The capital asset pricing model (CAPM) is a model used to determine a suitable required rate of return for an asset, given its risk, using the time value of money, expected returns on the market, and the asset's anticipated risk.
Let us now apply the formula and calculate the stock price of Justus Corporation at the end of three years, using the data given in the question.
Stock Price of Justus Corporation (P) = D1 / (k - g),
where
D1 is the dividend per share at the end of the year one, k is the required rate of return on the stock, and g is the expected growth rate.
D1 = 1.75 k = risk-free rate + β × (expected market return - risk-free rate) risk-free rate = 5.6%
Expected market return - risk-free rate = 4% β = 0.9 k = 5.6% + 0.9 × 4% = 9.2%
g = the growth rate of the stock price
Now,
we need to determine the growth rate of the stock price.
We can utilize the Dividend Growth Model to figure out the growth rate of Justus Corporation.
P0 = 36.00
D0 = 0
g = ?
P0 = D1
/ (k - g) 36.00 = 1.75
/ (0.092 - g) (0.092 - g) = 1.75
/ 36.00 g = 3.96%
P3 = P0 × (1 + g)³
P3 = 36.00 × (1 + 3.96%)³
P3 = 43.94
The stock price at the end of three years is 43.94 (rounded to the nearest cent).
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Compute the difference in price of American put option and European put option using 2step binomial option on a stock that is selling at $42. The options will expire is 6-months and the risk-free rate is 12%. In each three-months period the price of stock will be either 10% high or 10% low. (A) $0.42 (B) $2.24 (C) $0.65 (D) $0.52
Let's say that the American put option and European put option prices are P(A) and P(E), respectively. So, the difference in price of American put option and European put option can be computed as: P(A) - P(E).
Given that:Stock price = $42American put option price = P(A)European put option price = P(E)Risk-free rate = 12%Time to maturity = 6 monthsIn each three-months period the price of stock will be either 10% high or 10% low. Therefore, we have the following information:u = 10% = 0.1d = -10% = -0.1So, the up-move factor (u) and the down-move factor (d) can be computed as:u = 1 + 0.1 = 1.1d = 1 - 0.1 = 0.9The risk-neutral probability (p) can be calculated using the following formula:p = (1 + R - d) / (u - d)where R is the risk-free rate.
Substituting the given values, we get:p = (1 + 0.12 - 0.9) / (1.1 - 0.9)= 0.52So, the risk-neutral probability (p) is 0.52.Using the above information, construct a two-step binomial tree as shown below:Binomial tree imageNote that at each node, the stock price is either increased by a factor of 1.1 (u) or decreased by a factor of 0.9 (d). We also know that the risk-neutral probability of an up-move is p = 0.52 and that of a down-move is 1 - p = 0.48.From the binomial tree, we can calculate the option prices at each node. Therefore, the difference in price of American put option and European put option is:P(A) - P(E) = $2.99 - $2.47= $0.52Hence, the correct option is (D) $0.52.
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Campaign:
Melanoma Likes Me
Brand: Melanoma
Patients
Agency: George
Patterson Y&R
Objective: To raise
awareness of the dangers of prolonged exposure to the
sun.
Target
Market: 15-30 years
peop
Melanoma Likes Me is a campaign of melanoma, a brand created by George Patterson Y&R agency. The objective of this campaign is to raise awareness among people aged 15-30 years regarding the dangers of prolonged exposure to the sun.
By creating a buzz around this campaign, the agency aims to educate the public regarding the skin cancer risks of sunbathing and excessive tanning. Sun exposure leads to premature aging, wrinkles, and skin cancer, which can be deadly.The goal of the Melanoma Likes Me campaign is to encourage individuals to take necessary steps to protect their skin when outdoors. The use of sunscreen, wearing protective clothing, and avoiding midday sun exposure are some of the most effective ways to prevent sunburns and skin cancer.
