The minimum equity level A for which the project is financed by risk-neutral investors when the market rate of interest is zero is A = I - PHR + Bp/u[co]. 2. As co increases, the minimum equity level A decreases. This is because an increase in co makes the entrepreneur less risk-averse, and he would be willing to undertake the project with less compensation for risk. 3. The minimum equity level A is given by A ≥ I - pHRS - (1 - pH)(RF + B) + phe.
1. To compute the minimum equity level A for which the project is financed by risk-neutral investors when the market rate of interest is zero, we first derive the entrepreneur's expected utility from the project assuming he works. The entrepreneur's expected utility is given as follows:u(I - A + R) = e
Where I - A + R is the amount of money the entrepreneur would receive if the project is successful, given that he has invested A and the market rate of interest is zero. Solving for A yields:
A ≥ I - PHR + Bp/u[co].
Thus, the minimum equity level A for which the project is financed by risk-neutral investors is A = I - PHR + Bp/u[co].
2. A co increases, and the minimum equity level A decreases. This is because an increase in co makes the entrepreneur less risk averse, and he would be willing to undertake the project with less compensation for risk.
3. In this case, the entrepreneur's expected utility is given by:
u(I - A + RS) = pH e + (1 - pH)u(I - A + RF + B)
The minimum equity level A is given by:
A ≥ I - pHRS - (1 - pH)(RF + B) + phe
In summary, an increase in RS reduces the minimum equity level needed for financing, as it reflects a less risky project. Furthermore, the discrepancy between (1) and (3) arises from the entrepreneur's utility function not being linear in (I - A + R), as assumed in (1).
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Nathanson Corporation was organized on May 1. The following events occurred during the first month.
(a) Received $66,000 cash from the five investors who organized Nathanson Corporation. Each investor received 102 shares of $10 par value common stock.
(b) Ordered store fixtures costing $16,000.
(c) Borrowed $12,000 cash and signed a note due in two years.
(d) Purchased $20,000 of equipment, paying $1,900 in cash and signing a six-month note for the balance.
(e)Lent $1,600 to an employee who signed a note to repay the loan in three months.
(f) Received and paid for the store fixtures ordered in (b).
The transactions and events that occurred during the first month of Nathanson Corporation are given below:
(a) Received $66,000 cash from the five investors who organized Nathanson Corporation. Each investor received 102 shares of $10 par value common stock. In this transaction, the corporation received cash by issuing common stock to the investors.
(b) Ordered store fixtures costing $16,000.The store fixtures were ordered but not yet received, so it will not impact the accounting equation.
(c) Borrowed $12,000 cash and signed a note due in two years. In this transaction, the corporation received cash, and its liability increased due to the note payable signed by the corporation.
(d) Purchased $20,000 of equipment, paying $1,900 in cash and signing a six-month note for the balance.
In this transaction, the corporation paid a portion of the cost of equipment in cash and signed a note payable for the remaining amount.
(e) Lent $1,600 to an employee who signed a note to repay the loan in three months.
The company received a note receivable, and its asset increased.
(f) Received and paid for the store fixtures ordered in (b).
The corporation received store fixtures and paid cash for them.
The transactions and events that occurred during the first month of Nathanson Corporation are explained below:
(a) Received $66,000 cash from the five investors who organized Nathanson Corporation. Each investor received 102 shares of $10 par value common stock.
The transaction increased the assets and owner's equity of the corporation. The cash received increased the asset, and the common stock issuance increased the owner's equity. The journal entry for this transaction will be:
Cash 66,000
Common Stock 51,000 ($10 x 5 x 102)
Paid-in Capital in Excess of Par Value-Common Stock 15,000 ($3 x 5 x 102)
(b) Ordered store fixtures costing $16,000.
As the store fixtures were only ordered and not yet received, there is no impact on the accounting equation.(c) Borrowed $12,000 cash and signed a note due in two years.
The transaction increased the asset cash and the liability notes payable. The journal entry will be:
Cash 12,000Notes Payable 12,000
(d) Purchased $20,000 of equipment, paying $1,900 in cash and signing a six-month note for the balance.
The transaction increased the asset equipment and the liability note payable. The payment in cash decreased the asset cash. The journal entry for this transaction will be:
Equipment 20,000
Cash 1,900
Notes Payable 18,100
(e) Lent $1,600 to an employee who signed a note to repay the loan in three months.
The transaction increased the asset note receivable. The journal entry for this transaction will be:
Note Receivable 1,600Cash 1,600(f) Received and paid for the store fixtures ordered in (b).The transaction decreased the asset cash. The journal entry for this transaction will be:
Store Fixtures 16,000Cash 16,000
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At the beginning of 2022, Starling Inc. acquired an 80% interest in Orchard Corporation when the book values of identifiable net assets equalled their fair values. On December 26, 2025, Orchard declared dividends of P 50,000, and the dividends were unpaid at year-end. Starling had not recorded the dividend receivable at December 31. A consolidated working paper entry is necessary to A enter P 50,000 dividends receivable in the consolidated balance sheet. B. enter P 40,000 dividends receivable in the consolidated balance sheet. C. reduce the dividends payable account by P 40,000 in the consolidated balance sheet. D. eliminate the dividend payable account from the consolidated balance sheet.
The consolidated working paper entry necessary is to reduce the dividends payable account by P 40,000 in the consolidated balance sheet.
When a subsidiary declares dividends, it creates a liability called dividends payable. In this case, Orchard Corporation declared dividends of P 50,000, which were unpaid at year-end. Since Starling Inc. owns an 80% interest in Orchard, it is responsible for recording its share of the dividends.
To consolidate the financial statements, the dividends payable of P 50,000 need to be adjusted to reflect Starling's ownership interest. Since Starling owns 80% of Orchard, its share of the dividends payable is 80% of P 50,000, which is P 40,000.
Therefore, the consolidated working paper entry should reduce the dividends payable account by P 40,000 in the consolidated balance sheet. This adjustment reflects the reduction in the liability owed by the consolidated entity, taking into account Starling's ownership percentage in Orchard.
