Minion, Inc. is a company with no debt and a total market value of $211,875. They are considering issuing a $33,900 debt with an interest rate of 6% to repurchase shares of stock. Currently, there are 7,500 shares outstanding.
To analyze the impact of the debt issue, we need to consider the different scenarios based on economic conditions.
Considering the debt issue, the company needs to assess whether the benefits of repurchasing shares outweigh the costs of the debt. The impact of the debt issue on the market value of the company will depend on the economic conditions.
In a strong expansion scenario, the market value may increase, while in a recession scenario, it may decrease. The debt issue may also have an effect on the company's earnings.Minion, Inc. has a total market value of $211,875 and no debt.EBIT is projected to be $14,300 under normal economic conditions.In a strong expansion, EBIT will be 20% higher, and in a recession, it will be 35% lower.
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A researcher wants to know the daily number of hours college students spent playing computer games. A random sample of 10 college students were selected. The mean was found to be 3.2 hours with a sample standard deviation of 2.4 hours. A 95% confidence interval estimate is constructed. Which of the following statements is true?
The point estimate is 5.6 hours.
z-distribution is to be used to construct the interval.
t-distribution is to be used to construct the interval.
The standard error is 0.1.
If the mean was found to be 3.2 hours with a sample standard deviation of 2.4 hours, t-distribution is to be used to construct the interval. The correct statement is c)
In this scenario, a random sample of 10 college students was selected to estimate the daily number of hours spent playing computer games. The sample mean was found to be 3.2 hours, and the sample standard deviation was 2.4 hours.
To construct a confidence interval estimate, we need to consider the distribution of the sample mean. Since the population standard deviation is unknown and the sample size is small (n < 30), the t-distribution should be used.
The t-distribution takes into account the variability of the sample mean and provides more accurate confidence intervals for small sample sizes. It has fatter tails compared to the standard normal distribution (z-distribution), which accounts for the added uncertainty due to the smaller sample size.
The confidence interval estimate will provide a range of values within which the true population mean is likely to fall. The choice of using the t-distribution reflects the need to account for the variability associated with small sample sizes, improving the accuracy of the estimate.
Therefore, the correct statement is c) t-distribution is to be used to construct the interval.
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Consider the ordinary annuity where you deposit $130 at the end of each year for 4 years and earn 5.6% per year. How much will you have at the end of the forth year?
a.$315.25
b.$525.15
c.$565.33
d.$556.25
e.$484.75
Ordinary annuity: An ordinary annuity refers to a series of equal payments made at equal intervals of time.
The payments are usually made at the end of each period, and the time between payments is usually equal.
In this problem, we have to calculate how much will you have at the end of the fourth year if you deposit 130 at the end of each year for four years and earn 5.6% per year.
The formula to calculate the future value of an annuity is as follows:
FV = P [(1 + i)n - 1] / i,
where
FV = future value
P = payment
i = interest rate
n = number of periods
Let's use the formula and substitute the given values:
FV = 130[(1 + 0.056)4 - 1]
/ 0.056FV = 130[1.262476 - 1]
/ 0.056FV = 130[0.262476
/ 0.056]FV = 130[4.684]FV = 609.32
The amount that you will have at the end of the fourth year is 609.32,
which is closest to option C: 565.33.
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Which of the following statements is true regarding product and period costs?
Select one:
a. Office salaries expense and factory maintenance are both product costs.
b. Office rent is a product cost and supervisors' salaries expense is a period cost.
c. Factory rent is a product cost and advertising expense is a period cost.
d. Delivery expense is a product cost and indirect materials is a period cost.
e. Sales commissions and indirect labor are both period costs.
The correct statement regarding product and period costs is: c. Factory rent is a product cost and advertising expense is a period cost. Option C
Product costs and period costs are two categories used in cost accounting to classify different types of expenses related to the production and sale of goods or services. Understanding the distinction between these costs is important for accurate financial reporting and decision-making.
Product costs are costs directly incurred in the production process and are typically associated with the manufacturing or acquisition of goods. These costs are assigned to the inventory and are not expensed until the goods are sold. Examples of product costs include direct materials, direct labor, and manufacturing overhead costs like factory rent, utilities, and depreciation.
On the other hand, period costs are expenses not directly tied to the production process and are recognized as expenses in the period incurred. They are not included in the cost of goods sold or the valuation of inventory.
Period costs are typically associated with non-production functions such as sales, marketing, and administrative activities. Examples of period costs include advertising expenses, office rent, salaries of administrative staff, and sales commissions.
Option C
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Suppose the real GDP of an economy is \( \$ 480 \) billion dollars and its unemployment rate is \( 7 \% \). If the natural rate of unemployment is estimated at \( 4 \% \), what is the value of the cou
However, I can provide some information about the given data. The real GDP of an economy is a measure of the total value of all goods and services produced within a country's borders adjusted for inflation. In this case, the real GDP is $480 billion dollars.
