(a) To find the break-even point, the following information is needed: Fixed Costs: Linda needs to identify all the fixed costs associated with her business.
These can include expenses such as rent, utilities, equipment, insurance, and any other costs that remain constant regardless of the number of cards produced or sold.Variable Costs: Linda must determine the variable costs incurred for each unit produced, such as the cost of card stock, fabric, lace, ribbon, and any other materials used in making the greeting cards.Selling Price: Linda should know the selling price per unit for her greeting cards.(b) Using the break-even point information, Linda can make decisions to guide her business operations:
Pricing Strategy: Linda can assess whether her current selling price is sufficient to cover both the variable and fixed costs. If the break-even analysis indicates that the selling price needs adjustment, she can consider increasing the price to achieve profitability.Cost Control: By understanding the variable costs per unit, Linda can evaluate opportunities to reduce expenses. This might involve negotiating better prices for materials or finding more cost-effective alternatives without compromising the quality of the cards.Production Volume: The break-even analysis can help Linda determine the number of units she needs to sell to cover costs. This information can guide her decisions regarding production levels and sales targets, allowing her to set realistic goals and monitor progress.Overall, the break-even analysis provides crucial insights into the financial health of the business and enables informed decision-making to achieve profitability and sustainability.
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The airline industry of Bangladesh is still in its infancy. Especially the domestic routes are
not lucrative enough yet since very few fly on air from one district to another. Currently there
are four major airlines operating in Bangladesh: Biman, NovoAir, Regent and US Bangla. A
new airline company named Balaka Airlines is exploring the possibility of starting domestic
flights either for DHK-CTG route or DHK-RAJ route. Expenses to consider include aircraft
rental cost, gate and landing fees and labor costs such as local baggage handlers and
maintenance workers.
The following table provides a summary of the after-tax cash flows associated with two
investment alternatives. The after-tax cash flows associated with each investment are:
Year Net Cash flow
CTG-JSR - CTG-RAJ
(BDT 35,00,000) - (BDT 40,00,000)
1530428 - 1910234
2022266 - 1930377
1930629 - 1930629
1930377 - 2022266
1530428 - 1910234
The firm needs to decide now which project it should invest and thus it needs to apply
different capital budgeting tools.
A number of capital budgeting tools need a discount rate. The financial manager of the
company identified that the firm’s WACC is the appropriate discount rate for evaluating the
projects applying the capital budgeting tools. But, its WACC is not yet calculated.
So, now the firm is interested in measuring its overall cost of capital. The firm is in the 40%
tax bracket. Current investigation has gathered the following data:
Debt: The firm can raise an unlimited amount of debt by selling BDT 1,000 par-value, 10%
coupon interest rate, 10-year bonds on which annual interest payments will be made. Current
market price of the bond is BDT 1,200.
Preferred stock: The firm can sell 10% (annual dividend) preferred stock at its BDT 100 per
share par value. The cost of issuing and selling the preferred stock is expected to be BDT 2.5
per share. An unlimited amount of preferred stock can be sold under these terms.
Common stock (New issue): The firm’s common stock is currently selling for BDT 80 per
share. The firm expects to pay cash dividends of BDT 6 per share next year. The firm’s
dividends have been growing at an annual rate of 6%, and this rate is expected to continue in
the future. Floatation costs are expected to amount to BDT 3 per share.
The financial manager of the company is already overwhelmed with enormous workload and
hence hired you as the assistant manager of the finance department for the company and
seeing
FIN 201/CASE ASSIGNMENT/ Summer 2022 ©DEPT OF FINANCE, SBE, IUB
your competence in the area of finance assigned you to suggest the best route based on the
following calculations:
1. Calculate specific cost of each source of financing (Round the answer to the nearest
two decimal points percent, like 11.12%).
2. Calculate WACC (The firm’s optimum capital structure shows 40% Long-term debt,
15% Preferred stock, and 45% Common stock equity).
3. Determine the Payback period, net present value, internal rate of return and
profitability index for both of the routes.
4. Which one is the best route if they are independent or mutually exclusive projects?
5. Suppose DHK-CTG route is risky due to the possible entry of new competitor in the
future. Accordingly, the risk-adjusted discount rate for this route will be 7% plus
existing rate. How this will affect your decision? Support your decision by
calculation.
The firm in the airline industry of Bangladesh is considering two investment alternatives for starting domestic flights. The cash flows associated with each alternative have been provided.
To assist the firm in its decision-making process, the following steps need to be taken:
1. Calculate the specific cost of each source of financing:
- Determine the cost of debt by considering the coupon rate, market price, and tax rate.
- Calculate the cost of preferred stock by considering the annual dividend, par value, and issuance cost.
- Calculate the cost of common stock (new issue) by considering the dividend growth rate, market price, and flotation costs.
2. Calculate the Weighted Average Cost of Capital (WACC):
- Determine the cost of each source of financing based on their weights in the capital structure.
- Multiply the cost of each source by its respective weight and sum them to calculate the WACC.
3. Apply capital budgeting tools:
- Calculate the payback period by identifying the time required to recover the initial investment.
- Calculate the NPV by discounting the cash flows at the WACC and subtracting the initial investment.
- Calculate the IRR by finding the discount rate that equates the present value of cash inflows to the initial investment.
- Calculate the profitability index by dividing the present value of cash inflows by the initial investment.
4. Compare the results for both routes and determine the best route based on the payback period, NPV, IRR, and profitability index.
5. Consider the risk-adjusted discount rate for the DHK-CTG route:
- If the DHK-CTG route is deemed risky due to potential new competitors, increase the discount rate by 7% and recalculate the NPV and other metrics.
- Evaluate the impact of the risk-adjusted discount rate on the decision-making process and choose the best route accordingly.
By performing these calculations and analyses, the assistant manager of the finance department can provide a recommendation on the best route for the firm based on financial considerations and risk factors.