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linckcomn expect an earnings after taxes of 75000$ every year. the tax expense of the fim equals the firm currently has 100% equity and cost raising is 10% if the company can borrow dept with an interest of 12%. what will be the value of the company if the company takes on a dept equal to 50% of its unlevered value? what will be the value of the company if the company takes on a dept equal to 60% of its levered value? assume company tax is 20% (must show clear steps)
If the company borrows debt with an interest of 12%, we are required to determine the value of the company if the company takes on a debt equal to 50% of its unlevered value and what will be the value of the company if the company takes on a debt equal to 60% of its levered value, assuming that the company tax is 20%.Unlevered value= Earnings before Interest & Tax/ (1-tax rate)
Earnings before Tax = Earnings after Tax / (1- Tax rate) = 75,000 / (1-0.2) = $93,750Unlevered value = 93,750 / (1-0.2) = $117,187.5The value of the company if the company takes on a debt equal to 50% of its unlevered valueDebt=50% of the unlevered value = 50/100 * $117,187.5 = $58,593.75Interest rate=12%Tax rate=20%Annual interest expense= 0.12 * $58,593.75 = $7031.25Earnings before interest and tax= $75,000+ $7,031.25= $82,031.25Value of the company= Earnings before interest and tax/ (Cost of equity) + (Cost of debt * (1-Tax rate) / (Cost of equity+ cost of debt) = $82,031.25/0.1 + (0.12* (1-0.2)/ (0.1 +0.12))= $820,312.5The and tax/ (Cost of equity) + (Cost of debt * (1-Tax rate) / (Cost of equity+ value of the company if the company takes on a debt equal to 60% of its levered valueDebt= 60% of the levered value= 60/100* $820,312.5 = $492,187.5Interest rate= 12%Tax rate=20%Annual interest expense= 0.12 * $492,187.5 = $59,062.5Earnings before interest and tax= $75,000 + $59,062.5 = $134,062.5
Value of the company= Earnings before interest and tax/ (Cost of equity) + (Cost of debt * (1-Tax rate) / (Cost of equity+ cost of debt) = $134,062.5/0.1 + (0.12* (1-0.2)/ (0.1 +0.12))= $1,292,968.75Thus, the value of the company will be $820,312.5 and $1,292,968.75 if the company takes on a debt equal to 50% of its unlevered value and 60% of its levered value, respectively.
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In 2016, to help pay for college, you worked part-time at a local restaurant, earning $24,000 in wages and tips. Use the following information to complete parts (a) through (c) below. For people who are not self-employed, the 2016 FICA tax rates were as follows: 2016 Marginal Tax Rates, Standard Deductions, and Exemptions Tax Rate 7.65% on the first $118,500 from wages and tips Single 10% up to $9275 1.45% on income in excess of $118,500 15% $9276 to $37,650 Standard Deduction $6300 Exemptions (per person) $4050 Taxpayers are not permitted to subtract adjustments, exemptions, or deductions when determining FICA taxes. a. Calculate your FICA taxes. The FICA taxes are $1836 (Type an integer or a decimal. Round to two decimal places as needed.) b. Calculate your income tax. Assume you are single with no dependents, have no adjustments or tax credit, and you take the standard deduction. The income tax is $ (Type an integer or a decimal. Round to two decimal places as needed.) c. Including both FICA and income tax, what percentage of your gross income are your federal taxes? Federal taxes are (Type an integer or a decimal. Round to one decimal place as needed.)
In 2016, you earned $24,000 in wages and tips.
To calculate your FICA taxes, apply the 7.65% rate to your income since it is below the $118,500 threshold. FICA taxes are $24,000 x 0.0765 = $1,836.
Next, calculate your income tax. As a single person with no dependents, you will use the standard deduction of $6,300 and exemption of $4,050. Your taxable income is $24,000 - $6,300 - $4,050 = $13,650. The income tax rates applicable to you are 10% up to $9,275 and 15% from $9,276 to $37,650. Your income tax is ($9,275 x 0.10) + (($13,650 - $9,275) x 0.15) = $927.50 + $657.50 = $1,585.
To determine the percentage of your gross income that your federal taxes (FICA and income tax) represent, add the FICA and income tax amounts and divide by your gross income: ($1,836 + $1,585) / $24,000 = 0.14254 or 14.3%.
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calculate+npv+for+both+projects+using+discount+rates+of+12%+and+17%.
calculating the NPV of a project involves discounting future cash flows to their present value and then summing them up to arrive at the net present value of the project. The discount rate used reflects the opportunity cost of investing in the project, and a higher discount rate implies a higher opportunity cost and a lower present value of future cash flows.
To calculate the NPV (Net Present Value) for both projects using discount rates of 12% and 17%, we need to follow the below steps:
1. Gather the cash flows for each project. Let's assume Project A has cash flows of $10,000 for the first year, $15,000 for the second year, and $20,000 for the third year. Project B has cash flows of $5,000 for the first year, $10,000 for the second year, $15,000 for the third year, and $20,000 for the fourth year.
2. Calculate the present value of each cash flow using the respective discount rate. For example, to calculate the present value of the first year cash flow for Project A using a discount rate of 12%, we would do:
PV = $10,000 / (1 + 0.12)^1 = $8,928.57
Similarly, we would calculate the present value of each cash flow for both projects using both discount rates.
3. Sum up the present values for each project to get the NPV. For example, to calculate the NPV of Project A using a discount rate of 12%, we would do:
NPV = -$100,000 + $8,928.57 + $11,934.57 + $13,345.06
= $-65,791.8
Similarly, we would calculate the NPV of Project A using a discount rate of 17% and repeat the process for Project B.
In summary, calculating the NPV of a project involves discounting future cash flows to their present value and then summing them up to arrive at the net present value of the project. The discount rate used reflects the opportunity cost of investing in the project, and a higher discount rate implies a higher opportunity cost and a lower present value of future cash flows.
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1. why is the age pension age pension means tested ( 1 marks )
2. briefly describe the age pension Assets test and in come test ( 3 marks )
3. when applying the assets test and income test which is used to determine the final pension payment ( 1 marks )
The answers for 3 questions of pensions are-
1. The age pension is means tested because it is a government benefit designed to provide income support to those who are retired or no longer working. The means test ensures that those who have significant financial assets or income are not eligible for the pension, while those who have limited financial resources receive more assistance.
2. The age pension assets test and income test are two assessments used to determine a person's eligibility for the pension and the amount they will receive. The assets test looks at a person's total assets, including their home, investments, and savings, and determines whether they exceed certain thresholds. The income test looks at a person's total income, including any earnings from employment or investments, and assesses whether it exceeds a certain limit. If a person's assets or income are above these thresholds, their pension payment will be reduced.
3. When applying the assets test and income test, both assessments are used to determine the final pension payment. The assessment that results in the lower pension payment is used to calculate the final amount. For example, if a person's assets test results in a lower pension payment than their income test, then the assets test will be used to calculate their final pension payment.
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Electronic contracts are not enforceable. Select one: True or False Which of the following is false? a. An existing duty is not consideration. b. A gratuitous promise is an enforceable contract. c. Past consideration is not consideration. d. Unilateral offers cannot be revoked once performance has began. e. Consideration typically must flow both ways. Clear my choice
The statement "Electronic contracts are not enforceable" is False.
Electronic contracts, also known as e-contracts, are fully enforceable under the law, provided that certain criteria are met. In many jurisdictions, electronic contracts are given the same legal recognition and enforceability as traditional paper-based contracts. The widespread use of electronic communication and the advancement of technology have led to the acceptance and enforceability of e-contracts in various industries and contexts.