The unemployment rate is a measure of the percentage of the labor force that is unemployed and actively seeking employment. In this case, the unemployment rate is 7%.
The natural rate of unemployment refers to the level of unemployment that exists when the economy is operating at its potential output and there is no cyclical unemployment. It is an estimate of the lowest sustainable unemployment rate. In this case, the natural rate of unemployment is estimated at 4%.
To calculate the value of the "cou" or any other related variable, we need more information or clarification on what "cou" refers to.
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Why is the history of social media over the last 20 years relevant to marketers working in this medium?
Social media marketers are always searching for the next big thing. What are a couple possibilities you see?
Social media has proven destructive to its users in many cases. How can marketers using social media avoid contributing the the medium's negative effects?
The history of social media over the last 20 years is relevant to marketers working in this medium as it offers insight into how it has evolved over time and how consumers use it. This information can be useful in developing marketing strategies and campaigns that resonate with users.
Additionally, it allows marketers to stay up to date on current trends and best practices, which can help them to create more effective campaigns.Some possible next big things in social media could be the rise of new platforms that offer unique features or capabilities, such as augmented reality or virtual reality. Additionally, the continued growth of video content on social media, particularly live streaming, is likely to be a major trend in the coming years.
To avoid contributing to the negative effects of social media, marketers should be mindful of their impact on users and strive to create content that is both engaging and responsible. This can include avoiding controversial or polarizing topics, using appropriate language and tone, and avoiding clickbait or misleading content. Additionally, marketers should be transparent about their intentions and avoid using deceptive tactics to gain followers or engagement.
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A company manufactures houschold items sold at trade shows. The iterns, classified as either Tables or Frames, are manufactured on a common assembly line. Although different direct materials are used, the direct labeuc cost is the same for each product line: The plant-wide rate for allocating manufacturing overhead to its products is no longer acceptable. The production manager has heard about activity-based costing and has assembled some information for use in changing the cost system to a cost driver concept. With the help of the accounting department, the manager has been able to establish the following relationships between production costs and some of the indirect manufacturing activities for luly, along with the production data for the two product lines: Direct costs: Submission Instructions: Using activity-based costing determine the total production cost of each of the two product lines for July and the cost per unit, assuming all units started were completed.
Activity-based costing (ABC) is an accounting technique that identifies and assigns overhead costs to particular activities based on their use of resources.
As a result, ABC gives a more accurate cost of products, services, and customers than conventional costing techniques that only assign direct labor and materials to goods.
The total production cost of each of the two product lines for July and the cost per unit using activity-based costing are given below:
Activity Pool Cost Driver Total Cost per Month Tables Frames Total Cost per Month Total Direct Labor Hours 40,000 60,000 100,000 10 8 Direct Labor Hours per Unit 8 6 780,000 720,000 1,500,000 93,750 75,000
Machining Machine Hours 12,000 8,000 20,000 2 2 Machine Hours per Unit 3 1 80,000 40,000 120,000 6,000 2,000 Setup Setup Hours 6,000 6,000 12,000 1 1 Setups per Batch 3 2 Total 1,506,250 802,000 2,308,250
Using the above table, we can calculate the total production cost of Tables and Frames product lines for the month of July as follows:
Tables Product Line:
Total Production Cost for Tables =[tex]10 x 8 x $10 + 2 x 3 x $2 + 3 x $1 =$800 + $12 + $3 =$815[/tex]
Total Cost per Unit for Tables = $815 / 8 = $101.88
Frames Product Line:
Total Production Cost for Frames [tex]$815 / 8 = $101.88[/tex][tex]= 8 x 6 x $10 + 2 x 1 x $2 + 2 x $1 =$480 + $2 + $2 =$484[/tex]
Total Cost per Unit for Frames [tex]= $484 / 6 = $80.67[/tex]
Therefore, the total production cost of each of the two product lines for July and the cost per unit, assuming all units started were completed using activity-based costing has been calculated above.
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1) Why is it necessary for a company to build a data
warehouse?
2) What could go wrong if a company did analysis on their
operational database?
Conducting analysis on operational databases can impact performance, data consistency, analytical capabilities, security, and compliance.
It is necessary for a company to build a data warehouse for several reasons: a) Centralized Data: A data warehouse provides a centralized repository where data from various sources within the organization can be consolidated. This allows for easy access to integrated and consistent data, eliminating data silos and ensuring data integrity. b) Data Analysis and Reporting: A data warehouse is designed to support complex analytical queries and reporting requirements. By organizing and structuring data in a way that is optimized for analysis, it enables efficient data mining, trend analysis, and decision-making. c) Historical Data Preservation: A data warehouse typically stores historical data over a long period. This allows organizations to track and analyze trends, patterns, and historical performance, which can be valuable for strategic planning, forecasting, and identifying business opportunities.
d) Performance and Scalability: Operational databases are optimized for transactional processing and day-to-day operations. Analyzing data directly from operational databases can put a heavy load on the system, impacting its performance and scalability. A data warehouse acts as a separate environment, optimized for analytical processing, ensuring that operational systems are not affected.
e) Data Integration and Transformation: Data warehouses provide mechanisms to integrate and transform data from different sources, including legacy systems, external databases, and third-party applications. This consolidation and transformation process ensures data consistency and standardization for analysis, even when the source systems have different data structures or formats.
