In order to determine the fair price of the shares, the following steps need to be followed:
Step 1:
Calculation of dividends for the first 5 years:
Year 1 - 3:
No dividends are expected.
Year 4:
Dividend expected = 6p per share
Year 5:
Dividend expected = 6p per share
The present value of the above dividends is as follows:
Year
Present Value 4 5(6/(1+0.05 )^4) = 4.69(6/(1+0.05)^5 ) = 4.45
Step 2:
Calculation of dividends for the next 20 years:
The first year in which dividend growth occurs is in year 6.
Hence, growth occurs from year 6 to year 25.
Dividend in year 6 = 6.6p per share.
Dividend in year 7 = 7.26p per share.
Dividend growth rate = 10%Step 3:
Calculation of terminal value:
The growth rate of dividends after year 25 is 3.5% per annum.
The present value of dividends is calculated till year 25.
After year 25, we need to find the terminal value.
Terminal Value = Dividend at year 26 / (discount rate - growth rate) = 96.5p per share/(0.05 - 0.035) = 579.48p per share
Present value of the terminal value = 579.48/(1+0.05)^25 = 123.91p per share
Total present value of dividends = 4.69 + 4.45 + Σ PV of dividends from year 6 to 25 + 123.91= 145.05p per share
Approximate fair price of the share = Present value of dividends / (1+discount rate)^
n= 145.05p
per share / (1+0.05)^3= £16.84 per shareb)
If the discount rate is reduced from 5% to 3% per annum, the fair price of the shares will increase.
The new fair price of the shares can be calculated using the following formula:
New approximate fair price of the share = Present value of dividends / (1+discount rate)^n= 145.05p per share / (1+0.03)^3= £19.17 per sharec)
The initial investment is £16.84 per share and the selling price is £22.50 per share.
apital gain per share = £22.50 - £16.84 = £5.66 per share.
The investor paid income tax at 40% and capital gains tax at 28%.
Net yield on investment after tax = (capital gain - capital gain tax) * (1 - income tax rate)= (£5.66 - 0.28 * £5.66) * (1 - 0.4) = £1.98 per share.
The net yield on investment after tax is £1.98 per share.
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Competitive intelligence is an ongoing process that involves gathering data about
political differences between home and destination markets
legal and regulatory changes
cost analysis of a new product
economic growth of new markets
Competitive intelligence involves gathering data on political differences, legal changes, cost analysis, and economic growth of new markets.
Competitive intelligence is an ongoing process that aims to gather relevant data and information about various aspects of the business environment. While it encompasses a broad range of factors, including market trends and competitor analysis, the four mentioned points are essential components of competitive intelligence:
1. Political differences between home and destination markets: Understanding the political landscape and differences between the home market (where the business operates) and destination markets (where it plans to expand) is crucial. This involves analyzing factors such as government stability, trade policies, regulations, and political risks that may impact business operations.
2. Legal and regulatory changes: Staying informed about legal and regulatory changes is vital for businesses to ensure compliance and anticipate any potential impact on their operations. Monitoring changes in laws, regulations, industry standards, and policies can help businesses adjust their strategies and remain competitive.
3. Cost analysis of a new product: Conducting a thorough cost analysis of a new product or service is an essential part of competitive intelligence. It involves assessing various cost components such as production, distribution, marketing, and pricing to determine the viability and competitiveness of the offering in the market.
4. Economic growth of new markets: Monitoring the economic growth and potential of new markets is crucial for identifying opportunities for expansion and business development. Evaluating factors such as GDP growth, market size, consumer purchasing power, and market trends helps businesses make informed decisions about entering new markets.
In summary, competitive intelligence involves gathering data and analyzing factors like political differences, legal changes, cost analysis, and economic growth to gain a competitive edge and make informed business decisions. Applying these concepts in career or life involves staying updated on relevant information, conducting thorough analysis, and adapting strategies accordingly to stay competitive in the market.
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Suppose the economy is in a recession caused by high inflation. The inflation increases by 2% while the output decreases by 1%. How does the fed funds rate change if the Fed put it on Taylor rule autopilot?
The Taylor rule is a guideline that guides monetary policy based on economic situations. It recommends that monetary policymakers raise interest rates by a greater amount than the expected inflation rate. It suggests that real interest rates should be increased when the output gap is positive and inflation exceeds the target rate.
When the economy is in a recession caused by high inflation, and inflation increases by 2% while output decreases by 1%, the Fed fund rate is changed on the Taylor rule autopilot. If the Federal Reserve puts the Fed funds rate on Taylor rule autopilot, the rule recommends that the Fed should raise interest rates by more than 2% to achieve price stability.
The Taylor rule prescribes a real Fed funds rate that is equal to 1.5 times the rate of inflation plus 0.5 times the difference between the inflation rate and the target inflation rate, plus 0.5 times the output gap. Therefore, the Fed funds rate will increase if the inflation rate increases and the output gap is negative.
In conclusion, when the economy is in a recession caused by high inflation, and inflation increases by 2% while output decreases by 1%, the Fed funds rate will increase if the Fed puts it on Taylor rule autopilot.
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) What will happen to the federal funds rate if there is a
switch from currency to deposits? Use a graph to explain your
answer.
The federal funds rate is determined by supply and demand in the banking system and it affects how much banks charge each other for short-term loans. The use of deposits or currency doesn't change the overall demand for loans in the banking system, so it would not directly affect the federal funds rate.
When individuals or businesses hold more deposits instead of currency, banks have more reserves available to lend out, which can increase the supply of funds in the banking system and lower the federal funds rate. Conversely, if there is a switch from deposits to currency, banks have fewer reserves available to lend out, which can decrease the supply of funds in the banking system and raise the federal funds rate.
A graph of the federal funds rate over time may show fluctuations in response to changes in supply and demand in the banking system. If there is an increase in demand for loans, the federal funds rate may rise as banks compete for limited funds. If there is a decrease in demand for loans, the federal funds rate may fall as banks have excess funds to lend out.
