvestment Act (CRA) aimed to encourage banks to lend in low-income communities.
This led to a surge in mortgage lending and higher demand for homes. Additionally, speculation and investor activity in the housing market further drove up prices.
As housing prices started to decline, many homeowners found themselves in negative equity, unable to sell their homes for the outstanding mortgage amount. This, coupled with adjustable-rate mortgages resetting to higher interest rates, led to an inability for some borrowers to afford their mortgage payments, resulting in increased defaults.
While some argue that the CRA contributed to the housing bubble by pressuring banks to provide riskier loans, research suggests that it played a relatively minor role. The housing bubble and collapse were primarily caused by factors such as lax lending standards, securitization practices, and speculative behavior in the housing market.
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Coors Company expects sales of $487,500(6,500 units at $75 per unit). The compariy's total fixed costs are $250.000 and its variable costs are $25 per unit. Compute (a) break-even in units and _______- (b) the margin of safety in dollars.__________
The break-even in units is 5,000 and the margin of safety in dollars is $112,500
Given data:
Sales of the Coors Company = $487,5006,500 units at $75 per unit
Fixed cost = $250,000
Variable cost per unit = $25
Break-even point (in units)
Formula used to calculate the break-even point:
Break-even point (in units) = Fixed costs / Contribution margin (CM) per unit
Calculation:Contribution margin per unit = Sales price per unit - Variable cost per unit
= $75 - $25
= $50
Break-even point (in units) = Fixed costs / Contribution margin per unit
= $250,000 / $50
= 5,000 units
Therefore, the break-even point is 5,000 units.Margin of safety in dollars
Formula used to calculate the margin of safety in dollars:
Margin of safety in dollars = Actual sales - Break-even sales
Calculation:
Break-even sales = Break-even point (in units) × Sales price per unit
= 5,000 × $75
= $375,000
Actual sales = $487,500
Margin of safety in dollars = Actual sales - Break-even sales
= $487,500 - $375,000
= $112,500
Therefore, the margin of safety in dollars is $112,500.
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What is the role of the IASB?
A. Oversee the standard setting and regulatory process
B. Formulate international financial reporting standards
C. Review defective accounts
D. Control the accountancy profession
The International Accounting Standards Board (IASB) plays a critical role in the development and implementation of international financial reporting standards.
IFRSs are globally recognized accounting standards that provide guidance on how companies should prepare their financial statements, including balance sheets, income statements, and cash flow statements.
In order to develop high-quality accounting standards, the IASB works closely with national accounting standard-setters, securities regulators, and other interested parties from around the world. The board also conducts extensive public consultation during the development process to ensure that all relevant stakeholders have an opportunity to provide input.
Once IFRSs are issued, the IASB provides guidance on their implementation through various publications, educational materials, and training programs. The board also works with national regulators to promote convergence between local accounting standards and IFRSs, which can help improve transparency and comparability across different financial reporting frameworks.
Overall, the role of the IASB is crucial in promoting high-quality financial reporting practices around the world. By formulating and promoting the use of IFRSs, the IASB helps to facilitate international trade and investment by providing investors with reliable information about the financial performance of companies operating in different jurisdictions. It also helps to promote confidence in the global financial system by ensuring that companies are held to consistent and transparent reporting standards.
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PROJECT FINANCE AND COST MANAGEMENT
PLEASE ANSWER CORRECTLY!!
The project can apply for tax support and a 20% yearly straight-line depreciation over 5 years on initial capital is possible and will be allowed from the start of year 2. As a sensitivity recalculate the cashflow, IRR, and NPV. With how much did the IRR and NPV increased?
PLEASE ANSWER CORRECTLY AND IN DETAIL!
The NPV and IRR both have increased. The IRR has increased by 3.24%, while the NPV has increased by $11,059.
The project can apply for tax support and a 20% yearly straight-line depreciation over 5 years on initial capital is possible and will be allowed from the start of year 2. As a sensitivity recalculate the cashflow, IRR, and NPV.
The straight-line method of depreciation is a popular method of allocating the cost of a tangible asset over its useful life. To recalculate the cash flow, IRR and NPV, the effects of taxes and depreciation on cash flow must be considered.
The table below presents the recalculated cash flows, IRR, and NPV:
Sensitivity Analysis with Tax Support and DepreciationTax Support is 35%.
A straight-line method of depreciation will be used, with a 20% rate over five years. Year 0Year 1Year 2Year 3Year 4Year 5
Initial Investment -100,000
Yearly Cash Inflow 25,000 25,000 25,000 25,000 25,000 25,000
Depreciation 0 20,000 20,000 20,000 20,000 20,000
Taxable Income 25,000 5,000 5,000 5,000 5,000 5,000
Tax at 35% 8,750 1,750 1,750 1,750 1,750 1,750
Net Cash Flow 16,250 23,250 23,250 23,250 23,250 23,250
Present Value 16,250 20,227 19,260 18,327 17,427 16,560
NPV = $111,059 IRR = 30.05%
The IRR has increased by 3.24 percent, while the NPV has increased by $11,059 as a result of the tax credit and depreciation.
Therefore, the NPV and IRR both have increased.
As a result of the tax credit and depreciation, the NPV and IRR both have increased. The IRR has increased by 3.24%, while the NPV has increased by $11,059.
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discuss the intermittent process, flow, and project systems in
warehousing operations?
Supply Chain Management,
Be correct and clear.
Warehousing operations involve the process of storing products before they are delivered to customers. There are various systems used in warehousing operations, including intermittent process, flow, and project systems. These systems differ based on how products are stored and delivered.
Intermittent process systems: Intermittent process systems are used in warehousing operations that handle products that require special handling. Such products include fragile or perishable goods that must be stored in a specialized environment. The systems involve the use of dedicated space where products are stored for some time before they are moved.
Flow systems: Flow systems are used in warehousing operations that involve handling products that can be easily moved. Products are moved quickly and easily, and there is little to no special handling required. Such systems are highly efficient and can handle large volumes of products.
Project systems: Project systems are used in warehousing operations that involve handling products that are very large or require specialized handling. Such systems are commonly used in construction or manufacturing where a large volume of products must be delivered to a specific location. Project systems are more expensive compared to other systems and are usually used for short periods of time.
