The economic viability of the investment needs to be determined by calculating the annual costs and revenues, discounting them to present value, and assessing the net present value (NPV) using a 21% annual discount rate.
To determine the economic viability of the investment using the annual value method, we need to calculate the annual costs and revenues associated with the investment and discount them to present value. Here's an overview of the calculations involved:
1. Calculate the annual production quantity: The initial production quantity is 200,000 units per year, which will decrease by (4/3)% per year for the second 10 years.
2. Calculate the annual sales revenue: Multiply the annual production quantity by the selling price per unit, which is $3.
3. Calculate the annual raw material cost: Multiply the annual production quantity by the amount of raw material used per unit (0.2 kg) and the price per kg (0.8$). Adjust the raw material cost annually based on the escalation rate.
4. Calculate the annual electricity cost: Multiply the total electrical power consumed (80 kW) by the number of hours worked per year (5,000 + 100 * (2)). Multiply the result by the electricity price per kWh (0.8$) and adjust it annually based on the escalation rate.
5. Calculate the annual personnel cost: Multiply the number of personnel (10) by the average monthly cost per personnel ($7,000), adjusted annually based on the escalation rate.
6. Calculate the annual maintenance cost: The maintenance cost occurs every 5 years, starting from the fifth year. Calculate the present value of the maintenance cost over the investment period, considering the escalation rate.
7. Calculate the annual capital cost: Multiply the borrowed amount ($8,000,000) by the annual capital cost rate (18%), compounded monthly for 10 years.
8. Discount all annual costs and revenues to present value using the annual discount rate of 21%.
9. Calculate the annual net cash flow: Subtract the discounted costs from the discounted revenues for each year.
10. Determine the economic viability: If the net present value (NPV) of the investment is positive, the investment is considered economically viable. If the NPV is negative, the investment may not be economically feasible.
Performing these calculations will provide the necessary information to assess the economic viability of the investment using the annual value method.
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Brooks Topeka, a professional golfer, enters into an agreement whereby he agrees to see his set of golf clubs to Paige Spiranac for $950. If all of the elements of a valid contract can be established, the contract is enforceable by
a. the seller or the buyer.
b. the manufacturer of the golf clubs.
c. any third party with an interest in the deal, such as one of PGA's customers.
d. none of the choices.
The correct answer is a. Brooks Topeka, a professional golfer, enters into an agreement whereby he agrees to sell his set of golf clubs to Paige Spiranac for $950.
If all of the elements of a valid contract can be established, the contract is enforceable by: the seller or the buyer. Therefore, the correct answer is a.
The buyer can hold the seller accountable for fulfilling their obligations under the agreement, and the seller can seek legal recourse if the buyer fails to pay. In general, a contract is a legally binding agreement between two or more parties who agree to exchange something of value for something else. When it comes to contracts, there are a few key components that must be present for them to be legally binding: offer, acceptance, consideration, capacity, legality, and mutual assent.
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Suppose that this year's money supply is $400 billion, nominal GDP is $12 trillion, and real GDP is $4 trillion. The price level is , and the velocity of money is Suppose that velocity is constant and the economy's output of goods and services rises by 5 percent each year. Use this informe questions that follow. If the Fed keeps the money supply constant, the price level will , and nominal GDP will True or False: If the Fed wants to keep the price level stable instead, it should increase the money supply by 5% next year. True False If the Fed wants an inflation rate of 8 percent instead, it should the money supply by (Hint: The quantity equation can be rewritten as the following percentage change formula: (Percentage Change in M)+( Percentage Change in V)=( Percentage Change in P)+( Percentage Change in Y).)
Summary: If the Fed keeps the money supply constant, the price level will decrease, and nominal GDP will remain unchanged.
Based on the given information, we have the following data:
Money supply (M) = $400 billion
Nominal GDP (Y) = $12 trillion
Real GDP (Y) = $4 trillion
Price level (P) = ?
Velocity of money (V) = ?
To find the price level, we can use the quantity equation: M * V = P * Y
Given that velocity (V) is constant and the economy's output (Y) rises by 5 percent each year, we can assume that the percentage change in Y is 5%. We can rewrite the quantity equation in terms of percentage changes:
(Percentage Change in M) + (Percentage Change in V) = (Percentage Change in P) + (Percentage Change in Y)
Since the velocity is assumed to be constant, the percentage change in V is 0. Therefore, the equation becomes:
(Percentage Change in M) = (Percentage Change in P) + 5%
Now let's analyze the questions:
1. If the Fed keeps the money supply constant, the price level will _____, and nominal GDP will _____.
The Fed keeping the money supply constant means that the percentage change in M is 0%. According to the equation above, this would result in the percentage change in P being -5% (negative 5%) to offset the 5% increase in Y. Therefore, the price level will decrease, and nominal GDP will remain unchanged.
2. True or False: If the Fed wants to keep the price level stable instead, it should increase the money supply by 5% next year.
False. If the Fed wants to keep the price level stable, it needs to offset the 5% increase in Y. As shown in the equation, the percentage change in M would need to be -5% (negative 5%) to counterbalance the increase in Y.
3. If the Fed wants an inflation rate of 8 percent instead, it should _____ the money supply by _____.
To achieve an inflation rate of 8%, the Fed needs to increase the price level accordingly. Assuming the velocity remains constant, the equation tells us that the percentage change in M should be 3% (8% - 5%) to achieve the desired inflation rate.