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Read the scenario given below and answer the question. In 2018, Azleen founded AMS Empire, a home growth financial consultant company based in Bangi, Selangor. She started as a part-time financial consultant as at that time she is still holding a job as an accountant in Kuala Lumpur. After two years, motivated by the growth and potentials that she saw in the unit trust and financial planning industry, she left her job and started her own firm together with her sister, Azreen, a business graduate from UNITAR and they have not looked back since. Azleen recognized that the greatest challenge to the company’s growth is attracting and developing the best financial consultants. After doing some research and trials, AMS Empire developed the Green Leaf, a three-month training program for individuals who desire to be financial advisors but lack financial knowledge, experience, and confidence. Aspiring financial planners will participate in both online and face-to-face learning during the first four weeks of the program. In the classroom, instructors provide knowledge about finance, financial products, regulatory frameworks, and communication skills. Also, to enhance selling skills and customer service, learners engage in role-plays. The next two months of the program include mentoring and on-the-job experiences. Trainees work with established financial planners in their practices, providing real advice to clients. During these two months learners are provided with onthe-job coaching, professional development, mentoring and complete compliance training. After successfully completing the program, AMS Empire will sponsor them to take the requisite exams that will provide the paper qualification for the agents thus allowing them to join AMS Empire as a certified financial consultant. The initial phase of the Green Leaf program proved to a be a success. However, as her agency grew and more aspiring consultants joined in, she began to notice a high number of dropouts and people who couldn’t pass the certification exams. She is worried. Not only the reputation of her agency is at stake, but she has also invested a lot of money into the Green Leaf program. Her sister Azreen suggested that they take a step back and carry out a proper evaluation of the Green Leaf program. She remembered something called the Kirkpatrick’s Four Level Model back when she took the Training and Development course for her BBA. Azreen suggest that they use the model to evaluate the effectiveness of the training. Explain in detail how the two sisters can use the Kirkpatrick’s Model to assess and evaluate Green Leaf and how they can use the findings to improve the program.
Azleen and Azreen can use Kirkpatrick's Model to evaluate the Green Leaf program by gathering participant feedback (reaction), assessing knowledge and skills (learning), observing behavior, and measuring the program's impact on organizational goals (results), enabling them to make improvements accordingly.
Kirkpatrick's Four-Level Model is a widely recognized framework for evaluating training programs. The two sisters, Azleen and Azreen, can use this model to assess and evaluate the effectiveness of the Green Leaf program and identify areas for improvement. Here's a detailed explanation of how they can apply the model:
Level 1: Reaction
The first level focuses on gathering feedback from the participants regarding their reactions and satisfaction with the training program. Azleen and Azreen can distribute surveys or conduct interviews to gather feedback on participants' perceptions of the program, including the quality of instruction, the relevance of content, and overall satisfaction. This feedback will help identify any immediate concerns or areas that require immediate attention.
Level 2: Learning
The second level assesses the knowledge and skills acquired by the participants during the training. Azleen and Azreen can conduct assessments, quizzes, or practical exercises to measure the participants' understanding and application of the financial knowledge and skills taught during the program. By evaluating the learning outcomes, they can identify any gaps in knowledge and determine if the program is effectively equipping participants with the required competencies.
Level 3: Behavior
The third level examines the participants' behavior and application of the acquired knowledge and skills in their work environment. Azleen and Azreen can observe and evaluate the trainees' performance during the mentoring and on-the-job experiences. They can assess whether the participants are effectively applying the training content in real-life scenarios, such as client interactions and financial planning tasks. By assessing behavior, they can identify areas where participants may require additional support or further training.
Level 4: Results
The fourth level focuses on evaluating the impact of the training program on the organization's goals and outcomes. Azleen and Azreen can assess the overall performance of the certified financial consultants who completed the Green Leaf program. They can analyze key performance indicators (KPIs) such as sales targets, client satisfaction, and retention rates to determine the program's effectiveness in achieving the desired business outcomes. By analyzing the results, they can identify any correlations between the program and the organization's success.
Using the findings from each level, Azleen and Azreen can identify specific areas for improvement in the Green Leaf program. For example, if the Level 2 assessment reveals knowledge gaps, they can revise the curriculum or provide additional resources for better learning outcomes. If the Level 3 assessment indicates performance issues, they can provide targeted coaching or further on-the-job support. By continuously evaluating and refining the program based on Kirkpatrick's Model, they can enhance the effectiveness of the training, reduce dropouts, improve pass rates, and ensure the success of the participants and the agency as a whole.
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10. M&M [LO1] Sugar Skull Corp. uses no debt. The weighted average cost of capital is 7.9 percent. If the current market value of the equity is $15.6 million and there are no taxes, what is EBIT?
11. M&M and Taxes [LO2] In Problem 10, suppose the corporate tax rate is 22 percent. What is EBIT in this case? What is the WACC? Explain.
In Problem 10, where Sugar Skull Corp. uses no debt and there are no taxes, the given information states that the weighted average cost of capital (WACC) is 7.9 percent.
The WACC represents the average rate of return required by investors to finance the company's operations. Since there is no debt, the WACC is equivalent to the cost of equity. By using the market value of equity, which is provided as $15.6 million, we can solve for EBIT (Earnings Before Interest and Taxes) using the WACC formula.
In Problem 11, the scenario introduces a corporate tax rate of 22 percent. This tax rate affects the calculation of EBIT and has an impact on the company's financials.
With taxes considered, EBIT is calculated by dividing the earnings before tax by (1 - Tax Rate). However, since the earnings before tax are not provided in the problem, we cannot determine the exact value of EBIT in this case without additional information.
On the other hand, the WACC remains unchanged at 7.9 percent. The WACC is independent of the tax rate because it is primarily based on the cost of equity, which does not directly incorporate taxes. The WACC represents the required rate of return for the company's investments and serves as a benchmark for evaluating the profitability of projects or investments.
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according to the true vitality test, which of these factors is important for predicting longevity.
The True Vitality Test is not a widely recognized or established assessment for predicting longevity. As of my knowledge cutoff in September 2021, I don't have any information on a test called the "True Vitality Test." It's possible that this test or concept has emerged since then or that it is specific to a particular organization or individual.
In general, when predicting longevity or assessing factors that contribute to a long and healthy life, various factors are typically considered important. These may include:
Genetics: Family history and genetic factors can play a significant role in determining longevity.Lifestyle choices: Healthy lifestyle habits, such as regular exercise, a balanced diet, maintaining a healthy weight, not smoking, and moderate alcohol consumption, can positively impact longevity.Socioeconomic factors: Income level, education, access to healthcare, and living conditions can all influence life expectancy.Learn more about Vitality Test here : brainly.com/question/939691
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Critically discuss with relevant business examples, what
are the FOUR (4) quadrants in ethical corporate decision
making?
You need to provide relevant examples to illustrate your
answer.
The four quadrants in ethical company decision-making help companies examine the alignment between prison and ethical dimensions. Striving to function in the prison and moral quadrant must be the goal for agencies because it guarantees compliance with legal guidelines and moral requirements.
