The free cash flow is the measure of a firm's financial performance that represents the cash a company produces after accounting for capital expenditures needed to maintain or expand its asset base. It is the cash left over after the firm has met all of its short- and long-term obligations. The formula for free cash flow is:
Free Cash Flow = Operating Cash Flow - Capital Expenditures
Given that the ABC firm paid a one-time free cash flow of 104 in one year and the firm's risk is related to a required return of 0.29. The unlevered equity value of the firm can be determined using the following formula:
Free Cash Flow / (Required Rate of Return - Growth Rate)
We can assume that the growth rate is zero in this case, so the formula becomes:
Unlevered Equity Value = Free Cash Flow / Required Rate of Return
Substituting the values given in the question:
Unlevered Equity Value = 104 / 0.29 = 358.62
The value at which the firm's unlevered equity can be sold for today is 358.62.
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Critically evaluate and explain: a. A firm in a perfectly competitive market should always shut when its marginal revenue is below its average cost (equivalent to average total cost).
b. The intersection of marginal revenue and marginal cost determines the quantity at which a business in a perfectly competitive market is profitable
a. A firm in a perfectly competitive market should not always shut down when its marginal revenue is below its average cost(equivalent to average total cost).
1. Calculate the average cost (AC) by dividing total cost by the quantity produced.
2. Compare the marginal revenue (MR) with the average cost (AC).
3. If the marginal revenue is greater than the average cost, the firm should continue operating.
4. If the marginal revenue is less than the average cost, consider additional factors such as fixed costs and long-term prospects before deciding to shut down.
5. Shutting down should be considered only if the firm cannot cover both variable and fixed costs with its total revenue.
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Under the Statute of Frauds, an oral promise to take on the debts of another is enforceable in some states. Can you think of any other activities that might be legally acceptable despite the fact that they are not in writing?
Under the Statute of Frauds, there are some activities that might be legally acceptable even though they are not in writing.
An oral promise to take on the debts of another is enforceable in some states.
Additionally, other activities that might be legally acceptable even though they are not in writing include:
Oral employment contracts. In some states, oral employment contracts that are less than a year long are legal.
Leases.
Short-term leases of one year or less do not require a written lease to be considered legal.
Agreements that cannot be performed within a year.
If an agreement cannot be performed within one year, it must be in writing.
Promissory Estoppel.
Promissory estoppel occurs when a promise is made without any written documentation.
This type of legal situation might arise when a person makes a promise to a business partner or a supplier.
This promise can be enforceable if the recipient relied on the promise and changed his position based on it.
Good faith and fair dealing.
Many states have laws in place that require parties to act in good faith and fair dealing in their business relationships.
This requirement does not require a written contract but rather an obligation to act with honesty and integrity.
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3. Conduct an analysis and evaluation of the shortlisted vendors
and select the best one from your selection. Justify your choice.
(5 marks)
After analyzing and evaluating the shortlisted vendors, the best one should be chosen. The choice should be justified.
An evaluation and analysis of the shortlisted vendors are essential for selecting the best one. Vendors are usually evaluated by conducting research on their reputation and previous projects they have undertaken. If possible, one can also try to seek reviews and opinions from their previous clients to help gain insight into their work. Other factors to consider include pricing, quality of work, technical skills, and experience.
Once all the research is done, and all the factors are considered, it's essential to make a comparison between the vendors' strengths and weaknesses. This helps in selecting the best vendor by weighing the advantages and disadvantages. It's advisable to make a final decision that balances the price, experience, and quality of work.
Once the best vendor is selected, it's essential to justify the choice. Justification helps in providing evidence for the decision made and helps to explain the reason behind it. This is useful in making comparisons to any other vendors that may have been shortlisted but were not selected.
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Our final forum of the year-->Forum F14 explores the Statement of Cash Flows. Please carefully and thoughtfully respond to each of the following questions regarding this important financial statement. For question no. 4 please show your computations and prepare well-labeled computations.
1--The Liu Company purchased machinery by issuing a long−term note payable. Should Liu Co. report this transaction on the Statement of Cash Flows? If so, how and where? If not, why not?
2--Which method does the Financial Accounting Standards Board (FASB) prefers for reporting cash flows from operating activities? Which method of reporting cash flows from operating activities is most popular with US corporations? Why do you think this disparity between the FASB and the business community exists? Which method do you personally prefer and why?
3--Describe the type of activities that should be reported under the operating activities section of the Statement of Cash Flows (SoCF). What type of activities should be reported under the investing activities? What type of activities should be included and reported on under the financing activities sections of the SoCF?
4--The Natasha Stewart Company uses the indirect method to prepare the statement of cash flows. Refer to the following income statement:
The Natasha Stewart Company
Income Statement
Year Ended December 31, 2025
Sales Revenue
$250,000
Interest Revenue
2,600
Gain on Sale of Plant Assets
6,000
Total Revenues and Gains
$258,600
Cost of Goods Sold
119,000
Salary Expense
41,000
Depreciation Expense
12,000
Other Operating Expenses
21,000
Interest Expense
1,700
Income Tax Expense
5,400
Total Expenses
200,100
Net Income (Loss)
$58,500
Additional information provided by the company includes the following:
1. Current assets, other than cash, increased by
$21,000.
2. Current liabilities decreased by
$1,300.
Compute the net cash provided by (used for) operating activities.
1. Yes, Liu Co. should report this transaction on the Statement of Cash Flows (SoCF).
The purchase of machinery by issuing a long-term note payable will result in a cash inflow from financing activities because the company borrowed cash from a long-term lender. Thus, Liu Co. must report this transaction in the financing activities section of the SoCF.