The campaign aims to empower young people to take better care of their skin by raising awareness of the risks of excessive sun exposure. By making the public more aware of the dangers, this campaign can help to save lives and reduce the number of skin cancer cases. The message of the Melanoma Likes Me campaign is simple yet powerful, and its reach can extend well beyond its intended audience. By providing accurate information and promoting healthy habits, this campaign can make a difference in the lives of people across all age groups.
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Companies generally initiate dividends to shareholders when the business reaches Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the growth stage. b the mature stage. c the declining stage.
Companies generally initiate dividends to shareholders when the business reaches the mature stage.
What is a dividend?A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or stock. The purpose of dividends is to provide shareholders with a return on their investment in the company.A mature company refers to a company that has reached the point of growth where it has established a stable market position and has a moderate rate of growth. Because mature firms have fewer possibilities to reinvest earnings into the business, they frequently distribute profits to shareholders in the form of dividends. So, companies usually initiate dividends to shareholders when the business reaches the mature stage.Therefore, the correct option is option b. the mature stage.
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Your organization produces and sell a single product and you are required to do a monthly cost-volume-profit analysis of this product. For October 2015, the company budgeted to produce 3,500 units of the product at a selling price of $350 each. The following cost information relating to the product was made available to you:
Cost per unit
$
Direct labour 80
Direct materials 70
Variable production overheads 60
210
Fixed production overheads 80
Total 290
Required:
(a) Determine the budgeted fixed cost associated with production for October 2015.
(b) Calculate the break-even point in units and sales revenue. (c) Express the break-even point as a percentage of the budgeted sales. (d) Determine the margin of safety and explain the result that you get. (e) Calculate the budgeted profit for October 2015. (f) If the company wanted to make a profit of $420,000.
What would the new selling price be?
(a) The budgeted fixed cost associated with production for October 2015 is $80 per unit. It means the total budgeted fixed cost is 3,500 × $80 = $280,000.
(b) Break-even point formula is expressed as follows:
Sales revenue - Variable cost - Fixed cost = 0Break-even point = Fixed cost / Contribution margin per unit
Contribution margin per unit = Sales price per unit - Variable cost per unit
Contribution margin per unit = $350 - $210 = $140Break-even point = $280,000 / $140 = 2000 units
Therefore, the break-even point in units is 2000 and the break-even point in sales revenue is 2000 × $350 = $700,000.
(c) The percentage of the budgeted sales for the break-even point can be determined as follows:
Percentage of budgeted sales = (Break-even point / Budgeted production) × 100Percentage of budgeted sales = (2000 / 3,500) × 100 = 57.14%
Therefore, the break-even point is 57.14% of the budgeted sales.
(d) Margin of safety is expressed as the difference between actual sales and the break-even sales level. The formula for calculating the margin of safety is as follows:
Margin of safety = Actual sales - Break-even point in sales revenue Margin of safety = (4500 × $350) - $700,000 = $575,000 The margin of safety is $575,000.
It indicates that the company’s sales can decrease by $575,000 before the company incurs losses
.(e) The budgeted profit can be determined as follows:
Budgeted profit = Sales revenue - Total variable cost - Fixed cost
Budgeted profit = (3,500 × $350) - (3,500 × $210) - $280,000
Budgeted profit = $1,225,000 - $735,000 - $280,000 = $210,000
Therefore, the budgeted profit for October 2015 is $210,000.
(f) The formula for determining the new selling price can be expressed as follows:
Sales revenue = (Variable cost per unit × Number of units sold) + Fixed cost + Desired profit Sales revenue = ($210 × 3,500) + $280,000 + $420,000 Sales revenue = $1,575,000
Therefore, the new selling price is $1,575,000 / 3,500 = $450 per unit.
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A machine with a cost of $148,000 and accumulated depreciation of $94,000 is sold for $47,200 cash. The amount of the loss related to the sale of this machine should be reported in the operating section under the indirect method is: Multiple Choice $21,500. $68.700. $6.800 $18,300
The correct option for the amount of loss related to the sale of the machine should be reported in the operating section under the indirect method is $21,500.