In summary:
1. If the Fed keeps the money supply constant, the price level will decrease, and nominal GDP will remain unchanged.
2. False. To keep the price level stable, the Fed needs to decrease the money supply by 5%.
3. The Fed should increase the money supply by 3% to achieve an inflation rate of 8%.
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Scenario Ace Property Rentals (APR) is a growing property rental company that now manages over 200 properties on behalf of owners of the properties.To date, the company has used a combination of paper-based files and simple spreadsheets to store details of the properties and the tenants who rent the property.The management of APR would like you to create a database application that stores and processes the data for some of the functions of the company. APR manages the rental process on behalf of the owners for a set fee. An owner may own one or more properties. A tenant rents a property for a period of time, which can vary between 1-24 months. When a tenant is interested in one of the available properties, they must provide APR with some personal information. Currently, most of this information is recorded on a spreadsheet. If the tenant is successful with the rental request and it is approved and verified, APR will issue a tenancy agreement which contains information about the tenant, property rented, the duration of the rental and the monthly rental fee that the tenant needs to pay. Ace Property Rentals arranges a direct debit for payment of the monthly rental from the tenant’s bank details they provide. Tenant and tenancy records are kept for at least one year after the tenancy has expired as APR sometimes receive reference requests on the conduct of the tenant and if their tenancy was appropriately maintained (i.e. did the tenant pay promptly). APR will be alerted from their bank if a tenant’s direct debit isn’t paid. In this instance the spreadsheet held by APR is updated to reflect an unpaid direct debit and a member of staff will contact the tenant to arrange immediate payment – when payment is received the spreadsheet is updated again. Sometimes properties may need some maintenance due to problems such as leaky taps, faulty locks, and issues with the heating system etc. When a problem or fault arises with a property, the tenant will contact APR and report the issue to a member of staff – the tenants name is recorded on the fault report.. Depending on the nature and urgency of the reported fault, the member of staff at APR who takes the call from the tenant will assign the reported fault with one of four categories that identify the urgency of the fault or repair. The fault type recorded would normally identify how urgent the reported fault, e.g. a burst 2 pipe or broken front door would be very urgent and would require. a response within 4 hours. The member of staff logs the relevant information on a Maintenance Request card and will contact one of the specialist maintenance companies that APR work with, ensuring that the maintenance company can respond to the fault within the allocated time scale that is identified by the category assigned to the fault. The maintenance manager at APR receives a monthly report categorised by fault type so they can easily see the types of fault that are reported frequently. There are several issues with the current system: • The spreadsheet of missed payments isn’t always updated, and tenants may go months in arrears before it’s dealt with. • When faults are reported and assigned a category, it isn’t always dealt with within the allocated time. • Contractors don’t always contact APR with updates of the fault. Task 1 Database Design [30 Marks] 1. Produce an entity relationship model for the proposed database system for BlueValley Gardens. This should be a fully normalised model to 3rd normal form.[20 MARKS] 2. Produce a data dictionary for the entity relationship model showing all attributes,with data types and identifying primary and foreign keys [10 MARKS
Ace Property Rentals is a property rental firm that manages more than 200 properties on behalf of property owners. To store property and tenant details, the firm employs a combination of paper-based files and spreadsheets. The firm desires a database software to aid in managing some of its functions.
To design this database system, Task 1 proposes two different assignments. The first one deals with Database Design, which includes generating an entity relationship model for the proposed database system and normalizing the model to the third normal form, while the second assignment requires creating a data dictionary that details all the entities.
Entity-relationship (ER) modeling is a technique used to represent the entities that interact with one another and their attributes. To create an entity-relationship model, the following steps should be followed:Identify all the entities involved and their attributes.
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A classified balance sheet involves: Select one: Providing more detailed information regarding a company's existing assets and liabilities Presenting the balance sheet in a specific format, based on the standard by industry Grouping assets and liabilities into current and non-current assets and liabilities Organising the revenue and expense line items from largest to smallest
A classified balance sheet involves grouping assets and liabilities into current and non-current categories.
This classification helps provide more detailed information regarding a company's existing assets and liabilities. By separating current assets (those expected to be converted into cash within one year) from non-current assets (those expected to provide economic benefits for more than one year), and current liabilities (those due within one year) from non-current liabilities (those due after one year), the balance sheet offers a clearer picture of an organization's financial position. This classification allows users of the financial statements to assess the company's liquidity, solvency, and long-term stability. The presentation format of the balance sheet may vary across industries, but the classification of assets and liabilities into current and non-current is a fundamental aspect of a classified balance sheet.
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Pro Build Inc. Has had a net income of $16 million in its most recent year. Net income is expected to grow by 3% per year. The firm always pays out 60% of net income as dividends and has 7 million shares of common stock outstanding. The required return is 14%. [Attempt 1/ What is the intrinsic value of the stock?
Answer: The intrinsic value of Pro Build Inc.'s stock is approximately $1.24673 per share.
Explanation:
To calculate the intrinsic value of Pro Build Inc.'s stock, we need to follow a series of calculations using the Dividend Discount Model (DDM) approach.
Step 1: Calculate the dividend per share (DPS)
DPS = Net Income × Payout Ratio / Number of Shares
DPS = $16 million × 60% / 7 million
DPS = $0.13714 per share
Step 2: Determine the expected growth rate of dividends
Given that the net income is expected to grow by 3% per year, we assume the dividends will also grow at the same rate.
Step 3: Apply the Dividend Discount Model (DDM) formula
Intrinsic Value = DPS / (Required Return - Dividend Growth Rate)
Intrinsic Value = $0.13714 / (14% - 3%)
Intrinsic Value = $0.13714 / 0.11
Intrinsic Value = $1.24673 per share
Therefore, based on the calculations using the Dividend Discount Model (DDM), the intrinsic value of Pro Build Inc.'s stock is approximately $1.24673 per share.
The calculations involved considering the net income, payout ratio, number of shares, expected dividend growth rate, and the required return. These factors play a crucial role in determining the intrinsic value of a stock and help investors make informed decisions.