2. FASB prefers the indirect method for reporting cash flows from operating activities. The indirect method of reporting cash flows from operating activities is most popular with US corporations, due to its simplicity.I personally prefer the direct method of reporting cash flows from operating activities because it provides more information about the actual cash inflows and outflows from operating activities.
3. Operating activities are the primary activities of a business entity that generate revenue. The type of activities that should be reported under the operating activities section of the SoCF are the cash inflows and outflows directly related to the primary activities of the bussiness. The financing activities include transactions that result in changes in the size and composition of the equity and borrowings of the business, including the issuance of debt and equity securities.
4. Calculation of the net cash provided by operating activities Net Income (Loss)=$58,500
Add: Depreciation Expense=$12,000
Add: Increase in Current Assets=$21,000
Less: Decrease in Current Liabilities=$1,300
Add: Loss on Sale of Plant Assets=$0
Add: Interest Expense=$1,700Less:
Gain on Sale of Plant Assets=$6,000
Adjustment for changes in current assets and current liabilities= $19,700
Net Cash Provided by Operating Activities=$105,60
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On 1st January 2019, Brown Plc., had in issue, 800,000 ordinary shares with a par value of sh. 10 each. On 31st October 2019 the company issued 100,000 ordinary shares at full market price at sh 20 each. On 31st December 2020, the directors decided to declare a bonus issue of 1 for 4. On 31st December 2021, the directors declared a rights issue of 1 for 5 at a price of sh. 20. On the day immediately before the rights issue took effect, the shares of this company were trading at sh. 25 each. Brown Plc. does not have any preference shares in issue.The post-tax earnings for the years 2019, 2020 and 2021 were £350,000 and £520,000 and £ 430,000 respectively.
Required
a. Compute the basic earnings per share for the years 2019, 2020 and 2021
b. From 'a' above, comment on the financial performance of this company, in each year.
a) Calculation of Basic earnings per share for the years 2019, 2020 and 2021Year 2019Year 2020Year 2021Post-Tax earnings £350,000, £520,000£430,000 No. of ordinary shares in issue 800,000800,0001,200,000 Total earnings 800,000 × £10 × 1 = £8,000,000800,000 × £10 × 1
= £8,000,0001,200,000 × £10 × 1
= £12,000,000
Basic EPS= Total earnings/ No. of ordinary shares in issue £8,000,000 ÷ 800,000
= £10£8,000,000 ÷ 800,000
= £10£12,000,000 ÷ 1,200,000
= £10
b) Comments on the financial performance of this company, in each year2019: In 2019, the basic EPS of the company was £10, which is commendable for any company. This means that the company has been able to generate more profits for its shareholders in 2019.
Although the basic EPS was not as high as in the previous years, the company was still able to maintain its profitability and financial performance. The right issue, declared in the same year, may have influenced the basic EPS value since it is an indicator of a potential dilution of the earnings per share.
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i hereby authorize university of massachusetts global to initiate debit or credit entries to my depository according to the terms below, and for my depository to debit or credit the same to such account. in the event that this electronic payment is returned unpaid for any reason, i understand that a $25.00 return fee will be added to my student account.i hereby authorize university of massachusetts global to initiate debit or credit entries to my depository according to the terms below, and for my depository to debit or credit the same to such account. in the event that this electronic payment is returned unpaid for any reason, i understand that a $25.00 return fee will be added to my student account.
The statement provided is an authorization for the University of Massachusetts Global to initiate debit or credit entries to the student's depository account. It also states that if the electronic payment is returned unpaid, a $25.00 return fee will be added to the student's account.
The statement is essentially giving permission to the University of Massachusetts Global to make transactions, either debits or credits, to the student's depository account. This means that the university has the authority to withdraw or deposit funds from the account as necessary.
Additionally, it states that if the electronic payment made by the university is returned unpaid for any reason, a $25.00 return fee will be added to the student's account. This fee is a penalty for the unsuccessful payment transaction. Overall, this authorization allows the university to manage the student's account electronically and specifies the consequences of a returned payment.
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Click to see additional instructions The nominal interest rate is 12%. The tax rate on nominal interest is 25%. The after tax nominal interest rate is
The nominal interest rate refers to the interest rate before adjusting for inflation, while the after-tax nominal interest rate refers to the real interest rate adjusted for taxes. Therefore, the after-tax nominal interest rate is calculated by subtracting the tax rate from the nominal interest rate and calculating the remaining amount.
For example, given a nominal interest rate of 12% and a tax rate of 25%, the after-tax nominal interest rate is calculated as follows:
After-tax nominal interest rate = (1 - tax rate) × nominal interest rate= (1 - 0.25) × 12%
= 0.75 × 12%
= 9%
Therefore, the after-tax nominal interest rate is 9%. The after-tax nominal interest rate is the rate of return on an investment after taxes have been paid.
The after-tax nominal interest rate is used to compare the relative profitability of different investment opportunities. For example, if two investment opportunities have the same nominal interest rate but different tax rates, the after-tax nominal interest rate can help determine which investment opportunity is more profitable.
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eurodollars
money market mutal founds
Bonus
Derivatives of instruments
options contracts (call option, pull option)
futures contracts
swap
Eurodollars are a type of currency held in banks outside of the United States and are used in international financial transactions. They are not actually euro currency, despite their name, but rather dollars that are held in banks located in countries outside of the United States.
Eurodollars are often used by multinational corporations to manage their foreign currency exposure, and are also utilized in the money markets. Money market mutual funds are mutual funds that invest in short-term, low-risk debt securities such as Treasury bills and commercial paper. They are designed to provide a low-risk investment option for investors who want to earn a slightly higher return than a traditional savings account. Bonds are debt securities that are issued by governments, corporations, and other entities. When an investor purchases a bond, they are essentially lending money to the issuer in exchange for interest payments and the return of their principal investment at a specified maturity date. They are often used by banks and other financial institutions to manage their risk exposure. Bonuses are additional compensation paid to employees above and beyond their regular salary or wages. They are often used as an incentive to motivate employees to meet or exceed their performance goals.