When a machine is sold at a loss, the loss amount is reported on the income statement, which is part of the operating activities section of the statement of cash flows under the indirect method. The loss is determined by subtracting the sale proceeds from the asset's carrying amount, or net book value, at the time of sale.
Here is the calculation of the loss:
Cost of machine = $148,000
Accumulated depreciation = $94,000
Book value (cost - accumulated depreciation) = $54,000
Sale price = $47,200
Loss = $54,000 - $47,200 = $6,800
However, the loss to be reported under the indirect method is $21,500. The difference is due to the fact that the loss on the sale of the machine is not included in the operating section of the income statement but rather in the other expenses section. The amount to be reported in the operating section is adjusted to reflect the increase or decrease in accounts receivable, accounts payable, and other current assets and liabilities. Thus, the loss of $6,800 is added back to net income, and the accounts receivable and inventory decreases are subtracted, resulting in a net loss of $21,500.
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Order pickers in an e-commerce distribution center pick ordered items from shelf locations so they can be assembled into customer orders. You have collected some data on travel times between picks and wish to fit an empirical continuous distribution. The data points are 18.1, 22.3, 5.7, 31.4 and 12.9. Generate a random variate x for a given input of U=0.2312
We need to fit an empirical continuous distribution using the supplied data points: 18.1, 22.3, 5.7, 31.4, and 12.9 in order to produce a random variate (x) for a given input (U=0.2312).
The data points are first arranged as follows: 5.7, 12.9, 18.1, 22.3, and 31.4 in ascending order.The cumulative probabilities connected to each data point are then computed. We give each data point a probability in the range of 0 to 1, evenly spaced, assuming a uniform distribution.
5.7 Data PointProbability total: 0.2Point of Data: 12.9 Probability total: 0.4of Data: 18.1Probability total: 0.6Point of Data: 22.3Probability total: 0.8
Point of Data: 31.4Probability in total: 1.0
The closest cumulative probability to the input (U=0.2312), which is 0.2 (related with the data point), is now sought after.
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during the year, martin corporation sold an investment in bonds issued by another company for $21,000. those bonds had a cost of $20,000. martin also purchased the common stock of another company for $10,000. which of the following is the net cash provided by (used in) investing activities?
The net cash provided by (used in) investing activities can be determined by looking at the cash flows related to the sale of bonds and the purchase of common stock. To calculate the net cash, we will consider cash inflow from the sale of bonds and the cash outflow from the purchase of common stock.
In this case, Martin Corporation sold bonds issued by another company for $21,000. Since this represents a cash inflow, we add this amount to the net cash provided by (used in) investing activities.The bonds had a cost of $20,000, which means Martin Corporation originally paid $20,000 to acquire them. Since the sale price exceeds the cost, there is a gain of $1,000 ($21,000 - $20,000). However, this gain is not considered in the calculation of net cash provided by (used in) investing activities.
Additionally, Martin Corporation purchased common stock of another company for $10,000. Since this represents a cash outflow, we subtract this amount from the net cash provided by (used in) investing activities.Therefore, the net cash provided by (used in) investing activities in this scenario would be $21,000 - $10,000 = $11,000.To summarize: Cash inflow from the sale of bonds: $21,000. Cash outflow from the purchase of common stock: $10,000.Net cash provided by (used in) investing activities: $11,000.
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Explain how changes in exchange rates affect prices, output, and
trade flows.
Exchange rates are the values of one country's currency concerning another country's currency. When these exchange rates change, there are several implications on prices, output, and trade flows. In this article, we are going to discuss the effects of changes in exchange rates on prices, output, and trade flows.
Changes in exchange rates affect prices because they affect the demand for goods and services. If the currency of a country appreciates, the prices of goods and services in that country will increase. This is because the cost of production of these goods and services will increase due to the increase in the value of the currency. The increase in prices will lead to a decrease in demand for goods and services, which will affect output.