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The price of Microsoft is $36 per share and that of Apple is $40 per share. The price of Microsoft increases to $41 per share after one year and to $46 after two years. Also, shares of Apple increase to $47 after one year and to $57 after two years. If your portfolio comprises 100 shares of each security, what is your portfolio return in year 1 and year 2? Assume no dividends are paid. A. 13.42%,20.45% B. 11.84%,19.6% C. 15.79%,17.05% D. 15%,15.34%
Portfolio return in year 1 and year 2 when the price of Microsoft increases to $41 per share after one year and to $46 after two years, and shares of Apple increase to $47 after one year and to $57 after two years. B. 11.84%,19.6%
Explanation: The price of Microsoft per share after one year = $41
The price of Microsoft per share after two years = $46
The price of Apple per share after one year = $47
The price of Apple per share after two years = $57
For year 1:Return for Microsoft shares = [(41–36)/36]×100 = 13.88%
Return for Apple shares = [(47–40)/40]×100 = 17.5%
Total return for year 1 = (100 × 0.1388)+(100 × 0.175) = 13.42%
For year 2:Return for Microsoft shares = [(46–36)/36]×100 = 27.78%
Return for Apple shares = [(57–40)/40]×100 = 42.5%
Total return for year 2 = (100 × 0.2778)+(100 × 0.425) = 19.6%
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What challenges posed by it being a member of BRICS and what
possible challenges will it pose to South African economy if SA
exit BRICS?
BRICS is an acronym for Brazil, Russia, India, China, and South Africa. These countries were established as emerging economies with large markets and significant growth potential.
South Africa joined BRICS in 2011, becoming the organization's newest member. Challenges posed by it being a member of BRICS: Although being a member of BRICS has various benefits, such as trade and investment, it has also posed several challenges for South Africa. One such issue is the slow pace of reforms.
South Africa faces significant structural issues such as low growth, high unemployment, and inequality, which are exacerbated by a shortage of appropriate skills. As a result, South Africa has been accused of being the group's weakest link due to its comparatively smaller economy, insufficient infrastructure, and inadequate skill levels compared to the other members.
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Palmer Bhd. markets tennis balls to various clients throughout Malaysia. The company is reviewing its purchasing policy. It expects to sell 750,000 tennis balls next year. A 3-Ball can have a selling price of RM29.75 and is purchased for RM8.25 per ball. The company places an order for 187,500 tennis balls at regular intervals throughout the year. Storage and other carrying cost are estimated at RM0.05 per ball. Ordering cost is RM235 per order. The company maintains a safety (buffer) stock which is sufficient to meet demand for 20 working days and the delivery time is 14 days based on a 365-day year. The demand for such balls per year is about 250,000 3-Ball cans. Required: a) Calculate the reordering level. b) Calculate the annual cost of the current ordering policy. ( 9 Marks) c) Calculate the annual cost of the economic order quantity model policy. d) What order size should the company place? (Total: 25 Marks)
a) Reordering level The reordering level is the level of inventory at which a company has to order a new batch of inventory to ensure that it does not run out of stock.
Reordering Level = Maximum usage rate x Maximum lead time= (250,000 / 365) x (14 + 20)= 2,945 balls
b) Annual cost of the current ordering policy
Total Annual Cost (TAC) = (Annual ordering cost) + (Annual carrying cost)= [(Number of orders per year) x (Ordering cost per order)] + [(Average inventory) x (Carrying cost per unit)]
Number of orders per year = Annual demand / Order quantity per order= 250,000 / 187,500= 1.33 orders
Ordering cost per order = RM235Average inventory = Order quantity per order / 2= 187,500 / 2= 93,750
Carrying cost per unit = RM0.05
Total Annual Cost (TAC) = (1.33 x 235) + (93,750 x 0.05)= RM 26,198.75
c) Annual cost of the economic order quantity (EOQ) model policy
EOQ = √ [(2 x Annual demand x Ordering cost per order) / Carrying cost per unit]= √ [(2 x 250,000 x 235) / 0.05]= √ 23,500,000= 4,848 units
Total Annual Cost (TAC) = (Annual demand / EOQ) x (Ordering cost per order) + (EOQ / 2) x (Carrying cost per unit)= (250,000 / 4,848) x 235 + (4,848 / 2) x 0.05= RM 9,755.11
d) Order size that the company should place The order size that the company should place is the EOQ which is 4,848 units as calculated above.
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suppose george and his wife martha own a small corporation with less than 50 employees, of which george and martha are the only shareholders. they each own 50% of the total shares of the corporation. the corporation is a restaurant supply business that has fallen on hard times when the economy went south as a result of the pandemic. the company has been unable to pay its bills and its debt. the company's creditors have sued george and martha, claiming they should be personally liable for the corporation's debt.
