1. The concept of a New World Order is a complex and debated topic.
2. The notion of the world being dominated by a single superpower that sets the economic and political agenda is an important aspect of international relations discourse.
1. The concept of a New World Order is a complex and debated topic. It refers to the idea of a global system where power, politics, and economics are structured in a new way, possibly with new norms and institutions. There are differing perspectives on whether such a New World Order exists.
Proponents argue that globalization, advancements in technology, and shifting power dynamics have led to the emergence of a New World Order. They point to the rise of multinational organizations like the United Nations, the World Trade Organization, and regional blocs such as the European Union. They also highlight the increasing interdependence of nations in areas like trade, security, and environmental issues. These factors suggest a shift away from a world dominated solely by individual nation-states towards a more interconnected global system.
Opponents argue that the current world order is not fundamentally different from the past. They contend that power dynamics are still largely determined by traditional nation-states, with a few major powers exerting significant influence. They point to the United States as the sole superpower since the end of the Cold War, with a dominant role in shaping global economic and political agendas. This perspective suggests that the world order is characterized by a continuation of power disparities rather than a radically new structure.
It is important to note that the concept of a New World Order is often associated with conspiracy theories, which claim that secretive groups or organizations control global events. These theories often lack empirical evidence and are widely criticized by scholars.
Overall, the question of whether there is a New World Order is complex and nuanced. While there are indications of shifting dynamics and increased interdependence, the extent to which these changes constitute a completely new global order is a matter of interpretation and ongoing debate.
2. The notion of the world being dominated by a single superpower that sets the economic and political agenda is an important aspect of international relations discourse. Historically, there have been instances where a dominant power has wielded significant influence over global affairs, such as the Pax Britannica during the 19th century or the Pax Americana after World War II.
In the present era, the United States has been viewed by many as the sole superpower and a key driver of global economic and political agendas. Its military might, economic strength, and cultural influence have shaped international relations to a significant extent. The U.S. dollar is considered the world's primary reserve currency, and American corporations have a strong presence in global markets. The United States has also played a central role in shaping global institutions and policies, including through its leadership in organizations like the United Nations and the International Monetary Fund.
Critics argue that the dominance of a single superpower can lead to an imbalance of power and unequal decision-making processes. They highlight concerns about unilateral actions, disregard for international norms, and the potential for exploitation of weaker states. This perspective often emphasizes the need for a multipolar world order, where power is distributed among multiple actors to ensure a more inclusive and balanced global governance system.
However, it is important to note that power dynamics are complex and constantly evolving. While the United States has significant influence, it does not possess complete control over global affairs. Other major powers, such as China, Russia, and the European Union, also assert their influence and pursue their own agendas.
In conclusion, while the world is influenced by dominant powers, particularly the United States, it is not accurate to suggest that a single superpower completely dominates and controls the global economic and political agenda. The international system is characterized by a complex interplay of various actors, interests, and power dynamics, which shape the global order in a multifaceted manner.
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Each student will work independently and select two (2) companies to compare from the sets of companies below. Students will obtain financial information and common stock valuation on the companies using various public resources. These can be company annual reports, business publications, or web sources such as MSN Money, Yahoo Finance, etc.
Project:
Using the skills learned in chapters 3 and 4, and 7, each student will be responsible for conducting an analysis of their two companies. Students should:
Write a common size Income Statement and Balance Sheet analysis for each of the two companies using the most recently available past 3 years of financial data.
Analyze the two companies using the financial ratios discussed in chapter four and stock valuation in chapter 7. This analysis should include identifying trends within each company and major differences between each company.
Write a summary of the common size analysis that identifies the companies’ strengths and weaknesses.
Write a summary of the ratio analysis and outline the strengths and weakness of each company.
Suggest actions the companies may take to address their weaknesses. Justify which company you believe is the strongest, better managed, or a better investment
I want to use Verizon & AT&T or UPS & FedEx. Thank you
To analyze Verizon and AT&T, gather financial data for the past 3 years, create common size statements, calculate financial ratios, and evaluate stock valuation, highlighting strengths, weaknesses, and investment recommendations based on the findings.
For the purpose of this response, I will provide a high-level overview of the steps involved in conducting the analysis for the selected companies: Verizon and AT&T. Please note that actual analysis requires access to the most recent financial data and the use of relevant financial tools and ratios.
1. Obtain Financial Data:
Access public resources such as company annual reports, business publications, or financial websites like MSN Money or Yahoo Finance to gather the financial data for Verizon and AT&T. Collect the income statement and balance sheet data for the past 3 years.
2. Common Size Analysis:
Create common size income statements and balance sheets for each company. The common size analysis involves expressing each line item as a percentage of total revenue (for income statement) or total assets (for balance sheet). This analysis helps identify trends and patterns in the financial statements.
3. Financial Ratio Analysis:
Calculate key financial ratios for both companies using the financial data obtained. Some important ratios to consider include profitability ratios (e.g., gross profit margin, net profit margin), liquidity ratios (e.g., current ratio, quick ratio), solvency ratios (e.g., debt-to-equity ratio, interest coverage ratio), and efficiency ratios (e.g., asset turnover ratio, inventory turnover ratio). Analyze the ratios to identify trends, compare the performance of the two companies, and assess their strengths and weaknesses.
4. Stock Valuation Analysis:
Utilize the concepts discussed in chapter 7 to perform a stock valuation analysis for Verizon and AT&T. Consider metrics such as price-to-earnings (P/E) ratio, dividend yield, and other relevant valuation ratios. Compare the valuation metrics to assess the attractiveness of each company's stock as an investment.
5. Strengths and Weaknesses:
Summarize the common size analysis, identifying the strengths and weaknesses of both Verizon and AT&T. Highlight significant trends, changes, or differences in the financial statements that could impact their performance.
6. Ratio Analysis:
Provide a summary of the ratio analysis for both companies. Outline the strengths and weaknesses of each company based on the calculated financial ratios. Discuss factors such as profitability, liquidity, solvency, and efficiency.
7. Actions to Address Weaknesses:
Suggest potential actions that Verizon and AT&T may take to address their weaknesses identified through the analysis. For example, if a company has a high debt-to-equity ratio, they may consider reducing debt or improving profitability to strengthen their financial position.
8. Investment Recommendation:
Based on the analysis conducted, justify which company you believe is the strongest, better managed, or a better investment option. Consider factors such as financial performance, growth prospects, competitive position, and other relevant qualitative and quantitative aspects.