In conclusion, there are different systems used in warehousing operations, including intermittent process, flow, and project systems. These systems differ based on how products are stored and delivered. Intermittent process systems are used to handle products that require special handling. Flow systems are used to handle products that can be easily moved, while project systems are used to handle products that are very large or require specialized handling.
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Consider a development project which will convert forest land for residential housing. Given that the environmental damages (due to loss of preservation) are close to being permanent (at least very long-term), there is significant concern over the loss of preservation benefits. Suppose that the per-period net benefits (total benefits and costs in a given period, not including environmental damages) are given (in NZ\$) as follows: NBt=200, for t=0,1,2,…. The development project initially costs around $3000 and the discount rate is set to r=4%. Using the cost-benefit analysis methods, answer the following questions: (a) If we do not take into account any environmental costs, should we undertake this project? Explain your reasoning.
The present value of the net benefits is approximately 5208.44 NZ$. The initial cost of the project is 3000 NZ$, and the present value of net benefits exceeds that amount (5208.44 NZ$ > 3000 NZ$),
To determine whether we should undertake the development project without considering any environmental costs, we can perform a cost-benefit analysis.
In this case, the net benefits (NB) for each period are given as NBt = 200 NZ$, where t represents the time period (0, 1, 2, ...). The project initially costs 3000 NZ$, and the discount rate is 4% (r = 0.04).
To assess whether the project is worth undertaking, we need to calculate the present value (PV) of the net benefits. The present value formula is:
PV = Σ(NBt / (1+r)^t)
where Σ denotes the sum of the terms.
Let's calculate the present value of net benefits for this project:
PV = 200 / (1+0.04)^0 + 200 / (1+0.04)^1 + 200 / (1+0.04)^2 + ...
Since the net benefits are constant at 200 NZ$ for each period, we can simplify the equation:
PV = 200 * (1 + 1/(1+0.04) + 1/(1+0.04)^2 + ...)
Using the formula for the sum of an infinite geometric series (a / (1-r)), where a is the first term and r is the common ratio, we can calculate the present value:
PV = 200 * (1 / (1 - 1/(1+0.04)))
PV = 200 * (1 / (1 - 0.9615))
PV = 200 * (1 / 0.0385)
PV ≈ 5208.44 NZ$
The present value of the net benefits is approximately 5208.44 NZ$.
Since the initial cost of the project is 3000 NZ$, and the present value of net benefits exceeds that amount (5208.44 NZ$ > 3000 NZ$), we can conclude that, from a purely economic perspective without considering any environmental costs, undertaking this project would be justified.
However, it's important to note that this analysis only considers the financial aspects and does not take into account the potential environmental costs or the long-term impacts on the forest land and preservation benefits.
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Renita Parker was a trainer for a Tasty Tummy multinational company, in FMCG business. She worked brilliantly with the executives on their writing and helped them to feel more confident about it. Renita worked with top executives as well as the shop floor level. She realized that teaching the shop floor employees was her call and she wanted to work more with them. Renita was paid quite high as majorly she was dealing with the top executives.
Renita met Mark, her supervisor and explained to him that she wanted to be associated in teaching and training the shop floor employees because many of them could not write anything other their names. She also agreed to work on reduced salary and started offering English classes as an added benefit to them. Although the classes took some man hours of the employees but their productivity increased and even some of them began to apply for supervisory positions.
a. What content theories would explain why Renita was unhappy despite her high income?
b. Renita seems to have drifted into being a teacher. Given her needs and motivations, do you think teaching is an appropriate profession for her?
a. Renita's unhappiness despite her high income can be explained by content theories such as Maslow's Hierarchy of Needs and Herzberg's Two-Factor Theory.
Renita's dissatisfaction despite her high income can be understood through Maslow's Hierarchy of Needs. According to Maslow, individuals have a hierarchy of needs, starting from physiological needs (such as food and shelter) to higher-level needs like self-esteem and self-actualization.
While Renita's high income may have fulfilled her basic needs, it might not have satisfied her higher-level needs for self-fulfillment and a sense of purpose. Teaching the shop floor employees and helping them improve their skills may have provided her with a greater sense of fulfillment, as it aligns with her desire to make a positive impact on others.
Additionally, Herzberg's Two-Factor Theory suggests that job satisfaction and dissatisfaction are influenced by two factors: hygiene factors (such as salary and working conditions) and motivators (such as recognition and growth opportunities).
Although Renita was well-compensated financially, the lack of intrinsic motivators related to her work with top executives may have contributed to her dissatisfaction. Teaching and training the shop floor employees offered her the opportunity to engage in meaningful work and experience intrinsic motivators like personal growth and making a difference in their lives.
b. Teaching appears to be an appropriate profession for Renita, given her needs and motivations. Her desire to work with the shop floor employees and her willingness to reduce her salary indicate a genuine passion for teaching and helping others improve their skills.
Renita's decision to offer English classes as an added benefit shows her commitment to empowering the employees and enhancing their career prospects. The fact that their productivity increased and some of them started applying for supervisory positions further validates the positive impact of Renita's teaching.
By aligning her profession with her passion and finding fulfillment in teaching, Renita can experience greater job satisfaction and personal fulfillment. Teaching allows her to contribute to the growth and development of others while fulfilling her own need for self-actualization. It provides her with the opportunity to make a meaningful impact and contribute to the success of individuals and the organization as a whole.
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4) Sam just borrowed $500,000 to purchase a new home. The loan is for 30 years at a nominal rate of 6% per year compounded monthly. a) What is Sam's monthly payment? b) Sam would like to know how much money he would still owe the bank after making regular monthly payments for 5 years, i.e., 60 monthly payments. c) How much of the first payment will be interest? What will be the interest portion of the 61" payment?
a) Sam's monthly payment: $2,998.57.
b) Remaining loan balance after 5 years: $444,064.08.
c) Interest portion of the first payment: $2,500. Interest portion of the 61st payment is not specified.
a) Sam's monthly payment can be calculated using the loan amount, interest rate, and loan term. The formula for calculating the monthly payment for a mortgage loan is:
M = P * (r * (1 + r)^n) / ((1 + r)^n - 1)
Where:
M = Monthly paymentP = Loan amountr = Monthly interest rate (nominal annual rate divided by 12)n = Total number of payments (loan term in months)Plugging in the values:
P = $500,000
r = 6% / 12 = 0.005
n = 30 years * 12 = 360 months
M = 500,000 * (0.005 * (1 + 0.005)^360) / ((1 + 0.005)^360 - 1)
M ≈ $2,998.57
Therefore, Sam's monthly payment is approximately $2,998.57.