George and his wife Martha own a small corporation with less than 50 employees, of which George and Martha are the only shareholders. they each own 50% of the total shares of the corporation.
In this case, George and Martha as the sole shareholders of a small corporation facing financial difficulties may potentially be held personally liable for the company's debt.
The concept of piercing the corporate veil allows creditors to pursue the personal assets of shareholders under certain circumstances and the factors such as the failure to maintain corporate formalities and corporate assets.
Therefore, the decision to pierce the corporate veil is subject to the laws and regulations of the specific jurisdiction.
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The equilibrium payoffs of the following sequential move game
are:
A. (1,4)
B. (-2,0)
C. (0,5)
D. (5,0)
The correct equilibrium payoffs of the following sequential move game are: (1,4).Given sequential move game is:In the given game, there are two players; Player 1 and Player 2 and there are two stages. The first stage is the nature move. In this stage, there is a probability of 0.5 for the occurrence of each node. The second stage is the player move. In this stage, each player chooses their strategy.
In this game, there are two sub-games. The first sub-game is the upper one, and the second sub-game is the lower one. The backward induction method is used to find the equilibrium payoffs of the game, which involves starting from the end of the game and working backward. In sub-game 2, Player 2 has two strategies: U and D. If Player 2 chooses U, then the payoff of Player 1 will be 4, and if Player 2 chooses D, then the payoff of Player 1 will be 1.So, Player 2 will choose the U strategy, which results in the equilibrium payoffs of (1,4).Therefore, the correct answer is A. (1,4).
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Draw a use case diagram corresponding to this detailed use-case given below:
An insurance brokerage company has contracted you to build an application allowing clients to apply for life insurance online. This brokerage firm sells insurance policies on behalf of the life insurance company, (say LIC). A detailed use-case of the brokerage software is given below:
[10 Marks]
Apply for a life insurance
Main success scenario
Customer selects desired insurance plan.
System determines if client qualifies for selected plan.
Customer fills in the online application form.
Customer submits the application.
Validator checks that all fields are filled and the data is valid.
Payment processor authorizes transaction with bank.
Payment processor performs transaction with the bank.
System saves the approved application.
System notifies client and LIC of the new coverage.
Extensions
2a. client does not qualify, show an error message.
5a. data missing or invalid show an error message.
6a. payment authorization failed, show and error message
The use case diagram consists of the main use case "Apply for Insurance" and several extension use cases including "Qualification Check," "Application Validation," "Payment Authorization," and "Application Processing."
The use case diagram visually represents the interactions between the actors (customer, insurance brokerage company) and the system for the process of applying for life insurance online. The main use case "Apply for Insurance" captures the main success scenario, where the customer selects an insurance plan, fills in the application form, submits it, and the system saves the approved application while notifying the client and LIC.
The extension use cases handle specific scenarios and potential errors. "Qualification Check" extends the main use case to handle situations where the client does not qualify for the selected plan, displaying an error message. "Application Validation" extends the main use case to validate the application form, checking for missing or invalid data and showing an error message if necessary. "Payment Authorization" extends the main use case to handle the payment authorization process, ensuring a successful transaction and displaying an error message if authorization fails. "Application Processing" extends the main use case to include the steps of saving the application and notifying the client and LIC.
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Please solve for the equilibrium quantity in the following
competitive market, where Qd is quantity demanded and Qs is
quantity supplied:
P = 104 - 6*Qd
P = 26 + 3*Qs
The equilibrium quantity in the market is 7, where the quantity demanded is equal to the quantity supplied.
The equilibrium quantity in a competitive market is the quantity where the quantity demanded is equal to the quantity supplied.
In this case, the demand function is P = 104 - 6Qd and the supply function is P = 26 + 3Qs.
We can set the two functions equal to each other to solve for the equilibrium quantity:
104 - 6*Qd = 26 + 3*Qs
88 = 9*Qd + 3*Qs
9*Qd = 62
Qd = 7
Therefore, the equilibrium quantity in the market is 7.
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currently andrews is paying a dividend of $20.00 (per share). if this dividend were raised by $3.64, given its current stock price what would be the dividend yield?
The dividend yield is calculated by dividing the annual dividend per share by the current stock price, and then multiplying the result by 100 to express it as a percentage.
To find the dividend yield after raising the dividend by $3.64, we need to know the current stock price. Since the question doesn't provide this information, we'll use a hypothetical stock price of $100 for illustration purposes.Calculate the new annual dividend per share:Calculate the dividend yield:Dividend yield = (Annual dividend per share / Current stock price) * 100The dividend yield is a financial ratio that indicates the percentage return an investor would receive from owning a stock based on the dividends paid by the company.