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Indigo Company is considering investing in a new facility to extract and produce salt. The facility will increase revenues by $243,100, but it will also increase annual expenses by $183,185. The facility will cost $1,001,000 to build, and it will have a $41,000 salvage value at the end of its useful life: Calculate the annual rate of return on this facility. (Round answer to 2 decimal places, e.g. 52.75.) Annual rate of return \%
We must ascertain the net annual cash flow in order to compute the facility's annual rate of return. The net annual cash flow is calculated by subtracting the salvage value from the rise in revenue and the increase in expenses.
Increased revenue minus increased expenses plus salvage value equals increased net annual cash flow. Revenue Growth = $243,100 $183,185 more in expenses Value of Salvage: $41,000 $183,185 minus $41,000 plus $243,100 equals $100,915 in net annual cash flow. The net yearly cash flow is divided by the initial investment to get the annual rate of return, which is then multiplied by 100 to get the percentage. (Net Annual Cash Flow / Initial Investment) times 100 equals the annual rate of return. Initial Investing = $1.001 million ($100,915 / $1,001,000) x 100 equals the annual rate of return. = 10.09% As a result, the facility's yearly rate of return is roughly 10.09%.
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social security numbers: joe: 123-45-6789 jill: 333-222-111 hunter (son): 555-77-6666 ages: joe: 64 jill: 62 hunter: 11 jill paid $5,000 in childcare expenses for hunter while she worked. salaries: joe: $20,000 jill: $25,000 hunter: $1,500 investment income: interest from mellon bank: $8,000 interest on delaware municipal bonds: $5,000 dividends on microsoft, inc. stock: $4,000 sold 1,000 shares of ibm stock for $8,000 on january 15, 2022. shares were purchased on january 15, 2016, for $3,000.
Social Security numbers (SSNs) are used to identify a person and establish if they are eligible for Social Security benefits.
Before preparing and submitting Forms W-2, employers can use the Social Security Number Verification Service (SSNVS) to compare the names and Social Security numbers (SSNs) on their record of employees with Social Security records.
As the SSN is not directly tied to an applicant's qualifications for a job, businesses should generally refrain from requesting it on an employment application. However, it is permissible for an employer to request an SSN, and if they accept an offer, they will eventually want it to confirm the applicant's identification and work authorization as well as maybe conduct a background check.
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he company structure used to encourage innovation can include the appointment of a (n): Multiple Choice sales manager brand manager director of marketing advertising manager new product development manager
The company structure used to encourage innovation can include the appointment of a New Product Development Manager to oversee and coordinate the creation and launch of new products or services. Option D,
Innovation is a critical driver of growth and competitive advantage for organizations. To foster innovation effectively, companies need to establish structures and roles that support and promote the development of new ideas and products. One key role in this context is that of a New Product Development Manager.
A New Product Development Manager is responsible for overseeing and coordinating the process of creating and launching new products or services. They work closely with cross-functional teams, such as research and development, marketing, and operations, to drive innovation from concept to market introduction.
The New Product Development Manager plays a crucial role in facilitating collaboration, communication, and coordination among different departments involved in the innovation process. They help define the scope, objectives, and timelines of new product initiatives, allocate resources, identify potential risks, and ensure smooth execution.
By appointing a dedicated New Product Development Manager, companies can establish a focused and streamlined approach to innovation. This role helps to bridge the gap between research and development efforts and the market, ensuring that innovative ideas are effectively translated into successful commercial products.
In summary, the appointment of a New Product Development Manager within the company structure can greatly contribute to fostering innovation by providing dedicated oversight and coordination of new product initiatives. SO Option D is correct.
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Fill In The Blank, Companies can research many aspects of buying decisions. However, the one that is the most
difficult to identify is ________.
A) what consumers buy
B) how and how much they buy
C) why they buy
D) when they buy
E) where they buy
Companies can research many aspects of buying decisions. However, the one that is the most difficult to identify is why they buy. The "why" factor delves into the psychological, emotional, and situational aspects that drive consumer behavior.
While companies can gather data and insights on what consumers buy, how and how much they buy, when they buy, and where they buy through various research methods and tools, identifying the underlying motivations and reasons behind their purchasing decisions is often more challenging. The "why" factor delves into the psychological, emotional, and situational aspects that drive consumer behavior. It involves understanding consumers' needs, desires, values, preferences, and decision-making processes. This information is crucial for developing effective marketing strategies, crafting persuasive messaging, and creating products or services that align with consumer motivations. However, uncovering the specific motivations behind individual buying decisions can be complex and may require in-depth qualitative research, consumer surveys, interviews, or behavioral analysis to gain deeper insights into consumer behavior and decision-making.
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Why do the Keynesians claim that the economy will be slow to recover in the face of an AD-driven recession? What fiscal policy would they propose? How does it work to end the recession? Illustrate, using an aggregate demand/aggregate supply diagram.
The Key nesians claim that the economy will be slow to recover in the face of an AD-driven recession because they believe that in the short run, an economy can experience a deficiency of aggregate demand.
This occurs when aggregate demand falls below the level of full employment in the economy. Hence, output, income, and employment levels decline below the full employment level. According to Keynes, the primary cause of a deficiency of aggregate demand is a fall in investment.
This creates a circular flow of income problem, which is referred to as the Keynesian income-expenditure equilibrium theory.In response to the AD-driven recession, Key nesians would propose expansionary fiscal policy. Fiscal policy refers to the government's use of taxation and spending policies to influence macroeconomic conditions.
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2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31,2025 . Weimer will make annual deposits of $100,000 into a special bank account at the end of each of 10 years beginning December 31, 2016 . Assuming that the bank account pays 7% interest compounded annually, what will be the fund balance after the last payment is made on December 31,2025 ?