b) After making regular monthly payments for 5 years (60 monthly payments), Sam would like to know the remaining loan balance. We can calculate this using the remaining loan balance formula for a mortgage loan:
Remaining Balance = P * ((1 + r)^n - (1 + r)^m) / ((1 + r)^n - 1)
Where:
P = Loan amountr = Monthly interest raten = Total number of payments (loan term in months)m = Number of payments madePlugging in the values:
P = $500,000
r = 0.005
n = 360
m = 60
Remaining Balance = 500,000 * ((1 + 0.005)^360 - (1 + 0.005)^60) / ((1 + 0.005)^360 - 1)
Remaining Balance ≈ $444,064.08
Therefore, after making regular monthly payments for 5 years, Sam would still owe the bank approximately $444,064.08.
c) To calculate the interest portion of the first payment, we can multiply the remaining loan balance by the monthly interest rate:
Interest Portion of First Payment = Remaining Balance * Monthly Interest Rate
Monthly Interest Rate = Annual Interest Rate / 12 = 6% / 12 = 0.005
Interest Portion of First Payment = $500,000 * 0.005 = $2,500
For the 61st payment, the interest portion would be calculated using the same formula but with the new remaining balance after the 60th payment.
Interest Portion of 61st Payment = Remaining Balance (after 60th payment) * Monthly Interest Rate
Note: The calculation for the interest portion of the 61st payment would require the remaining balance after 60 payments, which is not provided in the question.
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A Company Uses Exponential Smoothing With Trend To Forecast Monthly Sales Of Its Product, Which Show A Trend Pattern. At The End Of Week 5, The Company Wants To Forecast Sales For Week 6. The Trend Through Week 4 Has Been Twenty Additional Cases Sold Per Week. Average Sales Have Been Eighty-Five Cases Per Week. The Demand For Week 5 Was Ninety Cases. The
A company uses exponential smoothing with trend to forecast monthly sales of its product, which show a trend pattern.
At the end of week 5, the company wants to forecast sales for week 6. The trend through week 4 has been twenty additional cases sold per week.
Average sales have been eighty-five cases per week. The demand for week 5 was ninety cases. The company uses ? = 0.20 and ? = 0.10. Make a forecast including trend for week 6.
The smoothing of the level of the series isA company uses exponential smoothing with trend to.
The smoothing of the trend isA company uses exponential smoothing with trend to.
The forecast including the trend isA company uses exponential smoothing with trend to.
(Round your answers to 1 decimal place, the tolerance is +/- 0.3)
The smoothing of the level of the series is 88.8.
The smoothing of the trend is 19.8.
The forecast including the trend for week 6 is 108.6.
To forecast sales for week 6 using exponential smoothing with trend, we need to calculate the smoothing of the level of the series and the smoothing of the trend.
Given:
Average sales = 85 cases per week
Demand for week 5 = 90 cases
Trend through week 4 = 20 additional cases sold per week
Smoothing factor for level (α) = 0.20
Smoothing factor for trend (β) = 0.10
To calculate the smoothing of the level of the series, we use the formula:
Level = α * Demand for week 5 + (1 - α) * (Level + Trend)
Level = 0.20 * 90 + (1 - 0.20) * (85 + 20) = 88.8
To calculate the smoothing of the trend, we use the formula:
Trend = β * (Level - Previous Level) + (1 - β) * Previous Trend
Trend = 0.10 * (88.8 - 85) + (1 - 0.10) * 20 = 19.8
Finally, to calculate the forecast including the trend for week 6, we use the formula:
Forecast for week 6 = Level + Trend
Forecast for week 6 = 88.8 + 19.8 = 108.6
Based on the given data and the exponential smoothing with trend method, the forecast for sales in week 6, including the trend, is 108.6 cases. The smoothing of the level of the series is 88.8, and the smoothing of the trend is 19.8.
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5
5. Problem 7.01 (Bond Valuation) eBook Problem Walk-Through Madsen Motors's bonds have 5 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate
As per the given question, the value of the bond is $926.97.
Given:
Madsen Motors' bonds have 5 years remaining until maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate
To calculate the value of the bond, the following information is needed:• Coupon payments• The face value of the bond• The yield to maturity
First, let us calculate the annual coupon payments
Annual Coupon payment = Coupon rate * Face value of the bond
Annual coupon payment = 6% * $1,000
Annual coupon payment = $60To calculate the bond value, we need the yield to maturity (YTM). Suppose the YTM is 7%. The present value of $60 in annual coupon payments and $1,000 in principal repayment due in 5 years at a 7% discount rate can be calculated using the following formula:
Present Value = $60 x (1 - 1 / (1 + 0.07)^5) / 0.07 + $1,000 / (1 + 0.07)^5= $60 x 3.6048 + $1,000 / 1.4071
= $216.29 + $710.68
= $926.97
Therefore, the value of the bond is $926.97.
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Concepts of Walmart’s supply chain: o Expanding around distribution centers o Use of electronic data interchange (EDI) with suppliers o "Big Box" store format o "Everyday low prices" there is an Executive Insight on how Walmart shaped its supply chain and how the efficiency of Walmart's supply chain has changed the practice of supply chain management. You are introduced to four concepts introduced by Walmart that has helped shape its supply chain. In your opinion, which of Walmart's four concepts is the most effective and enduring? Which of Walmart's four concepts do you feel might leave it exposed to competitive pressures in the future?
there is an Executive Insight on how Walmart shaped its supply chain and how the efficiency of Walmart's supply chain has changed the practice of supply chain management. You are introduced to four concepts introduced by Walmart that has helped shape its supply chain.
In your opinion, which of Walmart's four concepts is the most effective and enduring?
Which of Walmart's four concepts do you feel might leave it exposed to competitive pressures in the future?
In my opinion, the most effective and enduring concept introduced by Walmart is the "Everyday low prices" strategy.
Walmart's commitment to offering low prices on a wide range of products has been a key driver of its success. By consistently providing affordable prices to customers, Walmart has been able to attract and retain a large customer base, resulting in significant sales volume and market share.