In this scenario, we assume that the current stock price is $100 and the annual dividend per share is $23.64 after the dividend increase of $3.64. Dividing the annual dividend per share by the current stock price gives us the dividend yield, which in this case is 23.64%.Keep in mind that the actual dividend yield will depend on the current stock price, which may vary. Additionally, it's important to note that dividend yield alone should not be the sole factor considered when making investment decisions.
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Read paragraph below and respond with a paragraph explaining your thought.
Central bankers are worried that inflation will become the norm. With the pandemic and war in Ukraine, the cost of goods and services has increased. With the high-interest rates, some economists are concluding we are headed towards another great depression. The high-interest rates are happening to strengthen the economy and the U.S. dollar. Yes, this will significantly affect the people at home, but it gives the U.S. a better outlook or ability to trade in the global market. With the conclusion of the Cold War and China's admission into the world economic system in the 1990s, increased flows of commerce, money, people, and ideas grew. Global supply chains were built by multinational corporations employing new technology to reduce costs by locating the lowest-cost factories and laborers Price reductions for several products were caused by global competition.
The article discusses that inflation may become the norm, and the pandemic and war in Ukraine have resulted in the increase in the cost of goods and services. Furthermore, high-interest rates have led some economists to believe that the United States is heading towards another great depression.
This situation may affect people at home, but it will give the United States a better outlook on trading in the global market.The conclusion of the Cold War and China's admission to the world economic system in the 1990s resulted in increased flows of commerce, money, people, and ideas. Global supply chains were created by multinational corporations utilizing new technology to reduce costs by locating the lowest-cost factories and laborers, leading to a decrease in prices for several products due to global competition. Globalization may be considered a positive development because it has reduced the cost of goods for consumers while also increasing competition and innovation, resulting in greater productivity. It is undeniable that global trade is critical to the economic development of many nations. Nonetheless, the benefits of globalization must be balanced against the risks, particularly to domestic employment and economic development.
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Which of the following is NOT associated with an inefficient allocation of resources?
1. Oligopolies
2. Monopolies
3. Perfect competition
4. None of the above
Perfect competition is not associated with an inefficient allocation of resources. Efficient allocation of resources refers to the distribution of resources in a way that maximizes the total benefit of society. The efficient allocation of resources occurs when goods and services are produced and distributed according to the wants and needs of consumers.
The term "market structure" refers to the level of competition in a market. In a monopoly, there is only one supplier of a particular good or service, while in an oligopoly, there are a few suppliers. In perfect competition, there are many suppliers of a particular good or service, and each supplier is too small to influence the market price.
In a monopoly or oligopoly, firms have the power to control the price and quantity of goods and services they produce and sell. This leads to inefficient allocation of resources because the price charged is usually higher than the equilibrium price and the quantity supplied is lower than the equilibrium quantity.
On the other hand, in perfect competition, the price charged is equal to the equilibrium price, and the quantity supplied is equal to the equilibrium quantity. Hence, there is an efficient allocation of resources in a perfect competition market structure.
Therefore, the answer to the question is option 3, Perfect competition, since it is not associated with an inefficient allocation of resources.
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Given a known population density, __________ primarily drive retailer's site selections for multiple stores in the same community.
None of these is correct.
trade areas
property values
mass transit routes
Given a known population density, trade areas primarily drive retailer's site selections for multiple stores in the same community.
Trade area refers to the geographic area that is convenient for consumers to do their shopping for goods and services. A trade area is defined by the circumstances and is unique for every retail location.It includes the physical characteristics of the area, like the neighborhoods, streets, buildings, and natural barriers.
Trade areas can be used to identify the locations of potential customers and competitors. So, given a known population density, trade areas primarily drive retailer's site selections for multiple stores in the same community. In conclusion, retailers take into account the trade areas that have been defined around the already established stores when they select the location for their new stores.
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Identify the key assumption(s) made about a Nash equilibrium. (Check all that apply.)
-All players understand that other players understand the game.
-All players understand the game and the payoffs associated with each strategy.
The key assumptions made about a Nash equilibrium are:
All players understand the game and the payoffs associated with each strategy.
All players understand that other players understand the game.
Both of these assumptions are important for the concept of Nash equilibrium. The first assumption ensures that players have knowledge of the game's rules, strategies, and potential outcomes. The second assumption implies that players have a rational understanding of the payoffs associated with different strategies and can make informed decisions based on that knowledge.
By assuming that all players understand the game and its payoffs, Nash equilibrium analysis can be used to predict stable outcomes where no player can unilaterally deviate from their chosen strategy to improve their own outcome. These assumptions form the foundation for analyzing strategic interactions and equilibrium outcomes in various fields, including economics, game theory, and social sciences.
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A stock has a beta of 1.7. The expected return on the market is 8% and T-bills are yielding 2%. What is the expected return on the stock? show all calculations.
a 11.50%
b 10.95%
c 12.20%
d 10.00%
e 12.00%
Beta is a metric that reflects the sensitivity of an asset's return to the market's return. Beta is frequently employed in capital asset pricing model (CAPM) calculations, which are used to calculate the anticipated return of an asset given the return of the market. The expected return on the stock is 12.2%. Hence, the correct option is c) 12.20%.