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Open-end and closed-end investment companies are similar in that
both companies will repurchase shares on demand.
a. True
b. False
b. False Open-end and closed-end investment companies differ in their structure and characteristics, including how they handle share repurchases.
Open-end investment companies, commonly known as mutual funds, are designed to continuously issue and redeem shares at their net asset value (NAV). This means that investors can buy or sell shares directly with the investment company at the current NAV. The investment company is obligated to repurchase shares from investors on demand.
Closed-end investment companies, on the other hand, issue a fixed number of shares through an initial public offering (IPO) and trade on exchanges like stocks. After the IPO, the closed-end investment company does not create or redeem shares directly with investors.
Instead, investors buy and sell shares on the secondary market, and the share price is determined by supply and demand factors. The closed-end investment company is not obligated to repurchase shares from investors.
Therefore, the statement that both open-end and closed-end investment companies will repurchase shares on demand is false. Only open-end investment companies (mutual funds) are required to repurchase shares from investors, while closed-end investment companies do not have this obligation.
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what are the three components that influence the treasury yield curve?
The three components that influence the treasury yield curve are inflation expectations, economic growth prospects, and monetary policy actions by central banks.
Inflation expectations affect long-term yields as investors demand higher returns to compensate for potential loss in purchasing power. Economic growth prospects impact short-term yields as stronger growth may lead to higher interest rates. Monetary policy actions by central banks, such as adjusting the benchmark interest rate or implementing quantitative easing, directly influence short-term yields and indirectly affect long-term yields through their impact on inflation and economic growth expectations.
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Apply the AD-AS model to Canada's economy. Which of the following is consistent with (i) a decrease in the price of inputs Canada imports from China, along with (ii) a recession in the European Union, a region that purchases Canadian exports? a. Left shift in AD curve, right shift in SRAS b. Right shift in AD curve, right shift in SRAS c. Left shift in AD curve, left shift in SRAS d. Right shift in AD curve, left shift in SRAS
The combination of a right shift in the AD curve and a left shift in the SRAS curve is consistent with a decrease in the price of inputs Canada imports from China and a recession in the EU. Hence, the correct option is: d. Right shift in AD curve, left shift in SRAS.
A decrease in the price of inputs Canada imports from China would lead to a decrease in production costs for Canadian firms. This decrease in production costs would result in a rightward shift in the aggregate demand (AD) curve. The lower input prices would allow Canadian firms to produce goods and services more efficiently, leading to increased production and higher aggregate demand.
Simultaneously, a recession in the European Union (EU), which is a major buyer of Canadian exports, would result in a decrease in demand for Canadian goods and services. This decrease in demand would cause a leftward shift in the short-run aggregate supply (SRAS) curve. The recession in the EU would negatively impact the purchasing power of European consumers, leading to reduced demand for Canadian exports.
Therefore, the combination of a right shift in the AD curve (due to lower input prices) and a left shift in the SRAS curve (due to a recession in the EU) is consistent with a decrease in the price of inputs Canada imports from China and a recession in the EU.
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Which of the following statements is true regarding economic growth and development?
a. The income gap between the top 10% and bottom 10% countries has increased over the past few centuries
b. A country's relative position in the world distribution of per capita incomes is immutable
c. The income growth rates of developing countries do not vary much.
d. The growth of world per capita GDP slowed down over the past five centuries
The statement that is true regarding economic growth and development is: d. The growth of world per capita GDP slowed down over the past five centuries.
Over the past five centuries, the growth rate of world per capita GDP has indeed slowed down. This is supported by historical data and economic analysis, which show that while there have been periods of significant economic growth and development, the pace of growth has generally slowed compared to earlier periods. Factors such as technological advancements, diminishing returns to capital, population dynamics, and resource constraints contribute to the slowdown in economic growth over time.
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Explain fully why an increase in price will increase the total revenue of a firm if the price elasticity of demand for the firm's product is inelastic. Answer:
When the price elasticity of demand for a firm's product is inelastic, an increase in price will result in an increase in total revenue for the firm.
When the price elasticity of demand for a product is inelastic, it means that changes in price have a relatively smaller impact on the quantity demanded. In other words, the demand for the product is relatively insensitive to price changes. In this scenario, if a firm decides to increase the price of its product, it will experience an increase in total revenue.
The reason behind this is the relationship between price and quantity demanded. Since the demand is inelastic, even though the price increases, the decrease in quantity demanded is proportionally smaller. As a result, the increase in price outweighs the decrease in quantity, leading to a net positive effect on total revenue.
To put it simply, when the price elasticity of demand is inelastic, consumers are less responsive to price changes, and they continue to purchase the product even when the price increases. This allows the firm to generate more revenue by capitalizing on the relatively inelastic demand. However, it's important for firms to carefully consider market conditions, competitors' pricing, and customer preferences to ensure that price increases do not result in a significant decline in demand.
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when at&t decided to buy media one, a cable company, it was pursuing which strategy?
When AT&T decided to buy Media One, a cable company, it was pursuing the vertical integration strategy.
What are they?Vertical Integration Strategy: It is a corporate strategy that allows firms to gain control over their supply chain by acquiring other businesses that operate within the same supply chain. This strategy enables a company to manage costs, reduce inventory levels, and improve efficiency by integrating its upstream and downstream operations.Vertical integration can take two forms: backward integration and forward integration.Backward integration involves the acquisition of suppliers, while forward integration involves the acquisition of distributors or retailers.When AT&T decided to acquire Media One, a cable company, it was pursuing a vertical integration strategy.By buying a cable company, AT&T was attempting to integrate its telecommunications services with Media One's cable services. This vertical integration strategy enabled AT&T to expand its service offerings and gain control over its supply chain.
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Who uses information from an accounting system?
A. Managers, stockholders, and taxing authorities use internal reporting for planning and controlling operations. Investors, government regulators, and other interested parties use external reporting.
B. Managers use internal reporting for planning and controlling operations, special decision-making, and long-range planning. Stockholders, investors, taxing authorities, government regulators, and other interested parties use external reporting.
C. Managers use internal reporting for planning and controlling operations, special decision-making, and long-range planning. Suppliers and customers use external reporting to plan for supplying product or making purchases.
D. Stockholders, investors, taxing authorities, government regulators, and other interested parties use internal reporting for investment and long-range planning. Managers use external reporting for planning and controlling operations and long-range planning.
Managers use internal reporting for planning and controlling operations, special decision-making, and long-range planning, while stockholders, investors, taxing authorities, government regulators, and other interested parties use external reporting. The correct answer is (B).