In conclusion, a switch from currency to deposits may indirectly affect the federal funds rate if it changes the amount of reserves available to banks. However, it is not a direct relationship and other factors such as supply and demand in the banking system also play a role in determining the federal funds rate.
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Which of the following development methods is most suitable to build teamwork amongst employees?
Group of answer choices
a) Outdoor development experiences.
b) Job rotation.
c) Classroom, courses and seminars.
d) Committee assignments
The outdoor development experiences development method is most suitable to build teamwork among employees.
Outdoor development experiences are a form of experiential learning that involves a group of employees working together to achieve a goal or complete a challenge in an outdoor setting. Therefore, option A is the correct answer. Outdoor development experiences are useful for team building because they enable individuals to work collaboratively towards a common goal. Outdoor development experiences can include activities such as ropes courses, survival exercises, hiking, and camping trips, among others. By participating in these experiences, employees can develop a greater sense of trust and mutual respect for one another, which can translate into improved teamwork in the workplace. In conclusion, outdoor development experiences are an excellent method for building teamwork among employees, as they provide opportunities for individuals to work together, solve problems, and develop trust and respect for one another. Therefore, option A is the correct answer.
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The outdoor development experiences development method is most suitable to build teamwork among employees.
Outdoor development experiences are a form of experiential learning that involves a group of employees working together to achieve a goal or complete a challenge in an outdoor setting. Therefore, option A is the correct answer. Outdoor development experiences are useful for team building because they enable individuals to work collaboratively towards a common goal. Outdoor development experiences can include activities such as ropes courses, survival exercises, hiking, and camping trips, among others. By participating in these experiences, employees can develop a greater sense of trust and mutual respect for one another, which can translate into improved teamwork in the workplace. In conclusion, outdoor development experiences are an excellent method for building teamwork among employees, as they provide opportunities for individuals to work together, solve problems, and develop trust and respect for one another. Therefore, option A is the correct answer.
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The following are the non-strategic investment transactions of Wiki Garden Tool Inc. Assume each bond acquired is purchased with the intention to actively trade. 2020 Feb. 1 Paid $126,000, plus $200 in transaction fees to purchase a $130,000, four year, 6,0 o bond payable of capital Inc. dated Feb. 1. Interest is paid semiannually beginning August. 1 . Mar. 29 Bought 106,000 common shares of Regina Inc, for a total of $90,736, plus paid an extra $500 for transaction fees. May 7 fegina Inc:"'s board of directors declared a total dividend of $531,000 regarding the total. 3 , 500 , 000 shares 1ssued and outstanding. The date of record is May 30 , payable June 15 . June i Paid $149,000 including $500 in transaction fees to purchase a five-year, 9 , of, $142, 000 bond payable of Yates Corporation. Tnterest is paid annually each May 30 . 15 Meceived a cheque regarding the dividends declared on May ?. Aug. 1. Received a cheque fron Capital Inc. regarding semiannual interest. 1 Sold the capstal foc band at 08; 17. Purchased 81,000 Tech inc. coenon shares at. $7.20 plus 3400 in transactian fees. 0ec. 1 Sold 81, 000 of the Regina Inc, shares at 50.95 and incurred $250 in transaction fees. 31. Accrued interest on the Yates bond. Fair values of the eqaity securities on this date were Hegina. so.95; Tech Inc; $6.10. Assune that the carrying value of the Yates bond was equal to its fair value. Kay 30 Received a cheque fron Yates Carporatıon regarding-annaal interest. Prepare enties to record the above transactions. (if no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermed ate calculations and round your final answers to the nearest whiole dollar.)
A non-strategic investment is an investment that is purchased with the intent of trading actively. These investments are not long-term investments; rather, they are investments that are made with the intention of profiting from short-term market fluctuations.
The following are the non-strategic investment transactions of Wiki Garden Tool Inc. in the year 2020:Feb. 1: Paid $126,000 plus $200 in transaction fees to purchase a $130,000, four-year, 6.0% bond payable of Capital Inc. dated Feb. 1. Interest is paid semiannually beginning August 1. Journal Entry for this transaction is as follows: Mar. 29: Bought 106,000 common shares of Regina Inc., for a total of $90,736, plus paid an extra $500 for transaction fees. Journal Entry for this transaction is as follows:
May 7: Regina Inc.’s board of directors declared a total dividend of $531,000 regarding the total 3,500,000 shares issued and outstanding.
The date of record is May 30, payable June 15. Journal Entry for this transaction is as follows: June 1: Paid $149,000 including $500 in transaction fees to purchase a five-year, 9.0%, $142,000 bond payable of Yates Corporation. Interest is paid annually each May 30.
Journal Entry for this transaction is as follows: June 15: Received a cheque regarding the dividends declared on May 7. Journal Entry for this transaction is as follows: Aug. 1: Received a cheque from Capital Inc. regarding semiannual interest.
Journal Entry for this transaction is as follows: Sept. 17: Sold the Capital Inc. bond at 98. Journal Entry for this transaction is as follows: Sept. 17: Purchased 81,000 Tech Inc. common shares at $7.20 plus $3,400 in transaction fees. Journal Entry for this transaction is as follows: Dec. 1: Sold 81,000 of the Regina Inc. shares at $50.95 and incurred $250 in transaction fees.
Journal Entry for this transaction is as follows: Dec. 31: Accrued interest on the Yates bond. Fair values of the equity securities on this date were Regina, $50.95; Tech Inc., $6.10. Assume that the carrying value of the Yates bond was equal to its fair value.
Journal Entry for this transaction is as follows: May 30: Received a cheque from Yates Corporation regarding annual interest. Journal Entry for this transaction is as follows: Therefore, these are the entries that record the above transactions.