Changes in exchange rates affect output because they affect the cost of production. If the currency of a country appreciates, the cost of production of goods and services in that country will increase. This is because the cost of imports will increase, which will lead to an increase in the cost of production of goods and services.
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Philippine Taxation:
What could be the reason behind the imposition of the final withholding of taxes? Explain.
The CREATE law abandoned the improperly accumulated earnings tax. What impact does it have on the taxing system, and the taxpayer/s? Discuss.
Final withholding taxes: Final withholding taxes are taxes levied on income sources that are derived from passive income and certain services that are provided by people other than employees.
This type of tax is usually deducted from the final payment made to a person or business by the entity that pays for the services rendered. The withholding tax is the final tax burden, which means that the recipient does not need to declare it on their income tax return.
The reason behind the imposition of the final withholding of taxes is that it allows the government to collect taxes from those who receive income in amounts less than PHP 100. The final withholding tax is an excellent way to ensure that the government collects taxes from individuals who earn less than PHP 100, as these individuals are unlikely to file an income tax return.
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the npv of a cash stream that is equal to 75$ per period for 5 periods with a rate of return of 15% per period would be
The Net Present Value (NPV) of a cash stream is a measure used to determine the value of future cash flows in today's dollars.
To calculate the NPV, we need to discount each cash flow by the rate of return per period.
In this case, the cash stream is $75 per period for 5 periods, and the rate of return is 15% per period.
To calculate the NPV, we discount each cash flow using the formula:
NPV = CF1/(1+r)^1 + CF2/(1+r)^2 + ... + CFn/(1+r)^n
where CF is the cash flow for each period, r is the rate of return, and n is the number of periods.
Using this formula, we can calculate the NPV as follows:
NPV = 75/(1+0.15)^1 + 75/(1+0.15)^2 + 75/(1+0.15)^3 + 75/(1+0.15)^4 + 75/(1+0.15)^5
Simplifying this calculation, we have:
NPV = 75/1.15 + 75/1.3225 + 75/1.520875 + 75/1.74900625 + 75/2.0113571875
Calculating each term, we get:
NPV ≈ 65.22 + 56.7 + 49.31 + 43.38 + 38.03
Adding these values together, we find:
NPV ≈ 252.64
Therefore, the NPV of the cash stream that is equal to $75 per period for 5 periods, with a rate of return of 15% per period, is approximately $252.64.
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Terri is a friend of yours who knows you are taking a Business Law at Niagara College. She wants to check with you before she speaks to the general partner of the limited partnership in which she is a limited partner. - Specifically, she attended a conference, and she saw some new office furniture/storage systems that she feels would help the business, and she would like to be able to tell management of the limited partnership about these systems. Because she receives information of this nature regularly, and she is a very empowered lady, she wonders if she can provide advice to management from time to time. She does not like to hear the word "no." Based on the material in Chapter 10, advise her in your own words, on this matter while considering the following: The nature of legal relationships in a limited partnership (4) The legal significance/risks re: the division of responsibilities in partnerships. (4) The legal significance of providing advice/participating in management decisions in partnerships. (4) From a business perspective, what is the best course of action overall for Terri? (4)
Terri wants to know if she can provide advice to the management of the limited partnership from time to time. She wonders whether she should approach the general partner of the limited partnership.
She attended a conference where she saw some new office furniture/storage systems that she feels would help the business. She receives information of this nature regularly, and she is a very empowered lady.
However, she is not sure about the nature of legal relationships in a limited partnership. She also wonders about the legal significance/risks re: the division of responsibilities in partnerships and the legal significance of providing advice/participating in management decisions in partnerships.
Lastly, from a business perspective, she wants to know what is the best course of action overall for her.Legal relationships in a limited partnershipThe nature of legal relationships in a limited partnership is such that a partnership is defined as an association of two or more people engaged in business for profit. Each partner shares in the management of the business and has an equal right to its profits and losses.