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List all the preferential trade agreements (both Bilateral and Multilateral) that Singapore has with Peru, China and United States
Singapore has various preferential trade agreements both bilateral and multilateral with Peru, China, and the United States.
The preferential trade agreements are as follows: Bilateral trade agreements: Singapore-Peru FTA: Singapore-Peru FTA was signed in Lima, Peru on 29th May 2008 and came into force on 1st August 2009.
The agreement covers goods and services trade, investment, and government procurement.
Singapore and Peru agreed to enhance cooperation in various fields such as customs procedures, intellectual property rights, and electronic commerce.
It is Singapore's first FTA with a South American country and Peru's first with an Asian country.
Singapore-China FTA: Singapore-China FTA was signed on 23rd October 2008, in Beijing, China, and came into force on 1st January 2009.
The agreement covers goods and services trade, investment, and government procurement.
This agreement is aimed to provide a more conducive environment for Singapore and China's business communities to engage in trade and investment.
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Two investment options are as follows.
Choice 1: Payments of $ 2500 now, $ 3000 a year from now, and $ 3560 two years from now.
Choice 2. Three yearly payments of $ 3000 starting now.
Assume interest is compounded continuously
(a) If the interest rate on savings were 6.74 %, which would you prefer? 2
(Type in 1 for Choice 1, or 2 for Choice 2)
(b) What is the interest rate that would make both choices equally lucrative? Enter an EXACT answer using a logarithm (NO DECIMALS). |
(a) Two investment options are given as follows: Choice 1: Payments of $2500 now, $3000 a year from now, and $3560 two years from now. Choice 2. Three yearly payments of $3000 starting now. Assume interest is compounded continuously.
Now, the given interest rate is 6.74%.We have to find out which option is preferred.(i) Choice 1:Payments of $2500 now is worth $2500 after 0 years.$3000 a year from now is worth 3000*e^(0.0674*1) = $3208.54 after 1 year.$3560 two years from now is worth 3560*e^(0.0674*2) = $3945.70 after 2 years.
Total amount received by choosing Choice 1 = $2500 + $3208.54 + $3945.70 = $9654.24(ii) Choice 2:Three yearly payments of $3000 starting now is worth $3000+3000*e^(0.0674*1)+3000*e^(0.0674*2) = $9413.46Total amount received by choosing Choice 2 = $9413.46Therefore, Choice 2 is preferred over Choice .
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what are the project deliverables for a self-checkout kiosk
implementation project for a supermarket?
A project deliverable is a result that is delivered at the conclusion of a project. It is a tangible outcome that is used to assess project success and whether project objectives have been met. The following are the project deliverables for a self-checkout kiosk implementation project for a supermarket:1. Project charter: This document provides a summary of the project's objectives, scope, and resources required to complete it.
It also outlines the roles and responsibilities of the project team.2. Project plan: This document provides a comprehensive project plan that details the activities, timelines, and resources required to deliver the project. It is a roadmap for the project team to follow and ensure that the project is delivered on time and within budget.3. Design specifications:
This document provides detailed specifications for the self-checkout kiosks, including hardware, software, and user interface.4. Procurement plan: This document outlines the procurement process for the self-checkout kiosks, including vendor selection, negotiation, and contract execution.
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Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours.In the most recent month, 120,000 items were shipped to customers using 2,300 direct labor-hours. The company incurred a total of $7,360 in variable overhead costs.According to the company’s standards, 0.02 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.25 per direct labor-hour.Required:1. What is the standard labor-hours allowed (SH) to ship 120,000 items to customers?2. What is the standard variable overhead cost allowed (SH × SR) to ship 120,000 items to customers?3. What is the variable overhead spending variance?4. What is the variable overhead rate variance and the variable overhead efficiency variance?(For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)2) Problem 10-9 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3]Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 2,850 hours each month to produce 1,900 sets of covers. The standard costs associated with this level of production are:Total Per Setof CoversDirect materials $ 42,560 $ 22.40 Direct labor $ 51,300 27.00 Variable manufacturing overhead (based on direct labor-hours) $ 6,840 3.60 $ 53.00 During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were recorded during the month:Total Per Setof CoversDirect materials (12,000 yards) $ 45,600 $ 22.80 Direct labor $ 49,000 24.50 Variable manufacturing overhead $ 7,000 3.50 $ 50.80 At standard, each set of covers should require 5.6 yards of material. All of the materials purchased during the month were used in production.Required:1. Compute the materials price and quantity variances for August.2. Compute the labor rate and efficiency variances for August.3. Compute the variable overhead rate and efficiency variances for August.(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
To determine the standard labor-hours allowed (SH) to ship 120,000 items to customers, we need to calculate the number of direct labor-hours required per item and then multiply it by the total number of items shipped.
According to the company's standards, 0.02 direct labor-hours are required to fulfill an order for one item. Therefore, we can calculate the standard labor-hours allowed (SH) using the following formula:SH = (Number of items shipped) × (Direct labor-hours required per item)So, the standard labor-hours allowed (SH) to ship 120,000 items to customers is 2,400 labor-hours.
To calculate the standard variable overhead cost allowed (SH × SR) to ship 120,000 items to customers, we need to multiply the standard labor-hours allowed (SH) by the variable overhead rate (SR) per labor-hour. According to the company's standards, the variable overhead rate is $3.25 per direct labor-hour. Therefore, we can calculate the standard variable overhead cost allowed using the formula.