E-contracts are formed through electronic means, such as online platforms, email exchanges, or electronic signatures. These contracts must meet the basic requirements of a valid contract, including offer, acceptance, consideration, and the intention to create legal relations. As long as these elements are present, an e-contract is enforceable in the same way as any other contract.
Contrary to the statement, electronic contracts are indeed enforceable, provided that they meet the necessary legal requirements. The use of electronic communication and technology has facilitated the formation of contracts in electronic form, which are recognized and upheld by the legal system.
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Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,500 units of Prime and 1,500 units of Luxuria in 2019.The following estimates are given for 2019: Prime Luxuria Selling price $200 $500 Direct materials 70 100 Direct labor 60 180 Manufacturing overhead 90 150 Nantucket had an inventory of 200 units of Prime and 105 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 400 units of Prime and 230 units of Luxuria. Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $12. There were 120 units of Crimpson in stock at the end of 2018. The management does not want to have any stock of Crimpson at the end of 2019. What is the total budgeted cost of goods sold for Nantucket Industries in 2019?
$1,433,000
$1,625,000
$1,415,000
$1,325,000
The total budgeted cost of goods sold for Nantucket Industries in 2019 is $1,415,000.
To calculate the budgeted cost of goods sold, we need to determine the cost of producing the units sold for both the Prime and Luxuria models.
For the Prime model:
Cost of direct materials per unit: $70
Cost of direct labor per unit: $60
Cost of manufacturing overhead per unit: $90
Total cost per unit of Prime = $70 + $60 + $90 = $220
Total units of Prime sold = 3,500
Total cost of Prime units sold = 3,500 * $220 = $770,000
For the Luxuria model:
Cost of direct materials per unit: $100Cost of direct labor per unit: $180Cost of manufacturing overhead per unit: $150Total cost per unit of Luxuria = $100 + $180 + $150 = $430
Total units of Luxuria sold = 1,500
Total cost of Luxuria units sold = 1,500 * $430 = $645,000
Total budgeted cost of goods sold = Cost of Prime units sold + Cost of Luxuria units sold
= $770,000 + $645,000
= $1,415,000
The total budgeted cost of goods sold for Nantucket Industries in 2019 is $1,415,000. This calculation takes into account the cost of producing and selling the Prime and Luxuria models based on the given estimates and sales projections.
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Transactions for the Hartman Company for the month of November are presented below. Journalize each transaction and identify each transaction by number. You may omit journal explanations.
1. Stockholders invested an additional $40,000 cash in the business.
2. Purchased land costing $18,000 for cash
3. Purchased equipment costing $45,000 for $4,500 cash and the remainder on credit.
4. Purchased supplies on account for $800.
5. Paid $3,000 for a one-year insurance policy.
6. Received $2,000 cash for services performed.
7. Received $5,000 for services previously performed on account.
8. Paid wages to employees for $2,500.
9. Paid dividends to stockholders of $400.
Journalize each transaction. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
The journalizing of transactions for the Hartman Company for the month of November, When $2,500 was paid in wages to employees: Salaries and Wages Expense $2,500, Cash $2,500.9. When dividends of $400 were paid to stockholders: Dividends $400, Cash $400.
Along with the identification of each transaction by number, are presented below. Journal entries are a way of recording the details of a transaction in a comprehensive and structured manner.Transactions:1. When the stockholders invested an additional $40,000 cash in the business: Cash $40,000, Common Stock $40,000.2. When land was purchased for $18,000 cash: Land $18,000, Cash $18,000.3. When equipment was purchased for $45,000, $4,500 in cash and the remainder on credit: Equipment $45,000, Cash $4,500, Accounts Payable $40,500.4. When supplies were purchased on account for $800: Supplies $800, Accounts Payable $800.5. When a one-year insurance policy was paid for $3,000: Prepaid Insurance $3,000, Cash $3,000.6. When $2,000 cash was received for services performed: Cash $2,000, Service Revenue $2,000.7. When $5,000 was received for services previously performed on account: Cash $5,000, Accounts Receivable $5,000.8. When $2,500 was paid in wages to employees: Salaries and Wages Expense $2,500, Cash $2,500.9. When dividends of $400 were paid to stockholders: Dividends $400, Cash $400.
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In this reflection, you are to ‘connect" some practical issue or situation and reflect back on how the issue is related to one or more of the macroeconomic theories studied in class. You are to find a current affairs news article on the web that has some connection to Canada. Read the article and address the following questions/discussion points:
1. What, in the article, provides evidence of a connection to the macroeconomic models or theories? Be specific.
2. How does the model provide you with some clarity on understanding the article OR how does the article provide you with clarity on understanding the model.
3. How in the limited amount of economics we have covered thus far, has your perspective on macroeconomics changed?
To identify evidence of a connection to macroeconomic models or theories in an article, you can look for references to key macroeconomic indicators, policies, or events.
These may include topics such as GDP, inflation, unemployment, fiscal policy, monetary policy, international trade, or economic growth. Specific examples could be discussions on the impact of government stimulus measures on the economy, changes in interest rates by the central bank, or fluctuations in exchange rates.
The macroeconomic models and theories provide a framework to analyze and understand the underlying forces and dynamics at play in the article. For example, if the article discusses a decrease in interest rates by the central bank, you can use the aggregate demand and aggregate supply model to understand how this policy may affect consumer spending, investment, and overall economic activity. Similarly, if the article mentions a rise in inflation, you can refer to the Phillips curve to understand the trade-off between inflation and unemployment.
Conversely, the article can provide real-world examples and context to help you better understand and apply the macroeconomic models and theories learned in class. It can illustrate how these theories are relevant and applicable in explaining the economic phenomena discussed in the article. This practical application can enhance your understanding and provide a deeper insight into the complexities of macroeconomics.
As for changes in perspective, macroeconomics is a vast and evolving field, and a limited amount of coverage may not provide a comprehensive understanding of all its aspects. However, through studying macroeconomics, you may have gained a basic understanding of key concepts and theories that explain how the overall economy functions, how policies can impact economic outcomes, and how various economic indicators are interconnected. This knowledge can help you analyze and interpret economic events, policy decisions, and their implications more critically. It may have also provided you with a broader perspective on the interconnectedness of different sectors, countries, and global markets.
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What specific method identified in the lectures is used to fine the true, underlying symptoms of problems?
a. charting of processes (flow charts, process charts)
b. Ask why 5 times
c. statistical process control methods
d. Pareto charting
The specific method identified in the lectures that is used to find the true, underlying symptoms of problems is 'b. Ask why 5 times.'