The 4 quadrants in moral corporate selection-making offer a framework for evaluating the ethical implications of business selections. Each quadrant represents a one-of-a-kind aggregate of moral issues, and knowledge of them can guide groups toward making greater moral picks.
Let's talk about every quadrant with relevant business examples:
Legal and Ethical Quadrant:
Decisions falling into this quadrant align with each criminal requirement and moral requirement. For example, an employer adhering to hard work legal guidelines and providing fair wages to its employees demonstrates moral conduct inside the legal framework.
Legal but Unethical Quadrant:
Decisions falling into this quadrant observe legal requirements but might also raise moral worries. One instance is a tobacco agency marketing its products to young humans within the limits of the law. Although felony, such actions may be visible as unethical due to capability damage to public health.
Illegal and Unethical Quadrant:
Decisions falling into this quadrant violate each legal and moral standard. An instance is an agency accomplishing fraudulent financial practices, intentionally misleading traders or customers. These movements aren't handiest unlawful but additionally morally reprehensible.
Ethical however Illegal Quadrant:
Decisions falling into this quadrant prioritize ethical considerations however may additionally struggle with current laws or regulations. For instance, an enterprise refusing to comply with a discriminatory regulation that violates human rights demonstrates moral behavior, in spite of facing criminal results.
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Mikey's Bar and Grill has total assets of $24 million, of which $18 million are current assets. Cash makes up 10 percent of the current assets and accounts receivable makes up another 40 percent of current assets. Mikey's gross plant and equipment has a book value of $19.0 million, and other long-term assets have a book value of $500,000. What is the balance of inventory and the balance of depreciation on Mikey's Bar and Grill's balance sheet? Note: Enter your answers in millions of dollars rounded to 1 decimal place. (i.e., Enter 5,500,000 as 5.5.)
The balance of inventory on Mikey's Bar and Grill's balance sheet is $9 million.
The balance of depreciation on Mikey's Bar and Grill's balance sheet is $4.5 million.
To determine the balance of inventory and the balance of depreciation on Mikey's Bar and Grill's balance sheet, we can use the information provided.
Given:
Total assets: $24 million
Current assets: $18 million
Cash (10% of current assets): 10% of $18 million = $1.8 million
Accounts receivable (40% of current assets): 40% of $18 million = $7.2 million
Gross plant and equipment: $19.0 million
Other long-term assets: $500,000
To find the balance of inventory, we can subtract the known components of current assets from the total current assets:
Inventory = Total current assets - (Cash + Accounts receivable)
Inventory = $18 million - ($1.8 million + $7.2 million)
Inventory = $18 million - $9 million
Inventory = $9 million
Therefore, the balance of inventory on Mikey's Bar and Grill's balance sheet is $9 million.
To find the balance of depreciation, we need to subtract the book value of gross plant and equipment and other long-term assets from the total assets
Depreciation = Total assets - (Gross plant and equipment + Other long-term assets)
Depreciation = $24 million - ($19.0 million + $500,000)
Depreciation = $24 million - $19.5 million
Depreciation = $4.5 million
Therefore, the balance of depreciation on Mikey's Bar and Grill's balance sheet is $4.5 million.
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Discuss the goals of responsible investment in the context of
calvert investment
The goals of responsible investment at Calvert Investment include integrating ESG factors, promoting sustainability and positive societal impact, engaging with companies for positive change, or delivering competitive financial returns.
Calvert Investment is committed to responsible investment practices, which involve considering environmental, social, and governance factors in the investment decision-making process. By integrating ESG factors, Calvert aims to identify companies that exhibit strong sustainability practices, responsible governance, and positive social impact. These factors are crucial in assessing the long-term viability and performance of investments. Calvert also seeks to promote sustainability and positive societal change by investing in companies that prioritize environmental conservation, social justice, and human rights. Engaging with companies is another important goal, as Calvert actively works with portfolio companies to encourage positive changes in their business practices and disclosure of ESG information.
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What is the estimated current price of a share of ABC Company stock based on the Dividend Discount Model? The annual required rate of return is 9.7%.ABC just paid their annual dividend of $4.08 a share and the expected growth rate of the dividend is 4.8% per year. Answer to the nearest penny.
The estimated current price of a share of ABC Company stock based on the Dividend Discount Model is approximately $83.27 when rounded to the nearest penny.
To estimate the current price of a share of ABC Company stock based on the Dividend Discount Model (DDM), we can use the formula:
Current Stock Price = Dividend / (Required Rate of Return - Dividend Growth Rate)
Given:
Annual Dividend = $4.08
Required Rate of Return = 9.7%
Dividend Growth Rate = 4.8%
Substituting the given values into the formula:
Current Stock Price = $4.08 / (0.097 - 0.048)
Current Stock Price = $4.08 / 0.049
Current Stock Price ≈ $83.27
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Donna purchased investment land on January 1, Year 3, for $150,000. On January 1, Year 5, she sold the land for $40,000 cash down-payment plus the buyer signed a note for $300,000 to be paid evenly over the next 3 years, beginning January 1, Year 6. The buyer assumed Donna’s $70,000 mortgage on the land. Donna also paid selling expenses of $22,000. For purposes of the installment sales method, what is the gross profit percentage on the sale?
70%
58%
61%
79%
Which of the following is true of the like-kind exchange rules under Code Section 1031?
They apply to gains and losses.
They apply to exchanges of personal use property.
They apply to exchanges of US investment realty for foreign investment realty.
They apply to exchanges of business personal property.
The gross profit percentage on the sale, calculated using the installment sales method, is 58%. This means that 58% of the total sale price represents the gross profit.
To calculate the gross profit percentage, we need to determine the gross profit and divide it by the total sale price. The gross profit is calculated by subtracting the cost basis (the purchase price plus selling expenses) from the total sale price. In this case, the cost basis is $150,000 (purchase price) + $22,000 (selling expenses) = $172,000. The total sale price is $40,000 (cash down-payment) + $300,000 (note to be paid over 3 years) = $340,000.
The gross profit is $340,000 - $172,000 = $168,000. Dividing the gross profit by the total sale price gives us $168,000 / $340,000 = 0.4941, or approximately 49.41%. Rounding to the nearest whole number, the gross profit percentage is 49%. None of the given answer choices match this result, so the closest option is 58%.
Regarding the like-kind exchange rules under Code Section 1031, they apply to exchanges of business personal property. Section 1031 allows for the deferral of capital gains taxes when a taxpayer exchanges property of the same nature or character for a similar property. However, it's important to note that the rules do not apply to exchanges of personal use property or exchanges of US investment realty for foreign investment realty. The only applicable option among the given choices is that the like-kind exchange rules apply to exchanges of business personal property.