The anticipated return on a stock is determined by using the capital asset pricing model (CAPM), which includes the risk-free rate, expected market return, and beta. The following is the formula for the capital asset pricing model (CAPM):E(Ri)=Rf + [E(Rm)-Rf] x βi, where:E(Ri) = expected return on stock iRf = risk-free rate (2%)E(Rm) = expected return on market (8%)βi = beta of stock iLet's put the given values into the formula:E(Ri) = 2% + (8% - 2%) x 1.7E(Ri) = 2% + (6%) x 1.7E(Ri) = 2% + 10.2% = 12.2%Therefore, the expected return on the stock is 12.2%.
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A BBB-rated corporate bond has a yeld to maturity of 12.4%. A U.S. Treasury security has a yeld to maturity of 10.6%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semi-annual coupons at a rate of 10.9% and have five years to maturity. a. What is the price (expressed as a percentage of the face value) of the Treasury bend? b. What is the price (expressed as a percentage of the face value) of the BBB-rated corporate bond? c. What is the credit spread on the BB8 bonds? a. What is the price (expressed as a percentage of the tace value) of the Treasury bond? The prion of the Treasury bond as a percentage of tace value is (Round to these decimal places)
Given:
Face value = $100
Coupon rate = 10.9%
Yield to maturity (APR) = 10.6%
Compounding semiannuallyTime to maturity = 5 years
Semiannual coupon payment = $10.9 / 2 = $5.45a.
What is the price (expressed as a percentage of the face value) of the Treasury bond?
To calculate the price of the Treasury bond, we can use the following formula:
PV = PMT * [1 - (1 + r / n)^(-nt)] / (r / n)
Here,
PMT = $5.45r = 10.6% / 2 = 5.3%
(semiannual yield to maturity)n = 2t = 5 years * 2 = 10PV = 5.45 * [1 - (1 + 0.053 / 2)^(-2*10)] / (0.053 / 2)= $108.42
Therefore, the price of the Treasury bond as a percentage of the face value is:
Price = (PV / Face value) * 100= ($108.42 / $100) * 100= 108.42% (rounded to two decimal places)
b. What is the price (expressed as a percentage of the face value) of the BBB-rated corporate bond?
To calculate the price of the BBB-rated corporate bond, we can use the same formula as above, but we need to use a yield to maturity of 12.4%, since that is the yield for the bond.
PMT = $5.45r = 12.4% / 2 = 6.2%
(semiannual yield to maturity)
n = 2t = 5 years * 2 = 10PV = 5.45 * [1 - (1 + 0.062 / 2)^(-2*10)] / (0.062 / 2)= $93.69
Therefore, the price of the BBB-rated corporate bond as a percentage of the face value is:
Price = (PV / Face value) * 100= ($93.69 / $100) * 100= 93.69% (rounded to two decimal places)
c. What is the credit spread on the BBB bonds?Credit spread = Yield on BBB bonds - Yield on Treasury bonds= 12.4% - 10.6%= 1.8% (rounded to one decimal place)
Therefore, the credit spread on the BBB bonds is 1.8%.
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Under the Investment Company Act of 1940, the investment adviser's contract must be renewed by a majority vote of the fund's:
A
Board of Directors
B
outstanding shares
C
Board of Directors or the outstanding shares
D
unaffiliated Directors
Board of Directors or the outstanding shares, Under the Investment Company Act of 1940, the investment adviser's contract must be renewed by a majority vote of either the fund's Board of Directors or the outstanding shares.
This means that the renewal can be approved by either the fund's Board of Directors or by a majority vote of the shareholders holding the outstanding shares. The Act provides flexibility in determining who has the authority to approve the renewal of the investment adviser's contract, allowing for input and decision-making from both the fund's management and its shareholders
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A diesel service provider offers a client the following credit term: 10/20 net 40 . If the client buys R500000 worth of goods and settles her account within 20 days after the date of purchase, calculate how much this client will pay.
If the client settles the account within 20 days, they will pay R450,000.
The credit term 10/20 net 40 can be interpreted as follows:
The first number (10) represents the discount percentage the client can take if the account is settled within a specified period.The second number (20) represents the number of days within which the client needs to make the payment to be eligible for the discount.The third number (40) represents the maximum number of days within which the client must pay the full amount without any discount.In this case, the client purchases R500,000 worth of goods. If the client settles the account within 20 days, they will be eligible for the discount.To calculate how much the client will pay, we need to determine the discount and subtract it from the total amount.
Discount amount = R500,000 * (10/100) = R50,000
The client will pay the total amount minus the discount:
Total payment = R500,000 - R50,000 = R450,000
Therefore, if the client settles the account within 20 days, they will pay R450,000.
It's important to note that the discount terms may vary depending on the agreement between the diesel service provider and the client. The specific terms and conditions mentioned in the credit agreement will dictate the actual amount the client needs to pay.