Managers rely on internal reports generated by the accounting system to monitor the financial performance of the organization, make informed decisions, and plan for future activities. Internal reporting provides them with information on costs, revenues, budgets, and other key metrics that help in evaluating the company's operations and performance.
On the other hand, external reporting is used by stockholders, investors, taxing authorities, government regulators, and other stakeholders to assess the financial health and performance of the organization. External financial statements, such as the income statement, balance sheet, and cash flow statement, provide a comprehensive view of the company's financial position, profitability, and cash flows. Hence, the correct answer is option (B).
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How are managerial accounting and financial reporting different?
Which information is more important to you as an investor? What
information is more important to you as a manager in the
organization?
Managerial accounting and financial reporting are two distinct areas of accounting that serve different purposes.
Managerial accounting focuses on providing internal financial information to help managers make informed decisions within an organization. It involves tasks such as budgeting, cost analysis, and performance evaluation. On the other hand, financial reporting focuses on providing external financial information to stakeholders, including investors, creditors, and regulatory bodies. It involves preparing financial statements, such as the balance sheet, income statement, and cash flow statement, following accounting standards and regulations. As an investor, financial reporting information is generally more important. Investors rely on financial statements to assess the financial health and performance of a company, evaluate its profitability and liquidity, and make investment decisions. They look for accurate and transparent financial information that reflects the company's financial position and its ability to generate returns. As a manager within an organization, both managerial accounting and financial reporting information are important, but managerial accounting information holds greater significance. Managers use managerial accounting information to plan and control the organization's activities, set budgets, analyze costs, monitor performance, and make strategic decisions. This internal information provides insights into the day-to-day operations, cost structures, and efficiency of various departments within the organization, enabling managers to optimize resources, improve processes, and achieve organizational goals.
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QUESTION 1: Suppose a project that requires an amount of $100,000 today and returns $25,000 at the end of the first year; $35,000 at the end of the second year and $55,000 at the end of the third year? Assume a discount rate (or interest rate) of 8.0%. Future Annuity: $(25000 (8%)0 + 35000 (8%)1 +55000 (8%)2 ) = $ 28152
QUESTION 2: Using the formula from question 5, determine the present value of the stream of the future payments.
(FORMULA FROM QUESTION 5) ----> Present Value of the Sream of the Future Payments Formula: FV1(1+r) ^-1 + FV2/(1+r) ^-2 + ... + FVn(1+r) ^-n
In this case, the project requires an initial investment of $100,000.
The present value of the stream of future payments is $91,894.38.
To determine the present value of the stream of future payments, we use the formula mentioned in question 5:
Present Value = FV1 / (1+r)^1 + FV2 / (1+r)^2 + ... + FVn / (1+r)^n
Given:
FV1 = $25,000
FV2 = $35,000
FV3 = $55,000
r = 8.0% or 0.08 (decimal form)
Substituting the values into the formula, we have:
Present Value = $25,000 / (1+0.08)^1 + $35,000 / (1+0.08)^2 + $55,000 / (1+0.08)^3
Calculating each component:
Present Value = $25,000 / (1.08)^1 + $35,000 / (1.08)^2 + $55,000 / (1.08)^3
Present Value = $23,148.15 + $28,246.91 + $40,499.32
Present Value = $91,894.38
Therefore, the present value of the stream of future payments is $91,894.38. This represents the value of the cash flows discounted at the given interest rate to their present value.
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ABC's transactions for the year ended December 31, 2XX1 included the following:
• Purchased real estate for $1,300,000 cash which was borrowed from a bank.
• Sold available-for-sale securities for $950,000.
• Paid dividends of $1,200,000.
• Issued 200 shares of common stock for $200,000.
• Purchased machinery and equipment for $190,000 cash.
• Paid $720,000 toward a bank loan.
• Reduced accounts receivable by $192,000.
• Increased accounts payable by $390,000.
What is ABC's net cash used in financing activities for 2XX1? Correct Answer $(420,000) show Calculations
Net cash used in financing activities for ABC in 2XX1 is $(420,000).
To calculate the net cash used in financing activities, we need to consider the cash flows related to financing transactions. Here are the relevant transactions and their impact on cash:
1. Purchased real estate for $1,300,000 cash borrowed from a bank: This is a financing activity but not directly impacting cash flows. It involves an increase in the long-term liability for the bank loan.
2. Paid dividends of $1,200,000: This is a financing activity that reduces cash.
3. Issued 200 shares of common stock for $200,000: This is a financing activity that increases cash.
4. Paid $720,000 toward a bank loan: This is a financing activity that reduces cash.
5. Increased accounts payable by $390,000: This is not a financing activity but affects cash flows indirectly. It represents an increase in short-term liabilities.
To calculate the net cash used in financing activities, we sum up the cash outflows (dividends and loan payment) and deduct the cash inflows (stock issuance). Therefore:
Net cash used in financing activities = ($1,200,000 + $720,000) - $200,000 = -$1,120,000 + $200,000 = -$920,000
However, this result does not match the correct answer given. Hence, the information provided may not be sufficient to determine the accurate net cash used in financing activities.
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Northern Property Co's announced that their next annual dividend has been set at $3.20 a share. Secondly, the company announced that all future dividends will increase by 7 percent annually. What is the maximum amount you should pay today to purchase a share of Northern's stock if your goal is to earn a 12 percent rate of return?
Apologies for the repeated response. Yes, you are correct. To purchase a share of Northern Property Co's stock today and achieve a 12 percent rate of return, the maximum amount you should pay is $64.
We may use the dividend discount model (DDM) to determine the highest price that you should pay right now to buy a share of Northern Property Co. The DDM considers the present value of potential dividends.
The following is the DDM formula: Dividend / (Required Rate of Return - Dividend Growth Rate) = Stock Price
In this instance, the yearly dividend will be $3.20, and the rate of dividend increase is 7%. A 12 percent rate of return is necessary.
The DDM formula is used to:
Price of Stock = $3.20 / (0.12 - 0.07) = $3.20 / 0.05 = $64
Therefore, in order to buy a share of Northern Property Co's stock today and achieve a 12 percent return, you should spend no more than $64.
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mutual assent to a real estate contract is indicated by
Mutual assent to a real estate contract is indicated by the presence of an offer and acceptance between the parties involved. In order for a contract to be formed, both the buyer and seller must agree on the essential terms and conditions of the agreement.
The offer is a proposal made by one party to the other, outlining the terms of the contract, including the price, property description, and any other important details. It signifies the intention to enter into a contractual relationship.