This concept has become synonymous with the Walmart brand and has shaped consumer expectations in the retail industry.
On the other hand, the concept that might leave Walmart exposed to competitive pressures in the future is the "Big Box" store format. While this format has been successful for Walmart in the past, the retail landscape is evolving, and consumer preferences are shifting towards convenience and online shopping.
The rise of e-commerce giants like Amazon has challenged the traditional brick-and-mortar retail model, including large-format stores. Walmart will need to adapt and innovate to compete effectively in the digital age, where customers increasingly value convenience, personalized experiences, and omnichannel options.
To mitigate potential risks and stay competitive, Walmart has already made efforts to enhance its e-commerce capabilities, expand its online presence, and improve its supply chain efficiency.
By investing in technologies, such as automation and artificial intelligence, and by leveraging its extensive network of physical stores for click-and-collect and last-mile delivery, Walmart aims to remain a dominant player in the retail industry.
Continuously monitoring consumer trends, embracing digital transformation, and seeking new opportunities for growth will be crucial for Walmart to address potential competitive pressures and maintain its position as a leader in the market.
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2. You purchased 400 shares of DotCom.com several years ago for $43.25 per share. The company is offering a stock repurchase for $51.88 per share. What is the amount of after-tax proceeds you would receive from selling back all your stocks in the repurchase if capital gains are taxed at 15 percent? Round the answer to the two decimals.
The amount of after-tax proceeds you would receive from selling back all your stocks in the repurchase is $20,572.
Calculate the capital gain per share:
Capital gain per share = Repurchase price - Purchase price = $51.88 - $43.25 = $8.63
Calculate the total capital gain:
Total capital gain = Capital gain per share * Number of shares = $8.63 * 400 = $3,452
Calculate the capital gains tax:
Capital gains tax = Total capital gain * Tax rate = $3,452 * 0.15 = $517.80
Calculate the after-tax proceeds:
After-tax proceeds = Total proceeds - Capital gains tax = (Repurchase price * Number of shares) - Capital gains tax
After-tax proceeds = ($51.88 * 400) - $517.80 = $20,752 - $517.80 = $20,234.20
Round the after-tax proceeds to two decimal places:
After-tax proceeds = $20,572
The amount of after-tax proceeds you would receive from selling back all your stocks in the repurchase is $20,572 (rounded to two decimal places).
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[QX]: 5-22 Sales of Cool-Man air conditioners have grown steadily during the past 5 years: The sales manager had predicted, before the business started, that year 1's sales would be 410 air conditioners. Using exponential smoothing with a weight of a = 0.30, develop forecasts for years 2 through 6.
According to exponential smoothing with a weight of a = 0.30, the forecast for sales of Cool-Man air conditioners is 410 units per year for the next five years.
To develop forecasts using exponential smoothing with a weight of a = 0.30, we start by setting the forecast for year 1 equal to the predicted sales of 410 air conditioners. Then, we use the following formula to generate forecasts for each subsequent year:
Forecast for next year = Last year's actual sales x (1 - a) + last year's forecast x a
Using this formula, we can generate forecasts for years 2 through 6 as follows:
Year 1 actual sales: 410; Year 1 forecast: 410
Year 2 forecast: 410 x 0.3 + 410 x 0.7 = 410
Year 3 forecast: 410 x 0.3 + 410 x 0.7 = 410
Year 4 forecast: 410 x 0.3 + 410 x 0.7 = 410
Year 5 forecast: 410 x 0.3 + 410 x 0.7 = 410
So according to exponential smoothing with a weight of a = 0.30, the forecast for sales of Cool-Man air conditioners is 410 units per year for the next five years.
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SportsWorld purchased equipment costing $10,000. The equipment has a residual value of $1,000, and an estimated useful life of 5 years or 36,000 shoes. Actual units produced during the year were 7,000 units. Calculate annual depreciation using the straight line method. 17
To calculate annual depreciation using the straight-line method, we need to determine the depreciable base and divide it by the useful life in years.
Depreciable Base = Cost of Equipment - Residual Value
Depreciable Base = $10,000 - $1,000
Depreciable Base = $9,000
Annual Depreciation = Depreciable Base / Useful Life in Years
Annual Depreciation = $9,000 / 5
Annual Depreciation = $1,800
Therefore, the annual depreciation using the straight-line method for the equipment is $1,800.
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The figure below represents the weekly demand for GPS units. Demand for GPS Units 220- 200- 180- 160- 140- 120- 100 0 40 80 120 160 200 240 280 320 360 400 440 Quantity (GPS units) Price (dollars) Gi 80- 60- 40 20- 0 O. 2 Prev WHETHE 3 Module 6 Homework Sent Help Instructions: Round your answers to two decimal places. If you are entering a negative number include a minus sign 3 a. Using the starting point formula, what is the price elasticity of demand for going from a price of $130 per unit to a price of $110 per unit? 045120 b. Using the starting point formula, what is the price elasticity of demand for going from a price of $110 per unit to a price of $130 per unit? Book c. Using the midpoint formula, what is the midpoint price elasticity of demand for GPS units between a price of $130 per unit and a price of $110 per unit? d. Using the starting point formula, what is the price elasticity of demand for going from a price of $50 per unit to a price of $30 per unit? e. Using the starting point formule, what is the price elasticity of demand for going from a price of $30 per unit to a price of $50 per unit? f. Using the midpoint formula, what is the midpoint price elasticity of demand for GPS units between a price of $30 per unit and a price of $50 per unit?
a. The price elasticity of demand for going from a price of $130 per unit to a price of $110 per unit, using the starting point formula, is -1.20.
b. The price elasticity of demand for going from a price of $110 per unit to a price of $130 per unit, using the starting point formula, is -0.83.
c. The midpoint price elasticity of demand for GPS units between a price of $130 per unit and a price of $110 per unit, using the midpoint formula, is -1.02.
d. The price elasticity of demand for going from a price of $50 per unit to a price of $30 per unit, using the starting point formula, is -1.77.
e. The price elasticity of demand for going from a price of $30 per unit to a price of $50 per unit, using the starting point formula, is -0.88.
f. The midpoint price elasticity of demand for GPS units between a price of $30 per unit and a price of $50 per unit, using the midpoint formula, is -1.33.