The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2025.
Weimer will make annual deposits of $100,000 into a special bank account at the end of each of ten years beginning December 31, 2016.
The bank account pays 7% interest compounded annually.
What will be the fund balance after the last payment is made on December 31, 2025?
Solution:
The present value of an annuity formula calculates the value of a series of periodic payments at a future date by discounting them back to their current value at a given rate of interest.
The following is the formula for the present value of an annuity:
PV = P [(1 - (1 / (1 + r)n)) / r]
Where,
P = Payment amount
r = Interest rate
N = Number of payments
PV = Present value
The yearly deposit of the Weimer Corporation is $100,000,
which is a regular deposit.
Weimer Corporation will make ten deposits, one per year, beginning on December 31, 2016,
and the last payment will be on December 31, 2025.
The following is the calculation of the value of the annuity:
PMT = $100,000
r = 7% compounded annually
n = 10 years
PV = $1,000,000 [(1 - (1 / (1 + 7%)10)) / 7%]
PV = $1,000,000 [(1 - 0.5084) / 0.07]
PV = $1,000,000 (11.4713)
PV = $11,471,300
the fund balance after the last payment is made on December 31, 2025, will be $11,471,300.
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How do increasing a bond's coupon rate and market yield affect
the bond's duration?
Bond duration refers to the measurement of the sensitivity of a bond's price to a change in its yield-to-maturity.
An increase in the coupon rate of a bond results in a reduction of the bond's duration while an increase in the market yield causes an increase in the bond's duration.
What is the effect of an increase in the coupon rate of a bond on its duration?
The bond duration is inversely related to the bond's coupon rate.
When a bond's coupon rate increases, the present value of its cash flows, both coupon and principal, also increases.
A larger portion of the cash flow is received earlier when the bond's coupon rate increases, leading to a decrease in duration.
A bond with a higher coupon rate will return cash to the bondholder more rapidly, reducing the bond's duration.
As a result, an increase in a bond's coupon rate decreases its duration.
How does the market yield affect bond duration?
Market yield is the rate of return on a bond that is required by investors.
Bond duration is positively linked to market yield.
When the market yield of a bond rises, the bond's duration also increases, implying that the bond's price will fall more if interest rates rise.
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This question requires you to reflect on your learning of various macroeconomic models to analyse plausible impacts of a pandemic shock, government intervention, and investment in health. They ask you to reflect on their temporary, i.e., short-run (SR), and permanent, i.e., long-run (LR), static and dynamic impacts on the macroeconomy.
Use any model of endogenous growth to answer.
Illustrate your answer to each question with suitable diagrams or with a numerical example. Plan your answer to approximately 100 words.
What are the LR static and dynamic impacts on the macroeconomy of the gov policy that improves the average years of schooling of its population? (5 marks)
The government policy that improves the average years of schooling of its population will have long-run static and dynamic impacts on the macroeconomy.
This policy has the potential to increase the human capital of the economy, resulting in long-run economic growth. As people become more educated, they are more productive and can earn higher wages, resulting in increased income and output levels.
The long-run static impact on the macroeconomy is the increase in the supply of human capital. As a result, the aggregate production function will shift upwards and to the right, resulting in higher levels of output and income. This increase in income and output will be persistent as the supply of human capital will remain higher.
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In preparing its cash flow statement for the year ended Decem ber 31, 2022, Green Co. gathered the following data: In its December 31, 2022 , statement of cash flows, what amount should Green report as net cash from financing activities? A) $57,000 B) $59,000 c) $60,000 D) $49,000
In preparing the cash flow statement, the information about financing activities is obtained from the sources that are long-term in nature, such as stock and bond issues.
The net cash inflow or outflow from these activities is reported on the cash flow statement under the heading "Cash Flows from Financing Activities."So, the formula for calculating net cash from financing activities is: Net cash flow from financing activities = Cash inflow from financing activities - Cash outflow from financing activities Given data: Green Co. gathered the following data:
Proceeds from the issuance of common stock $73,000 Payments on long-term debt 30,000
Dividends paid 13,000Total cash outflow from financing activities = $30,000 + $13,000 = $43,000
Net cash from financing activities = Proceeds from the issuance of common stock -
Total cash outflow from financing activities= $73,000 - $43,000= $30,000 ,
Option A, $57,000, is incorrect. Option B, $59,000, is incorrect. Option C, $60,000,
is incorrect. Option D, $49,000, is correct.
The amount that should Green report as net cash from financing activities is $49,000.
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Imagine you have been assigned knowledge champion in a company, how and where will you establish knowledge management strategy and how ?
As a knowledge champion in a company, establishing a knowledge management strategy is critical to enhancing performance and achieving the goals and objectives of the company. The knowledge management strategy should be a holistic approach that is tailored to meet the needs of the company's stakeholders, customers, and partners.
The following are ways and places where a knowledge management strategy can be established:
1. Identify the needs of the stakeholders: Understanding the knowledge needs of the stakeholders is crucial to establishing a knowledge management strategy that meets their needs. This will involve conducting surveys and focus groups to identify the key areas of knowledge gaps.
2. Develop a knowledge management plan: A knowledge management plan should outline the objectives of the strategy and the steps that will be taken to achieve them. This includes establishing policies and procedures, assigning roles and responsibilities, and identifying resources that will be required to implement the plan.
3. Establish a knowledge management system: A knowledge management system should be established to capture, store, and disseminate knowledge across the organization. This includes developing a database that contains the company's knowledge assets, such as best practices, policies, and procedures.
4. Train employees: Employees should be trained on how to use the knowledge management system to ensure that they can effectively access and use the knowledge assets.