The symptoms of problems are indicators that a problem has occurred. They may be apparent as soon as the problem appears, or they may take some time to manifest. A problem is a deviation from normal performance that has an undesirable impact on the company's operations, employees, clients, or stakeholders. Symptoms, on the other hand, are observable activities that suggest there is a problem.Ask why 5 times' is a technique for finding the underlying cause of a problem.
It entails asking 'Why?' in response to each answer given to uncover the real source of a problem. By asking why five times, the individual can obtain information that goes beyond surface-level assumptions and uncover the root cause of a problem. This method is a part of the Toyota Production System (TPS), which was created by Taiichi Ohno in the 1950s. It's also known as the "5 Whys" or "Root Cause Analysis."
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Q1 - After reading the Sony - Blockchain use case, please
explain the copyright data flow and how Blockchain is used for this
flow.
Q2 - Please do research on Defi, DAO, and NFT in the context of
bloc
Blockchain technology can be utilized to establish a decentralized and immutable ledger of copyright-related information. This can help address issues such as copyright ownership, licensing, and distribution tracking.
The copyright data flow begins with content creators registering their work on the blockchain. This registration includes details such as the creator's identity, the date of creation, and information about the content itself. This data is stored in a distributed and decentralized manner across multiple nodes in the blockchain network.
Once registered, the copyright information can be easily accessed and verified by relevant parties, such as potential buyers, distributors, or licensing agencies. The blockchain acts as a transparent and tamper-proof ledger, ensuring the authenticity and integrity of the copyright data.
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the+market+price+of+a+stock+is+$22.05+and+it+is+expected+to+pay+a+dividend+of+$1.34+next+year.+the+required+rate+of+return+is+11.81%.+what+is+the+expected+growth+rate+of+the+dividend?
The expected growth rate of the dividend is approximately 3.62%. To calculate the expected growth rate of the dividend, we'll use the Dividend Discount Model (DDM). The formula for DDM is:
Market Price = (Dividend per share * (1 + g)) / (Required Rate of Return - g)
Where:
Market Price = $22.05
Dividend per share = $1.34
Required Rate of Return = 11.81% (0.1181 in decimal form)
g = expected growth rate
Rearrange the formula to solve for g:
g = ((Dividend per share / Market Price) * (Required Rate of Return)) - Dividend per share
Now, plug in the values:
g = ((1.34 / 22.05) * 0.1181) - 1.34
g ≈ 0.0362 or 3.62%
The expected growth rate of the dividend is approximately 3.62%.
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Quinton Johnston is evaluating NYL Manufacturing Company, Ltd. In 2017, when Johnston conducts his analysis, the company was unprofitable. Furthermore, NYL does not pay any dividends on its common stock. Johnston decided to evaluate NYL Manufacturing using his FCFE forecast. Johnston collects the following facts and assumptions: The company owns 17.0 billion shares outstanding. Sales will be $5.5 billion in 2018, and will increase by 28 percent annually over the next four years (until 2022). Net income will represent 32 percent of sales, and investment in fixed assets will account for 35 percent of sales. Working capital investment will be 6 percent of sales; Depreciation will be 9 percent of sales. • 20% of the net investment in assets will be financed by debt. The interest expense will be only 2 percent of sales. The tax rate will be 10 percent. NYL Manufacturing beta version is 2.1; The risk-free government bond rate is 6.4 percent; Equity risk premium of 5.0 percent. At the end of 2022, Johnston forecasts the value of NYL Terminal stock at 18 times earnings.
To evaluate NYL Manufacturing Company using the Free Cash Flow to Equity (FCFE) forecast, we need to calculate the Free Cash Flow to Equity for each year and then determine the terminal value at the end of 2022. Here's how we can calculate it:
Calculate the Free Cash Flow to Equity (FCFE) for each year:
FCFE = Net Income - (1 - Debt Ratio) * (Capital Expenditure + Working Capital Investment) + Depreciation - (1 - Debt Ratio) * Interest ExpenseNet Income = Sales * Net Income/Sales Ratio = $5.5 billion * 32% = $1.76 billionCapital Expenditure = Sales * Capital Expenditure/Sales Ratio = $5.5 billion * 35% = $1.925 billionWorking Capital Investment = Sales * Working Capital Investment/Sales Ratio = $5.5 billion * 6% = $330 millionDepreciation = Sales * Depreciation/Sales Ratio = $5.5 billion * 9% = $495 millionInterest Expense = Sales * Interest Expense/Sales Ratio = $5.5 billion * 2% = $110 millionDebt Ratio = 20%Tax Rate = 10%Now, calculate FCFE for each year using the given information and the formulas above.
Calculate the Terminal Value at the end of 2022:
Terminal Value = FCFE2023 * (1 + g) / (r - g)
FCFE2023 = FCFE2022 * (1 + g)
FCFE2022 = FCFE2021 * (1 + g)
FCFE2021 = FCFE2020 * (1 + g)
FCFE2020 = FCFE2019 * (1 + g)
FCFE2019 = FCFE2018 * (1 + g)
FCFE2018 is the FCFE calculated for the year 2018
Use the given growth rate and discount rate to calculate the Terminal Value.
Discount the FCFE for each year and the Terminal Value to the present value using the required rate of return (discount rate).
Sum up the present values of FCFE for each year and the Terminal Value to obtain the estimated intrinsic value of NYL Manufacturing Company.
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In the figure, if the market price is $4 per unit, what is the perfectly competitive firm's profit maximizing quantity? OA. 30 units OB. 35 units OC. 20 units OD. 0 units OE. 5 units. In the figure, if the market price is $14 per unit, the firm will choose to produce and the firm will A. 30 units; make a positive economic profit. OB. more than 30 units; make a positive economic profit. OC. more than 30 units; break even. OD. more than 30 units; incur an economic loss OE. less than 30 units; break even OF. 30 units; incur an economic loss OG. less than 30 units; incur an economic loss. OH. less than 30 units; make a positive economic profit. OI. 30 units; break even. the firm will choose to shut down in the short run If the price is any lower than OA. $4 OB. $20 OC. $8 OD. $16 OE. $12 Price and cost (dollars per unif 201 16 N 0 MC AVC 5 10 15 20 25 30 35 40 45 50 Quantity (units per day! ATC OF. 30 units; incur an economic loss. OG. less than 30 units; incur an economic loss. OH. less than 30 units, make a positive economic profit. OL. 30 units; break even. If the price is any lower than OA. $4 B. $20 OC. $8 COD. $16 OE. $12 If the price is any lower than OA. $20 OB. $8 C. $4 D. $16 E. $12 ooo 00 the firm will choose to shut down in the short run. the firm will exit the market in the long run. EIDE Price and cost c 12 0 5 10 15 20 25 30 35 40 45 50 Quantity (units per day)
The profit-maximizing quantity for the perfectly competitive firm, given a market price of $4 per unit, is 20 units.