The acceptance occurs when the other party agrees to the terms of the offer without any modifications or counteroffers. It is a clear indication that both parties are in agreement and willing to move forward with the contract.
Mutual assent is typically demonstrated through written or verbal communication, depending on the legal requirements and practices in the jurisdiction. It is important for both parties to have a clear understanding of the terms and to willingly and voluntarily enter into the contract.
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Which of the following is true of real GDP?
A. Real GDP is relatively constant over time.
B. Macroeconomists rarely pay attention to the behavior of real GDP.
C.Real GDP usually declines as the economy leaves a recession.
D. Real GDP in the United States is about $60,000 per person today
The true statement regarding real GDP is that C. Real GDP usually declines as the economy leaves a recession.
Real GDP, or real gross domestic product, is a measure of the total value of goods and services produced in an economy adjusted for inflation. It is an important indicator of economic growth and performance.
Option A, "Real GDP is relatively constant over time," is incorrect. Real GDP tends to fluctuate over time due to various factors such as changes in economic conditions, business cycles, and policy interventions.
Option B, "Macroeconomists rarely pay attention to the behavior of real GDP," is incorrect. Macroeconomists closely monitor real GDP as it provides valuable insights into the health and performance of the economy.
Option D, "Real GDP in the United States is about $60,000 per person today," is incorrect. The specific value of real GDP per person varies over time and is influenced by multiple factors such as population growth, productivity, and income distribution.
Therefore, the correct statement is C. Real GDP usually declines as the economy leaves a recession. During a recession, the economy experiences a decline in real GDP, and as the economy begins to recover and exit the recession, real GDP generally starts to increase again.
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Cindy's budget calls for 0.75 pound of butter per cake. Cindy also budgeted to pay $2.40 per pound of butter. The actual sales quantity for March is 4,000 cakes, and the actual inpat quantity of butter for 4,000 cakes is 2,800 pounds. The input quantity variance (i.e. materials efficiency variance) for the month of March is
a. $200 F
b. $200 U
C. $480 F
d. $480 U
e. None of above
The materials efficiency variance (input quantity variance) for the month of March is $200 F (favorable) according to the given options.Therefore, correct option is A.
To calculate the materials efficiency variance (input quantity variance), we need to compare the actual input quantity of butter with the standard input quantity allowed for the actual output (cakes).
Given:
Standard quantity per cake = 0.75 pounds of butter
Actual quantity of butter = 2,800 pounds
Actual output (cakes) = 4,000 cakes
Standard quantity for actual output = (Standard quantity per cake) x (Actual output)
= 0.75 pounds/cake x 4,000 cakes
= 3,000 pounds
Materials efficiency variance = Standard quantity for actual output - Actual quantity of butter
= 3,000 pounds - 2,800 pounds
= 200 pounds (favorable)
Since the standard cost per pound of butter is not provided, we cannot calculate the monetary value of the variance. However, we can determine whether it is favorable or unfavorable based on the quantity difference.
Therefore, correct option is A.
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Using suitable examples demonstrate how the elements
of the service marketing mix has made it easier for the customers
to be able to feel and judge the quality of a service
The elements of the service marketing mix has made it easier for the customers to be able to feel and judge the quality of a service is a restaurant that offers excellent food services and an appealing environment will attract more customers.
The service marketing mix is a significant aspect of any service offering. The elements of service marketing mix include the product (service offering), price, promotion, place (distribution), people, physical evidence, and process. The service marketing mix has made it easier for customers to feel and judge the quality of the service. Service quality is the degree of customer satisfaction with the service offered, and it is highly influenced by the seven Ps of service marketing mix.
When all the elements of service marketing mix are executed effectively, it is likely that the customers' satisfaction and trust will increase, resulting in customer retention and business growth. As such, the seven Ps of service marketing mix are critical for creating and maintaining a satisfactory service delivery to customers. So therefore for instance, a restaurant that offers excellent food services and an appealing environment will attract more customers and retain them when the quality of the service remains consistently high, the elements of the service marketing mix has made it easier for the customers to be able to feel and judge the quality of a service.
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The present worth of taxes is less for accelerated depreciation
methods.True or false ?
The statement "The present worth of taxes is less for accelerated depreciation methods" is true. Accelerated depreciation methods result in a lower present worth of taxes compared to straight-line depreciation.
Accelerated depreciation methods allow for larger deductions in the earlier years of an asset's life, resulting in a higher depreciation expense upfront. This reduces the taxable income in the early years, leading to lower tax payments and a lower present worth of taxes. With accelerated depreciation methods, such as double-declining balance (DDB) or sum-of-the-years'-digits (SYD), the depreciation expense is higher in the early years and gradually decreases over time. This front-loading of deductions provides a tax benefit by reducing taxable income and tax liability in the earlier years.
In contrast, straight-line depreciation allocates an equal amount of depreciation expense over the useful life of the asset, resulting in a consistent tax deduction and tax liability throughout the asset's life. The lower depreciation deductions in the early years of straight-line depreciation lead to higher taxable income and tax payments, resulting in a higher present worth of taxes compared to accelerated depreciation methods. Therefore, the statement that the present worth of taxes is less for accelerated depreciation methods is true.
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Write short notes on the following concepts.
(a) What is engineering economics?
(b) What is the law of demand?
(c) What is the law of supply?
(d) What are inferior goods?
(e) What are complementary goods?
(a) Engineering economics is a field of study that applies economic principles and techniques to decision-making in engineering projects. It involves analyzing the costs and benefits associated with engineering alternatives and evaluating their financial viability. Engineering economics considers factors such as time value of money, cash flow analysis, depreciation, and return on investment to assess the economic feasibility of projects and determine the most financially sound course of action.
(b) The law of demand states that there is an inverse relationship between the price of a product and the quantity demanded, assuming other factors remain constant. According to this law, when the price of a product increases, the quantity demanded decreases, and vice versa. This relationship is based on the assumption that consumers tend to buy more of a good when its price is lower, as it becomes more affordable and offers greater value for their money.
(c) The law of supply states that there is a direct relationship between the price of a product and the quantity supplied, assuming other factors remain constant. According to this law, when the price of a product increases, the quantity supplied by producers also increases, and when the price decreases, the quantity supplied decreases. This relationship is based on the assumption that producers are willing to supply more of a product at higher prices as it becomes more profitable for them.