5. Monitor and evaluate the strategy: The knowledge management strategy should be monitored and evaluated on a regular basis to determine its effectiveness and make necessary adjustments.
In conclusion, the knowledge management strategy should be flexible and adaptable to meet the evolving needs of the stakeholders. A successful knowledge management strategy can lead to improved performance, increased innovation, and a competitive advantage.
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Q5) Your corporation is considering investing in a new product line. The annual revenues (sales) for the new product line are expected to be $135,546.00 with variable costs equal to 50% of these sales. In addition annual fixed costs associated with this new product line are expected to be $42.494.00. The old equipment currently has no market value. The new equipment cost $60,803.00. The new equipment will be depreciated to zero using straight-line depreciation for the three-year life of the project. At the end of the project the equipment is expected to have a salvage value of $28,201.00. An increase in net working capital of $69,448.00 is also required for the life of the project. The corporation has a beta of 0.853, a tax rate of 37.30%, and a target capital structure consisting of 51.66% equity and 48.34% debt. Treasury securities have a yie 1.66% and the expected return on the market is 9.07%. In addition, the company currently has outstanding bonds that have a yield to maturity of 4.02%.
The new product line's annual revenues (sales) are expected to be $135,546.00. The variable costs will be 50% of the sales and the annual fixed costs associated with this new product line will be $42.494.00. The new equipment cost will be $60,803.00.
Depreciation will be done using straight-line depreciation for the three-year life of the project. At the end of the project, the equipment will have a salvage value of $28,201.00. An increase in net working capital of $69,448.00 is also required for the life of the project. The corporation has a tax rate of 37.30%. The company's beta is 0.853 and the expected return on the market is 9.07%. Treasury securities have a yield of 1.66% and the company's outstanding bonds have a yield to maturity of 4.02%.The WACC is used to evaluate whether or not to invest in a project.
The formula to calculate WACC is as follows:
WACC = E/V x Re + D/V x Rd x (1-Tc)
E represents equity, V represents the value of the firm, Re represents the required return on equity, D represents debt, Rd represents the required return on debt, and Tc represents the corporate tax rate. The WACC is calculated by the following formula:0.5166 x 0.105 + 0.4834 x 0.0402 x (1-0.3730) = 0.0738The investment's present value is calculated by discounting future cash flows using a discount rate that is equal to the WACC:
PV = (135546 – (0.50 x 135546) – 42494 – 60803 + 28201)/(1+0.0738)^1 + (135546 – (0.50 x 135546) – 42494 – 60803 + 28201)/(1+0.0738)^2 + (135546 – (0.50 x 135546) – 42494 – 60803 + 28201 + 69448)/(1+0.0738)^3 + 28201/(1+0.0738)^3= $174,273.26
The corporation should invest in the new product line if it costs less than $174,273.26. It would not be a wise investment if it costs more than that.
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Which of the following is NOT one of the phases of risk
management?
Risk Assessment
Risk Analysis
Risk Communication
Risk Treatment
The phase of Risk Management that is not included in the options given is Risk Mitigation. Here is a brief explanation of the four phases of Risk Management:
Risk Assessment: The initial step in the process of risk management is to recognize and evaluate the dangers that the organization faces.
Risk Analysis: Analyzing the risk data that was gathered in the assessment phase. The objective of risk analysis is to determine the nature, sources, and probability of various types of risk.
Risk Communication: The information obtained through the previous two phases should be conveyed to the stakeholders who are impacted by the risk event.
Risk Treatment: This is the stage in which the methods for managing risks are implemented. The methods are put into action with the intent of lowering risk levels to acceptable thresholds.
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An asset having a cost of $70,000 and accumulated depreciation of $20.000 is revalued to $90.000 at the beginning of the current year. Depreciation for the year is based on the revalued amount and the remaining useful life of six years. Required: Ptepare journal entries to teflect the revaluation of the asset and the subsequent depreciation of the revalued asset.
Revaluation entry: Debit Asset Account ($20,000 + $70,000) $90,000; Credit Revaluation Surplus Account $20,000; Credit Asset Account (Depreciation Reserve) $60,000.
Depreciation entry: Debit Depreciation Expense Account ($90,000/6 years) $15,000; Credit Asset Account (Depreciation Reserve) $15,000.
To reflect the revaluation of the asset and the subsequent depreciation of the revalued asset, the following journal entries can be prepared:
Revaluation entry:
Debit - Asset Account ($20,000 + $70,000) - $90,000
Credit - Revaluation Surplus Account - $20,000
Credit - Asset Account (Depreciation Reserve) - $60,000
Depreciation entry:
Debit - Depreciation Expense Account ($90,000/6 years) - $15,000
Credit - Asset Account (Depreciation Reserve) - $15,000
The Depreciation Expense Account is a profit and loss account that is debited to record the depreciation on the asset. The Asset Account, as well as the Depreciation Reserve account, are credited.
The Depreciation Reserve is an equity account that is credited to account for the expense of depreciation. Since the asset has been revalued, the credit entry to the Revaluation Surplus Account represents the profit, while the debit entry to the Asset Account reflects the asset's cost.
If the company had previously accounted for the asset on a revaluation basis, it would credit the revaluation account and debit the asset account in a similar manner to reflect the reversal of the revaluation.
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ow are scan backs better than off invoice promotions?
What did the experiment show about the benefits of scan back promotions?
What are retail pass-through rates?
How do slotting fees affect consumers? Discuss the ways in which consumers are affected by the practice of charging slotting fees (as discussed in class).
Why is the Federal Trade Commission unable to draw rules or policies regarding slotting fees?