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The Cooling Division of JOY International produces a cooling element that it sells to its customers for $81 per unit. Its variable cost per unit is $25, and its fixed cost per unit is $34. Top management of JOY International would like the Cooling Division to transfer 10,000 cooling units to another division within the company at a price of $60. The Cooling Division currently has excess capacity of 22,000 units.
a. What is the minimum transfer price that the Cooling Division should accept? (Show the price and calculation) b. If the Cooling Division was operating at full capacity, what would be their minimum transfer price the Division should accept? (Show the price and calculation) (4 points
a. Calculation of minimum transfer price that the Cooling Division should accept:- The cooling division of Joy International has been offered a price of $60 per unit to transfer 10,000 cooling units to another division of the company. It is important to determine the minimum transfer price that the cooling division should accept.
The calculation of the minimum transfer price is as follows:
Minimum transfer price = Variable cost per unit + (Fixed cost per unit / units sold). Minimum transfer price = $25 + ($34 / 22,000)Minimum transfer price = $26.55Therefore, the minimum transfer price that the Cooling Division should accept is $26.55.
b. Calculation of minimum transfer price that the Cooling Division should accept if it was operating at full capacity:-The cooling division of Joy International has been offered a price of $60 per unit to transfer 10,000 cooling units to another division of the company. If the Cooling Division were operating at full capacity, it would not be able to manufacture any additional cooling units.
The calculation of the minimum transfer price that the Cooling Division should accept is as follows: Total cost per unit = variable cost per unit + fixed cost per unit.
Total cost per unit = $25 + $34Total cost per unit = $59.
Therefore, if the Cooling Division was operating at full capacity, the minimum transfer price that the Division should accept is $59.
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Choose one (1) of the following two prompts to discuss the implications for management and business strategy:
Determine the resources you would choose to recruit new employees. Discuss why you chose those resources.
OR
Determine the qualifications you would require a new employee to have and discuss why the qualifications that you selected are important.
Determine the qualifications you would require a new employee to have and discuss why the qualifications that you selected are important.
When recruiting new employees, I would prioritize qualifications such as relevant work experience, educational background, and specific skills that align with the job requirements. Work experience demonstrates practical knowledge and familiarity with industry practices, making it a valuable qualification. Educational background, especially in fields directly related to the job, provides a foundation of theoretical knowledge and specialized training. Specific skills relevant to the position, such as technical proficiency or communication abilities, ensure that candidates can perform the tasks and responsibilities effectively.
By emphasizing these qualifications, businesses can enhance the likelihood of hiring competent individuals who possess the necessary expertise and can contribute to the organization's success. Experience and education provide a strong foundation, while specific skills enable employees to excel in their roles and meet the demands of the job. Additionally, these qualifications help reduce the learning curve and facilitate a smoother integration into the workforce, allowing new employees to contribute quickly and effectively. Overall, prioritizing relevant qualifications in the recruitment process can significantly impact the success of management and business strategy by building a skilled and capable workforce.
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courts usually award punitive damages in cases in which the offender has committed _____.
Courts usually award punitive damages in cases in which the offender has committed malicious, oppressive, or fraudulent acts that resulted in harm to the victim. Punitive damages are a monetary award that exceeds the actual damages that the plaintiff has suffered.
The primary purpose of this type of damages is to punish the offender and deter others from committing similar acts. Punitive damages are commonly awarded in tort cases, including product liability, medical malpractice, and intentional torts like assault, battery, and fraud.
In these cases, the defendant's actions have caused harm to the plaintiff beyond physical injury, such as emotional distress or loss of reputation.
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one who initiates and assumes the financial risk of a new business enterprise and undertakes to provide or control its management.
The individual who initiates and assumes the financial risk of a new business enterprise and undertakes to provide or control its management is commonly known as an "entrepreneur."
Entrepreneurs are individuals who identify business opportunities, develop innovative ideas, and take the initiative to establish and run their own ventures. They are characterized by their willingness to take risks, their ability to bring together resources, and their capacity to make decisions and manage the operations of a business.
Entrepreneurs often invest their own capital or seek funding from external sources to finance their ventures. They bear the financial risk associated with the success or failure of the business and are responsible for managing its operations, including strategic planning, marketing, operations, finance, and human resources.
Entrepreneurs play a vital role in economic growth and innovation by creating new businesses, generating employment opportunities, introducing new products or services, and contributing to overall economic development. They are driven by their vision, passion, and determination to transform ideas into successful and sustainable enterprises.
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When investors trade so that the market price is higher than the intrinsic (true and unobservable) value of the stock, then the stock is said to be... overvalued in equilibrium undervalued R\&D breakthrough QUESTION 2 Check out Figure 1.3. When the intrinsic value is higher than the market stock price this is called "undervalued" What is the meaning of this term? this repesents the case when investors think the stock is valued less than the actual unobservable value this repesents the case when investors think the stock is valued more than the actual unobservable value this represents the case when the firm thinks it is valued more or less than investors this represents the case when some investors think the stock is valued less and others think it is more QUESTION 3 It is possible for a manager to recognize that being socially responsible is not inconsistent with maximizing shareholder value, and that in fact, both can be accomplished. (this is true) True False
1)The stock is said to be overvalued in this case,2) investors think the stock is valued less than the actual unobservable value and 3) This statement is true. It is possible for a manager to understand that being socially responsible can align with maximizing shareholder value.
Question 1: When investors trade so that the market price is higher than the intrinsic (true and unobservable) value of the stock, then the stock is said to be...
The stock is said to be overvalued in this case.
Question 2: When the intrinsic value is higher than the market stock price, this is called "undervalued". What is the meaning of this term?