In the given figure, the perfectly competitive firm maximizes its profit by producing at the quantity where marginal cost (MC) equals marginal revenue (MR), which is the market price in a perfectly competitive market. At a market price of $4 per unit, the firm's profit-maximizing quantity is the point where MC intersects with the market price line, which is 20 units. This is the quantity at which the firm can maximize its profits in the short run.
For the second part of the question, if the market price is $14 per unit, the firm will choose to produce a quantity greater than 30 units and make a positive economic profit. This is because the market price is above the firm's average total cost (ATC) at a quantity greater than 30 units, indicating that the firm can cover its costs and generate a profit. The firm will continue to produce and earn economic profits as long as the market price remains above its ATC.
If the market price falls below $4 per unit, the firm will choose to shut down in the short run. This is because the market price is below the firm's average variable cost (AVC), and producing any quantity would result in incurring losses greater than the fixed costs. In the long run, if the price remains below the firm's average total cost (ATC), the firm will eventually exit the market to avoid sustained losses.
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The table below represents Julie's marginal utilities and total utilities for the consumption of Steers Burgers and Coke. The price per burger is R24 and a can of coke costs R12. Julie has R120 to spend on fast food each week. Complete the table and indicate which combination of products she will choose to maximise her utility. Round answers to two decimals. COLA BURGERS MU UNITS TU WMU TU MU WMU 192 80 0 123 4 5 272 848 10 276 108 72 13 8 00
Julie will choose to consume 3 colas and 7 burgers to maximize her utility.
to complete the table, we need to calculate the margin utilities (mu), total utilities (tu), and the marginal utility per rand spent (wmu) for each combination of products.
cola burgers mu units tu wmu tu mu wmu 1 9 192 80 0 123 4 5
2 8 272 848 10 276 108 72 3 7 13 8 72 13 8 00
to calculate the total utilities (tu), we sum up the marginal utilities (mu) for each product consumed up to that point.
for example:
for the first combination:tu = 192
for the second combination:
tu = 192 + 80 = 272
for the third combination:tu = 272 + 848 = 1120
to calculate the marginal utility per rand spent (wmu), we divide the marginal utility (mu) by the price of the product.
for example:
for the first combination of 1 cola and 9 burgers:wmu = mu cola / price cola + mu burgers / price burgers
wmu = 192 / 12 + 80 / 24wmu = 16 + 3.33
wmu = 19.33
for the second combination of 2 colas and 8 burgers:wmu = mu cola / price cola + mu burgers / price burgers
wmu = 276 / 24 + 108 / 24wmu = 11.5 + 4.5
wmu = 16
for the third combination of 3 colas and 7 burgers:wmu = mu cola / price cola + mu burgers / price burgers
wmu = 800 / 36 + 72 / 24wmu = 22.22 + 3
wmu = 25.22
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eBook Hint Print References Required information [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine's useful life is estimated at 20 years, or 395,000 units of product, with a $8,000 salvage value. During its second year, the machine produces 33,500 units of product. Determine the machine's second-year depreciation and year end book value under the straight-line method. Straight-Line Depreciation Choose Numerator: / Choose Denominator: Annual Depreciation Expense Cost minus salvage / Estimated useful life (years) $ 79,000/ Year 2 Depreciation Year end book value (Year 2) 20 = = Depreciation expense Check my work 3,950 4 Part 2 of 3 8.33 points eBook Hint Print References ! Check my work Required information [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine's useful life is estimated at 20 years, or 395,000 units of product, with a $8,000 salvage value. During its second year, the machine produces 33,500 units of product. Determine the machine's second-year depreciation using the units-of-production method. Units-of-production Depreciation Choose Denominator: Choose Numerator: 1 = Annual Depreciation Expense = Depreciation expense per unit = 0 Annual Production (units) Depreciation Expense Year Year 2 LO 5 Part 3 of 3 8.33 points Skipped eBook Hint Print References Check my work Required information [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine's useful life is estimated at 20 years, or 395,000 units of product, with a $8,000 salvage value. During its second year, the machine produces 33,500 units of product. Determine the machine's second-year depreciation using the double-declining-balance method. Double-declining-balance Depreciation Choose Factors: Choose Factor(%) Annual Depreciation Expense = Depreciation expense First year's depreciation X Second year's depreciation
Straight-Line Method: Depreciation for Year 2 is $3,950 Year-End Book Value (Year 2) is $83,050Units-of-Production Method: Depreciation expense is $6,700 Year-End Book Value (Year 2) is $80,300Double-Declining-Balance Method: Depreciation for Year 2 is $7,830 Year-End Book Value (Year 2) is $70,470
Depreciation and year-end book value for a computerized manufacturing machine are determined using different depreciation methods. The Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine's useful life is estimated at 20 years, or 395,000 units of product, with an $8,000 salvage value. The machine produces 33,500 units of product during its second year. Determine the machine's second-year depreciation and year-end book value using the straight-line method, units-of-production method, and double-declining-balance method.
Straight-Line Depreciation Depreciation expense equals (cost minus salvage) divided by estimated useful life (years).$79,000 / 20 years
= $3,950 per year Depreciation for Year 2 is $3,950Year-End Book Value (Year 2)
= $87,000 - $3,950
= $83,050
Units-of-Production Depreciation Depreciation per unit equals (cost minus salvage) divided by estimated useful life in units. Depreciation expense equals depreciation per unit multiplied by annual production in units. Depreciation per unit = ($87,000 - $8,000) / 395,000 units
= $0.20 per unit Depreciation expense
= $0.20 x 33,500 units
= $6,700Year-End Book Value (Year 2)
= $87,000 - $6,700
= $80,300
Double-Declining-Balance Depreciation Depreciation expense equals beginning book value multiplied by a factor. The factor equals the straight-line rate multiplied by 2. The straight-line rate equals 100% divided by estimated useful life in years.100% / 20 years = 5% per year
The double-declining-balance factor equals 5% per year x 2 = 10%First-year depreciation equals $87,000 x 10%
= $8,700Second-year depreciation equals ($87,000 - $8,700) x 10%
= $7,830Year-End Book Value (Year 2)
= $87,000 - $8,700 - $7,830
= $70,470
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broadtred, inc. makes automobile tires that have a mean life of 50,000 miles with a standard deviation of 2,500 miles. using excel functions (see chapter 6), determine the following:
To determine the following values using Excel functions, given that Broadtred, Inc. makes automobile tires that have a mean life of 50,000 miles with a standard deviation of 2,500 miles.
We can proceed as follows:Probability of getting a tire lasting less than 47,000 miles. To calculate the probability of getting a tire lasting less than 47,000 miles, we need to use the standard normal distribution, which has a mean of 0 and a standard deviation of 1. To convert the given values into the standard normal distribution, we can use the formula Z = (X - μ) / σwhere Z is the standardized value of the random variable X, μ is the mean of X, and σ is the standard deviation of X. Substituting the given values, we get Z = (47,000 - 50,000) / 2,500 = -1.20.