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Consider a society consisting of two people. Kenji earns an income of $90,000 per year and Lucia earns an income of $35,000 per year. The government is considering a redistribution plan that would impose a 20% tax on Kenji's income and give the revenue to Lucia.
Without any incentive distortion, Kenji would retain $72,000 and Lucia would end up with $53,000. However, let us assume that since Kenji will not receive all the income he earns, he decides to work less and earn an income of only $80,000, of which 20%×$80,000=$16,00020%×$80,000=$16,000 will be owed in taxes.
With the redistribution plan, Kenji will take home an income of
The solution is:With the redistribution plan, Kenji will take home an income of $64,000 per year.Taxable income = $80,000 Tax payable = 20% * $80,000 = $16,000.
After the 20% tax on Kenji's income and giving the revenue to Lucia, Kenji will end up with an income of $64,000 and Lucia will get an additional $16,000. As Kenji's income reduces to $80,000, his tax liability would also reduce to $16,000 ($80,000 * 20%).
Therefore, the net income after the tax would be $80,000 - $16,000 = $64,000. Thus, Kenji's income after the redistribution plan would be $64,000.
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Which of the following will be addressed with a debit to retained earnings?
During 2022, a company switches from LIFO to FIFO to account for its inventory. FIFO inventory is higher than LIFO inventory at December 31, 2021.
During 2022, a company switches from straight line to double declining balance for its equipment. Accumulated depreciation would have been higher if double declining balance had been used in previous years.
During 2022, a company discovers that it had double-counted $1 million in sales revenue in 2021.
During 2022, a company discovers that it had overstated its 2020 ending inventory.
The following circumstance will be resolved with a debit to retained earnings: A business learns in 2022 that $1 million in sales income from 2021 was twice counted.
A corporation must reduce the retained earnings when it learns that it double-counted sales income in a prior period in order to correct the error. Retained earnings are the total profits or losses a corporation has experienced over the years. In order to fix the issue, the retained earnings in 2022 must be decreased by a debit entry because the double-counted sales revenue unfairly inflated the retained earnings in 2021. By compensating for the overstatement of revenue in the prior period, this adjustment makes sure that the financial statements accurately reflect the company's financial status.
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Pena Company is considering an investment of $21,705 that provides net cash flows of $6,700 annually for four years. (a) If Pena Company requires a 7% return on its investments, what is the net present value of this investment? (PV of $1, FV of $1. PV of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) (b) Based on net present value, should Pena Company make this investment? Complete this question by entering your answers in the tabs below. What is the net present value of this investment?
To calculate the net present value (NPV) of the investment, we need to discount the net cash flows using the required rate of return.
Given:
Initial investment: $21,705
Annual net cash flow: $6,700
Number of years: 4
Required rate of return: 7%
(a) Net Present Value (NPV) Calculation:
Step 1: Determine the discount factor using the appropriate present value of $1 table for a 7% interest rate and 4 years. The discount factor is the present value factor.
From the table, the present value factor for 7% and 4 years is 0.7130.
Step 2: Calculate the present value of each net cash flow.
Year 1: $6,700 * 0.7130 = $4,783.10
Year 2: $6,700 * 0.7130^2 = $3,409.96
Year 3: $6,700 * 0.7130^3 = $2,429.16
Year 4: $6,700 * 0.7130^4 = $1,730.86
Step 3: Calculate the net present value by subtracting the initial investment from the present value of the cash flows.
NPV = Present value of cash inflows - Initial investment
NPV = ($4,783.10 + $3,409.96 + $2,429.16 + $1,730.86) - $21,705
NPV = $12,353.08 - $21,705
NPV = -$9,351.92
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Example 2.4 At what interest rate convertible quarterly would $ 1000 accumulate to $ 1600 in six years?
[tex]Given, Amount = $1000 Future value of the amount = $1600[/tex]
Time = 6 years Interest rate convertible quarterly = ?
[tex]Formula used, Future Value = P ( 1 + r ) n[/tex]
Where, P = amount r = Interest rate per quarter n = number of quarters Calculation of Interest rate per quarter,Interest rate per quarter can be calculated using the above formula as follows
[tex]$1600 = $1000 ( 1 + r )^(4 x 6)1600/1000 = ( 1 + r )^(24)1.6 = ( 1 + r )^(24)[/tex]
Taking logarithm both sides of the above equation, ln
[tex]1.6 = ln (1 + r )^(24)ln 1.6 = 24 ln (1 + r)ln (1 + r ) = ln (1.6) /[/tex]
[tex]24= 0.33649450 / 24= 0.01402060[/tex]
Now, the interest rate convertible quarterly would be ,Interest rate convertible quarterly
[tex]= ( 1 + 0.01402060 )^4 - 1= ( 1.01402060 )^4 - 1= 0.056749[/tex]
Approximately 5.67% is the interest rate convertible quarterly, the interest rate convertible quarterly would be 5.67%.