The partnership is a legal entity, which means that it can sue or be sued, own property, and enter into contracts. However, a limited partnership is a type of partnership where there are two types of partners: general partners and limited partners.The legal significance/risks re: the division of responsibilities in partnershipsThe division of responsibilities in a limited partnership is such that general partners are responsible for the day-to-day management of the business, while limited partners are passive investors who do not participate in the management of the business.
Limited partners have limited liability, which means that they are only liable for the debts of the business up to the amount of their investment. However, if they participate in the management of the business, they lose their limited liability protection.
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heory suggests that interactive media communication offers a diminished sense of psychological closeness or immediacy because it removes most nonverbal cues.
A multimodality
B Uncertainty reduction
C media richness
D social presence
The correct answer is D. social presence. Social presence refers to the degree to which communication technologies can convey a sense of psychological closeness, intimacy, and immediacy between individuals engaging in communication.
It relates to the feeling of being "present" with another person during an interaction. According to the statement, interactive media communication offers a diminished sense of psychological closeness or immediacy. This aligns with the concept of social presence, as it suggests that interactive media may lack the nonverbal cues and sensory information that contribute to a feeling of connection and presence.
Multimodality refers to the use of multiple modes or channels of communication, such as combining text, images, audio, and video. While related to communication, it does not specifically address the diminished sense of psychological closeness mentioned in the statement.
Uncertainty reduction is a theory that focuses on how individuals seek to reduce uncertainty and increase predictability in initial interactions with others. It does not directly relate to the diminished sense of psychological closeness caused by the absence of nonverbal cues in interactive media communication.
Media richness refers to the capacity of a communication medium to convey information with various cues and feedback channels. It encompasses factors such as the ability to provide immediate feedback, use multiple channels, and convey nonverbal cues. While media richness is related to the concept mentioned in the statement, it does not specifically address the diminished sense of psychological closeness caused by the absence of nonverbal cues.
Therefore, the most appropriate answer is D. social presence.
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A) What is the float and how can a company use it for working capital? Provide an example that illustrates how it happens.
B) If the company records indicate the following:
Opening amount $10,000
Deposits 30,000
Cheques -22,000
Closing balance $18,000
The bank statement indicates that the opening amount is $10,000, the deposits are 22,000 and the cheques that have cleared are 2,000, what is the amount of the float?
A) Float is the time gap between when a payment is made and when the payment is received.
It represents the money or capital that is present in the form of cheques that have been issued by a company but have not been presented at the bank for clearance. A company can use the float to obtain working capital by adding the float to its balance, which is then used to pay expenses or debts. This gives the company the ability to generate income from the float. Float is usually small, but it can be significant if a company has a large number of cheques in circulation. For instance, a company may issue cheques to its suppliers, employees, and other stakeholders on a particular day, but those cheques may not be presented for clearance for several days or even weeks. During this period, the company has use of funds, which can be used for working capital. Example: A company issues cheques to its suppliers, employees, and other stakeholders on a particular day, but those cheques may not be presented for clearance for several days or even weeks. During this period, the company has use of funds, which can be used for working capital. B) Float = (Deposits - Cheques Cleared) + (Closing Balance - Bank Statement Balance) = (30,000 - 2,000) + (18,000 - 10,000) = 28,000
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life insurance proceeds paid to your heirs are not usually subject to state or federal income taxes. group of answer choices true false
The main answer is true. Life insurance proceeds paid to your heirs are generally not subject to state or federal income taxes.
Life insurance death benefits are typically received by the beneficiaries tax-free. This is because life insurance is designed to provide financial support to your beneficiaries in the event of your death, and it is not considered taxable income. However, it is important to note that there may be exceptions or specific circumstances where a portion of the proceeds could be subject to taxes, such as when the policy has been assigned to a third party or if the policy is considered an investment vehicle. It is recommended to consult with a tax professional or financial advisor to fully understand the tax implications related to life insurance proceeds based on your specific situation and local tax laws.