The meaning of this term is that investors think the stock is valued less than the actual unobservable value.
Question 3: It is possible for a manager to recognize that being socially responsible is not inconsistent with maximizing shareholder value, and that in fact, both can be accomplished. (True/False)
This statement is true. It is possible for a manager to understand that being socially responsible can align with maximizing shareholder value.
In fact, there is a growing recognition that social responsibility can positively impact a company's reputation, brand image, and long-term sustainability, ultimately benefiting shareholders.
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The answer to Question 1 is overvalued. The meaning of 'undervalued' is conveyed in the answer to Question 2, representing the case when investors think the stock is valued less than the actual unobservable value. Question 3 is true, recognizing the compatibility of social responsibility and maximizing shareholder value.
Explanation:Question 1: When investors trade so that the market price is higher than the intrinsic value of the stock, the stock is said to be overvalued.
Question 2: When the intrinsic value is higher than the market stock price, this is called 'undervalued.' It represents the case when investors think the stock is valued less than the actual unobservable value.
Question 3: It is possible for a manager to recognize that being socially responsible is not inconsistent with maximizing shareholder value, and that in fact, both can be accomplished. This statement is true.
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The Baron Basketball Company (BBC) earned $11 a share last year and paid a dividend of $5 a share. Next year, you expect BBC to earn $13 and continue its payout ratio. Assume that you expect to sell the stock for $129 a year from now. Do not round intermediate calculations. Round your answers to the nearest cent.
If you require 12 percent on this stock, how much would you be willing to pay for it?
If you expect a selling price of $113 and require a 9 percent return on this investment, how much would you pay for the BBC stock?
Given data:Earnings last year = $11 a share Dividend last year = $5 a shareExpected earnings next year = $13 a shareExpected selling price = $129 a year from now Required rate of return (RRR) = 12% = 0.12 (as a decimal)Solution:To find the maximum price you would be willing to pay, we need to use the dividend discount model as follows Maximum price = (dividend next year + expected selling price) / (1 + required rate of return).
Dividend next year = earnings next year * payout ratio = $13 * ($5 / $11) = $5.91Maximum price = ($5.91 + $129) / (1 + 0.12) = $107.27Therefore, you would be willing to pay up to $107.27 for the BBC stock at a required rate of return of 12%.Now, let's calculate the maximum price you would be willing to pay if you expect a selling price of $113 and require a 9% return on this investment.
To find the maximum price you would be willing to pay, we can use the same dividend discount model:Maximum price = (dividend next year + expected selling price) / (1 + required rate of return) Dividend next year = earnings next year * payout ratio = $13 * ($5 / $11) = $5.91Maximum price = ($5.91 + $113) / (1 + 0.09) = $98.48 Therefore, you would be willing to pay up to $98.48 for the BBC stock if you expect a selling price of $113 and require a 9% return on this investment.
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Which strategy attempts to establish and maintain the image that an SBU's product or services are fundamentally unique from other products or services in the same market segment?
A) corporate strategy
B) differentiation strategy
C) related diversification strategy
D) unrelated diversification strategy
The strategy that attempts to establish and maintain the image that an SBU's product or services are fundamentally unique from other products or services in the same market segment is the differentiation strategy.
The differentiation strategy is focused on creating a unique and distinctive positioning for a product or service in the market. It involves developing features, qualities, or attributes that set the offering apart from competitors and create a perception of value and uniqueness among customers. By emphasizing the unique aspects of their products or services, companies implementing a differentiation strategy aim to attract customers based on their distinctive features rather than solely competing on price. This strategy helps to build a competitive advantage and create a perception of superiority in the market segment, thus distinguishing the SBU from its competitors.
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kurt lewin's model of change involves understanding the need for change, changing, and evaluating the change.
Kurt Lewin's model of change involves three main steps: understanding the need for change, making the change, and evaluating the change.
Understanding the need for change: This step involves recognizing that there is a problem or a need for improvement in a particular situation. It could be something like outdated processes, low productivity, or customer dissatisfaction. To understand the need for change, it's important to gather information, analyze data, and identify areas that require improvement.
Making the change: Once the need for change has been identified, the next step is to implement the necessary changes. This involves developing a plan, communicating it to the relevant stakeholders, and executing the plan. It may include actions such as introducing new procedures, training employees, or updating technology. It's essential to involve and engage all those affected by the change to increase acceptance and cooperation.
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Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects cash sales of $25,000 and $41,500, respectively. It also expects credit sales of $51,500 and $61,500, respectively. The company expects to collect 45% of its credit sales in the month of the sale, 50% in the following month, and 5% is deemed uncollectible. What amount of cash collections would appear in the company's cash budget for the first month? . Multiple Choice $64,675 $23.175 $64.675 $23.15 $48.5 $4500
We must take into account both the cash and credit sales as well as the credit sales' collection trends in order to calculate the cash collections for the first month.
The business anticipates $25,000 in cash sales for the first month. Since these sales are done in cash, the proceeds will be collected right away. The corporation anticipates $51,500 in credit sales, but only 45% of them are paid for in the month of the transaction. Therefore, 45% of $51,500, or $23,175, would be the cash collected from credit sales in the first month. We sum the cash sales and the cash collections from credit sales to determine the total cash collections for the first month: first-month cash collections equal cash sales plus cash receipts from Credit sales equal $25,000 plus $23,175 for a total of 48,175 As a result, the right response is $48,175, which isn't one of the available multiple-choice answers.
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Fill In The Blank, The "dual-rate" cost-allocation method classifies costs in each support dept into a ____. (select all that apply)
budgeted-cost pool and an actual-cost pool
direct-cost pool and an indirect-cost pool
variable-cost pool and a fixed-cost pool
direct-cost pool and a reciprocal-cost pool
manufacturing-cost pool and a non-manufacturing cost pool
Which of the following describes the direct method's allocation of support-dept costs?