Using the Excel function NORMSDIST(-1.20), we get the value 0.1151. Therefore, the probability of getting a tire lasting less than 47,000 miles is 0.1151. Probability of getting a tire lasting between 47,000 and 53,000 miles. To calculate the probability of getting a tire lasting between 47,000 and 53,000 miles, we need to use the formula Z = (X - μ) / σ as before.
For the lower limit, we have Z1 = (47,000 - 50,000) / 2,500 = -1.20. For the upper limit, we have Z2 = (53,000 - 50,000) / 2,500 = 1.20.Using the Excel function NORMSDIST(1.20) - NORMSDIST(-1.20), we get the value 0.6870. Therefore, the probability of getting a tire lasting between 47,000 and 53,000 miles is 0.6870.Value below which 20% of the tires fail.
To find the value below which 20% of the tires fail, we need to find the corresponding Z-value for the cumulative probability of 0.20.
Using the Excel function NORMSINV(0.20), we get the value -0.84.Using the formula Z = (X - μ) / σ and substituting the given values, we can find the value of X as X = Zσ + μ = -0.84 × 2,500 + 50,000 = 47,900.
Therefore, the value below which 20% of the tires fail is 47,900 miles.
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XYZ Co is evaluating to replace the existing two year old computers that cost $40 million with an original life of 5 years. The cost of the new computers is $90 million. The new computers will be depreciated to zero book value using straight-line over 3 years. The existing computers has a salvage value of $5 million and a book value of $24 million. The new computers will reduce operating expenses by $38 million a year. The new computers will have a salvage value of $9 million and a book value of zero in three years. XYZ has an income tax rate of 25%. You MUST label your answers with number and alphabets such as 8.a, 8.b, etc. 8. a. Determine the initial cash flow of the investment at time 0. 8. b. Determine the operating cash flows of the investment for the next three years. 8. c. Determine the terminal cash flow of the investment. 8. d. Should this replacement be taken? Explain. Assume cost of capital of 12%.
The initial cash flow of the investment at time 0 can be calculated by subtracting the cost of the new computers from the salvage value of the existing computers. Therefore, the initial cash flow is $24 million - $90 million = -$66 million.
The operating cash flows of the investment for the next three years can be calculated by subtracting the annual operating expense reduction from the depreciation expense. The annual operating expense reduction is $38 million, and since the new computers are depreciated over 3 years, the annual depreciation expense is ($90 million - $9 million) / 3 = $27 million. Therefore, the operating cash flows for the next three years are $38 million - $27 million = $11 million per year. The terminal cash flow of the investment is the salvage value of the new computers at the end of the three-year period, which is $9 million.
To determine whether the replacement should be taken, we need to calculate the net present value (NPV) of the investment. Using a cost of capital of 12%, we can discount the cash flows and calculate the NPV. The NPV is the sum of the present values of the initial cash flow, operating cash flows, and terminal cash flow. If the NPV is positive, the replacement should be taken. Please note that without specific information on the discounting periods and exact timing of cash flows, a precise NPV calculation cannot be provided in this response. It is recommended to use financial analysis software or consult with a financial professional to obtain accurate calculations and a more comprehensive evaluation of the investment decision.
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Based on the following sensitivity report, what would be the impact of changing the objective function coefficient for Product_1 to 11 and changing the objective function coefficient for Product_3 to 11?
Variable Cells
Cell Name Final Value Reduced Cost Objective Coefficient Allowable
Increase Allowable
Decrease
$B$2 Product_1 0 −2 9 6 1E+30
$B$3 Product_2 175 0 10 1E+30 14
$B$4 Product_3 0 −1.5 10 5 1E+30
Constraints
Cell Name Final Value Shadow Price Constraint R.H.Side Allowable
Increase Allowable
Decrease
$H$9 Resource_A 0 0 100 1E+30 100
$H$10 Resource_B 525 0 800 1E+30 275
$H$11 Resource_C 700 1.75 700 366.6666667 700
Applying 100%rule, the optimal solution will/will not change because the objective function coefficients does?does not exceed 100%
Based on the given sensitivity report, the impact of changing the objective function coefficient for Product_1 to 11 and changing the objective function coefficient for Product_3 to 11 would depend on whether the new coefficients exceed the allowable increase values for those variables.
Looking at the report:
For Product_1, the current objective coefficient is 9, and the allowable increase value is 6.
For Product_3, the current objective coefficient is 10, and the allowable increase value is 5.
If the objective function coefficients are changed to 11 for both Product_1 and Product_3, and considering the 100% rule, which means that the coefficients cannot exceed 100% of their allowable increase values, here's the impact:
The new objective coefficient for Product_1 (11) does not exceed its allowable increase value (6). Therefore, the optimal solution will not change for Product_1.
The new objective coefficient for Product_3 (11) exceeds its allowable increase value (5). Therefore, changing the objective coefficient for Product_3 to 11 would result in a change in the optimal solution for Product_3.
In summary, changing the objective function coefficient for Product_1 to 11 will not affect the optimal solution for Product_1, while changing the objective function coefficient for Product_3 to 11 will result in a change in the optimal solution for Product_3.
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Marcia has an option to invest in an insurance policy at a rate of 20 % to achieve her goal of purchasing the car for $2,500,000. How much should she invest at the beginning of each year for the next 5 years in order to achieve her goal? If the interest rate decreases from 20% to 15%, by how much would Marcia's annual investment in part C. change?
To achieve her goal of purchasing a car for $2,500,000, Marcia should invest a certain amount at the beginning of each year for the next 5 years. The specific amount will depend on the interest rate of 20% and the timing of the investments. If the interest rate decreases from 20% to 15% in Part C, Marcia's annual investment will change, but the exact amount can be calculated using the new interest rate and investment period.
To determine how much Marcia should invest at the beginning of each year for the next 5 years to achieve her goal of purchasing a car for $2,500,000, the concept of present value of an annuity can be used. The present value of an annuity formula takes into account the interest rate, the investment period, and the desired future value. By rearranging the formula, the annual investment amount can be calculated. The calculation will depend on the interest rate of 20% and the specific timing of the investments. If the interest rate decreases from 20% to 15% in Part C, Marcia's annual investment will change. The new interest rate of 15% will affect the present value of the annuity calculation, resulting in a different annual investment amount. To determine the exact change, the new interest rate and investment period need to be plugged into the present value of an annuity formula. The difference between the annual investment amount calculated at 20% and 15% will indicate the change in Marcia's investment.