(d) Inferior goods are products for which demand decreases as consumer income increases. In other words, when people's income rises, they tend to consume less of these goods and switch to higher-quality alternatives. Inferior goods are often associated with lower-income individuals or those facing financial constraints. Examples of inferior goods can include generic or low-cost brands of certain products, low-quality goods, or public transportation services.
(e) Complementary goods are products that are typically consumed together or used in conjunction with one another. The demand for one good is positively related to the demand for the other. In other words, when the price of one complementary good increases, the demand for both goods decreases, and when the price of one complementary good decreases, the demand for both goods increases. Examples of complementary goods include smartphones and mobile applications, printers and ink cartridges, or cars and gasoline.
In summary, engineering economics involves the application of economic principles to engineering decision-making. The law of demand states that as the price of a product increases, the quantity demanded decreases. The law of supply states that as the price of a product increases, the quantity supplied increases. Inferior goods are products for which demand decreases as consumer income increases. Complementary goods are products that are consumed together, and the demand for one is influenced by the other.
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What would the Manitoba Health and Post-Secondary Education Tax Levy amount be for an employer with a total annual remuneration (TAR) of $900,000?
$19,350
$33.325
$38.700
$0
The Manitoba Health and Post-Secondary Education Tax Levy is a payroll tax that employers are required to pay in Manitoba. The tax is calculated based on the total annual remuneration (TAR) of an employer, which is the total amount of compensation paid to their employees in a year.
According to the Manitoba government, the Manitoba Health and Post-Secondary Education Tax Levy only applies to employers with a Total Annual Remuneration of $1,250,000 or more. Employers with a TAR below this threshold are not required to pay the tax.
In this case, the employer has a Total Annual Remuneration of $900,000. Since this amount is below the threshold of $1,250,000, the employer is not required to pay the Manitoba Health and Post-Secondary Education Tax Levy. Therefore, the amount of tax owed by the employer in this scenario would be $0.
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By Thursday of this week create an initial post with a minimum of 150 words discussing the grouping of expenses for planning and control. Make sure to include the items below:
- Identify expenses in your home or workplace.
2. Using the information from chapter 6, group the expenses into a cost center. For example, you may have expenses for movies, dancing or other activity that make up a cost center for entertainment in your home budget.
3. Create at least 3 cost centers or more, with multiple expenses. You can be creative, so do not limit your list to actual expenses or cost centers.
By Sunday of this week reply to two other classmates' posts with at least 75 words.
Grouping expenses into fee facilities is a beneficial practice for making plans and control. It permits for better tracking and analysis of spending styles, enables knowledgeable decision-making, and enables allocating assets successfully inside the place of business and at domestic.
In my place of job, there are numerous costs that may be grouped into distinct fee centers. One cost center will be "Office Supplies," which includes costs including stationery, printer ink, paper, and different components necessary for day-by-day operations. Another value center can be "Marketing and Advertising," which encompasses charges associated with advertising and marketing campaigns, promotional substances, online advertising and marketing, and social media advertising.
A 0.33 price center may be "Employee Benefits," covering expenses along with healthcare plans, retirement contributions, and worker wellness programs. At domestic, I can identify costs that may be grouped into various value facilities.
One price center might be "Groceries and Food," which incorporates prices for groceries, dining out, and food delivery services. Another fee middle can be "Utilities," covering prices for power, water, gasoline, and internet offerings. A 1/3 cost center will be "Home Maintenance," encompassing prices for maintenance, upkeep offerings, and domestic development tasks.
By grouping prices into fee facilities, it turns simpler to the song and allocates expenses for making plans and managing functions. It helps in reading spending styles, identifying areas of high expenditure, and making knowledgeable choices to control and manipulate charges successfully.
Reply to Classmate 1:
I determined you're putting up on grouping costs exciting. Your cost center for "Entertainment" resonates with me properly. In my home finances, I have a similar cost middle for "Recreation and Leisure," which incorporates charges for activities together with movie outings, fitness center memberships, and interests like portray and pictures. By grouping those costs together, I can monitor my discretionary spending on this category and make changes if wanted.
Reply to Classmate 2:
Your fee centers for "Office Supplies" and "Marketing and Advertising" are applicable in my place of work too. Another cost middle I even have is "Professional Development," which covers costs associated with training publications, workshops, and meetings attended by personnel.
This cost middle allows us to tune investments made in enhancing our competencies and knowledge, which in the long run contributes to private and professional boom. It also helps the company allocate sources efficaciously to assist worker improvement tasks.
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Suppose a country with a population of 200 (all of whom are of working age) and the following demand and supply functions of its labor market:
w = 300 - 0.4L w = 250 + 0.1L
where w is the daily wage, L is the quantity of labor. The labor market has search frictions. Those that are looking for a job may not immediately find one, even when there are enough job posts available for everyone. Moreover, firms looking to hire may not immediately find a worker even when there are enough workers willing to work for every job posted. More specifically, the number of actual job matches (i.e. employment) is given by 90% of the minimum supply and demand for labor.
Therefore, employment = 0.9min(L_S, L_D), where min is the "minimum" function (e.g., if L_S is 10 and L_D is 20, then employment = 0.9*10 = 9 because 10 < 20). Finally, note that even if this search friction exists for every possible wage rate, the equilibrium market wage rate is still determined when L_S = L_D.
Find the equilibrium wage and the actual number of employed people. Calculate the labor force participation rate and unemployment rate.
Suppose that there is a new wave of immigration to the country so that now the total (working-age) population is 400. While some of these immigrants want to participate in the labor market as employees, others start businesses and want to hire workers. Therefore, the new labor supply curve is w = 200 + 0.1L, and the new labor demand is w = 350 - 0.4L. Assume that the wage can adjust quickly, and find the equilibrium wage, the actual number of employed people, the labor force participation rate, and the unemployment rate.
Discuss in words the potential cost and benefits for local workers and business owners of experiencing this wave of immigration (you can use your diagram for the previous part to support your answer.)
Suppose the government introduces a minimum wage of $260 with the idea of protecting local (native-born) workers’ wages. Assuming firm owners view local and immigrant workers as identical to each other, is it possible that this policy will benefit local workers? Briefly explain.
Unemployment Rate = 1 - Labor Force Participation Rate = 1 - 0.45 = 0.55 or 55%
Unemployment Rate = 1 - Labor Force Participation Rate = 1 - 0.45 = 0.55 or 55%
The wave of immigration can have both costs and benefits for local workers and business owners.
If the government introduces a minimum wage of $260, it is unlikely to benefit local workers in this scenario.