Scan-back promotions are more beneficial than off-invoice promotions because provide discounts, efficient, higher redemption rate. Retail pass-through rates are the percentage of trade promotions that pass from the retailers to the consumers in the form of price discounts. The Federal Trade Commission (FTC) is unable to draw rules or policies regarding slotting fees because of Slotting fees.
Scan-back promotions are more beneficial than off-invoice promotions because of the following reasons:
Scan-back promotions provide discounts to the consumers at the time of purchase, which increases their loyalty to the brand. In contrast, off-invoice promotions provide discounts to the retailers instead of consumers.
In scan-back promotions, the brand pays the retailer after the sale is made, so there is a high probability that the promotion will be executed correctly, and there won't be any errors in the process.
The experiment conducted showed that the scan-back promotions have a higher redemption rate, and the sales lift was significant in comparison to the off-invoice promotions.
Retail pass-through rates are the percentage of trade promotions that pass from the retailers to the consumers in the form of price discounts. The pass-through rate can be calculated by dividing the amount of trade promotions offered by the manufacturers to the retailers by the total retail sales during that period.
Slotting fees affect consumers in many ways, and some of the ways are as follows:
Consumers are affected by slotting fees as the cost of the product increases, which leads to higher prices in the market.
The variety of products that consumers can buy from the market decreases as the slotting fees force the manufacturers to concentrate on producing a limited number of products, which ultimately decreases the variety for consumers.
The Federal Trade Commission (FTC) is unable to draw rules or policies regarding slotting fees because of the following reasons:
Slotting fees are paid to the retailers, and it is a voluntary payment, which means it's up to the retailers to decide whether to take the payment or not, which makes it difficult for the FTC to regulate this practice.
Slotting fees are considered as promotional expenses and not a violation of antitrust laws, which means that it is legal for manufacturers to pay the fees to retailers.
Thus, it becomes difficult for the FTC to regulate something that is not against the law.
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Sufficient audit evidence means that a satisfactory amount (quantity) of audit evidence has been gathered, appropriate audit evidence means that the evidence is reliable and relevant, i.e. it has the necessary quality which the auditor requires. The following audit procedures have been carried out by the audit team on the audit of Futex (Pty) Ltd, an electronics manufacturer:
1. Extracted a sample of items from the inventory sheets and performed test counts at the annual inventory count.
2. Reviewed the report of an electronics expert who was engaged (by the audit firm) to value work in progress at year end.
3. Attended a wage count.
4. Discussed the allowance for bad debts with the credit controller.
5. Re-performed the casts and extensions of the payroll for three different weeks.
6. Reviewed the client's debtor's age analysis.
Required:
2.1 Discuss the factors which the auditor should consider when assessing the quality of audit evidence.
(12)
2.2 Discuss the reliability of the evidence gathered from each of the above audit procedures.
2.3 State to which assertion each of the above is most relevant.
(5)
(3)
The nature, timeliness, and scope of the procedures carried out are some of the elements that decide whether the audit evidence is sufficient and appropriate.
1. The nature of the procedures: To acquire evidence, the audit team combined analytical and substantive procedures (such as checking the debtor's age analysis) with test counts, value reviews, and re-performance of computations. This guarantees a thorough evaluation of the financial statements. 2. Procedures were carried out in accordance with the timing of the yearly inventory count, year-end valuation, wage count, and conversations with the credit controller. By carrying out operations at the proper time, it is possible to gather pertinent data and lower the possibility that a substantial misrepresentation would escape unnoticed. 3. Procedures' Length: The sample size for payroll re-performance and inventory counts was not stated, however It need to be adequate to offer a sound foundation for making judgements. In order to handle the specific risks and materiality of the financial statements, the auditor must make sure that the scope of the procedures is suitable. Overall, the audit team sought to obtain sufficient and appropriate information to support their conclusions regarding the financial statements of Futex (Pty) Ltd by combining various techniques and engaging with pertinent parties. The particular elements taken into account in each operation would vary depending on the particulars and hazards of the engagement.
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On January 25. Coot Company has $350.000 deposited with a local bank. On January 27 , the company writes and malls checks of $30,000 and $70,000 to suppllers. At the end of the month, Coot's financial manager deposits a $55,000 check recelved from a customer in the morning mall and plcks up the end-of-month account summary from the bank The manager notes that only the $30,000 payment of the 27 th has cleared the bank. • What is the company's avallable bolance with its bank?
Given data:On January 25. Coot Company has 350,000 deposited with a local bank.On January 27, the company writes and mails checks of 30,000 and 70,000 to suppliers.
At the end of the month, Coot's financial manager deposits a 55,000 check received from a customer in the morning mail and picks up the end-of-month account summary from the bankThe manager notes that only the 30,000 payment of the 27th has cleared the bank.Available balance with the bank = Deposits - Outstanding Checks - Uncleared Deposits.
Step 1: Calculation of DepositsThe company has deposited $350,000 on January 25.Now, the company has received a check of 55,000 from a customer. Therefore, the total deposits with the bank = 350,000 + 55,000
= 405,000
Step 2: Calculation of Outstanding checksOutstanding checks are the checks that have been written and mailed but have not yet been presented for payment to the bank. Coot Company has written two checks of 30,000 and 70,000 on January 27.
Therefore, the outstanding checks = 30,000 + 70,000
= 100,000.
Step 3: Calculation of Uncleared depositsUncleared deposits are the deposits that are not yet credited to the account by the bank.Coot's financial manager deposits a check of 55,000 received from a customer at the end of the month, but the bank has not yet cleared it.
So, the uncleared deposits = 55,000Therefore, the available balance with the
bank= Deposits - Outstanding Checks - Uncleared Deposits
= 405,000 - 100,000 - 55,000
= 250,000Therefore, the company's available balance with its bank is 250,000.