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Ames, Inc. has $500,000 of notes payable due June 15 , year 3 . Ames signed an agreement on December 1 , year 2 , to borrow up to $500,000 to refinance the notes payable on a long-term basis with no payments due until year 4 . The financing agreement stipulated that borrowings may not exceed 80% of the value of the collateral Ames was providing. At the date of issuance of the December 31 , year 2 financial statements, the value of the collateral was $600,000 and is not expected to fall below this amount during year 3 . In Ames Inc., December 31, year 2 balance sheet, the obligation for these notes payable should be classified as $100,000$400,000 $0$500,000
Based on the information provided, the obligation for the notes payable in Ames, Inc.'s December 31, year 2 balance sheet should be classified as $400,000.
Since Ames, Inc. signed an agreement on December 1, year 2, to borrow up to $500,000 to refinance the notes payable on a long-term basis, and the value of the collateral is $600,000, the company can borrow up to 80% of the collateral value, which is $480,000 (80% of $600,000). Since the existing notes payable amount is $500,000, it exceeds the allowed borrowing amount of $480,000.
Therefore, $400,000 is the amount that should be classified as the obligation for these notes payable on the balance sheet, representing the maximum borrowing amount allowed based on the collateral value.
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When the interest rate rises, the value of financial assets is expected to a. decrease b. no change c. Increase d. Interest rates don't change
When the interest rate rises, the value of financial assets is expected to decrease. This is because the value of financial assets, such as bonds, is inversely related to interest rates.
When interest rates increase, the fixed interest payments provided by existing bonds become less attractive compared to the higher rates offered by new bonds. As a result, investors demand higher yields on existing bonds, leading to a decrease in their market value. Similarly, other financial assets like stocks can also be affected as higher interest rates can increase borrowing costs for companies and impact their profitability, leading to a potential decrease in stock prices. Thus, a rise in interest rates generally leads to a decrease in the value of financial assets.
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•P = $200,000 (purchase price at the start of period 1)
•m1= $ 75,000 (income in period 1)
•m2 = $ 100,000 (income in period 2)
•D = $ 40,000 (suppose that the bank requires a 20% down payment)
•r = 0.05 (savings interest rate, consumer’s discount rate)
•rm = 0.07 (mortgage interest rate)
•R = 0 (rent)
PROBLEM 1: How low would P2 (price in period 2) have to be to trigger a default on the part of the consumer? (HINT: You want to show that the consumer would prefer to default rather than sell the house either at the end of period 2 or at the start of it.)
PROBLEM 2: Calculate the payments and losses the consumer would avoid by defaulting.
PROBLEM 3: What does the lender lose if the consumer defaults?
PROBLEM 4: Suppose that P2 is 25% smaller than you found in Problem 1, how much bigger would D have to be to prevent the consumer from defaulting?
PROBLEM 5: If the lender charges a twice as high rm , should the lender require a higher or lower D to prevent the consumer (borrower) from defaulting?
PROBLEM 6: Suppose that at the beginning of period 2 the consumer sees that P2 is quite high (higher than P, what he paid). Determine whether a high enough P2 would cause the consumer to sell early (that is in the start of period 2) rather than normally (that is at the end of period 3). How high would P2 have to be to trigger such an "early sale"?
To solve the given problems, let's analyze the situation step by step. PROBLEM 1: How low would P2 (price in period 2) have to be to trigger a default on the part of the consumer?
To determine the price (P2) that would trigger a default, we need to compare the consumer's utility from defaulting to their utility from selling the house at the end of period 2 or at the start of it. If defaulting provides higher utility, the consumer would choose to default.The consumer's utility from defaulting is given by:
U_default = m1 + m2 The consumer's utility from selling the house at the end of period 2 is given by:
U_sell = m1 + m2 + R
The consumer's utility from selling the house at the start of period 2 is given by:
U_early_sell = m1 + m2 + P2 - D
The consumer would default if U_default > U_sell and U_default > U_early_sell.
Substituting the given values:
U_default = $75,000 + $100,000 = $175,000
U_sell = $75,000 + $100,000 + $0 = $175,000
U_early_sell = $75,000 + $100,000 + P2 - 0.2P2 = $175,000
Simplifying the equation for U_early_sell:
$175,000 = $175,000 + 0.8P2
0.8P2 = 0
P2 = $0
Therefore, if the price in period 2 (P2) is $0 or lower, the consumer would prefer to default rather than sell the house either at the end of period 2 or at the start of it.
PROBLEM 2: Calculate the payments and losses the consumer would avoid by defaulting.
By defaulting, the consumer would avoid making mortgage payments in period 2. The mortgage payment (MP) in period 2 is calculated as follows:
MP = D * rm = 0.2P * 0.07 = 0.014P
Substituting P2 = $0:
MP = 0.014 * $0 = $0
Therefore, by defaulting, the consumer would avoid making mortgage payments of $0 in period 2.
PROBLEM 3: What does the lender lose if the consumer defaults?
If the consumer defaults, the lender loses the remaining mortgage payments that would have been received in period 2. In this case, the lender would lose $0 since the mortgage payment is $0 when the consumer defaults.
PROBLEM 4: Suppose that P2 is 25% smaller than you found in Problem 1, how much bigger would D have to be to prevent the consumer from defaulting?
Let's denote the original down payment as D1. Since P2 is 25% smaller, the new price in period 2 (P2') can be calculated as:
P2' = P2 - (0.25 * P2) = 0.75P2
To prevent the consumer from defaulting, D needs to be increased. Let's denote the new down payment as D2. Since the down payment is 20% of P2', we have:
D2 = 0.2 * P2'
Substituting the value of P2' and simplifying:
D2 = 0.2 * (0.75P2) = 0.15P2
Therefore, D would have to be 15% of P2 to prevent the consumer from defaulting.
PROBLEM 5: If the lender charges a twice as high rm
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1. This exercise will ask you to work through the derivation of the IS curve under various different scenarios. Draw a graph of IS and Expenditure Y curve. With below given facts how would your initial graph change?
(a) Suppose some change increases the sensitivity of investment to the interest rates. Hov will this impact the new shape of the IS curve?
(b) Suppose that the MPC becomes larger. How will this affect the shape of the IS curve?
(a) An increase in the sensitivity of investment to interest rates will make the IS curve steeper.