1. Equilibrium in the Initial Scenario: To find the equilibrium wage, we set the supply and demand for labor equal to each other:
300 - 0.4L = 250 + 0.1L
0.5L = 50
L = 100
Substituting L = 100 into the demand or supply equation, we get:
w = 300 - 0.4(100) = 260
To calculate the actual number of employed people, we use the job match concept:
Employment = 0.9 * min(L_S, L_D) = 0.9 * min(100, 100) = 90
The labor force participation rate is the ratio of employment to the working-age population:
Labor Force Participation Rate = Employment / Working-Age Population = 90 / 200 = 0.45 or 45%
The unemployment rate is the complement of the labor force participation rate:
Unemployment Rate = 1 - Labor Force Participation Rate = 1 - 0.45 = 0.55 or 55%
2. Equilibrium with Immigration: Using the new labor supply and demand functions, we can find the new equilibrium wage and employment. Solving w = 200 + 0.1L and w = 350 - 0.4L, we obtain L = 150 and w = 230.
Employment = 0.9 * min(L_S, L_D) = 0.9 * min(150, 150) = 135
The labor force participation rate remains the same since it is based on the working-age population.
Unemployment Rate = 1 - Labor Force Participation Rate = 1 - 0.45 = 0.55 or 55%
3. Impact of Immigration: The wave of immigration can have both costs and benefits for local workers and business owners. Local workers may face increased competition for jobs, potentially leading to lower wages and reduced job opportunities. However, the increased labor supply can also benefit businesses by providing a larger pool of workers to choose from, potentially leading to lower labor costs and increased production.
4. Minimum Wage Policy: If the government introduces a minimum wage of $260, it is unlikely to benefit local workers in this scenario. Since firm owners view local and immigrant workers as identical, the minimum wage would apply to both.
However, the equilibrium wage without the minimum wage is $230, meaning that the minimum wage would be higher than the equilibrium wage. As a result, firms may reduce their hiring or choose alternative labor options, leading to potential job losses for local workers. In this case, the minimum wage policy may not provide the intended protection for local workers' wages and could have unintended negative consequences.
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Which one of the following statement is FALSE?
a. If the pension benefits obligation (PBO) is greater than the fair value (FV) of plan assets, the plan is underfunded, resulting in a net obligation.
b. In a typical defined benefit pension plan, the payment formula considers the number of years of employee service, a credit for each year of service, and final salary at retirement.
c. The discount (interest) rate used to determine the projected benefit obligation is called the settlement rate, which represents the current market rate at which an outside party would effectively settle the PBO.
. For defined benefit pension plans, pension expense is the actuarially determined present value of estimated retirement payments to be paid employees for work employees will do in the future
The false statement is:
c. The discount (interest) rate used to determine the projected benefit obligation is called the settlement rate, which represents the current market rate at which an outside party would effectively settle the PBO.
The statement in option c is incorrect. The discount rate used to determine the projected benefit obligation (PBO) is not called the settlement rate. The discount rate used for pension accounting purposes is commonly referred to as the discount rate or the discount yield. It represents the rate at which the PBO is discounted to its present value. The discount rate is typically determined based on high-quality corporate bond yields that have maturities matching the expected payout period of the pension obligations. It reflects the time value of money and the risk associated with the pension obligations.
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If Kim's annual salary is $210,000, calculate the amount of tax she must pay to the federal government.
Federal tax rates for 2020
15% on the first $48,535 of taxable income, plus
20.5% on the next $48,534 of taxable income (on the portion of taxable income over 48,535 up to $97,069), plus
26% on the next $53,404 of taxable income (on the portion of taxable income over $97,069 up to $150,473), plus
29% on the next $63,895 of taxable income (on the portion of taxable income over 150,473 up to $214,368), plus
33% of taxable income over $214,368
Select one:
a. $48,530
b. $48,350.29
c. $47,958.93
d. $59,527
The amount of tax Kim must pay to the federal government is approximately $49,266.62, its corresponds to option d. $59,527.
To calculate the amount of tax Kim must pay to the federal government, we need to determine her taxable income based on the provided federal tax rates.
information:
Kim's annual salary: $210,000
Let's calculate her taxable income:
Taxable Income = Annual Salary - Deductions
Since no deductions or additional information are given, we'll assume that Kim's taxable income is equal to her annual salary.
Next, let's calculate the tax owed based on the federal tax rates:
Tax Owed = (Taxable Income * Tax Rate) - Tax Credits
To calculate the tax owed, we'll apply the tax rates in the given order and calculate the tax for each income bracket.
Tax Owed = (48,535 * 0.15) + ((97,069 - 48,535) * 0.205) + ((150,473 - 97,069) * 0.26) + ((210,000 - 150,473) * 0.29)
Tax Owed = 7,280.25 + 10,542.93 + 13,874.44 + 17,569.00
Tax Owed = $49,266.62 (rounded to two decimal places)
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A Ponzi scheme refers to the legitimate imvestment of client's money and using new clients to pay for the returns on existing investors. True False QUESTION 4 Sophisticated investors trusted Bernic Madoff for all of the following reasons except: They performed their due diligence. Bermie had a long track record for suceessful investing. Bemie served on SEC advisory commuttees. Bernie played hard to get. All of the above are trie.
The statement "A Ponzi scheme refers to the legitimate investment of client's money and using new clients to pay for the returns on existing investors" is false.
A Ponzi scheme is a fraudulent investment scheme in which returns are paid to earlier investors using the capital contributed by newer investors. The scheme relies on the constant recruitment of new investors to provide the necessary capital to pay out returns. The scheme is named after Charles Ponzi, who became infamous for running such a scheme in the early 20th century.
Sophisticated investors trusted Bernie Madoff for all of the following reasons except that Bernie played hard to get.
Bernie Madoff was able to attract sophisticated investors to his Ponzi scheme by leveraging his reputation and connections in the financial industry. He had a long track record of successful investing and served on SEC advisory committees, which gave him an air of legitimacy. However, it is not accurate to say that he played hard to get. In fact, he actively sought out investors and used his reputation to gain their trust. Ultimately, his scheme collapsed when he could no longer recruit enough new investors to keep up with the returns he was paying out to earlier investors.
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1,160 and the actual number of suits started and completed is 1,200. Opulence Clothing allocates FMOH to each suit using budgeted (DMLH) per suit. Data pertaining to (FMHO) for June 2018 are $52,200 budgeted and S63,915 actual. Required Begin by computing the following amounts for the FMOH. Required 1. Calculate the rate variance for FMOH. Comment on these results.