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"Diminishing marginal benefit" implies that when Sally consumes one fewer unit of a good that she likes, her marginal benefit increases. total benefit increases. income decreases. marginal benefit decreases.
Previous question
Diminishing marginal benefit is a concept of economics that explains that as an individual consumes more and more of a particular good, the utility or satisfaction he/she derives from each unit decreases over time.
She orders a large pizza, and the first slice gives her a lot of satisfaction, the second slice also satisfies her but less than the first slice, and so on.
After a certain point, the utility derived from each additional slice will continue to decrease until Sally reaches a point where she is no longer getting any pleasure from eating another slice.
At that point, Sally has reached the saturation point or maximum utility of pizza.
In such a scenario, if Sally chooses to consume one fewer slice, her marginal benefit will increase since she will now experience less discomfort, indigestion, or bloating, and will derive more pleasure and satisfaction from her existing slices.
This increase in marginal benefit happens because the total amount of utility derived from consuming one less slice is greater than the utility derived from consuming that additional slice.
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After deciding to buy a new car, you can either lease the car or purchase it on a two-year loan. The car you wish to buy costs $32,000. The dealer has a special leasing arrangement where you pay $93 today and $493 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 7 percent. You believe you will be able to sell the car for $20,000 in two years.
What break-even resale price in two years would make you indifferent between buying and leasing?
So, if you sell the car for $31,041.58, you will break even, and it will be up to you to decide which option to pursue.
The monthly payment for leasing is $493 and the dealer requires a $93 payment today. You should also note that the total number of monthly payments over two years will be 24 (24 x $493 = $11,832).
So the total amount you will pay in monthly installments is $11,832 plus the initial $93 payment for a total of $11,925.Alternatively, if you decided to purchase the car, you would finance $32,000 for two years at 7% APR and make monthly payments.
The monthly payment would be $1,496.56, and the total amount paid over two years would be $35,916.58 (24 x $1,496.56).In two years, the car is estimated to be worth $20,000.
Since the break-even point is the price at which you would pay the same amount for the lease as you would for the purchase, you want to find out what the break-even point is, given the $20,000 estimated resale value.So, the equation is:
$11,925 + $20,000 = $35,916.58 - XThe $11,925 represents the cost of leasing for two years, while the $20,000 is the estimated resale value. The $35,916.58 represents the total amount of payments made for the purchase.
"X" represents the amount you need to sell the car for after purchasing it to reach the break-even point.
After solving for X:$31,041.58 = XSo, if you sell the car for $31,041.58, you will break even, and it will be up to you to decide which option to pursue.
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Costing methods are an important accounting policy choice for the following reasons: a. In a period of rising prices, FIFO has a higher per unit cost held in ending inventory b. Once selected, companies must restate financial statement if they decide to change their accounting policy c. The costing method used in a period of changing unit costs will impact ending inventory balances and COGS d. All the answers
d. All the answers. Therefore, choosing the appropriate costing method is an important decision that can significantly influence financial reporting and analysis.
Costing methods are indeed an important accounting policy choice for several reasons. Firstly, in a period of rising prices, the FIFO (First-In, First-Out) method will result in a higher per unit cost held in ending inventory compared to other methods like LIFO (Last-In, First-Out). This can impact the reported profitability and financial position of a company.
Secondly, once a costing method is selected and consistently applied, companies are generally required to maintain consistency in their accounting policies. Changing the costing method would necessitate restating financial statements, ensuring comparability and transparency.
Lastly, the costing method used during periods of changing unit costs, such as inflation or deflation, will have a direct impact on the valuation of ending inventory balances and the calculation of cost of goods sold (COGS). This, in turn, affects the reported profitability and financial performance of the company.