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Adjustment to Net Income - Indirect Method Omni Corporation's accumulated depreciation increased by $12,000, while $3,400 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $4,100 from the sale of land. Reconcile Omni's net income of $50,000 to net cash flow from operating activities.
Here is the reconciliation of Omni Corporation's net income of $50,000 to net cash flow from operating activities:
The ReconciliationNet income: $50,000
Add back depreciation expense: $12,000
Add back amortization expense: $3,400
Subtract gain on sale of land: $4,100
Net cash flow from operating activities: $62,700
The increase in accumulated depreciation and patent amortization reduced net income but not cash flow. Net income did not include land sale proceeds. We can better estimate Omni's operating cash flow by adding back these items and subtracting the land sale gain.
Thus, Omni generated $62,700 in operating cash during the year. This cash funded the company's investing, financing, and dividends.
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the only money exchanged by both the long and short at the creation of a futures contract is called the ___________.
The only money exchanged by both the long and short at the creation of a futures contract is called the initial margin
The initial margin serves as a security deposit or collateral to mitigate potential risks and ensure the financial integrity of the futures market.
When a futures contract is established, both the buyer (long) and the seller (short) are required to deposit an initial margin with the clearinghouse or exchange. This initial margin represents a small fraction of the total contract value and acts as a commitment to fulfill the terms of the contract. It serves as a buffer to cover potential losses that may occur during the life of the contract.
The purpose of the initial margin is twofold. First, it safeguards the market participants and the exchange against default risk. By requiring both parties to deposit an initial margin, the exchange ensures that they have the financial capacity to meet their obligations. This reduces the possibility of a party being unable to honor the contract due to financial constraints.
Second, the initial margin facilitates price stability and orderly trading in the futures market. By having an initial margin requirement, the exchange discourages excessive speculation and promotes responsible trading practices. It acts as a deterrent for market participants to take on excessive risk and helps maintain market integrity.
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Suppose each of two firms must simultaneously choose to set either a high price or a low price. Below is the normal-form representation of this game. (Total 10 Points) What is the Nash equilibrium in the single shot game? Show your work. If the game is repeated over an infinite time horizon, when can cooperation be sustained ia a Grim Trigger strategy. Derive the expression.
The Nash Equilibrium in the single-shot gameIn the single-shot game, the Nash Equilibrium is that both firms will choose a high price because there is no incentive for any of them to deviate from this strategy. Each firm will choose the strategy that benefits it the most,
given the strategy of the other firm. Therefore, if both firms set high prices, they will make a profit of $4 million each. However, if one firm sets a high price and the other firm sets a low price, the firm that sets the low price will make a profit of $6 million, while the firm that sets the high price will make a profit of $2 million. If both firms set a low price, they will make a profit of $3 million each,
which is less than the profit they would make if they both set a high price. Therefore, both firms will choose to set a high price.What is the Grim Trigger strategy?The Grim Trigger strategy is a way to sustain cooperation in repeated games. In this strategy, players cooperate as long as the other player cooperates.
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The purchase of office equipment for cash would be recorded in the
1) cash receipts journal 2)control account 3) accounts payable subsidiary ledger 4)cash payments journal
The purchase of office equipment for cash would be recorded in the cash payments journal. The cash payments journal is a book used to record all transactions that result in cash outflows. This journal is used to keep track of payments made in cash, cheques, and electronic transfers.
In the cash payments journal, all cash outflows are recorded, such as the purchase of goods for cash, the payment of bills, and the payment of salaries and wages. The cash payments journal is used to keep track of all cash transactions in an organization to ensure that the cash is accounted for and to track the movement of cash within the company.The cash payments journal is used to keep track of all cash transactions in an organization to ensure that the cash is accounted for and to track the movement of cash within the company.
The cash payments journal records the date of the transaction, the cheque number, the payee, the purpose of the payment, and the amount paid. The cash payments journal is an important accounting tool that helps businesses maintain accurate financial records. It is important to record all cash outflows in the cash payments journal to ensure that the cash balance is accurate and to help prevent fraud.
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s the same for everyone. is the total amount given up when a person makes a choice. only includes monetary costs and benefits. is the value of the next-best alternative that is given up when a choice is made.
The total amount given up when a person makes a choice is the opportunity cost.
The value of the next-best alternative that is given up when a choice is made is the opportunity cost.
What is an opportunity cost?An opportunity cost refers to the forgone alternative. This means that when a person has to choose between two alternatives, the choice that they would forgo is the opportunity cost.
This is the price they would pay for not choosing the other alternative. So, the value of the next-best alternative when a choice is given up is the opportunity cost.
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You run a school in Florida. Fixed monthly cost is $5,877.00 for rent and utilities, $5,910.00 is spent in salaries and $1,334.00 in insurance. Also every student adds up to $102.00 per month in stationary, food etc. You charge $660.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $10,200.00, salaries to $6,892.00 and insurance to $2,185.00 per month. Variable cost per student will increase up to $189.00 per month. However you can charge $1,018.00 per student. You want to determine in percent the new charge compared to the previous charge. To calculate this, divide the new charge per student by the previous charge per student, keep in a decimal form and round to 3 decimal points. You run a school in Florida. Fixed monthly cost is $5,397.00 for rent and utilities, $6,383.00 is spent in salaries and $1,367.00 in insurance. Also every student adds up to $94.00 per month in stationary, food etc. You charge $670.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $10,699.00, salaries to $6,633.00 and insurance to $2,281.00 per month. Variable cost per student will increase up to $184.00 per month. However you can charge $1,170.00 per student. How much do you currently charge per student?
The new current charge per student is $1018.00
The percentage increase in the new charge is 152.76%
The current charge per student is $660.
To calculate the new charge per student, we need to add up the fixed costs and the variable costs per student. The fixed costs in the new location will be $10,200 + $6,892 + $2,185 = $19,277.
The variable costs per student in the new location will be $189, so the total cost per student will be $19,277 + $189 = $19,466.
Therefore, the new charge per student will be $1,018.