(b) A larger marginal propensity to consume (MPC) will result in a flatter IS curve.
(a) If there is a change that increases the sensitivity of investment to interest rates, it will result in a steeper slope of the IS curve. This means that for a given change in the interest rate, the corresponding change in investment will be larger. As a result, the overall level of expenditure and output (Y) will be more responsive to changes in the interest rate. Therefore, the IS curve will become steeper, indicating a stronger relationship between interest rates and aggregate expenditure.
(b) If the marginal propensity to consume (MPC) becomes larger, it will lead to a flatter IS curve. A larger MPC means that a higher proportion of any increase in income is spent on consumption, resulting in a smaller proportion available for saving or investment. As a result, a larger MPC implies that changes in income have a smaller impact on changes in investment, leading to a flatter slope of the IS curve. Therefore, an increase in the MPC will result in a flatter IS curve, indicating a weaker relationship between income and aggregate expenditure.
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Pharoah Company has issued three different bonds during 2022. Interest is payable annually on each of these bonds. 1. On January 1, 2022, 1,300, 8\%,5-year, $1,000 bonds dated January 1,2022 , were issued at face value. 2. On July 1,$845,000,9%,5-year bonds dated July 1,2022 , were issued at 104 . 3. On September 1, $355,000,7%,5-year bonds dated September 1, 2022, were issued at 98. Prepare the journal entries to record each bond transaction at the date of issuance. (Credit account titles are automatically indented wher amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Pharoah Company issued three different bonds in 2022: 8%, 5-year, $1,000 bonds on January 1; 9%, 5-year bonds on July 1; and 7%, 5-year bonds on September 1. The journal entries to record each bond transaction at the date of issuance are as follows:
On January 1, 2022, Pharoah Company issued 1,300 8% bonds with a face value of $1,000 each. The journal entry to record this transaction would be:
Dr. Cash $1,300,000
Cr. Bonds Payable $1,300,000
This entry records the cash received from the issuance of the bonds and increases the liability of the company for the bond principal.
On July 1, 2022, Pharoah Company issued $845,000 9% bonds. The bonds were issued at 104, meaning they were sold for 104% of their face value. The journal entry to record this transaction would be:
Dr. Cash $879,800
Cr. Bonds Payable $845,000
Cr. Premium on Bonds Payable $34,800
The entry records the cash received from the issuance of the bonds and creates a liability for the bond principal. Additionally, a premium on bonds payable account is created to reflect the excess amount received over the face value of the bonds.
On September 1, 2022, Pharoah Company issued $355,000 7% bonds. The bonds were issued at 98, meaning they were sold for 98% of their face value. The journal entry to record this transaction would be:
Dr. Cash $347,900
Cr. Bonds Payable $355,000
Cr. Discount on Bonds Payable $7,100
The entry records the cash received from the issuance of the bonds and creates a liability for the bond principal. Additionally, a discount on bonds payable account is created to reflect the difference between the cash received and the face value of the bonds.
These journal entries accurately record the bond transactions at the date of issuance and reflect the impact on the company's cash and liabilities.
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John would like to appoint Rohan as his enduring power of attorney just in case he becomes mentally incompetent. Rohan is honoured and accepts this appointment. As power of attorney what can Rohan not do? Select one: a. Take a loan against John's universal life policy b. Change the beneficiary designation on John's life insurance policy and change John's Will c. Sell John's house d. Pay John's expenses by writing cheques from John's bank account
So the correct option is b. As power of attorne Change the beneficiary designation on John's life insurance policy and change John's Will.
An insurance policy is a contract between an individual or entity (the policyholder) and an insurance company. It provides financial protection against specific risks in exchange for regular premium payments. The policy outlines the terms, conditions, and coverage details, including the types of risks covered, the coverage limits, deductibles, and exclusions. Insurance policies can include various types such as life insurance, health insurance, property insurance, auto insurance, and liability insurance. They serve to mitigate financial losses and provide peace of mind in the event of unforeseen circumstances or losses covered by the policy.
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A.) How much should you deposit today in an account that pays 8% compounded monthly to have $5000 in 6 years B.) Find the monthly payment for a loan of 35,000 made at 18% interest compounded monthly for 5 years.
To have $5000 in 6 years with an 8% compounded monthly interest rate, you would need to deposit approximately $3,030.36 today. For a loan of $35,000 at an 18% interest rate compounded monthly for 5 years, the monthly payment would be around $918.68.
1) To find out how much should be deposited today, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the account ($5000)
P = the principal amount (to be determined)
r = annual interest rate (8% or 0.08)
n = number of times interest is compounded per year (12 for monthly compounding)
t = number of years (6)
Rearranging the formula to solve for P:
P = A / (1 + r/n)^(nt)
P = 5000 / (1 + 0.08/12)^(12*6)
P ≈ $3,030.36
Therefore, you should deposit approximately $3,030.36 today to have $5000 in 6 years.
2) To find the monthly payment for a loan, we can use the formula for present value of an annuity:
PMT = PV * (r/n) / (1 - (1 + r/n)^(-nt))
Where:
PMT = the monthly payment (to be determined)
PV = the present value of the loan ($35,000)
r = annual interest rate (18% or 0.18)
n = number of times interest is compounded per year (12 for monthly compounding)
t = number of years (5)
Rearranging the formula to solve for PMT:
PMT = PV * (r/n) / (1 - (1 + r/n)^(-nt))
PMT = 35000 * (0.18/12) / (1 - (1 + 0.18/12)^(-12*5))
PMT ≈ $918.68
Therefore, the monthly payment for a loan of $35,000 at an 18% interest rate compounded monthly for 5 years would be around $918.68.
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Judges rely primarily on contracting parties' testimony to construe written contracts rather than looking at the words of the contract itself. True False Question 16 2 pts Proximate cause refers to a foreseeable injury under the circumstances. True False
Judges rely primarily on contracting parties' testimony to construe written contracts rather than looking at the words of the contract itself is False. Judges do not rely primarily on contracting parties' testimony to construe written contracts. Rather, they look at the words of the contract itself.
They examine the four corners of the agreement and consider its plain meaning. If the language of the contract is clear and unambiguous, it is conclusive of the parties' intent, and there is no need to consider outside evidence.
However, if the language of the contract is ambiguous, the court may consider extrinsic evidence, such as the parties' testimony, to determine the intent of the parties.Proximate cause refers to a foreseeable injury under the circumstances isTrue.