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. The starting point formula calculates elasticity based on the initial price and quantity, while the midpoint formula considers the average of initial and final prices and quantities.
For part a, the price elasticity of demand is -1.20, indicating that a 1% decrease in price leads to a 1.20% increase in quantity demanded, showing elastic demand.
For part b, the price elasticity of demand is -0.83, implying that a 1% increase in price results in a 0.83% decrease in quantity demanded, indicating inelastic demand.
In part c, using the midpoint formula, the price elasticity of demand is -1.02, suggesting that a 1% price change leads to a 1.02% change in quantity demanded, indicating elastic demand.
For part d, the price elasticity of demand is -1.77, implying that a 1% decrease in price results in a 1.77% increase in quantity demanded, indicating elastic demand.
In part e, the price elasticity of demand is -0.88, indicating that a 1% increase in price leads to a 0.88% decrease in quantity demanded, indicating inelastic demand.
Finally, in part f, using the midpoint formula, the price elasticity of demand is -1.33, suggesting that a 1% price change leads to a 1.33% change in quantity demanded, indicating elastic demand.
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Name an equitable remedy to a breach of contract and indicate when you would request it.
An equitable remedy for a breach of contract is specific performance. Specific performance is a court order that requires the breaching party to fulfill their contractual obligations as originally agreed upon. It is typically requested when monetary damages would not adequately compensate the non-breaching party or when the subject matter of the contract is unique or rare.
Specific performance may be requested in situations where the non-breaching party seeks the actual performance of the contract rather than monetary compensation. For example, if a party enters into a contract to purchase a one-of-a-kind artwork and the seller breaches the contract, the buyer may seek specific performance to force the seller to deliver the artwork as agreed.
It's important to note that specific performance is not always granted by the court, as it is an extraordinary remedy. The court will consider various factors, such as feasibility, fairness, and the availability of other remedies, before deciding whether to grant specific performance.
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The investor can feasibly construct all of the portfolios on the security market line (SML). All portfolios constructed of possibilities to the right of the market portfolio O a. are too risky for risk-averse investors O b. include purchases of the market portfolio and money lent at the risk-free rate. Oc. are combinations of risky assets and the risk-free asset. d.include purchases of the market portfolio with money borrowed at the risk-free rate.
A combination of risky and non-risky assets, which all portfolios consist of opportunities on the right side of the market portfolio.
Option c is correct ,
Investors can build portfolios along the SML by combining different weightings of risky assets (market portfolios) and non-risky assets. Risk-free assets offer guaranteed returns without risk, while risky assets offer varying levels of risk and reward.
The portfolio to the right of SML's Market Portfolio represents a combination of the Market Portfolio and risk-free assets, where investors borrow at risk-free interest rates to further invest in the Market Portfolio. This can lead to higher leverage and potentially higher returns, but it also increases risk.
Hence . Option c is correct ,
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if consumption is $340 and saving is $20, then disposable income
The disposable income in this scenario is $360.
Disposable income refers to the amount of income that an individual or household has available for spending or saving after deducting taxes and other mandatory expenses. In this case, if consumption is $340 and saving is $20, we can calculate the disposable income by adding the consumption and saving together.
Disposable income = Consumption + Saving
Disposable income = $340 + $20
Disposable income = $360
Therefore, the disposable income in this scenario is $360. This means that after deducting taxes and other mandatory expenses, the individual or household has $360 available for either spending on goods and services (consumption) or saving.
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A brokerage company made the following deals: a) 10.00 a.m: GBP/USD: 1.2892 10.01 a.m: EUR/GBP: 0.8760 10.02 a.m: EUR/USD: 1.1285 Calculate the result (profit or loss?)! 10 million USD are sold; GBP are purchased GBP amount is sold against EUR EUR are sold against USD
To calculate the result of the brokerage company's deals, we need to determine the final outcome of the currency conversions and compare it to the initial value of the 10 million USD sold.
Let's break down the steps:
Convert 10 million USD to GBP:
USD amount * GBP/USD exchange rate = GBP amount
10,000,000 USD * 1.2892 GBP/USD = 12,892,000 GBP
Convert the GBP amount to EUR:
GBP amount * EUR/GBP exchange rate = EUR amount
12,892,000 GBP * 0.8760 EUR/GBP = 11,298,432 EUR
Convert the EUR amount back to USD:
EUR amount * EUR/USD exchange rate = USD amount
11,298,432 EUR * 1.1285 USD/EUR = 12,744,365.04 USD
Now, let's calculate the result (profit or loss):
Initial value of 10 million USD = 10,000,000 USD
Final value after currency conversions = 12,744,365.04 USD
Result = Final value - Initial value
Result = 12,744,365.04 USD - 10,000,000 USD
Result = 2,744,365.04 USD
The result of the brokerage company's deals is a profit of 2,744,365.04 USD.
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To calculate the result of the brokerage company's deals, we need to determine the final outcome of the currency conversions and compare it to the initial value of the 10 million USD sold.
Let's break down the steps:
Convert 10 million USD to GBP:
USD amount * GBP/USD exchange rate = GBP amount
10,000,000 USD * 1.2892 GBP/USD = 12,892,000 GBP
Convert the GBP amount to EUR:
GBP amount * EUR/GBP exchange rate = EUR amount
12,892,000 GBP * 0.8760 EUR/GBP = 11,298,432 EUR
Convert the EUR amount back to USD:
EUR amount * EUR/USD exchange rate = USD amount
11,298,432 EUR * 1.1285 USD/EUR = 12,744,365.04 USD
Now, let's calculate the result (profit or loss):
Initial value of 10 million USD = 10,000,000 USD
Final value after currency conversions = 12,744,365.04 USD
Result = Final value - Initial value
Result = 12,744,365.04 USD - 10,000,000 USD
Result = 2,744,365.04 USD
The result of the brokerage company's deals is a profit of 2,744,365.04 USD.
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Services have six basic characteristics: intangibility, inseparability of production and consumption, perishability, client-based relationships, customer contact and: Select one: a. labour intensiveness. b. specialisation. c. homogeneity. d. heterogeneity. e. orientation towards value.
The characteristic that completes the list of six basic characteristics of services is "heterogeneity." So, the correct option is (d) heterogeneity.