To calculate the percentage increase in the new charge, we need to divide the new charge by the old charge and multiply by 100%. This gives us:
(1018 / 660) * 100% = 152.76%
The new charge is 152.76% higher than the old charge.
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The one year forward rate of the japanese yen is quoted at $0.013 and the spot rate of the japanese yen is quoted at $0.011. The forward ____ is ____percent?
A) discount , 18.18%
B) premiun, 18.18 %
C) discount, 15.38
D) premiun, 15.38
A) discount , 18.18%
To determine whether the forward rate is a discount or premium and calculate the percentage, we need to compare the forward rate to the spot rate.
In this case, the forward rate of the Japanese yen is $0.013 and the spot rate is $0.011.
To calculate the forward rate percentage, we can use the following formula:
Forward Rate Percentage = ((Forward Rate - Spot Rate) / Spot Rate) * 100
Using the provided values, we can calculate the forward rate percentage:
((0.013 - 0.011) / 0.011) * 100
≈ 18.18
Therefore, the correct answer is:
A) discount, 18.18%
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a. Name two organizations that help to set and amend accounting standards.
b. Which Accounting principle is internationally accepted and used?
c. What is the difference between User Specific Qualities and Primary Qualitative Characteristics?
a. Two organizations that help to set and amend accounting standards are:International Accounting Standards Board (IASB)Financial Accounting Standards Board (FASB)The International Accounting Standards Board (IASB) is responsible for developing and publishing the International Financial Reporting Standards (IFRS). It sets accounting standards for more than 120 countries and provides guidance for investors and stakeholders
The Financial Accounting Standards Board (FASB) is responsible for developing and publishing Generally Accepted Accounting Principles (GAAP), which is used in the United States.b.
The accounting principle that is internationally accepted and used is International Financial Reporting Standards (IFRS). IFRS is a set of accounting standards that are designed to be applied consistently across the world.
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Use of activist fiscal and monetary policy can bring rapid growth, as was the case in the United States before the 1972 election. One consequence of an activist policy is:
Select one:
a. a political business cycle caused by the use of macroeconomic policy to serve political ends.
b. use of macroeconomic policy that stabilizes the economy.
c. countercyclical macroeconomic policy designed to help the economy.
d. crowding out as decreases in government spending push out the private business spending.
A consequence of an activist policy is a political business cycle caused by the use of macroeconomic policy to serve political ends.
An activist fiscal and monetary policy can bring rapid growth, as was the case in the United States before the 1972 election.
This is one of the consequences of this type of policy.
The use of activist fiscal and monetary policy can stimulate rapid growth and employment,
but it can also cause inflation, currency depreciation, and an unsustainable trade balance.
This policy is based on the premise that government intervention in the economy is necessary to stabilize it and smooth out the business cycle.
When a country is experiencing a recession or slow growth, an activist policy can be used to increase aggregate demand by increasing government spending or cutting taxes.
Conversely, during a period of high growth, macroeconomic policy can be tightened to reduce aggregate demand and prevent overheating.
However, one consequence of an activist policy is a political business cycle caused by the use of macroeconomic policy to serve political ends.
In this case, the government may pursue expansionary policies before an election to stimulate growth and win votes, and then pursue contractionary policies afterward to combat inflation.
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Foley Corporation (a C corporation subject to a 21% income tax rate) has 2 shareholders: Wang Corporation (a C corporation which ownt 20% of the stock) and Anthony (a single individual who owns 80% of the stock). Anthony's basis for his stock is 380,000 and Wang Corporation's basis for its stock is $20,000. Foley Corp. has $226,000 current E8. and $45,000 accurnulated E8P belore adjusting for the following: During the year Foley Corp. distributed property (with a fair market value of $240,000 and adjusted basis of $125,000 ) to Anthory On the same day, Foley Corp. also made a distribution to Wang Corporation of property (with a fair market value of 395,000 and adjusted basis of $50,000). Wang Corporation also assumed a $35,000 labilify on this property. These were the only distritutions this year by Foley Corporation. How much fotal gain does Foley Corporation recognize as a result of the distributions? A. Zero B. $160,000 c. $126,400 0,5125,000
the correct answer is C. $126,400.Foley Corporation would recognize a total gain of $126,400 as a result of the distributions.
1. Distribution to Anthony:
- Fair market value of the distributed property: $240,000
- Adjusted basis of the distributed property: $125,000
- Gain recognized: Fair market value - Adjusted basis =
[tex]\$240,000 -\$125,000 = \$115,000[/tex]
2. Distribution to Wang Corporation:
- Fair market value of the distributed property: $395,000
- Adjusted basis of the distributed property: $50,000
- Liability assumed by Wang Corporation: $35,000
- Gain recognized: (Fair market value - Adjusted basis) - Assumed liability =
[tex](\$395,000 - \$50,000) - \$35,000\\= \$310,000[/tex]
Now, we need to determine the taxable portion of the gain for each shareholder:
- Anthony's share of the gain: 80%
- Taxable gain for Anthony: 80% of $115,000 = $92,000
- Wang Corporation's share of the gain: 20%
- Taxable gain for Wang Corporation: 20% of $310,000 = $62,000
Finally, we add up the taxable gains of both shareholders:
[tex]\$92,000 (Anthony's gain) + \$62,000 (Wang Corporation's gain) = \$154,000[/tex]
Since Foley Corporation is subject to a 21% income tax rate, the total gain recognized by the corporation is $154,000 * 21% = $32,340.
Therefore, the correct answer is C. $126,400.
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_________ can be used to create a perfect CPI-measured inflation hedge. Multiple Choice
The S&P 500 Index
TIPS
Gold
None of the options are correct.
Real estat
To create a perfect CPI-measured inflation hedge, the option that can be used is TIPS (Treasury Inflation-Protected Securities).