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In the context of technological advancements, outsourcing, and offshoring, multinational corporations have moved certain production activities overseas to capitalize on _____.
Multinational corporations have moved certain production activities overseas to capitalize on various factors, which can include:
Cost advantages: Outsourcing and offshoring can allow companies to take advantage of lower labor costs in foreign countries. This can help reduce production expenses, increase profit margins, and remain competitive in the global market. Access to specialized skills and resources: Some countries may possess specific expertise, technologies, or resources that are valuable for certain production activities. Multinational corporations may opt to offshore production to leverage these specialized skills and resources that may not be as readily available domestically. Expanded markets: Moving production overseas can facilitate market expansion by establishing a local presence in foreign markets. Producing goods or services closer to the target market can lead to greater market responsiveness, reduced transportation costs, and improved customer service.
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Consider FASB standards for reporting revenues from government grants received by a not-for-profit organization. Answer the following questions:
a. What features of government grants indicate they are conditional contributions?
b. When should revenue be recognized under a cost-reimbursement grant?
Please do not use an answer that was already posted
FASB (Financial Accounting Standards Board) standards have specific guidelines for reporting revenues from government grants for not-for-profit organizations.
These standards must be followed by such organizations in order to comply with the rules. Below are the answers to the given questions:
a. Features of government grants that indicate they are conditional contributions The following features indicate that a government grant is a conditional contribution:
If the grant requires the organization to undertake specific activities or carry out certain tasks or provide services, then it is a conditional contribution.
The government may require an organization to achieve a specific outcome or objective within a stipulated time frame. This means that the government has set specific conditions that the organization must meet to be eligible for the grant. Thus, it is a conditional contribution.
The grant agreement may also specify the conditions of eligibility. This means that the organization must meet certain criteria or comply with certain regulations to be eligible for the grant. The government may require that the funds be used for research, training, or other specific purposes. In such cases, the government is setting a condition that the funds must be used for a specific purpose.
b. Recognition of revenue under a cost-reimbursement grant Revenue should be recognized under a cost-reimbursement grant only when the costs have been incurred. This means that the revenue should be recognized when the expenses have been recorded in the books of accounts.
Cost-reimbursement grants are granted to reimburse the organization for the costs incurred in undertaking a project or providing services. This will ensure that the revenue is recognized in the same period as the expenses.
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Which of the following best describes the impact of covid on
corporate capital structure?
A. Covid would decrease the tax shield benefits, thereby lower
target debt ratio
B.Covid would increase financ
Corporate capital structure refers to the financing and investment strategies of companies, including the mix of debt and equity financing used to fund operations and growth. The COVID-19 pandemic has significantly impacted corporate capital structure, especially in terms of debt financing and target debt ratio. Since the pandemic has caused major economic disruptions, businesses have faced severe financial challenges. Many companies have struggled to maintain revenue and profits due to the economic downturn caused by the pandemic.
To address these challenges, many companies have sought to adjust their capital structures by reducing their debt levels and increasing equity financing. This is because the pandemic has decreased the tax shield benefits, thereby lowering the target debt ratio.
In addition, the high level of uncertainty and risk associated with the pandemic has made equity financing more attractive to investors as it provides greater flexibility and reduces financial risk. As a result, many companies have been forced to re-evaluate their capital structures and make adjustments to better manage their financial risk.
The best description of the impact of Covid on corporate capital structure is that Covid would decrease the tax shield benefits, thereby lower the target debt ratio.
Thus, option A is the correct.
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Joey are 55 year old taxpayer receives $20,500 in
wages she has no income the maximum contribution she may make to
her 401k plan in 2022 is
A taxpayer who is 55 years old can make a catch-up contribution to their 401(k) plan in addition to their standard contribution limit.
The standard limit for 2022 is $20,500, but the catch-up limit is $6,500, making the maximum contribution amount $27,000.Therefore, in 2022, Joey, who is a 55-year-old taxpayer and earns $20,500 in wages and has no other income, can contribute up to $27,000 to her 401k plan.