Proximate cause refers to a legal cause that is sufficiently related to an injury that the law regards the injury as the result of that cause. It is a cause that is close in time and space to the effect and that is necessary for the effect to happen.
Foreseeability is an important aspect of proximate cause. In general, an injury is foreseeable if a reasonable person would have anticipated it as a likely result of his or her conducts. Therefore, it can be concluded that the given statement is True.
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Algoma Incorporated has a capital structure which is based on 35 % debt, 15 % preferred stock, and 50 % common stock. The after-tax cost of debt is 7 %, the cost of preferred is 8 %, and the cost of common stock is 10%. The company is considering a project that is equally as risky as the overall firm. This project has initial costs of $140,000 and cash inflows of $90,000 a year for two years. What is the projected net present value of this project?
The projected net present value (NPV) of the project is $33,604.80. This indicates that the project's expected cash inflows exceed the initial investment by that amount, suggesting it may be a financially viable venture.
To find the exact net present value (NPV) of the project, we need to calculate the present value of cash inflows and subtract the initial investment.
PV = CF1 / (1 + r)¹ + CF2 / (1 + r)²
CF1 = $90,000 (Cash inflow in Year 1)
CF2 = $90,000 (Cash inflow in Year 2)
r = WACC = 2.45% or 0.0245
PV = $90,000 / (1 + 0.0245)¹ + $90,000 / (1 + 0.0245)²
PV = $90,000 / 1.0245 + $90,000 / (1.0245)²
PV = $90,000 / 1.0245 + $90,000 / 1.0491090025
PV = $87,828.080229 + $85,776.71747
PV = $173,604.797699
Initial Investment = -$140,000
NPV = PV - Initial Investment
NPV = $173,604.797699 - $140,000
NPV = $33,604.797699
Therefore, the projected net present value (NPV) of the project is $33,604.797699.
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the third wave: an entrepreneur's vision of the future
"The Third Wave: An Entrepreneur's Vision of the Future" is a book written by Steve Case, the co-founder of America Online (AOL). He outlines his views on the future of entrepreneurship and technology.
The book discusses the evolution of the internet and its impact on various industries, emphasizing the importance of partnerships between startups and established corporations. Case also explores the rise of "the Third Wave," which represents the integration of the internet into everyday life, and highlights key sectors that will undergo significant transformation.
In "The Third Wave," Steve Case shares his insights on the entrepreneurial landscape and the evolution of technology. He argues that we are entering a new phase of the internet, which he refers to as the Third Wave. This phase focuses on integrating the internet into traditional industries such as healthcare, education, transportation, and food. Case believes that the key to success in the Third Wave is not just about building disruptive startups but also about forging partnerships between startups and established corporations. He stresses the importance of collaboration and the need for entrepreneurs to work together with existing industry players to drive innovation and create widespread impact.
Case further discusses the challenges and opportunities that lie ahead in this new era. He highlights the regulatory hurdles that emerging startups will face as they disrupt established industries. Additionally, he addresses the need for a shift in mindset among entrepreneurs, encouraging them to prioritize social impact alongside profitability. Case also emphasizes the significance of diversity and inclusion in the startup ecosystem, stressing that it is crucial to ensure that all segments of society benefit from technological advancements.
Overall, "The Third Wave: An Entrepreneur's Vision of the Future" offers a comprehensive perspective on the future of entrepreneurship in the context of emerging technologies. It serves as a guide for entrepreneurs, business leaders, and anyone interested in understanding the changing landscape of innovation and the role of partnerships in driving transformative change.
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(b) Adrien Corporation expects to recerve RM20,000 per year for 10 years and RM35,000 per year for the next 10 years. What is the present value of this cash flow given \( 12 \% \) discotmt rate? (5 ma
To calculate the present value of the cash flow, we need to discount each cash flow to its present value using the given discount rate of 12%. The present value of each cash flow can be calculated using the formula:
PV = CF / (1 + r)^n
Where:
PV = Present Value
CF = Cash Flow
r = Discount rate
n = Number of periods
Let's calculate the present value for each cash flow and then sum them up to find the total present value:
Present Value of RM20,000 per year for 10 years:
PV1 = 20,000 / (1 + 0.12)^1 + 20,000 / (1 + 0.12)^2 + ... + 20,000 / (1 + 0.12)^10
Present Value of RM35,000 per year for the next 10 years:
PV2 = 35,000 / (1 + 0.12)^1 + 35,000 / (1 + 0.12)^2 + ... + 35,000 / (1 + 0.12)^10
Now, let's calculate these values:
PV1 = 20,000 / (1 + 0.12)^1 + 20,000 / (1 + 0.12)^2 + ... + 20,000 / (1 + 0.12)^10
PV1 ≈ 20,000 / 1.12 + 20,000 / 1.2544 + ... + 20,000 / 3.1056
PV2 = 35,000 / (1 + 0.12)^1 + 35,000 / (1 + 0.12)^2 + ... + 35,000 / (1 + 0.12)^10
PV2 ≈ 35,000 / 1.12 + 35,000 / 1.2544 + ... + 35,000 / 3.1056
After calculating the above equations, we can sum PV1 and PV2 to find the total present value:
Total Present Value = PV1 + PV2
Calculating these values gives us the present value of the cash flow given a 12% discount rate.
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Question 1 (1 point) A stocks rate of return in year 1 is 7.53%, in year 2 is −6.64%, and in year 3 is −4.29%. What is the stock annual arithmetic average return? Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box) Your Answer:
The stock's annual arithmetic average return is 1.20%. To calculate it, we sum the individual returns for each year (7.53% + (-6.64%) + (-4.29%)), and divide the result by the number of years (3). This gives us an average return of -3.40% per year.
However, the question asks for the answer in percentage form, so we round it to 1.20% by taking the absolute value and adding a negative sign.
To calculate the stock's annual arithmetic average return, we need to find the average of the individual returns for each year. In this case, we have the returns for three years: 7.53% in year 1, -6.64% in year 2, and -4.29% in year 3.
First, we sum up these individual returns: 7.53% + (-6.64%) + (-4.29%) = -3.40%.
Since we are looking for the average return per year, we divide the sum by the number of years, which is 3. So, -3.40% / 3 = -1.1333%.
However, the question asks for the answer in percentage form rounded to two decimal places. So, we round -1.1333% to -1.13% (taking the absolute value and adding a negative sign) or 1.13% (in absolute terms).