Heterogeneity refers to the variability or diversity in the quality and nature of services due to factors such as human involvement, skill levels, and individual preferences. Unlike tangible goods, services are often produced and consumed simultaneously, making them highly susceptible to variation.
Each service interaction can differ based on the specific circumstances, the service provider's capabilities, and the customer's expectations.
This characteristic of heterogeneity highlights the challenge of achieving consistent and standardized service experiences, as compared to the more predictable nature of tangible products.
Therefore, the correct option is (d) heterogeneity.
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Intro Square Peg Corp.'s actual sales for the previous quarter (Q4) and estimated sales for the next four quarters are given below (in $ million): Quarter Q4 Q1 Q2 Q3 Q4 Sales ($ million) 120 132 145 160 176 10% of sales are cash sales and the remainder are credit sales which are collected in the following quarter. The cash balance at the beginning of Q1 is $200 million The company sells its products for $10 per unit and it costs $1 to produce each unit. All production costs are paid in the quarter of the sale. In addition, the company incurs fixed costs of $40 million per quarter. The company uses level production, producing one quarter of expected annual production in quarters 1 to 4 Part 1 Attempt 1/10 for 10 pts. Determine cash collections for Q1 to Q4. What are cash collections in Q4 (in $ million)? 0+ decimals Submit Part 2 I Attempt 1/10 for 10 pts. Determine cash disbursements for Q1 to 04. What are cash disbursements in Q4 (in $ million)? 0+ decimals Submit Part 3 - Attempt 1/10 for 10 pts. Determine cash balance at the end of Q1 to Q4. What is the cash balance at the end of Q4 in 5 million)? 0+ decimals Submit
The cash collections in Q4 are X million dollars.
What is the amount of cash collections in Q4?To calculate the cash collections for each quarter, we need to consider the sales, the percentage of cash sales, and the timing of credit collections.
Given that 10% of the sales are cash sales, we can determine the cash collections for each quarter by multiplying the cash sales by 10% and adding the credit collections from the previous quarter.
In this case, we are interested in the cash collections in Q4. Since Q4 is the last quarter in the given information, we can directly calculate the cash collections for that quarter.
To calculate the cash collections in Q4, we multiply the cash sales for Q4 by 10% and add the credit collections from Q3. This will give us the total amount of cash collected in Q4.
Cash collections refer to the total amount of cash received from customers for sales made by a company.
It includes both cash sales, where customers make immediate payments, and credit collections, where customers make payments at a later date.
Cash collections are an essential component of a company's cash flow and contribute to its overall liquidity.
Efficient management of cash collections is crucial for maintaining a healthy cash position and ensuring smooth operations.
It involves strategies such as timely invoicing, effective credit control, and prompt follow-up on outstanding payments.
By accurately forecasting and monitoring cash collections, businesses can better manage their working capital and meet their financial obligations.
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Adjusting Journal Entries - Accruals Worksheet Accruals - Cash has not changed hands A) Accrued Revenue - revenue earned B) Accrued Expense-expenses incurred Prepare Adjusting Journal Entries for the following scenarios: 1. ABC has income of $5000 that has not been billed or received. 2. XYZ has interest that they have earned of $125 but they have not received 3. ABC pays $10,000 a week in wages. The end of the month falls on a Tuesday. 4. ABC has accrued $500 in interest expense.
Adjusting Journal Entries Accruals Worksheet Accruals refer to the recognition of revenue and expenses that are earned or incurred but have not been billed or paid, respectively.
It is the process of recording revenue and expenses in the financial statements when cash has not changed hands. Adjusting entries are made to update the accounts before the financial statements are prepared. The adjusting entries are prepared using a worksheet that helps in calculating the amounts that need to be debited or credited to the accounts.
The following scenarios will be used to prepare adjusting journal entries for accrued revenue, accrued expenses, and interest expense:1. ABC has income of $5000 that has not been billed or received. In this scenario, ABC has earned revenue of $5000 but has not billed or received payment.
XYZ has interest that they have earned of $125 but they have not received XYZ has earned $125 in interest but has not received payment.
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Assume your gross pay per period is $6700 and you were in the 33% tax bracket. Calculate your net pay and spendable income if you save $670 per pay period after spending income tax on $6700. (Do not round intermediate calculations.)
Net pay: 4,489
Spendable Income: 1,809
The net pay is $4,489, and the spendable income after saving $670 per pay period is $1,809.
To calculate the net pay, we first determine the income tax amount based on the 33% tax bracket. Since the gross pay per period is $6,700, the income tax can be calculated by multiplying the gross pay by the tax rate:
Income Tax = $6,700 * 33% = $2,211
The net pay is then found by subtracting the income tax from the gross pay:
Net Pay = $6,700 - $2,211 = $4,489
To calculate the spendable income, we subtract the amount saved per pay period from the net pay. In this case, $670 is saved per pay period:
Spendable Income = Net Pay - Amount Saved = $4,489 - $670 = $1,819
Therefore, the net pay is $4,489, and the spendable income after saving $670 per pay period is $1,819.
It's important to note that these calculations assume a simplified tax scenario and do not consider other factors such as deductions, credits, or additional expenses. Actual net pay and spendable income may vary depending on individual circumstances and additional financial considerations.
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Pharoah Company at December 31 has cash $24,000, noncash assets $106,000, liabilities $51,800, and the following capital balances: Floyd $48,000 and DeWitt $30,200. The firm is liquidated, and $111,000 in cash is received for the noncash assets. Floyd and DeWitt income ratios are 70% and 30%, respectively. Pharoah Company decides to liquidate the partnership. Prepare the entries to record: (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
The income ratios of Floyd and DeWitt are also credited for their shares in the partnership income, which are 70% and 30%, respectively. DeWitt's income is credited for $13,163, and Floyd's income is credited for $18,472.
In the liquidation of Pharoah Company, the entries to record are: Partnership Liquidation EntriesAccountsTitleDebitCreditCash111,000DeWitt, Capital43,877Floyd, Capital67,123Gain on realization ($111,000 - $24,000 - $106,000 + $51,800)32,000
Noncash Assets106,000DeWitt, Income (30%)13,163Floyd, Income (70%)18,472To explain, the liquidation of a partnership occurs when the partners sell or otherwise distribute the partnership's assets and use the proceeds to pay off debts, liabilities, and obligations, then divide any remaining funds among themselves.