TIPS (Treasury Inflation-Protected Securities) can be used to create a perfect CPI-measured inflation hedge. TIPS are government bonds that are specifically designed to protect investors from inflation. They provide a guaranteed return that adjusts with changes in the Consumer Price Index (CPI), which is a common measure of inflation. As the CPI increases, the principal value of TIPS is adjusted upward, which means the interest payments and the final redemption value also increase accordingly.
This adjustment ensures that the investor's purchasing power remains relatively stable in an inflationary environment. Therefore, TIPS are considered an effective investment instrument for hedging against inflation, providing a direct link to CPI and offering protection against the erosion of purchasing power.
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To create a perfect CPI-measured inflation hedge, the option that can be used is TIPS (Treasury Inflation-Protected Securities).
TIPS (Treasury Inflation-Protected Securities) can be used to create a perfect CPI-measured inflation hedge. TIPS are government bonds that are specifically designed to protect investors from inflation. They provide a guaranteed return that adjusts with changes in the Consumer Price Index (CPI), which is a common measure of inflation. As the CPI increases, the principal value of TIPS is adjusted upward, which means the interest payments and the final redemption value also increase accordingly.
This adjustment ensures that the investor's purchasing power remains relatively stable in an inflationary environment. Therefore, TIPS are considered an effective investment instrument for hedging against inflation, providing a direct link to CPI and offering protection against the erosion of purchasing power.
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Hulu Berhad (Hulu) is analysing the possible acquisition of Hilir Berhad (Hilir). Both firms have no debt. Hulu believes the acquisition will increase its total after-tax annual cash flows by RM2.4 million indefinitely. The current market value of Hilir is RM58 million, and that of Hulu is RM107 million. The appropriate discount rate for the incremental cash flows is 10%. Hulu is trying to decide whether it should offer 40% of its stock or RM73 million in cash to Hilir's shareholders.
From the above information you are required to answer the following questions.
Find out the cost of each alternative. From your answer in part (i), determine the Net Present Value (NPV) of each alternative. Based on NPV in part (ii), which alternative should Hulu choose? Explain your answer.
(i)Cost of each alternative:The first alternative is offering 40% of its stock. If the value of Hulu is RM107 million, then 40% of it would be:0.40 × RM107 million = RM42.8 million
(ii)Net Present Value (NPV) of each alternative:
We can determine the NPV of each alternative by using the formula:
NPV = PV of cash flows − Initial investment
where, PV of cash flows = RM2.4 million / 0.10 = RM24 million
Initial investment: For the first alternative, the initial investment would be the cost of offering 40% of its stock, which is RM42.8 million. For the second alternative, the initial investment would be the cost of offering RM73 million in cash, which is RM73 million.
First Alternative: NPV = PV of cash flows - Initial investment= RM24 million - RM42.8 million= -RM18.8 million
Second Alternative: NPV = PV of cash flows - Initial investment= RM24 million - RM73 million= -RM49 million
Based on the NPV results, the first alternative has a higher NPV.
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1. In cell D4, use the SUBTOTAL function to calculate the average number of Halloween costumes sold. Format with 0 decimals.
2. In cell D5, use the SUBTOTAL function to calculate the total number of Christmas costumes sold. Format with 0 decimals.
3. Insert a slicer for the Month field. Format the slicer with 4 columns, and then resize and move the slicer so it covers range M2:R5 (set the slicer within the borders of these cells). In the slicer, select November.
Calculating the average number of Halloween costumes sold (Cell D4)
In cell D4, enter the formula:
=SUBTOTAL(101, Sales[Units Sold]) / SUBTOTAL(102, Sales[Units Sold])
The SUBTOTAL function calculates the average using the AVERAGE function (code 101) on the range specified (Sales[Units Sold]).
Format cell D4 to display 0 decimal places.
Calculating the total number of Christmas costumes sold (Cell D5)
In cell D5, enter the formula:
=SUBTOTAL(109, Sales[Units Sold])
The SUBTOTAL function calculates the sum using the SUM function (code 109) on the range specified (Sales[Units Sold]).
Format cell D5 to display 0 decimal places.
Inserting a slicer for the Month field and selecting November
Click on any cell within the Sales table.
Go to the "Insert" tab on the Excel ribbon.
Click on "Slicer" in the "Filters" group.
In the "Insert Slicers" window, select the "Month" field and click "OK".
Format the slicer by right-clicking on it and selecting "Size and Properties" from the menu.
In the dialog box, set the "Number of columns" to 4 and click "OK".
Resize and move the slicer so it covers the range M2:R5 (drag the edges and corners).
Ensure the slicer is within the borders of these cells.
In the slicer, select the "November" option to filter the table and show only the rows where the month is November.
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Other than Oman, critically compare any two GCC countries and evaluate their business practices with respect to global business environment.Identify and critically discuss the benefits of GCC countries from EU-GCC Trade Agreement
The Gulf Cooperation Council (GCC) is a political and economic association of six Arab countries bordering the Persian Gulf: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). Other than Oman, this essay will compare two GCC countries and evaluate their business practices concerning the global business environment. The countries selected for this paper are the United Arab Emirates and Saudi Arabia. lemented legal frameworks to promote fair competition, protect intellectual property rights, and prevent corruption.
Additionally, both countries have established free trade zones, which offer various incentives such as tax exemptions, streamlined customs procedures, and 100% foreign ownership. However, the business environment in each country is unique due to differences in their political, social, and cultural systems. Saudi Arabia has a more conservative culture, which may affect the business practices of foreign companies operating in the country. In contrast, the UAE is more cosmopolitan and open to foreign influence.The EU-GCC Trade Agreement offers several benefits to GCC countries. The agreement aims to strengthen economic ties between the EU and the GCC, promoting trade and investment in various sectors such as energy, finance, and agriculture. It provides a framework for reducing trade barriers, enhancing regulatory cooperation, and protecting intellectual property rights.