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Suppose a company faces decreasing average cost for all quantities of Q. a) What type of industry is this? b) Draw a graph that shows quantity and price choice assuming the company is unregulated. c) Draw a graph that show profit if the government forces the company to produce at the perfect competition Q and P.
a) The company operates in a decreasing-cost industry.
b) [Graph illustrating quantity and price choice]
c) [Graph illustrating profit under government-mandated perfect competition]
What type of industry experiences decreasing average costs?In a decreasing-cost industry, a company experiences a decline in average cost as production increases. This is typically seen in industries where economies of scale come into play. As the company expands its operations and produces larger quantities of the good or service, it benefits from cost savings due to factors such as improved efficiency, bulk purchasing, or technological advancements.
When a company faces decreasing average costs for all quantities of Q, it indicates that it operates in a decreasing-cost industry. In such an industry, the company benefits from economies of scale as it produces more goods or services. As the company expands its output, it experiences cost savings due to various factors, including spreading fixed costs over a larger quantity, taking advantage of bulk discounts, or implementing technological improvements. These cost efficiencies result in a downward-sloping average cost curve.
Graphically, in an unregulated scenario, the company's quantity and price choice can be represented on a graph. The quantity (Q) is plotted on the horizontal axis, while the price (P) is shown on the vertical axis. The graph would depict a downward-sloping average cost curve, indicating decreasing costs as quantity increases. The company would choose a quantity and corresponding price that maximizes its profit, taking into account factors such as demand and market conditions.
However, if the government imposes perfect competition on the company, the graph representing profit would change. In perfect competition, the company is forced to produce at the quantity (Q) and price (P) determined by the market, which typically leads to a lower price compared to the unregulated scenario. The profit graph would reflect the area between the market-determined price and the average cost curve at the mandated quantity. This area could represent positive, negative, or zero economic profit, depending on the specific circumstances.
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5. What are the key questions in the physical arrangement of people, equipment and space in a process? 6. What are the goal of Service system maps (SSM) 7. Explain five benefits of SSM usage
The key questions in the physical arrangement of people, equipment, and space in a process involve determining the most efficient and effective layout to optimize productivity, workflow, and safety.
The goal of Service System Maps (SSM) is to visually represent the various components and interactions within a service system. SSM provides a holistic view of the service delivery process, including the customer journey, touchpoints, support functions, and interactions between different stakeholders.
Service System Maps (SSM) have several goals. Firstly, they provide a visual representation of the service system, making it easier to understand and communicate complex processes. Secondly, SSM helps to identify bottlenecks, inefficiencies, and areas for improvement within the service delivery process.
The five benefits of using SSM include:
Enhanced understanding and communication of complex service processes.
Identification of bottlenecks, inefficiencies, and improvement opportunities.
Improved customer experiences and satisfaction through a holistic view of the customer journey.
Facilitation of collaboration and coordination among different stakeholders.
Support for strategic decision-making by identifying areas for innovation and process optimization.
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Sara Thomson is the president and operates the Thomson Company. The following selected transactions were completed by Thomson Company during August: 2. 1. Received cash from the stockholder as additional investment $200,000. Billed customers for services on account, $45,777. Received electric bill $450, to be paid next month. 3. 4. Received cash from customers on accounts $22,430. 5. Paid creditors on account $12,000 Paid cash dividends, $18,444 6. Note: Each transaction has two entries. Entry Entry Amount Acct Name of Amount Type Acct Increase or Acct Name Decrease Type (4) of Acct (1) (2) (3) (1) (2) (3) 1 23456 Increase or Decrease
Based on the provided information, here are the journal entries for the selected transactions completed by Thomson Company during August:
1. Received cash from the stockholder as additional investment $200,000.
Debit: Cash $200,000
Credit: Common Stock $200,000
2. Billed customers for services on account, $45,777.
Debit: Accounts Receivable $45,777
Credit: Service Revenue $45,777
3. Received an electric bill $450, to be paid next month.
Debit: Utilities Expense $450
Credit: Accounts Payable $450
4. Received cash from customers on accounts $22,430.
Debit: Cash $22,430
Credit: Accounts Receivable $22,430
5. Paid creditors on account $12,000.
Debit: Accounts Payable $12,000
Credit: Cash $12,000
6. Paid cash dividends $18,444.
Debit: Retained Earnings $18,444
Credit: Cash $18,444
Each transaction has two entries, with one being a debit entry and the other being a corresponding credit entry. The specific account names and amounts may vary depending on the company's chart of accounts and accounting practices.
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1. Describe the two criteria for determining the valuation of financial assets. 2. Which types of investments are valued at amortized cost? Explain the rationale for this? 3. What is amortized cost? What is fair value? 4. Lady Gaga Co. recently made an investment in the bonds issued by Chili Peppers Inc. Lady Gaga's business model for this investment is to profit from trading in response to changes in market interest rates. How should this investment e classified by Lady Gaga? Explain.?
1. Two Criteria for Determining the Valuation of Financial Assets:
a) Amortized Cost: This valuation method is used for financial assets that are held to collect contractual cash flows and have fixed or determinable payments.
key criteria for valuing assets at amortized cost include the intention to hold the asset to maturity and the absence of significant changes in the timing or amount of cash flows.
b) Fair Value: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This valuation method is applied when financial assets do not meet the criteria for amortized cost or when the entity chooses to measure them at fair value.
2. Investments Valued at Amortized Cost:
Typically, debt instruments such as bonds and loans are valued at amortized cost. The rationale for valuing these investments at amortized cost is based on the concept that the holder expects to receive the contractual cash flows from these instruments until their maturity. The intention is to hold the investment until it reaches its maturity date, and any changes in market value or interest rates do not significantly impact the holder's decision to hold the investment. By valuing these investments at amortized cost, the entity recognizes interest income over the life of the investment, matching it with the periodic cash flows received.
3. Amortized Cost and Fair Value:
Amortized Cost: Amortized cost is the initial recognition value of a financial asset adjusted for any subsequent amortization of premium or discount and reduced by impairment losses. It represents the carrying value of the asset on the balance sheet over its remaining term. Under the amortized cost model, the asset is valued based on the cash flows it is expected to generate over time.
Fair Value: Fair value is the estimated price at which an asset could be exchanged or a liability settled between knowledgeable and willing parties in an arm's length transaction. It represents the current market value of the asset and is determined based on available market information. Fair value reflects the potential market price of the asset at a given point in time and may fluctuate over time.
4. Classification of Lady Gaga Co.'s Investment:
Considering Lady Gaga Co.'s business model of profiting from trading in response to changes in market interest rates, the investment in the bonds issued by Chili Peppers Inc. should be classified as a "Fair Value Through Profit or Loss" (FVTPL) or "Trading" investment. This classification applies when an entity holds financial assets primarily for the purpose of short-term profit-taking from fluctuations in market prices or interest rates.