It allocates support-dept costs to operating dept by fully recognizing the mutual services provided among all support depts
It allocates each support dept costs to operating depts only
It allocates support-dept cost to other support depts and to operating depts in a sequential manner that partially recognizes the mutual services provided among all support dept.
It requires managers to rank the support depts after predicting the usage of multiple support depts
The "dual-rate" cost-allocation method classifies costs in each support dept into a budgeted-cost pool and an actual-cost pool and direct-cost pool and an indirect-cost pool.Both direct-cost pool and an indirect-cost pool are used to classify the costs in each support dept.
The direct-cost pool includes costs incurred for a single department while the indirect-cost pool includes costs incurred for several departments.
The direct method's allocation of support-dept costs allocates support-dept costs to operating dept by fully recognizing the mutual services provided among all support depts. The direct method is an alternative method for allocating support-department costs to operating departments.The direct method allocates each support department's total costs to operating departments without considering any services provided by other support departments.
The direct method only accounts for the services the support department provides to the operating department.In conclusion, The "dual-rate" cost-allocation method classifies costs in each support dept into a budgeted-cost pool and an actual-cost pool and a direct-cost pool and an indirect-cost pool.
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Nine-year Treasury bonds are yielding 4.8% per year and a nine-year corporate bond is yielding 6.3% per year. If the corporate bond's yield includes a 0.8% per year default premium and a 1.7% per year inflation premium, what is its liquidity premium?
1) 0.6%
2) 0.9%
3) 0.5%
4) 0.8%
5) 0.7%
The given information is:
Nine-year Treasury bonds are yielding 4.8% per year and a nine-year corporate bond is yielding 6.3% per year. If the corporate bond's yield includes a 0.8% per year default premium and a 1.7% per year inflation premium
The liquidity premium is the extra return that investors expect in exchange for providing liquidity to less-liquid securities. The formula to calculate liquidity premium is: Liquidity premium
= Yield on less liquid security - Yield on more liquid security For The yield on the more liquid security is the Treasury bond yield. We have,
Corporate bond yield = 6.3%
Treasury bond yield = 4.8%
Inflation premium = 1.7%
Default premium = 0.8%
The total risk premium of the corporate bond is:Risk premium
= Inflation premium + Default premium
Risk premium = 1.7% + 0.8%
Risk premium = 2.5%
Hence, the yield on the corporate bond, which consists of the required return plus the risk premium, is:
Corporate bond yield = Required return + Risk premium
Corporate bond yield = 6.3% + 2.5%
Corporate bond yield = 8.8%
Now we can use the formula to calculate the liquidity premium of the corporate bond.
Liquidity premium = Yield on less liquid security - Yield on more liquid security
Liquidity premium = 8.8% - 4.8%
Liquidity premium = 4%
Therefore, the liquidity premium is 4%. Thus, option 1 is the correct choice.
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Benito Manufactures Pty is considering spending R8.5 million building a new manufacturing production facility on a site it bought for R1.25 million few years ago. The site is not currently in use and is currently valued at R2.5 million. If it goes ahead with the project, it expects to be able to sell the site at the end of the project for R3 million. No tax effects are expected on the proceeds of the sale of the land. The company will be manufacturing units and expects to be able to sell an average of 20 000 units in the first year and then increasing by 2 % from year 2 to year 5 at a price of R220 per unit. The variable costs to be incurred in production will total R110 per unit with fixed costs of R550 000 per year. The project will require a one-time investment in working capital initially and will be recovered at the end of the project. The company will be able to sell the production facility at R5 million. Company taxes are 35 % and depreciation allowances are calculated on a straight-line basis to zero over 5 years. The discount rate for the company’s projects is 12%.
There is no inflation over this period. At the beginning of the project, the company will need cash of R2 million, market securities of R1.46 million, allowance for account receivables of R2 million, inventory of raw material and spare inventory amounting to R3 millions. The current ratio is 1.25
What is the estimated project’s NPV?
Would you recommend that he build the manufacturing facility?
What is the number of the units required to break-even?
Comment on the rationale of using the accounting break-even analysis under certain circumstances to assess project viabilit
The Benito Manufactures Pty is considering spending R8.5 million on building a new manufacturing production facility on a site it bought for R1.25 million few years ago. The site is currently valued at R2.5 million, and if it goes ahead with the project, it expects to sell the site at the end of the project for R3 million.
The company will manufacture units and expects to sell an average of 20 000 units in the first year, increasing by 2% from year 2 to year 5 at a price of R220 per unit. The variable costs incurred in production will total R110 per unit, and the fixed costs will be R550 000 per year. The project will require a one-time investment in working capital, which will be recovered at the end of the project.
The company can sell the production facility at R5 million. The taxes of the company are 35%, and the depreciation allowances are calculated on a straight-line basis to zero over five years. The discount rate for the company’s projects is 12%. At the beginning of the project, the company will need cash of R2 million, market securities of R1.46 million, allowance for account receivables of R2 million, inventory of raw material and spare inventory amounting to R3 million.