Additionally, the agreement can help GCC countries diversify their economies, reduce their dependence on oil exports, and increase their competitiveness in the global market.In conclusion, Saudi Arabia and the UAE have developed business practices that are aligned with global standards. Both countries have diversified economies, business-friendly environments, and legal frameworks that protect the interests of foreign investors. The EU-GCC Trade Agreement offers several benefits to GCC countries, including increased trade and investment, reduced trade barriers, and greater regulatory cooperation.
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1. The value of a common stock that just paid a $2.00 dividend will be if investors require a 12% return and dividends and earnings are expected to grow at 8% per year. $66.67 $72.00 $81.00 $54.00 1. The Treynor ratio is a risk-adjusted return measure that divides the stock's excess return ( ie ki−kid) by the stock's beta. True False
1. The value of a common stock that just paid a $2.00 dividend will be if investors require a 12% return and dividends and earnings are expected to grow at 8% per year.The price of the common stock can be determined using the following formula:P = D1 / (r - g).
Where:P = Price of the stockD1 = Expected dividend per share in one yearr = Investor's required rate of returng = Expected growth rate of dividendsThe price of the common stock is calculated using the formula:P = D1 / (r - g)Given that the stock paid a dividend of $2.00, the dividend in the next year (D1) can be calculated as follows:D1 = D0 × (1 + g)Where:D0 = Dividend just paid in the current yearg = Expected growth rate of dividends.
Substituting the values in the above equation[tex]:D1 = 2 × (1 + 8%) = $2.16[/tex]Given that the investor requires a 12% return, the required rate of return (r) can be calculated as follows:r = 12% = 0.12Expected growth rate of dividends (g) = 8% = 0.08Substituting the values in the formula[tex]:P = D1 / (r - g)P = 2.16 / (0.12 - 0.08)P = $54.00[/tex] Thus, the value of the common stock is $54.00.2.
The Treynor ratio is a risk-adjusted return measure that divides the stock's excess return (ki−kid) by the stock's beta. TrueThe Treynor ratio is a risk-adjusted return measure that divides the stock's excess return (ki−kid) by the stock's beta. It is given by the formula:Treynor Ratio = (ki−kid) / biWhere:ki = Expected portfolio returnkid = Risk-free ratebi = Beta of the stockThe Treynor ratio measures how much excess return is generated for each unit of systematic risk undertaken. Therefore, the given statement is true.
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How much is accumulated in each of the savings plans over two years? a. Deposit €1300 today at 10 percent compounded annually. b. Deposit €600 today at 18 percent compounded monthly. a. The total amount in the savings plan at the end of two years when depositing €1300 today at 10 percent compounded annually will be ϵ (Round to the nearest hundredth as needed.) b. The total amount in the savings plan at the end of two years when depositing €600 today at 18 percent compounded monthly will be ϵ (Round to the nearest hundredth as needed.)
Deposit €1300 today at 10 percent compounded annually. The formula to calculate the total amount in the savings plan is given by [tex]A = P (1 + r/n)^(nt)[/tex]
Putting the values in the formula, we get:[tex]A = 1300 (1 + 0.1/1)^(1 × 2)A = €1716.10[/tex] The total amount in the savings plan at the end of two years when depositing €1300 today at 10 percent compounded annually will be €1716.10. Deposit €600 today at 18 percent compounded monthly. The formula to calculate the total amount in the savings plan is given by
[tex]A = P (1 + r/n)^(nt) Where,P = €600r = 18 % per annum (compounded monthly).[/tex]
So, [tex]r = 18/12 = 1.5 % per month (in decimal form, r = 0.015)n = 12t = 2 years.[/tex]Putting the values in the formula, we get:
[tex]A = 600 (1 + 0.015/12)^(12 × 2)A = €1004.60[/tex]The total amount in the savings plan at the end of two years when depositing[tex]€600 today at 18 percent compounded monthly will be €1004.60.[/tex]
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a client who is hallucinating fearfully says to the nurse, "Please tell that demon to get out." How should the nurse respond to the client
I know you must be very upset by this, but I don't see a demon
When a client who is hallucinating fearfully says to the nurse, "Please tell that demon to get out,The nurse should respond to the client with empathy and assurance that everything is going to be okay.
The nurse should say, "I know you must be very upset by this, but I don't see a demon. Your fear is real, but it isn't grounded in reality." The nurse should also reassure the client that they are in a safe and protected place. The nurse should remain calm and professional while addressing the client. This would provide the client with a safe and reassuring environment to alleviate their fears. It is important to note that during hallucinations, clients are experiencing a subjective perception of reality that is unrelated to the objective reality. It is important to reassure the clients that they are safe and provide a safe and comfortable environment for them to ease their anxiety. Hallucinations could be caused by different factors such as drugs, medical conditions, and psychological disorders.
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Uncle's Café sells regular coffee, but decides they want to offer Latte's to the menu. They expect to sell one Latte for $4.00. They want to evaluate this decision using a break-even analysis and have hired you to do the work! They want to purchase two (2) Nespresso machines for the business to support this new product line. Details on costs are below. For this exercise, assume the following: - The useful life of the machine is 5-years - Assume no salvage value in 5 -years - Discount Rate: 14\%; Tax Rate: 24% Costs: Each machine costs $220 one-time, upfront. The cost of the machines are not amortized. To make each Latte drink the machine requires a coffee pod which costs $1.00 per pod and frothed milk $0.20 per drink. Cups, lids and other related expenses per cup are $0.20. How many Lattes must Uncle's sell per year to break-even on a Financial Basis (NPV) Basis? (1) Initially model your cash flows in Excel and calculate the NPV at 100 cups per year. (2) Then, create a separate tab (copy original) and calculate the Breakeven units using the goal seek function. Use the "Coffee Express" solution in your review problem sets plus the other resources at your disposal for guidance (notes, video lessons, etc..) Goalseek video link (3) Next, on another separate tab (copy #2) assume that taxes will rise to 35% in years 3,4 and 5 and that pod costs will increase by 5% each year starting in year 2 (through 5 ).