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The Rational Rule for Society is that society should produce another unit of a good if:
the total social benefit exceeds the total social cost.
the marginal social benefit exceeds the marginal social cost.
the marginal private benefit exceeds the marginal private cost.
gains to the producer exceed losses to the producer.
The rational rule for society is that society should produce another unit of a good if the marginal social benefit exceeds the marginal social cost. The option is B.
Marginal social benefit (MSB) is the total gain in satisfaction or utility from an additional unit of a good or service that is enjoyed by the entire society.
Marginal social cost (MSC) is the total cost incurred by society to produce an additional unit of a good or service.
The rule is such that if MSB > MSC, society should produce another unit of good since it will produce an overall net gain to society.
The rationale is to maximize the benefits to society as a whole rather than focusing only on the private benefits or costs.
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. Draw a supply and demand curve for US government bonds. Show equilibrium. 2. Show and explain what the effect expansionary monetary policy, using open market operations, will have on this equilibrium. 3. Show and explain what the effect of contractionary monetary policy, using open market operations, will have on this equilibrium. 4. Explain what the Fed should do if the actual interest rate is below its target rate? Or above?
The equilibrium of supply and demand for US government bonds is when the quantity of bonds demanded is equal to the quantity of bonds supplied.
In other words, equilibrium is achieved where the two curves intersect. Open market operations are one way that the Fed uses to implement monetary policy. The expansionary monetary policy, using open market operations, will decrease interest rates, leading to a rightward shift in the demand curve for US government bonds.
The lower interest rate will incentivize investors to purchase more US government bonds, leading to an increase in the quantity of bonds demanded. On the other hand, the supply curve will remain constant. The increase in demand leads to an increase in bond prices, which is shown by the upward pressure of the demand curve. Thus, the equilibrium point shifts upwards.
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an investor has $19,000 to invest and believes that the ibm stock price is going to increase in the following 12 months from the current stock price of $200. call options on ibm stock expiring in 12 months have a strike price of $219 and sell at a premium of $20 each. assume that the stock price will be $280 per share after 12 months.
The investor's rate of return if they buy 95 shares will be 18.64%.
What will be the investor's rate of return?The cost of buying 95 shares of IBM stock at the current price of $200 per share would be:
= 95 shares * $200/share
= $19,000
The cost of purchasing the call options would be:
= 95 options * $20/option
= $1,900
The total investment cost would be the sum of the stock and option costs:
= $19,000 (stock) + $1,900 (options)
= $20,900
After 12 months, if the stock price reaches $280 per share, the investor can exercise the options and sell the shares at the strike price of $219 per share.
The profit per option would be:
= ($280 - $219) - $20
= $41
The total profit from exercising all the options would be:
= 95 options * $41/option
= $3,895
Rate of return = ($3,895 / $20,900) * 100
Rate of return = 18.6363636%
Rate of return = 18.64%.
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This week, you’re exploring your communication skill.
Think of a time when effective or ineffective communication affected your success at home, school, or work. Describe what happened.
Then, explain how strong communication contributed to or could have improved the situation’s outcome. Be specific.
Remember to answer by writing two paragraphs. Each paragraph should be 5-7 sentences with no grammatical errors (total 10-14 sentences). Also, respond to at least 1 of your peers (3-5 sentences).
I would like to give you an example of how communication skills impacted my academic success. My instructor handed out a group assignment in which we were to analyze a case study and create a comprehensive presentation. At the outset, the entire team was extremely excited, and we agreed on a topic and brainstormed ideas. We decided to split the task equally, with each team member taking on a specific aspect of the project.
Each team member worked independently, but one team member did not follow the guidelines that were agreed upon. He failed to communicate the work he was doing to the rest of the team, which led to an accumulation of work that had already been completed.
This issue resulted in the team's failure to meet the submission deadline and caused a delay in the submission of our presentation. As a result, we were unable to secure the grade we had anticipated.
The situation could have been resolved if the team member had demonstrated strong communication skills by notifying the team of the work he was doing and contributing his ideas, he would have received feedback from the team, and we could have addressed any concerns or made suggestions as required.
Additionally, if the team member had shared his progress regularly with the team, it would have allowed the team to track the progress of the work, identify the areas that needed improvement and correct them immediately.
Thus, if the team member had shared his progress frequently, the team would have been able to finish the project within the deadline and achieve a higher grade.
Effective communication is critical when working in a group, and strong communication skills contribute significantly to successful teamwork.
Responses to peers:
Response to peer 1: I appreciate the way you approached your situation. I also faced a situation where poor communication impacted my project's outcome. The situation occurred during my second year of college when my group was assigned a research paper. We had divided the task among ourselves, with each team member responsible for collecting data on specific aspects of the research.
However, one team member failed to deliver his work on time, despite the fact that the deadline was approaching. As a result, I had to collect the data assigned to him, which was a significant burden for me. I was already struggling with my workload, and this issue added to my stress level, which affected my work quality and my grades.
If the team member had communicated his concerns or notified the rest of us of his difficulties, we could have identified a solution together and helped him complete his work. Thus, strong communication is essential to ensuring that every member of a team is aware of their responsibilities and can assist others in completing their tasks. Response to peer.
2: I completely agree with your point that communication is crucial to a team's success. I have also been in a situation where effective communication was a key component of my success. The situation occurred when my company was undergoing a merger with another company. As a result, the department in which I was working underwent a significant restructuring.
However, due to the lack of communication, there was a lot of confusion regarding the new reporting structure, and we were unsure about our new roles and responsibilities. As a result, I took the initiative to talk to my manager and understand the new structure. I was then able to communicate the information to my team members, which helped us all to understand the changes and adapt to the new environment more effectively.