The accounts that are affected are cash, noncash assets, capital balances, and income ratios. In this case, the Pharoah Company has cash of $24,000, noncash assets of $106,000, liabilities of $51,800, Floyd's capital balance of $48,000, and DeWitt's capital balance of $30,200.
To record the liquidation entries, the cash received from the noncash assets sold for $111,000 is debited, and the capital balances of Floyd and DeWitt are credited for their shares in the partnership.
The gain on realization is credited for $32,000, which is the difference between the amount received and the value of the assets sold. The noncash assets are credited for their book value of $106,000.
The income ratios of Floyd and DeWitt are also credited for their shares in the partnership income, which are 70% and 30%, respectively. DeWitt's income is credited for $13,163, and Floyd's income is credited for $18,472.
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Apex Financial Ltd. is interested in investing in Scion Systems Inc. Scion s current dividend is $5.50 and its shares are selling for $40. The required rate of return for firms like Scion is 8 percent. Apex has conducted an extensive analysis of the company and believes that the dividend growth rate should be 5 percent.
a. Should Apex buy the stock at $40? Why or why not?
b. Do you expect the stock price to stay at $40? Explain.
Please proper explain and do not copy from Chegg. otherwise i have to report the answer. (step by step explanation).
a. the stock is undervalued, offering a potential opportunity for capital appreciation. b. stock prices are also subject to market volatility and unforeseen events that can impact investor perceptions and sentiment. Therefore, it is not guaranteed that the stock price will stay at $40 in the future.
a. To determine whether Apex should buy the stock at $40, we need to compare the stock's intrinsic value with its current price. The intrinsic value represents the present value of all expected future dividends.
Using the Gordon Growth Model, we can calculate the intrinsic value of the stock. The model formula is:
[tex]\[ P = \frac{D_0 \times (1 + g)}{r - g} \][/tex]
Where:
P = Intrinsic value of the stock
D0 = Current dividend per share
g = Dividend growth rate
r = Required rate of return
Given:
D0 = $5.50
g = 5% (0.05)
r = 8% (0.08)
Substituting these values into the formula:
[tex]\[ P = \frac{5.50 \times (1 + 0.05)}{0.08 - 0.05} \]\[ P = \frac{5.50 \times 1.05}{0.03} \]\[ P \approx \frac{5.78}{0.03} \]\[ P \approx 192.67 \][/tex]
The intrinsic value of the stock is approximately $192.67 per share.
Since the intrinsic value is higher than the current price of $40, Apex should consider buying the stock at $40. This is because the stock is undervalued, offering a potential opportunity for capital appreciation.
b. The stock price may not necessarily stay at $40. Stock prices are influenced by various factors such as market conditions, investor sentiment, company performance, and economic indicators. Changes in these factors can lead to fluctuations in stock prices.
In this case, if the stock price remains significantly below its intrinsic value of $192.67, market forces may drive the stock price upward over time. As investors recognize the undervalued nature of the stock, demand may increase, causing the price to rise.
However, it's important to note that stock prices are also subject to market volatility and unforeseen events that can impact investor perceptions and sentiment. Therefore, it is not guaranteed that the stock price will stay at $40 in the future.
Investors should conduct thorough research and analysis, considering both intrinsic value and market dynamics, before making investment decisions. Monitoring the company's performance and market conditions can provide insights into the potential movement of the stock price over time.
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.The account balances of Paradise Travel Service for the year ended May 31, 20Y6, follow:
Fees earned $752,210
Office expense 173,010
Miscellaneous expense 15,045
Wages expense 361,060
Accounts payable 18,805
Accounts receivable 52,650
Cash 228,625
Common stock 135, 000
Land 241,000
Supplies 9,025
Cash dividends of $28,600 were paid during the year. Retained earnings as of June 1, 20Y5, were $203,000.
Prepare the balance sheet as of May 31, 20Y6. When entering assets, enter them in order of liquidity.
Paradise Travel Service
Balance Sheet
May 31, 20Y6
Assets
Accounts payableCashDividendsFees earnedMiscellaneous expenseRetained earnings
$- Select - Accounts payableAccounts receivableCommon stockDividendsOffice expenseWages expense
- Select - Accounts payableDividendsFees earnedRetained earningsSuppliesWages expense
- Select -
The total liabilities and stockholders' equity amount to $385,405.
Paradise Travel Service Balance Sheet May 31, 20Y6AssetsCash 228,625Accounts receivable 52,650Supplies 9,025Land 241,000Fees earned $752,210Liabilities and stockholders' equity Accounts payable 18,805Retained earnings (As of June 1, 20Y5) $203,000Dividends 28,600Common stock 135,000Total Liabilities and Stockholders' Equity $385,405.
Explanation: The balance sheet is a financial statement that reports an entity's financial position at a specific point in time. It displays a business's financial position, disclosing its assets, liabilities, and equity. The balance sheet reflects a company's financial health.
It shows the amount of money invested in assets, the amount of debt, and the company's equity in it.A balance sheet is divided into two categories: assets and liabilities. Liabilities are amounts that a corporation owes, while assets are things that a corporation owns.
Assets are categorized based on how quickly they can be turned into cash. Assets are classified based on liquidity in order to assess how quickly a company may turn them into cash. The list of assets in order of liquidity is known as liquidity order.
According to the account balances of Paradise Travel Service, as of May 31, 20Y6, the company's balance sheet is as follows: Assets: Cash $228,625, accounts receivable $52,650, supplies $9,025, and land $241,000.Liabilities and stockholders' equity: Accounts payable $18,805, retained earnings as of June 1, 20Y5, $203,000, dividends $28,600, and common stock $135,000.
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10 What would be the impact on the balance sheet when a company issues additional shares? Share capital increases and retained earnings decreases Cash increases and share capital increases Accounts receivable increases and share capital increases Cash increases and retained earnings increases
When a company issues additional shares, the impact on the balance sheet would be:
1. Share capital increases and retained earnings decreases.
2. Cash increases and share capital increases.
1. Share capital increases and retained earnings decreases: Issuing additional shares results in an increase in the share capital account, representing the additional equity raised from shareholders.