The current ratio is 1.25.Estimating the project's NPV:
Initial cash outflow = R8.5 million + R2 million + R1.46 million + R2 million + R3 million = R16.96 million
Year 1Sales = 20 000 × R220 = R4.4 millionVariable cost = 20 000 × R110 = R2.2 millionFixed cost = R550 000Depreciation = R8.5 million / 5 years = R1.7 millionTaxable income = R4.4 million - R2.2 million - R550 000 - R1.7 million = R950 000Taxes = 35% of R950 000 = R332 500Cash inflow = R4.4 million - R2.2 million - R550 000 - R332 500 + R1.7 million = R2.0175 millionYear 2Sales = 20 000 × 1.02 × R220 = R4.488 millionVariable cost = 20 000 × 1.02 × R110 = R2.244 millionFixed cost = R550 000Depreciation = R8.5 million / 5 years = R1.7 millionTaxable income = R4.488 million - R2.244 million - R550 000 - R1.7 million = R994 000Taxes = 35% of R994 000 = R347 900Cash inflow = R4.488 million - R2.244 million - R550 000 - R347 900 + R1.7 million = R2.0461 millionYear 3Sales = 20 000 × (1.02)² × R220 = R4.57776 millionVariable cost = 20 000 × (1.02)² × R110 = R2.28888 millionFixed cost = R550 000Depreciation = R8.5 million / 5 years = R1.7 millionTaxable income = R4.57776 million - R2.28888 million - R550 000 - R1.7 million = R1.03988 millionTaxes = 35% of R1.03988 million = R364,958Cash inflow = R4.57776 million - R2.28888 million - R550 000 - R364,958 + R1.7 million = R2.07393 millionYear 4Sales = 20 000 × (1.02)³ × R220 = R4.668224 millionVariable cost = 20 000 × (1.02)³ × R110 = R2.334112 millionFixed cost = R550 000Depreciation = R8.5 million / 5 years = R1.7 millionTaxable income = R4.668224 million - R2.334112 million - R550 000 - R1.7 million = R1.084012 millionTaxes = 35% of R1.084012 million = R379,404Cash inflow = R4.668224 million - R2.334112 million - R550 000 - R379,404 + R1.7 million = R2.105608 millionYear 5Sales = 20 000 × (1.02)⁴ × R220 = R4.75927488 millionVariable cost = 20 000 × (1.02)⁴ × R110 = R2.37963744 millionFixed cost = R550 000Depreciation = R8.5 million / 5 years = R1.7 millionTaxable income = R4.75927488 million - R2.37963744 million - R550 000 - R1.7 million = R1.12993744 millionTaxes = 35% of R1.12993744 million = R395,478.104Cash inflow = R4.75927488 million - R2.37963744 million - R550 000 - R395,478.104 + R1.7 million = R2.153519436 millionWorking capital recovery = R1.25 millionTerminal cash flow = R3 million + R5 million - R2.153519436 million = R5.846480564 millionNPV = Cash inflows - Cash outflows = R16.96 million - R11.05826561 million = R5.90173439 millionYes, Benito Manufactures Pty should build the manufacturing facility. The estimated project's NPV is R5.90173439 million.Number of units required to break-even:Revenue = Cost (Fixed Cost + Variable Cost)Revenue = R220 × 20 000 × 1.02⁴ = R4,759,274.88Cost = R550,000 + R110 × 20,000 × 1.02⁴ = R2,379,637.44Breakeven point = Cost / RevenueBreakeven point = R2,379,637.44 / R4,759,274.88 = 0.5Therefore, 10,000 units are required to break-even.
Using the accounting break-even analysis to assess project viability under certain circumstances can be a very useful tool. The accounting break-even analysis provides insight into the minimum number of units a company must sell to break even. The analysis also helps determine the impact of various expenses, such as variable and fixed costs, on the project's bottom line. By performing an accounting break-even analysis, a company can ensure that it can pay its bills and cover its costs while maintaining a reasonable profit margin. The accounting break-even analysis is a useful tool for decision-making, as it helps management determine whether a project or initiative is financially viable and worth pursuing.
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Murray Compensation, Inc. issued 100,000 employee share options on 1/1/2016. The grand-date market price is $18 per share, exercise price is also $18 per share, and the fair value of the options is $9 per share. The vesting period is 3 years.
How much stock option compensation should be record for the first year (2016]?
Due to the significant decrease in stock price, the fair value of the option dropped to $4 per share as of 1/1/18. As a result, Murray decreased the exercise price of the option to from $18 to $12 per share. With the re-pricing, the fair value is now $6 per share. How much additional compensation should be recorded for 2018? . How much total compensation should be recorded for 2018?
Stock options compensation is an expense. It is recorded in the income statement and is deducted from revenue in order to arrive at the net income.
Stock options compensation arises when the company grants employee stock options. The amount of compensation is calculated based on the fair value of the options as of the grant date and is usually expensed over the vesting period. Murray Compensation, Inc. issued 100,000 employee share options on 1/1/2016. The grant-date market price is $18 per share, exercise price is also $18 per share, and the fair value of the options is $9 per share. The vesting period is 3 years. In the first year,
the company would recognize $3 per share (=$9/3) as stock option compensation expense.
The total compensation expense for 2016 would be $300,000 (=100,000 shares x $3/share).Due to the significant decrease in stock price, the fair value of the option dropped to $4 per share as of 1/1/18. As a result, Murray decreased the exercise price of the option from $18 to $12 per share.
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In July 2007, News Corporation entered into an agreement to purchase all of the outstanding shares of Dow Jones and Company for $54 per share. Immediately prior to the News Corporation bid, the shares of Dow Jones traded at $29 per share. The number of outstanding shares at the time of the announcement was 74 million. The book value of interest-bearing liabilities on the balance sheet of Dow Jones was $1.39 billion. Estimate the cost of this acquisition to the shareholders of News Corporation What value did News Corporation place on the control of Dow Jones and Company?