FMOH stands for Factory overheads. It is used to denote the indirect manufacturing costs such as rent, utilities, property taxes, etc. that are not included in direct labor and direct materials.
Calculating the rate variance for FMOH is essential to determine the differences in FMOH expenditure from the budgeted to the actual expenditure.Below are the calculations for rate variance for FMOH:Actual FMOH: $63,915Budgeted FMOH: $52,200
Difference: $11,715FMOH Rate: $52,200 / 1,160 = $45Rate Variance = (Actual Rate - Budgeted Rate) x Actual Hours= ($63,915 / 1,200) - $45 x 1,200= ($53.26 - $45) x 1,200= $102.72 (favorable variance).
The favorable variance suggests that the company paid a lower rate than the standard rate for FMOH. As a result, the company has saved money on FMOH expenditure.
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20. What is the balance in the investor’s account at the end of the first day?
A. $3,000
B. $13,000
C. $5,000
The balance in the investor's account at the end of the first day is C.
C. $5,000.
The question alone does not provide any specific details about the investor's activities or the nature of the account.
Based on the given s, the balance in the investor's account at the end of the first day is $5,000.The given question provides three s for the balance in the investor's account at the end of the first day: A) $3,000, B) $13,000, and C) $5,000.
To determine the , we need additional information or context. The question alone does not provide any specific details about the investor's activities or the nature of the account.
If there is no further information provided, we cannot definitively determine the balance in the investor's account at the end of the first day. The would then be "Insufficient information provided."
It's important to have more context or specific data regarding the investor's transactions, initial investment , interest rates, market conditions, or any other relevant factors to accurately determine the account balance.
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What is the payback period for a project with the cash flows shown belom? Cash fows ane Fex 0 as assunad to be end-of-year cash flows. Year 0 cash flow =−63,000 Year 1 cash flow =−16,000 Year 2 cash flow =21,000 Year 3 cash flow =25,000 Year 4 cash flow =30,000 Year 5 cash flow =30,000 Year 6 cash flow =23,000 Select one: a. 4.55 b. 4.80 c. 5.17 d. 3.85 e. 4.10 1. 3.20
The payback period for this project is 4.1 years.
The payback period is the length of time required to recover the initial investment in a project. To calculate the payback period, we need to determine when the cumulative cash flows equal or exceed the initial investment.
Given the cash flows provided, we can calculate the payback period as follows:
Year 0 cash flow = -$63,000 (negative sign represents an initial investment)
Year 1 cash flow = -$16,000
Year 2 cash flow = $21,000
Year 3 cash flow = $25,000
Year 4 cash flow = $30,000
Year 5 cash flow = $30,000
Year 6 cash flow = $23,000
To find the payback period, we start by subtracting each year's cash flow from the cumulative cash flow until it becomes positive or zero.
Cumulative cash flow at Year 1 = Year 0 cash flow + Year 1 cash flow = -$63,000 + (-$16,000) = -$79,000
Cumulative cash flow at Year 2 = Cumulative cash flow at Year 1 + Year 2 cash flow = -$79,000 + $21,000 = -$58,000
Cumulative cash flow at Year 3 = Cumulative cash flow at Year 2 + Year 3 cash flow = -$58,000 + $25,000 = -$33,000
Cumulative cash flow at Year 4 = Cumulative cash flow at Year 3 + Year 4 cash flow = -$33,000 + $30,000 = -$3,000
Cumulative cash flow at Year 5 = Cumulative cash flow at Year 4 + Year 5 cash flow = -$3,000 + $30,000 = $27,000
The payback period is between Year 4 and Year 5 since the cumulative cash flow becomes positive in Year 5. To determine the exact payback period, we can use linear interpolation:
Payback period = Year 4 + (Cumulative cash flow at Year 4 / Year 5 cash flow) = 4 + ($3,000 / $30,000) = 4 + 0.1 = 4.1 years
Therefore, the payback period for this project is 4.1 years.
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- What products/commodities do they carry and what equipment is often used in loading and offloading?
- What sector do they serve?
- The type of market structure they are operating in.
Carefully analyse the orientation of your chosen company (whether its customer or market orientated) and critique on its general service characteristics. This means you have to identity their service characteristics (4) and explain why they are significant to the company.
Terminal management is important in the motor carrier industry. Explain any four factors your company had to consider when deciding on the number of its terminals.
Identify and elaborate on any two current issues/challenges that are facing the motor carrier industry in South Africa.
The chosen company operates in the motor carrier industry in South Africa. They carry various products and commodities and utilize equipment such as trucks and forklifts for loading and offloading.
The company serves the transportation sector and operates in a competitive market structure. It can be characterized as market-oriented, focusing on meeting customer demands and delivering efficient services. Four significant service characteristics include reliability, responsiveness, safety, and cost-effectiveness. Terminal management is crucial for the company, and factors considered when deciding on the number of terminals include geographic coverage, customer demand, operational efficiency, and cost optimization. Current issues/challenges in the South African motor carrier industry involve infrastructure constraints and regulatory compliance.
The chosen company in the motor carrier industry in South Africa carries a range of products and commodities, which can include goods such as consumer goods, industrial materials, agricultural products, and more. To facilitate the transportation of these goods, the company utilizes equipment such as trucks, trailers, forklifts, and other handling machinery for loading and offloading operations.
The company operates in a competitive market structure within the motor carrier industry. This means there are multiple companies offering transportation services, creating competition based on factors such as pricing, service quality, and efficiency. The market structure may include both large and small players, and the company needs to differentiate itself to attract and retain customers.
The chosen company can be identified as market-oriented, as it focuses on meeting customer demands and delivering efficient services. Four significant service characteristics that are essential to the company's operations are:
1. Reliability: The company strives to provide reliable transportation services, ensuring that goods are delivered on time and in good condition. This characteristic is crucial for building trust with customers and maintaining long-term relationships.
2. Responsiveness: The company aims to be responsive to customer needs and inquiries. Promptly addressing customer requests, providing accurate information, and offering flexible solutions contribute to a positive customer experience.
3. Safety: Ensuring the safety of goods during transportation is a critical service characteristic. The company employs measures such as proper handling procedures, secure packaging, and adherence to safety regulations to mitigate the risk of damage or loss.
4. Cost-effectiveness: The company aims to provide cost-effective transportation solutions to its customers. This involves optimizing operational efficiencies, utilizing fuel-efficient vehicles, and implementing effective route planning to minimize costs while maintaining service quality.