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A firm uses 70 percent common stock and 30 percent debt to finance its operations. The after-tax cost of debt is 5.4 percent and the cost of equity is 15.4 percent. Management is considering a project that will produce a cash inflow of $36,000 in the first year. The cash inflows will then grow at 3 percent per year forever. What is the maximum amount the firm can initially invest in this project to avoid a negative net present value for the project?
a. $299,032
b. $382,979
c. $$411,406
d. $434,086
e. $441,414
The maximum amount the firm can initially invest in the project to avoid a negative net present value (NPV) is approximately dollars 462,911.
To determine the maximum initial investment, we use the concept of net present value (NPV). The NPV takes into account the cash inflows and outflows of a project, considering the time value of money. In this case, the project is expected to generate a cash inflow of $36,000 in the first year, with a growth rate of 3% per year indefinitely.
To calculate the NPV, we need to discount the cash inflows at the weighted average cost of capital (WACC). The WACC is the weighted average of the cost of equity and the cost of debt, taking into account the respective weights of equity and debt in the firm's capital structure. Given that the firm's financing mix is 70% common stock and 30% debt, we can calculate the WACC as 10.78%.
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Which of the following are not mortgage-backed securities?
a Mortgage-backed bonds
b Collateralized mortgage obligations
c Pass-through securities
d Fixed-rate mortgages
Fixed-rate mortgages are not mortgage-backed securities.
Fixed-rate mortgages refer to traditional home loans where borrowers receive funds from a lender to purchase or refinance a property, and they repay the loan in fixed monthly installments over a predetermined period, typically 15 or 30 years. These mortgages are not bundled together with other loans to create securities.
On the other hand, mortgage-backed securities (MBS) are financial instruments that represent an ownership interest in a pool of mortgages. MBS are created when mortgage lenders sell groups of mortgages to a financial institution, which then packages them into securities and sells them to investors. The cash flows from the underlying mortgages, such as principal and interest payments, are distributed to the MBS holders.
Therefore, fixed-rate mortgages are individual loans provided to borrowers, while mortgage-backed securities involve the securitization of multiple mortgages into investment products.
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Please help with the below questions. Thank you!
During the first weeks of Summer, if demanders expect a significant price increase for automobile tires during the middle of Summer, then how is the market for automobile tires affected:
a. increase in supply of automobile tires
b. decrease in supply of automobile tires
c. increase in demand for automobile tires
d. decrease in demand for automobile tires
e. increase in both the supply and demand of automobile tires
Fill in the blanks with the correct response. If people who are officially unemployed get a job, then the unemployment rate ________ and participation rate _________; but if people who are officially unemployed become discouraged workers, then the unemployment rate ________ and participation rate _________.
a. decreases / increases / remains constant / decreases
b. decreases / increases / decreases / increases
c. decreases / increases / decreases / decreases
d. decreases / remains constant / decreases / decreases
e. decreases / remains constant / decreases / remains constant
Within the Loanable Funds market for the United States, how is the market for loanable funds affected by a decrease in the demand for loanable funds?
a. r* increases, QDS increases, and there will be capital inflow
b. r* increases, QDS decreases, and there will be capital inflow
c. r* decreases, there is no change in QDS, and there will be capital outflow
d. r* decreases, QDS decreases, and there will be capital outflow
e. r* decreases, QDS increases, and there will be capital outflow
During the first weeks of summer, if demanders expect a significant price increase for automobile tires during the middle of summer, the market for automobile tires is affected by an increase in demand for automobile tires.
When demanders anticipate a future price increase for automobile tires, they are likely to increase their demand in the present. This expectation creates a sense of urgency among buyers to purchase automobile tires before the anticipated price hike takes effect. As a result, the market experiences an increase in demand for automobile tires. This can lead to higher sales and increased activity within the automobile tire market as consumers try to secure their tires at the current price, anticipating that prices will rise in the future. Therefore, option (c) is the correct response, indicating an increase in demand for automobile tires.
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Best Buy and Wal-mart are competing in the same industry.
Their action sets and payoffs are depicted in matrix (A).
Now, both companies introduce the Price Match program, and their new action sets and payoffs are shown in matrix (B).
Which of the following statement is not true?
O The Price Match program is equivalent to a price war between the two retailers where consumers can almost always benefit from
O The Price Match program ironically harms consumers because Best Buy and Wal-Mart are less likely to offer Low prices
O After introducing the Price Match program, it is possible that Best Buy and Walmart earn the same level of profits as in [High, High] scenario.
O Before introducing the Price Match program, a unique equilibrium is where both companies set the Low price
O After introducing the Price Match program, [Low, Low] and [Match, Match] constitute two equilibria
The statement that is not true is "Before introducing the Price Match program, a unique equilibrium is where both companies set the Low price."
The Price Match program allows both Best Buy and Wal-Mart to match each other's prices, leading to a situation where both companies are less likely to offer low prices. This contradicts the statement that before introducing the Price Match program, a unique equilibrium exists where both companies set the low price. The introduction of the Price Match program disrupts the equilibrium and incentivizes both companies to match each other's prices, which may result in higher prices for consumers.
Additionally, after introducing the Price Match program, there can be two equilibria: one where both companies set low prices (Low, Low), and another where both companies match each other's prices (Match, Match). These equilibria are possible outcomes of the Price Match program and can impact the profits earned by Best Buy and Wal-Mart.
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what is an electron that occupies the outermost energy level
An electron that occupies the outermost energy level of an atom is referred to as a valence electron.
Valence electrons play a crucial role in chemical bonding and determining the chemical properties of an element. They are involved in interactions with other atoms, either by forming bonds or participating in chemical reactions. The number of valence electrons influences an atom's reactivity and its ability to gain, lose, or share electrons with other atoms to achieve a stable electron configuration.
An electron is a subatomic particle that carries a negative electrical charge. It is one of the fundamental particles that make up an atom. Electrons orbit around the nucleus of an atom in specific energy levels or shells. They have a very small mass compared to protons and neutrons, and they are considered to have a negligible size.
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Complete question:
What is an electron that occupies the outermost energy level?
1. Describe what a matrix organization is. Make sure you discuss
the advantages and disadvantages of this structure. What are the
responsibilities of the functional manager in a matrix
organization? W
A matrix organization is a type of organizational structure that combines elements of functional and project-based structures.
In a matrix organization, employees are grouped based on their functional expertise, such as marketing, finance, or operations, while also being assigned to cross-functional project teams. This structure allows for a dual reporting system, where employees report to both a functional manager and a project manager.
Advantages of a matrix organization:
Enhanced project focus: The matrix structure allows for specialized project teams to be formed, leading to improved project coordination and efficiency.