Therefore, in situations where there is a lack of information or understanding, it is essential to communicate effectively and provide clarity to others.
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What do you think will be the state of LGBTQ community issues in
our schools in the coming decades?
The issues that the LGBTQ+ community faces in schools continue to be a problem in many parts of the world. Despite the fact that a growing number of people are supportive of gay rights, the notion that schools are supposed to be free from bullying, intimidation, and discrimination is far from the reality for a lot of LGBT students.
The implementation of policies, safe spaces, and support networks for LGBT+ students has increased over the past few years, but there is still much more that can be done. Transphobia, homophobia, and discrimination persist among both students and teachers.
This is particularly troubling since schools are supposed to be institutions that promote diversity, understanding, and acceptance. It's also worth noting that the United States is not the only country facing these challenges as they are present in other parts of the world as well
.For many LGBT+ students, schools are not safe spaces for them to learn and grow in, and a large number of these students still hide their true identities to avoid bullying and discrimination. The issues faced by the LGBTQ+ community in schools are not simple, and solutions may take time, but it's important to continue fighting for the rights of all students, regardless of their sexual orientation or gender identity.
With more support and education, there is hope for a future in which schools can truly be safe spaces for all students.
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6. Write down the definition of liquidity and point out the
difference between M1 and M2.-
Liquidity is the ability of an asset to be converted into cash quickly without any loss of value. In financial terms, liquidity refers to how easily an asset can be bought or sold without causing a significant change in price.
The measure of liquidity is represented by M1 and M2.M1 is the narrowest definition of money supply that includes cash, coins, and demand deposits that can be used for making payments.
M2, on the other hand, is a broader measure of money supply that includes M1 plus savings deposits, time deposits less than $100,000, and non-institutional money market fund shares.Liquidity plays a significant role in determining the health of an economy.
It is critical for a stable economy to have adequate liquidity as it enables individuals and businesses to carry out transactions with ease. If there is a shortage of liquidity in the economy, businesses may struggle to pay their debts, and individuals may not be able to access credit, leading to a slowdown in economic growth.In conclusion, liquidity refers to the ease with which an asset can be converted to cash.
M1 and M2 are the measures used to determine the liquidity of an economy, with M1 being the narrowest measure and M2 being a broader measure of money supply that includes savings deposits, time deposits, and non-institutional money market fund shares.
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What are the characteristics that distinguish a constitutional
crisis from a political crisis
A constitutional crisis is different from a political crisis as it involves a problem with the country's constitution, laws, or principles. This problem could occur when one or more branches of government have overstepped their bounds or when a legal system is unable to handle current issues.
A political crisis, on the other hand, typically involves the current ruling party or political system, its popularity, or actions that may have gone against the public's wishes. Constitutional crises often arise when there are conflicting interpretations of the constitution, such as with executive power or rights of citizens.
The consequences of constitutional crises can be far-reaching, affecting the stability of the government and the legitimacy of its rule. In contrast, a political crisis can be a temporary situation that often occurs when a government fails to address important issues or when there is a lack of confidence in the current political system.
These issues can result in public protests, calls for reforms, or even a change in leadership. The key characteristics that distinguish a constitutional crisis from a political crisis include the focus on legal and constitutional issues versus political issues, the potential to threaten the stability of the government, and the long-term implications for the country's democratic process.
A political crisis can be resolved with political reforms or changes in leadership, but a constitutional crisis requires fundamental changes to the legal system or constitution itself.
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which of the following are important determinants of collusion in pricing games? A) History
B) The number of firms
C) Firm size
D) All of the statements associated with this question are correct.
All of the statements A), B), and C) are important determinants of collusion in pricing games.A) History: Past interactions and experiences among firms can influence the likelihood of collusion.
If there has been a history of collusion or coordination in the industry, firms may be more inclined to collude in the future. B) The number of firms: The number of firms in the market plays a significant role in collusion. Collusion becomes more difficult to sustain as the number of firms increases since there are more participants to monitor and enforce compliance. C) Firm size: The size of the firms involved can impact collusion. Larger firms may have more resources and market power to enforce collusion agreements, while smaller firms may find it more challenging to participate in or influence collusive behavior. Considering all three statements, history, the number of firms, and firm size are important factors that affect collusion in pricing games.
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On January 1, 2022. Adam Corp. changed its inventory method to FFO from tifo for both financiai and incorne tax reporting purposes. The charge rssited in a s500,00a increase in January 1,2022 inventory. Assume that the income tax rate for all years is 20%. The effect of the accounting change should be reported by Adarm in its 2022. retained earnings statement as a $400,000 addition to the beginning balance. income statement as a $400,000 cumulative effect of accounting change. retained earnings statement as a 5500,000 addition to the beginning balance: income statement as a $500,000 cumulative effect of accounting change.
The effect of accounting change should be reported by Adam Corp. in its 2022 retained earnings statement as a $400,000 addition to the beginning balance.
Moreover, it should be reported in the income statement as a $500,000 cumulative effect of the accounting change.The accounting change method that is used by companies can affect their earnings, particularly when changing from LIFO to FIFO. This is due to the fact that the inventory accounting method chosen by a company may impact its financial results and tax filings.
Thus, in January 2022, Adam Corp. changed its inventory method to FFO from TIFO for both financial and income tax reporting purposes. This caused a charge of $500,000 increase in inventory on January 1, 2022. It is assumed that the income tax rate for all years is 20%.The change in the inventory accounting method by Adam Corp.
should be reported in its 2022 retained earnings statement as a $400,000 addition to the beginning balance. This is because the company used the cumulative effect adjustment method in which it adjusts the beginning balance of the year in which the change is made.
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