Uncle's Cafe sells regular coffee, but they have decided to add latte to their menu. They anticipate selling one latte for $4.00. They want to assess this decision using a break-even analysis and have hired you to complete the task.
They want to purchase two Nespresso machines to support this new product line. The cost of each machine is $220 one-time upfront. To make each latte, the machine requires one coffee pod that costs $1.00 per pod and frothed milk that costs $0.20 per drink. Cups, lids, and other related expenses per cup are $0.20. The following are some of the main assumptions:Useful life of the machine is 5 yearsNo salvage value after 5 yearsDiscount Rate is 14%; Tax Rate is 24%.Calculation of NPV at 100 cups per yearInitial cash outflow for the purchase of machines is $440 ($220 x 2)Total cost of pods, milk, cups, lids, and other expenses per latte is $1.40Total contribution margin per latte is $2.60 (4.00 - 1.40)The contribution margin is the difference between the total revenue and the total variable cost. Formula: (Unit price - Variable cost per unit)NPV of cash flows= $71.10Calculation of the Breakeven units using the goal seek functionThe goal is to find the number of lattes that Uncle's Cafe must sell to break even. This is the point where the total revenue from latte sales is equal to the total cost of latte production, including the initial purchase of the machines.
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1. Identify the designated Shariah internal control functions under the Shariah Governance Policy Document of Bank Negara Malaysia issued in 2019 and discuss the Shariah functions of any two thereof?
2. Evaluate using examples the practices from the other jurisdiction any two (2) factors that may contribute to weak internal control practices in an Islamic financial institution?
1. Shariah Governance Policy Document The designated Shariah internal control functions under the Shariah Governance Policy Document of Bank Negara Malaysia issued in 2019 include:
Shariah audit - The Shariah audit's objective is to verify the effectiveness of the Shariah compliance framework by providing an independent evaluation of Shariah compliance. In addition, it also includes the assessment of Shariah-compliant reporting and accounting.
Shariah review - The Shariah review is conducted to evaluate the effectiveness and efficiency of the Shariah compliance process. The purpose of Shariah review is to ensure that the internal controls and systems put in place are adequate to manage the risks and to achieve the objectives of the Shariah.
Shariah risk management - The objective of the Shariah risk management is to identify, measure, manage, and monitor the risks related to Shariah compliance. Shariah risk management ensures that the Shariah compliance process is aligned with the overall risk management process of the institution.
2. Weak internal control practices in an Islamic financial institutionThere are several factors that may contribute to weak internal control practices in an Islamic financial institution, two of which are discussed below:
1) Lack of governance framework - The lack of governance framework is a key factor that may contribute to weak internal control practices in an Islamic financial institution. In some jurisdictions, there is a lack of regulatory framework to guide the internal control practices in Islamic financial institutions. Without a robust governance framework, it is difficult to ensure that the internal controls in place are adequate to manage the risks.
For example, in Pakistan, the State Bank of Pakistan (SBP) has issued guidelines for the internal control practices in Islamic financial institutions. However, these guidelines are not comprehensive, and there are several areas where the guidelines are not clear. As a result, some Islamic financial institutions in Pakistan may not have robust internal control practices in place.
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You're running a small firm, and you have an estimate of both your cost function and your demand curve. Your cost function is TC=852-13q+5q^2, while your inverse demand curve is P=1,228-0.4q, where P is the price of one unit of your output and q is the quantity of units produced and sold.
If you wanted to maximize revenue, what quantity would you produce? Please round your answer to the nearest whole number (i.e., no decimal places).
Given that the cost function of a small firm is TC=852-13q+5q² while its inverse demand curve is P=1228-0.4q, where P is the price of one unit of the output, and q is the number of units produced and sold.
The formula for revenue is revenue = price x quantity. Therefore, the formula for revenue is P(q) = (1228 - 0.4q)q or P(q) = 1228q - 0.4q².Substitute the cost function into the revenue function to get P(q) = 1228q - 0.4q² and TC = 852 - 13q + 5q².The formula for profit is profit = revenue - cost. Therefore, Profit = P(q) - TC.Substitute P(q) = 1228q - 0.4q² and TC = 852 - 13q + 5q² into the profit formula to get Profit = 1228q - 0.4q² - (852 - 13q + 5q²)Simplify the profit equation by combining like terms to get Profit = 8q² - 5q + 376.To maximize profits.
we will take the first derivative of the profit function and set it to zero. This is because the slope of the profit function will be zero at its maximum point.The derivative of the profit function is 16q - 5.To find the maximum point of the profit function, set the derivative equal to zero and solve for q.16q - 5 = 0 ⇒ 16q = 5 ⇒ q = 5/16 ≈ 0.3125 (rounded to 1 decimal place).Rounding the answer to the nearest whole number, the quantity to be produced is q = 0. Hence, the quantity to be produced is 0 units.
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The market price of a semi-annual pay bond is $969.20. It has 11.00 years to maturity and a coupon rate of 7.00%. Par value is $1,000. What is the effective annual yield?
A bond is a financial instrument issued by the government or corporations that offer an investor fixed income over a specific period. The price of the bond depends on various factors, including maturity, coupon rate, and market interest rates.
This answer provides information on how to calculate the effective annual yield of a bond.
Bond Information:
Market price
(P) = 969.20Coupon rate
(C) = 7.00%Par value
(F) = 1,000Maturity
(n) = 11 years
To calculate the effective annual yield of the bond, we need to use the following formula:
Effective Annual Yield = [(1 + Yield to Maturity/n) ^n] - 1
We can find the Yield to Maturity of the bond using the following formula:
Price of bond = [C / (1 + Yield to Maturity/2)^(2*n)] + [F / (1 + Yield to Maturity/2)^(2*n)]
where C is the coupon payment and F is the par value.