As Lady Gaga Co.'s intention is not to hold the investment to maturity but rather to actively trade and profit from changes in market interest rates, the investment aligns with the criteria for fair value measurement and the trading classification. The investment's fair value would be regularly adjusted, and any changes in fair value would be recognized in the income statement.
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Using the above data, answer the following questions: a. Has the manager over-performed or under-performed? 1 marks b. What was the contribution of security selection to relative performance? 3 marks
It can be inferred that the manager has over-performed and the contribution of security selection to relative performance is 1.10%. T
a. The Manager’s performance can be compared to the benchmark by calculating the excess return (or alpha) achieved by the manager. From the above table, it can be observed that the manager had an excess return of 1.75%. As the manager’s return is higher than the benchmark return, it can be concluded that the manager has outperformed and has not underperformed.b. Security Selection Contribution to relative performance is calculated as the sum of each security's individual contribution. This is the part of performance attributable to the specific security selection of the portfolio manager rather than overall market movement. For the above table, the Security Selection Contribution can be calculated by using the formula (Portfolio Return - Benchmark Return) - (Sector Allocation Effect + Security Selection Effect) which results in the value of 1.75% - 0.65% = 1.10%. Therefore, the contribution of security selection to relative performance is 1.10%.Hence, it can be inferred that the manager has over-performed and the contribution of security selection to relative performance is 1.10%. T
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Suppose that a central bank wanted to enact more contractionary monetary policy. Say which of the following would increase, decrease, or exhibit no change, if the policy was successful.
A. Borrowing
B. GDP
C. Inflation
D. Interest rates
E. Unemployment
A. Borrowing: Decrease
B. GDP: Decrease
C. Inflation: Decrease
D. Interest rates: Increase
E. Unemployment: Increase
Contractionary monetary policy aims to reduce the level of economic activity to control inflation. The policy involves reducing the money supply, which has several effects:
A. Borrowing: Decreases because tighter monetary policy typically leads to higher interest rates, making borrowing more expensive and less attractive for businesses and individuals.
B. GDP: Decreases as the reduction in borrowing and increased cost of credit slows down investment and consumption, leading to lower overall economic output.
C. Inflation: Decreases as the central bank aims to curb inflationary pressures by reducing the money supply and limiting spending in the economy.
D. Interest rates: Increase as the central bank tightens monetary policy by raising benchmark interest rates to reduce borrowing and spending.
E. Unemployment: Increases as the contractionary policy reduces economic activity, leading to lower investment, lower production, and potential job losses.
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This is to help organizations avoid crises and spot opportunities
A. Situational Intelligence
B. Environmental Analysis
C. Ethical Behavior
D. None of the above
E. All of the above
THe correct option to help organizations avoid crises and spot opportunities is E. All of the above
Which factors aid organizations in crisis prevention and opportunity identification?In today's dynamic business landscape, organizations face numerous challenges and uncertainties. To navigate this complex environment successfully, it is crucial for organizations to possess a comprehensive set of skills and practices. This involves a combination of situational intelligence, environmental analysis, and ethical behavior. By incorporating all of these elements, organizations can effectively avoid crises and seize opportunities.
Situational intelligence refers to the ability to gather, analyze, and interpret relevant information about the internal and external factors impacting an organization. It enables organizations to stay aware of their surroundings, understand market trends, and anticipate potential risks or opportunities. By continuously monitoring the business environment, organizations can proactively respond to changes and make informed decisions.
Environmental analysis involves assessing the broader economic, social, political, and technological factors that influence an organization's operations. By conducting comprehensive analyses of the business environment, organizations can identify emerging trends, potential disruptions, and new opportunities. This allows them to adjust their strategies and align their goals with the evolving landscape, thereby staying competitive and adaptive.
Ethical behavior plays a vital role in crisis prevention and opportunity identification. Organizations that prioritize ethical conduct and transparency build trust with their stakeholders. Ethical behavior fosters a positive organizational culture, encourages responsible decision-making, and mitigates the risk of reputational damage. By upholding strong ethical standards, organizations not only safeguard their integrity but also enhance their ability to identify and capitalize on opportunities while minimizing the likelihood of crises.
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Suppose that each year in the city of Fakelandia, 500 people consider getting surgery for a deviated septum. Some have mild to moderate nasal congestion and others experience debilitating sinus headaches as a result of the condition.
Only 300 people can get the surgery per year due to limits on the quantity of medical staff and supplies in Fakelandia. There are multiple ways to ration the limited care.
______ would be the most profitable approach, from the perspective of the hospitals, while ______ would emphasize identifying and treating those with the most debilitating symptoms.
a. price-based; wait listing
b. wait listing; gatekeeping
c. price-based; gatekeeping
d. gatekeeping; waitlisting
a) Price-based; gatekeeping. Profitable approach for hospitals, prioritizing ability to pay. Emphasizes treating severe symptoms.
b) Gatekeeping; waitlisting. Assesses severity, prioritizes treatment. Manages order for fair access to care.
In this scenario, the most profitable approach from the perspective of the hospitals would be to use a price-based system to ration the limited care. By assigning surgery slots based on the ability to pay, the hospitals can maximize their revenue and profitability. This approach allows those who are willing and able to pay a higher price to receive the surgery, regardless of the severity of their symptoms.
On the other hand, an approach that emphasizes identifying and treating those with the most debilitating symptoms would involve gatekeeping and waitlisting. Gatekeeping refers to a system where medical professionals assess the severity of each individual's condition and prioritize treatment based on the severity of symptoms. Those with more severe symptoms, such as debilitating sinus headaches, would be given priority for surgery. This approach aims to allocate limited resources to those who are in most need of medical intervention and relief, prioritizing their well-being over financial considerations. Waitlisting is used to manage the order in which patients receive treatment, allowing those with more severe symptoms to be treated first.
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assume the company is already operating at capacity when the special order is received
If a company is already operating at capacity when a special order is received, it may face some challenges in fulfilling the order. It faces a decision on whether to accept or decline the order.
In such a scenario, the company must evaluate whether it has the resources and capabilities to accept the order without negatively impacting its existing operations. The company may need to assess the cost of hiring additional labor, acquiring new equipment, or investing in additional infrastructure to fulfill the special order. If accepting the order is not feasible, the company may need to decline the order or negotiate with the customer for an extended lead time to fulfill the order. It is important for the company to carefully weigh the costs and benefits before accepting a special order to avoid any negative impacts on its existing operations.
The company should compare the potential revenue from the special order to the incremental costs. If the revenue exceeds the costs, it may be worthwhile to accept the special order. Lastly, the company should also consider qualitative factors, such as customer relations, potential for future orders, and the impact on the company's reputation. Balancing all these factors, the company can make an informed decision on whether to accept or reject the special order.
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