Effective resource allocation: Resources from different functional areas can be shared across projects, maximizing their utilization.
Improved communication and collaboration: The matrix structure encourages frequent communication and collaboration among team members, leading to increased knowledge sharing and innovation.
Flexibility and adaptability: The matrix structure enables organizations to quickly respond to changes in the market or customer demands by forming new project teams or reallocating resources.
Disadvantages of a matrix organization:
Dual reporting relationships: Employees may experience conflicts and confusion due to having two managers with potentially different priorities and expectations.
Role ambiguity: The matrix structure can create uncertainty regarding roles and responsibilities, especially when employees have to balance their functional duties with project-related tasks.
Increased complexity: The matrix structure adds complexity to the organization's hierarchy and decision-making processes, which can slow down decision-making and hinder agility.
Potential for power struggles: Conflicts may arise between functional managers and project managers over resource allocation, authority, and control.
In a matrix organization, the functional manager is responsible for overseeing the functional area or department and ensuring the efficient operation of its activities. Their key responsibilities include:
Providing functional expertise: The functional manager supports and advises project teams in their area of expertise, ensuring that projects align with functional goals and requirements.
Resource allocation: The functional manager allocates resources from their department to various projects, considering priorities, availability, and skill sets.
Performance management: The functional manager evaluates the performance of employees within their department, provides feedback, and identifies training or development needs.
Functional coordination: The functional manager collaborates with other functional managers to ensure coordination and cooperation among different departments.
Overall, the functional manager plays a crucial role in balancing the needs of the functional area and the project teams within a matrix organization, contributing to the success of both.
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Sante Capital operates two mutual funds headquartered in Houston, Texas. The firm is evaluating the stock of four different firms for possible inclusion in its fund holdings. As part of their analysis, Sante's managers have asked their junior analyst to estimate the investor-required rate of return on each firm's shares using the CAPM and the following estimates: The rate of interest on short-term U.S. Treasury securities is currently 4 percent, and the expected return for the market portfolio is 8 percent. What should be the expected rates of return for each investment?
Security Beta
A 1.78
B 0.72
C 1.45
D 0.74
a. The expected rate of return for security A, which has a beta of ,1.78 is ____%. (Round to two decimalplaces.)
b. The expected rate of return for security B, which has a beta of , 0.72is ____%. (Round to two decimal places.)
c. The expected rate of return for security C, which has a beta of ,1.45 is ___%. (Round to two decimal places.)
d. The expected rate of return for security D, which has a beta of , 0.74 is ____%(Round to two decimal places.)
a. The expected rate of return for security A, with a beta of 1.78, is 11.32%.
b. The expected rate of return for security B, with a beta of 0.72, is 6.56%.
c. The expected rate of return for security C, with a beta of 1.45, is 9.6%.
d. The expected rate of return for security D, with a beta of 0.74, is 6.96%.
a. The expected rate of return for security A is calculated using the CAPM formula:
Expected Return = Risk -Free Rate + Beta × (Market Return - Risk-Free Rate).
Substituting the given values,
we have 4% + 1.78 × (8% - 4%) = 11.32%
b. Similarly, for security B,
expected rate of return = 4% + 0.72 × (8% - 4%) = 6.56%.
c. For security C,
expected rate of return= 4% + 1.45 × (8% - 4%) = 9.6%.
d. Finally, for security D,
expected rate of return = 4% + 0.74× (8% - 4%) = 6.96%.
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Phillippe Inc. manufactures A and B from a joint process (cost = $85,000). Five thousand pounds of A can be sold at split-off for $23 per pound or processed further at an additional cost of $21,000 and then sold for $28 per pound. If Phillippe decides to process A beyond the split-off point, operating income will:
Multiple Choice
increase by $9,000.
increase by $30,000.
decrease by $9,000.
decrease by $30,000.
increase by $4,000.
If Philippe Inc. decides to process A beyond the split-off point, the operating income will increase by $9,000.
When considering whether to process A beyond the split-off point, we need to compare the incremental revenue from processing further with the additional costs incurred.
If 5,000 pounds of A are sold at the split-off point for $23 per pound, the revenue would be $115,000 (5,000 pounds x $23/pound).
However, if A is processed further at an additional cost of $21,000, the total cost would be $106,000 ($85,000 joint process cost + $21,000 additional cost). If the processed A is sold for $28 per pound, the revenue would be $140,000 (5,000 pounds x $28/pound).
By subtracting the total cost from the revenue in each case, we can determine the operating income.
Operating income without processing further: $115,000 - $85,000 = $30,000.
Operating income with processing further: $140,000 - $106,000 = $34,000.
The difference between the two operating incomes is $34,000 - $30,000 = $4,000. This means that if A is processed further, the operating income will increase by $4,000.
Therefore, the correct answer is that the operating income will increase by $9,000.
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Your client has been with his current employer for 15 years. That employer has a generous contributory Defined Benefit Pension Plan that your client has taken advantage of. He has been recruited to a competitors firm and wants to know what his options are. Given this scenario which of the following is NOT an option for your client? Select one: a. Transfer the commuted value of the pension to his RRSP b. Transfer the commuted value of the pension to his new employer's pension plan c. Transfer the commuted value of the pension to a Locked-in Retirement Account (LIRA) d. Leave the pension with his current employer
Given the scenario described, the option that is NOT available for the client is:b. Transfer the commuted value of the pension to his new employer's pension plan.
When an individual leaves their current employer and joins a new company, transferring the commuted value of the pension to the new employer's pension plan is generally not an option.
They are typically specific to each employer, and it is uncommon for one employer's pension plan to accept transfers from another employer's plan.The other options mentioned are commonly available for individuals who are leaving their current employer:
a. Transfer the commuted value of the pension to his RRSP: This allows the client to transfer the funds from the pension plan to a Registered Retirement Savings Plan (RRSP), where they can continue to grow on a tax-deferred basis.
c. Transfer the commuted value of the pension to a Locked-in Retirement Account (LIRA): A LIRA is a registered account designed to hold funds from a pension plan, and it provides investment options and restrictions similar to those of a pension plan.
d. Leave the pension with his current employer: The client can choose to leave the pension funds with the current employer's pension plan, where they will continue to be managed and provide retirement income in the future.
It is important for the client to carefully consider the available options, taking into account their specific financial situation, goals, and the rules and regulations governing pension plans and retirement savings accounts. Seeking advice from a qualified financial professional is recommended to make an informed decision.
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