Substituting the values in the formula, we get:
969.20 = [35 / (1 + Yield to Maturity/2)^(2*11)] + [1,000 / (1 + Yield to Maturity/2)^(2*11)]
Solving this equation for Yield to Maturity, we get Yield to Maturity = 3.498%.
Substituting the Yield to Maturity in the effective annual yield formula, we get:
Effective Annual Yield = [(1 + 3.498%/2) ^2] - 1
Effective Annual Yield = 7.12%
The effective annual yield of the bond is 7.12%.
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What is the discount yield, bond equivalent yield, and
effective annual return on a $1 million T-bill that
currently sells at 96.375 percent of its face value and is
65 days from maturity? (Use 360 days for discount
yield and 365 days in a year for bond equivalent yield
and effective annual return. Do not round intermediatecalculations. Round your answers to 3 decimal places.
(e.g., 32.161))
Discount yield %
Bond equivalent yield %
Effective annual return %
The discount yield, bond equivalent yield and effective annual return on a 1 million T-bill that currently sells at 96.375% of its face value and is 65 days from maturity are as follows.
Calculations:The face value of the T-bill is 1,000,000The T-bill is currently selling at 96.375% of its face valueThus, the purchase price of the T-bill is 963,750The number of days to maturity is 65 daysThe discount on the T-bill is equal to the difference between its face value and purchase price1,000,000 - 963,750 = 36,250.
Discount yield = Discount / Face Value x 360 days / Number of Days to Maturity
Discount Yield[tex]= $36,250 / $1,000,000 x 360 days / 65 daysDiscount yield[/tex]
= 7.121%Bond Equivalent Yield (BEY) = Discount yield x 365 days / 360 daysBond Equivalent Yield (BEY)
= 7.121% x 365 days / 360 daysBond Equivalent Yield (BEY)
= 7.246%Effective Annual Return (EAR)
= (1 + Discount yield x Number of Days to Maturity / 360 days) ^ (365 days / Number of Days to Maturity) - 1Effective Annual Return (EAR)
= (1 + 7.121% x 65 days / 360 days) ^ (365 days / 65 days) - 1Effective Annual Return (EAR)
= 7.498%
Therefore, the Discount yield % is 7.121%, Bond equivalent yield % is 7.246% and the Effective annual return % is 7.498%.
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the aggregate demand curve generally slopes downward and to the right because, for any given money supply m a higher price level p causes a real money supply m/p, which the interest rate and spending. the aggregate demand curve generally slopes downward and to the right because, for any given money supply m a higher price level p causes a real money supply m/p, which the interest rate and spending. higher; raises; reduces lower; raises; reduces higher; lowers; increases lower; lowers; increases
The correct statement is: "The aggregate demand curve generally slopes downward and to the right because, for any given money supply (m), a higher price level (p) reduces the real money supply (m/p), which lowers the interest rate and reduces spending." Hence, option C is the correct answer.
The aggregate demand curve shows the relationship between the overall price level and the quantity of real GDP demanded in an economy. It is downward sloping because of several factors, including the wealth effect, the interest rate effect, and the international trade effect.
When the price level (p) increases, the real money supply (m/p) decreases. This means that individuals and businesses have less purchasing power in terms of real goods and services.
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1. One effect of climate change is that lakes in many northern regions like Wisconsin will have more algae. When people use lakes for recreation they often do not like algae. We want to put a dollar amount to this loss in recreation value.
Assume that each car faces $1 per mile of cost to drive. We observe two lakes, one with algae and one without.
First the lake with algae. People will drive 1 mile for access to this late. We never observe anyone who incurs more travel to visit this lake.
Second the lake without algae. People will drive 50 miles for access to this lake. We never observe anyone who incurs more travel to visit this lake.
What is the willingness to pay (or the valuation) of access to the lake with algae?
2. Continuing with the prior question with algae and two lakes:
What dollar amount represents the damage done (willingness to pay) to a representative recreational user of a lake when algae grows in a lake where it was previously not present?
3. There are two firms in the economy with marginal cost of reduction curves
MCR1: P=2*R
MCR2 P=3*R
The unregulated level of pollution is 150 units, the regulatory agency offers 100 pollution permits at auction, one permit is needed to produce one unit of pollution. What price should arise for these permits at the auction?
1. The willingness to pay (or the valuation) of access to the lake with algae Since people are willing to drive only one mile to access the algae lake, we can conclude that they do not consider the algae lake much valuable.
However, since people are willing to drive 50 miles to access the lake without algae, we can conclude that the lake without algae is very valuable to people.
We can put a dollar amount to this loss in recreation value. We know that people are willing to drive $1 per mile of cost to drive. Therefore, for the lake with algae.
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Suppose the following simultaneous move game is instead played
sequentially with A going first. The equilibrium payoffs of the
sequential game would be:
A. (1,1)
B. (6,4)
C. (4,6)
D. (-4,-4)
The sequential game where A goes first will alter the equilibrium payoffs for the following simultaneous move game. Therefore, the correct option is B. (6,4).
In simultaneous move games, players make their moves at the same time, so they don't know what the other player's strategy will be. As a result, we must look for Nash Equilibria in the simultaneous game. There is a single Nash equilibrium in the simultaneous game, which is the outcome in which both A and B choose Row, giving the (4,6) payoffs. We can also consider the sequential version of this game where A moves first and then B moves second. Suppose A moves first, choosing Row or Column. B is then informed of A's selection and is allowed to choose. We can solve for the subgame perfect Nash equilibrium in this game. In the first step, A selects Row. Since the subgame in which B chooses has no Nash equilibrium, the outcome of this sequential game is the same as the outcome of the simultaneous game. Thus, the sequential game yields the following equilibrium payoffs: (6,4).Option A (1,1) is incorrect because both players earn less than their equilibrium payoffs. Option C (4,6) is the equilibrium outcome for the simultaneous move game. Option D (-4,-4) is not even one of the possible outcomes because players can't make moves that will cause them both to receive negative payoffs.
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