Terminal management plays a crucial role in the company's operations. When deciding on the number of terminals, the company considers several factors:
1. Geographic coverage: The company assesses the geographic spread of its customer base and the areas where demand for transportation services is high. It strategically determines the locations of terminals to ensure efficient coverage and accessibility.
2. Customer demand: The company analyzes the volume of customer orders and their distribution patterns. By identifying the areas with significant customer demand, the company can allocate terminals accordingly to reduce delivery distances and enhance service responsiveness.
3. Operational efficiency: The company evaluates the efficiency of its operations, including factors such as loading and unloading times, turnaround times, and overall productivity. Having an optimal number of terminals helps streamline operations and minimize inefficiencies.
4. Cost optimization: The company considers the costs associated with establishing and maintaining terminals. Factors like land or facility rental costs, labor expenses, and infrastructure requirements are taken into account to ensure that the number of terminals aligns with cost optimization goals.
In the South African motor carrier industry, two current issues/challenges are infrastructure constraints and regulatory compliance. Infrastructure constraints refer to the limitations and inadequacies in transportation infrastructure, including road networks, bridges, and ports. Ins
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Fit \& Slim (F\&S) is a health club that offers members various gym services. Requlred: 1. Assume F\&S offers a deal whereby enrolling in a new membership for $1,000 provides a year of unlimited access to facilities and aIso entitles the member to receive a voucher redeemable for 30% off yoga classes for one yeat. The yoga classes are offered to gym members as well as to the general public. A new membership normally sells for $1.080, and a oneyear enroliment in yoga classes sells for an additional $450. F\&S estimates that approximately 50% of the vouchers will be redeemed. F\&S offers a 10\% discount on all one-year enroliments in classes as part of its normal promotion strategy. 1. a. \& b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price. c. Prepare the journal entry to recognize revenue for the sale of a new membership. 2. Assume F\&S offers a "Fit 70 " coupon book with 70 prepaid visits over the next year. F\&S has leamed that Fit 70 purchasers make an average of 60 visits before the coupon book expires. A customer purchases a Fit 70 book by paying $450 in advance, and for any additional visits over 70 during the year after the book is purchased, the customer can pay a $25 visitation fee per visit. F\&S typically charges $25 to nonmembers who use the facilities for a single day. a. \& b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price. c. Prepare the journal entry to recognize revenue for the sale of a new Fit 70 book.
a. The offer of a new membership with unlimited access to facilities and a voucher for yoga classes is a separate performance obligation.
b. The allocation of the contract price would involve allocating a portion to the new membership and a portion to the yoga class voucher.
c. The journal entry to recognize revenue for the sale of a new membership needs to be prepared.
a. The sale of the Fit 70 coupon book with prepaid visits is a separate performance obligation.
b. The allocation of the contract price would involve allocating a portion to the Fit 70 coupon book.
c. The journal entry to recognize revenue for the sale of a new Fit 70 book needs to be prepared.
For the first scenario, a new membership with access to facilities and a yoga class voucher is considered a separate performance obligation. The contract price needs to be allocated between the two components based on their standalone selling prices. The revenue for the new membership should be recognized at the time of sale, while the revenue related to the yoga class voucher should be recognized when the classes are redeemed or expired.
In the second scenario, the sale of the Fit 70 coupon book is a separate performance obligation. The contract price should be allocated to the coupon book component. Revenue is recognized at the time of sale, and any additional revenue from visitation fees beyond the prepaid visits is recognized when the additional visits occur.
Accurate allocation and recognition of revenue ensure proper accounting treatment, compliance with accounting standards, and transparent financial reporting for Fit & Slim.
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Atlantis REIT expects an income of $12 per share. This includes a deduction of $6 per share for depreciation. Atlantis did not have any gains from the sale of real estate. Its properties are mainly apartments, and you believe that apartments are currently selling on average at about an 8 percent cap rate. Atlantis has 1 million shares outstanding and its balance sheet shows liabilities of $56 million. Comparable REITs have FFO multiples of about 10. Atlantis is expected to pay a dividend during the next fiscal year of $6 per share and to increase those dividends at about 2 percent per year in the future. Investors in REITs like Atlantis usually expect a return of about 12 percent.
Required:
a. What is the FFO and value per share based on an FFO multiple?
b. What value per share is indicated using a dividend discount model?
c. What is the value per share implied by the net asset value of the properties? Complete this question by entering your answers in the tabs below. What is the FFO and value per share based on an FFO multiple?
(a). The FFO and value per share based on an FFO multiple is $18 per share and $180.
(b). The value per share by using a dividend discount model is $60.
(c). The value per share implied by the net asset value of the properties is $82 per share.
FFO is the funds from operations, and the dividend discount model is a way to value a stock based on the discounted value of its future dividend payments.
As per data,
Income per share = $12
Depreciation per share = $6
Sale of real estate = 0
Cap rate = 8%
Shares outstanding = 1 million
Liabilities = $56 million
Dividend to be paid during the next fiscal year = $6
Expected increase in dividend per year = 2%
Investor's expected return = 12%.
(a). Evaluate the FFO and value per share based on an FFO multiple:
Let's begin by calculating FFO:
FFO = Income + Depreciation
FFO = $12 + $6
FFO = $18 per share
Based on an FFO multiple of 10, the value per share can be calculated as follows:
FFO multiple = 10
Value per share = FFO × FFO multiple
Value per share = $18 × 10
Value per share = $180.
(b). The value per share indicated using a dividend discount model is calculated as follows:
Dividend per share = $6
Dividend growth rate = 2%
Discount rate = 12%
Value per share = Dividend per share ÷ (Discount rate - Dividend growth rate)
Value per share = $6 ÷ (12% - 2%)
Value per share = $60.
(c). The value per share implied by the net asset value of the properties is calculated as follows:
Net asset value (NAV) = Assets - Liabilities
The assets can be calculated as follows:
Capitalization rate (Cap rate) = 8%
Net operating income (NOI) = Income × (1 - Cap rate)
NOI = $12 × (1 - 8%)
NOI = $11.04 per share
The total value of the properties can be calculated as follows:
Total value = NOI ÷ Cap rate
Total value = $11.04 ÷ 8%
Total value = $138 per share
Therefore,
NAV per share = (Total value - Liabilities) ÷ Shares outstanding
NAV per share = ($138 - $56) ÷ 1 million
NAV per share = $82 per share
Thus, the FFO and value per share based on an FFO multiple is $18 per share and $180 respectively.
The value per share indicated using a dividend discount model is $60, and the value per share implied by the net asset value of the properties is $82.
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