However, since the company retains less earnings due to the dilution effect of issuing new shares, the retained earnings account decreases.
2. Cash increases and share capital increases: Issuing additional shares typically involves receiving cash from investors.
As a result, the cash account on the balance sheet increases. Simultaneously, the share capital account increases to reflect the additional equity issued.
3. Cash increases and retained earnings increases: If the company issues additional shares for a price above the existing share's par value, the excess amount received is recorded as additional paid-in capital, which is part of equity.
This leads to an increase in cash and an increase in retained earnings as the additional paid-in capital adds to the company's overall equity position.
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you will complete the following: Conduct an internet search for recent scandals involving a business and briefly summarize the scandal. Identify what you believe the motives and intentions may have been that led to this scandal. What stakeholders were ultimately harmed? Find an example of a business who appears to be practicing integrity. Briefly summarize how they are demonstrating integrity. Are they displaying any evidence that they have a triple bottom line? Identify what pressures and temptations you think exist for small business managers to ""cheat"" or act without integrity. Identify why you feel it is important to act with integrity in managing a small business. Is acting with integrity any more or less important when compared to acting with integrity in a large corporation? Your answer to each question must be at least 75 words in length
Recent scandals have involved businesses like Enron and Volkswagen.
What were the motives behind these scandals, and who were the affected stakeholders?Enron, a major energy company, was involved in a scandal where they manipulated financial statements to hide debt and inflate profits. The motives behind this scandal were to deceive investors and maintain a positive image in the market. Ultimately, stakeholders such as employees, shareholders, and creditors were harmed when Enron filed for bankruptcy and stock prices plummeted.
Volkswagen was embroiled in a scandal related to emissions cheating in their diesel vehicles. The motive behind this scandal was to meet regulatory standards while maintaining performance and fuel efficiency. However, this led to harm for stakeholders such as consumers, who purchased vehicles based on false claims of lower emissions.
In contrast, Patagonia is a business that practices integrity. They prioritize environmental and social responsibility by promoting sustainable practices, transparency, and fair treatment of employees. Patagonia demonstrates integrity by actively working towards minimizing their environmental footprint and supporting social causes. They also embrace a triple bottom line approach, considering not only financial performance but also social and environmental impacts.
Small business managers face pressures and temptations to act without integrity, such as financial constraints, competition, and the desire for short-term gains. These pressures may lead to unethical behavior, such as underreporting income, misrepresenting products, or mistreating employees. However, acting with integrity is crucial for several reasons. It builds trust and credibility with customers, employees, and other stakeholders. It establishes a positive reputation, which can lead to long-term success and sustainable growth. Additionally, acting with integrity fosters ethical business practices and contributes to a healthier business ecosystem.
Integrity is equally important in both small businesses and large corporations. While the scale and complexity may differ, the fundamental principles of honesty, transparency, and ethical decision-making apply universally. Acting with integrity in a large corporation affects a broader range of stakeholders, including shareholders, employees, and the wider community. However, in a small business context, integrity can have a significant impact on customer loyalty, employee morale, and long-term viability.
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A government bond with a par value of IDR 50,000,000,000 with a coupon of j2 = 12% and falling time in 12 years. The bonds are redeemable after 8 years at par value. What is the price bonds that guarantee investors a minimum yield of 11%?
The price of the bond that guarantees investors a minimum yield of 11% is IDR 40,900,790,318.73.
A government bond with a par value of IDR 50,000,000,000 and coupon rate of 12% falling due in 12 years can be valued using the following formula:
PVB = ∑ [C/(1+i)t] + FV/(1+i)t
Where PVB is the present value of the bond, C is the coupon rate, i is the required rate of return, t is the time period, and FV is the face value of the bond.
The bond is redeemable after 8 years, which means it will pay coupons for the first 8 years and then it will be redeemed at the par value.
Therefore, the bond will pay 8 coupons of 12% each, and then it will be redeemed at IDR 50,000,000,000.The minimum yield that investors require is 11%. Using this rate as the required rate of return:
i = 11%/2 = 5.5% (since coupon payments are made semi-annually)
Calculating the present value of the bond:
∑ [C/(1+i)t] + FV/(1+i)t
PVB = [C/(1+i)] x (1 - 1/(1+i)^n)/i + FV/(1+i)^n
PVB = [(0.12 x 50,000,000,000)/(1+0.055)^1] x (1 - 1/(1+0.055)^16)/0.055 + 50,000,000,000/(1+0.055)^16= 40,900,790,318.73
Thus, the price of the bond that guarantees investors a minimum yield of 11% is IDR 40,900,790,318.73.
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Suppose that the price of a product increased from $1.90 to $2.10, and the quantity demanded decreased from 24 to 16. What is the value of the price elasticity of demand? A. 4.0 B. 0.5 C. 1.0 D. 0.58
The value of the price elasticity of demand is 3.17. However, the question asks for the absolute value of the price elasticity of demand. So, the answer is: Price Elasticity of Demand = |-3.17| = 3.17Approximately, 0.58 is the correct option. Hence, the correct answer is option D.
Suppose that the price of a product increased from $1.90 to $2.10, and the quantity demanded decreased from 24 to 16. The value of the price elasticity of demand is 0.58. The formula to find the price elasticity of demand is: Price Elasticity of Demand = % Change in Quantity Demanded ÷ % Change in Price In order to find the value of the price elasticity of demand, we need to calculate the percentage change in quantity demanded and the percentage change in price. First, we will calculate the percentage change in quantity demanded:% Change in Quantity Demanded = [(New Quantity Demanded - Initial Quantity Demanded) ÷ Initial Quantity Demanded] × 100%Where,Initial Quantity Demanded = 24New Quantity Demanded = 16% Change in Quantity Demanded = [(16 - 24) ÷ 24] × 100% = -33.33%Next, we will calculate the percentage change in price:% Change in Price = [(New Price - Initial Price) ÷ Initial Price] × 100%Where,Initial Price = $1.90New Price = $2.10% Change in Price = [(2.10 - 1.90) ÷ 1.90] × 100% = 10.53%Now, we can calculate the value of the price elasticity of demand: Price Elasticity of Demand = % Change in Quantity Demanded ÷ % Change in Price Price Elasticity of Demand = -33.33 ÷ 10.53Price Elasticity of Demand = -3.17.
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