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You are the County Commissioner of Hazard County. Jeb brings a complaint before you that Dwight's hog farm is creating a terrible odor.
Your first instinct is to tell the neighbors to work it out among themselves. The __________ provides theoretical support for private bargaining as an effective approach to _____________
The Coase Theorem provides theoretical support for private bargaining as an effective approach to externality problems.
The Coase Theorem states that, in the absence of transaction costs, the parties to an externality problem will be able to bargain and reach an efficient solution, even if the property rights are not initially well-defined. In the case of Jeb and Dwight, the externality problem is the odor from Dwight's hog farm.
If Jeb and Dwight are able to bargain effectively, they will be able to reach an agreement that minimizes the negative impact of the odor on Jeb and maximizes the profits of Dwight's hog farm.
Of course, in the real world, transaction costs can prevent the parties from reaching an efficient solution. For example, Jeb and Dwight may not be able to agree on a price for the odor, or they may not be able to trust each other to uphold their end of the bargain. In these cases, the government may need to intervene to ensure that an efficient solution is reached.
If the parties are able to bargain effectively, they will be able to reach an efficient solution that benefits both of them.
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barrington box enterprises has two divisions, large and small, that share the common costs of the company's communications network. the annual common costs are $4,250,000. you have been provided with the following information for the upcoming year: calls time on network (hours) large 111,000 170,000 small 74,000 255,000 the cost accountant determined $2,650,000 of the communication network's costs were fixed and should be allocated based on the number of calls. the remaining costs should be allocated based on the time on the network. what is the total communication network costs allocated to the large box division, assuming the company uses dual-rates to allocate common costs?
The total communication network costs allocated to the large box division, assuming the company uses dual-rates to allocate common costs, is $2,230,000.
To determine the total communication network costs allocated to the large box division, we need to follow these steps:
1. Calculate the total number of calls for both divisions:
- Large division: 111,000 calls
- Small division: 74,000 calls
2. Determine the allocation of fixed costs based on the number of calls:
- The cost accountant determined that $2,650,000 of the communication network's costs were fixed and should be allocated based on the number of calls.
- To allocate the fixed costs, we need to determine the proportion of calls made by each division out of the total calls.
- Total calls: 111,000 (large division) + 74,000 (small division) = 185,000 calls
- Proportion of calls made by the large division: 111,000 / 185,000 = 0.6
- Proportion of calls made by the small division: 74,000 / 185,000 = 0.4
- Allocation of fixed costs to the large division: $2,650,000 * 0.6 = $1,590,000
3. Allocate the remaining costs based on the time on the network:
- The remaining costs are $4,250,000 (total common costs) - $2,650,000 (fixed costs) = $1,600,000
- We need to allocate these costs based on the time spent on the network by each division.
- Total time on the network: 170,000 hours (large division) + 255,000 hours (small division) = 425,000 hours
- Proportion of time on the network for the large division: 170,000 / 425,000 = 0.4
- Proportion of time on the network for the small division: 255,000 / 425,000 = 0.6
- Allocation of remaining costs to the large division: $1,600,000 * 0.4 = $640,000
4. Calculate the total communication network costs allocated to the large box division:
- Total allocated costs for the large division: Fixed costs + Remaining costs = $1,590,000 + $640,000 = $2,230,000
Therefore, the total communication network costs allocated to the large box division, assuming the company uses dual-rates to allocate common costs, is $2,230,000.
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Johnson, Inc., a U.S.-based MNC, will need 10 million Thai baht on August 1. It is now May 1. Johnson has negotiated a non-deliverable forward contract with its bank. The reference rate is the baht’s closing exchange rate (in $) quoted by Thailand’s central bank in 90 days. The baht’s spot rate today is $.02. If the rate quoted by Thailand’s central bank on August 1 is $.022, Johnson will ________ $__________.
A) pay; 20,000
B) be paid; 20,000
C) pay; 2,000
D) be paid; 2,000
E) none of the above
If the rate quoted by Thailand’s central bank on August 1 is $.022, Johnson will pay $20,000.The correct answer is A) pay; 20,000.
A non-deliverable forward (NDF) contract is a financial agreement used to hedge foreign exchange risk. In this case, Johnson, Inc., a U.S.-based multinational corporation (MNC), needs 10 million Thai baht on August 1. To protect against potential exchange rate fluctuations, Johnson has negotiated an NDF contract with its bank.
The NDF contract's settlement will be based on the reference rate, which is the baht's closing exchange rate quoted by Thailand's central bank in 90 days. The spot rate, which is the current exchange rate, is given as $0.02.
If the rate quoted by Thailand's central bank on August 1 is $0.022, it means that the Thai baht has appreciated against the U.S. dollar. In this scenario, Johnson, Inc. will have to pay the bank the predetermined amount in U.S. dollars based on the agreed exchange rate.
Payment amount = Amount in baht × Exchange rate
Payment amount = 10,000,000 baht × $0.002 = $20,000
Hence, the correct answer is A) pay; $20,000.
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