More than 100 words:News Corporation entered into an agreement to buy Dow Jones and Company in July 2007. News Corp.
bid for $54 per share for all outstanding shares of Dow Jones, and the shares traded at $29 per share. The number of shares at the time of the announcement was 74 million. The book value of interest-bearing liabilities on the balance sheet of Dow Jones was $1.39 billion. As a result, the cost of acquisition to News Corporation's shareholders can be calculated. The market value of the shares at the time of the announcement is equal to the cost of the shares, so we can calculate the cost of the acquisition by multiplying the number of shares by the price per share.
As a result, the cost of acquisition to News Corp. is equal to 74 million x $54 per share, or $3.996 billion. The cost of acquisition was more than $2.5 billion higher than the book value of the interest-bearing liabilities on the balance sheet of Dow Jones.
News Corporation will pay a price per share that is higher than the current market price, meaning that the company expects future cash flows from Dow Jones to be higher than the current market price.
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4. Payer yield is a metric used to benchmark various contracts of similar financial classes against others to examine financial performance. Payer yield is expressed as a percentage, calculated as (total payments/total charges). If Humana’s yield is 62% and Anthem’s yield is 67%, what percentage increase should Managed Care negotiate with Humana to bring it to parity with Anthem?
Payer yield is a metric used to benchmark various contracts of similar financial classes against others to examine financial performance. It is expressed as a percentage, calculated as (total payments/total charges).
To bring Humana's payer yield to parity with Anthem, we will first determine the percentage increase required.
Let's set up an equation to solve for the percentage increase we need to bring Humana to parity with Anthem:
Percentage Increase = [(Anthem's yield - Humana's yield)/Humana's yield] x 100Substitute the values we know into the formula:
Percentage Increase = [(67 - 62)/62] x 100Percentage Increase = (5/62) x 100Percentage Increase = 8.06%
Thus, Managed Care should negotiate an 8.06% increase in payer yield with Humana to bring it to parity with Anthem.
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A five-year, 6.5% bond with a YTM of 5.0% has a duration of 4.45 and convexity of 25.59. The bond's current price quote is 106.494. Assume the bond pays annual coupons and has a par value of $1.000. a. Compute the percentage change in the bond's price if its YTM increases 75 basis points. b. Estimate the percentage change in the bond's price using modified duration and the convexity correction (the duration \& convexity rule) if the bond's YTM increases 75 basis points. c. Compute the percentage change in the bond's price if its YTM decreases 90 basis points. d. Estimate the percentage change in the bond's price using modified duration and the convexity correction (the duration \& convexity rule) if the bond's YTM decreases 90 basis points.
To calculate the percentage change in the bond's price if its YTM increases 75 basis points, we can use the following formula.
[tex]% Change in bond price = - Duration × ΔYTM + (Convexity × ΔYTM²) / 2[/tex] Where: Duration = 4.45ΔYTM = 75 basis points = 0.75%Convexity = 25.59 Therefore, [tex]% Change in bond price = - 4.45 × 0.75 + (25.59 × 0.75²) / 2= - 3.3375 + 11.4141= 8.0766[/tex] The percentage change in the bond's price if its YTM increases 75 basis points is approximately 8.08%.
To estimate the percentage change in the bond's price using modified duration and the convexity correction if the bond's YTM increases 75 basis points, we can use the following formula:[tex]% Change in bond price = - Duration × ΔYTM + (Convexity × ΔYTM²) / 2[/tex]Where: [tex]Duration = 4.45ΔYTM = 75[/tex] [tex]basis points = 0.75%Convexity = 25.59.[/tex]
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your company wants to activate enterprise licenses on a one-time basis by calling microsoft. which of the following activation processes will they need to use?
To activate enterprise licenses on a one-time basis, the company needs to initiate the process through a phone call to Microsoft, as it requires direct communication for activation. Therefore, option D is correct.
Activation refers to the process of enabling or authorizing the use of enterprise licenses. In the context of Microsoft, it involves validating and activating the licenses to grant users access to the designated software or services.
Phone activation requires the company to initiate a direct conversation with Microsoft's support or licensing team to provide the necessary information and follow the required steps for license activation.
This interactive approach ensures proper verification and facilitates any additional steps or clarifications needed for successful license activation, ensuring compliance and authorized usage of the enterprise licenses.
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Most probably; your complete question is here:
your company wants to activate enterprise licenses on a one-time basis by calling microsoft. which of the following activation processes will they need to use?
A. Online activation through Microsoft's website.
B. Email activation request to Microsoft.
C. In-person activation at a Microsoft service center.
D. Phone activation by calling Microsoft.
Which of the following statements concerning accounting for depreciation and depletion in an estate is not true? a. For any depreciation taken, an equal amount of income maybe transferred to principal. b. Depreciation is a calculated on a basis other than GAAP. c. Depletion is generally taken for wasting assets. d. All of the above.
The statement that is false concerning accounting for depreciation and depletion in an estate is b. Depreciation is a calculated on a basis other than GAAP.
Accounting refers to the process of recording financial transactions pertaining to a business or an organization. It includes summarizing, analyzing, and reporting these transactions to agencies and tax collection entities.
It is a method of keeping track of the financial activities of a business or individual. An estate is the total assets and liabilities of a deceased person.
Accounting for depreciation and depletion in an estate is a process of determining how much the assets of a deceased person have decreased in value.
The difference between an asset's initial purchase value and its present value is called depreciation. Depletion, on the other hand, is the process of determining how much an asset has been used up.
The depletion of an asset is the cost of its extraction or depletion over a period of time. Therefore, depletion is generally taken for wasting assets.
The statement that is false concerning accounting for depreciation and depletion in an estate is b.
Depreciation is a calculated on a basis other than GAAP. Depreciation is calculated according to GAAP, which is the Generally Accepted Accounting Principles.
These are the guidelines for financial accounting and reporting.
Therefore, all the statements provided are false except statement c.
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