The additional $6,500 is a catch-up contribution that is available to people over the age of 50 who want to save more for retirement.In general, 401(k) plans are tax-deferred retirement accounts. Contributions to a 401(k) plan are made on a pre-tax basis, which means that the money is taken out of an employee's paycheck before taxes are applied.
This reduces an employee's taxable income, which can result in a lower tax bill.
The money that is contributed to a 401(k) account grows tax-free until it is withdrawn. Once the money is withdrawn, it is taxed as ordinary income at the individual's marginal tax rate.
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A foreign subsidiary does not have an independent cost of capital. However, in order to estimate the discount rate for a comparable host-country firm, the analyst should try to calculate a hypothetical cost of capital. How is this done?
To estimate the discount rate for a foreign subsidiary, calculate a hypothetical cost of capital by identifying a comparable domestic firm in a similar industry and estimating its cost of capital using appropriate models like CAPM.
In order to estimate the discount rate for a comparable host-country firm, the analyst should try to calculate a hypothetical cost of capital.
The best way to calculate a hypothetical cost of capital is by looking at the comparable domestic firms. The analyst needs to select the industry that is closest to the industry of the foreign subsidiary. Then the analyst can choose a representative firm in the industry that is comparable to the subsidiary of the foreign company.
After that, the analyst can estimate the cost of capital of the representative firm using the Capital Asset Pricing Model (CAPM) or any other appropriate model. The risk-free rate, the market rate, and the beta of the representative firm should be determined first.
After that, the estimated cost of capital for the representative firm can be used as the hypothetical cost of capital for the foreign subsidiary. This is an appropriate method to calculate the cost of capital for a foreign subsidiary, given that it does not have an independent cost of capital.
The cost of capital can be used to calculate the present value of the subsidiary's cash flows. It can also be used to calculate the value of the subsidiary as a whole, which can be useful in making strategic decisions regarding the subsidiary's future.
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Present discussion and analysis of the consolidated financial statements required for not-for-profit organizations.
Consolidated financial statements refer to financial statements that are created from the financial information of several organizations and put together as if it were the financial statements of a single entity.
The primary purpose of the consolidated financial statements for non-profit organizations is to offer a clear picture of the resources and expenditures for the entire organization as a whole. This report's most crucial elements include the statement of operations, balance sheet, statement of cash flows, and statement of changes in net assets.
These statements offer a broad and comprehensive understanding of an organization's financial position, financial performance, and overall operations.
Consolidated financial statements for non-profit organizations are essential for the board members, donors, auditors, lenders, and other stakeholders who evaluate the organization's financial health.
These statements help the stakeholders identify the organization's liquidity and solvency positions, funding sources, and how the organization uses its resources. Consolidated financial statements are crucial to non-profit organizations as they use it to demonstrate their accountability, financial health, and the financial stability of the organization.
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Critically assess the assumptions of fixed and random effects models.
Fixed effects models assume that the observed entities in the dataset are the only ones of interest, and their effects are fixed and constant across all observations.
Random effects models assume that the observed entities are a random sample from a larger population, and their effects vary randomly across observations.
In a fixed effects model, the focus is on the within-group variation, as it assumes the effects are specific to each observed entity. This model is useful when the goal is to analyze the impact of entity-specific characteristics. However, fixed effects models can be limited if the researcher is interested in generalizing the findings to a larger population.
On the other hand, random effects models capture both within-group and between-group variation. They assume that the effects are randomly drawn from a population distribution. Random effects models are suitable when the researcher wants to generalize the findings beyond the observed entities and make inferences about the larger population. However, random effects models may overlook important heterogeneity if the effects are truly fixed and not randomly varying.
The choice between fixed and random effects models depends on the research objectives and the underlying assumptions about the nature of the data and the effects being studied.
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Industrial products have estimated that fixed costs per month are $81,100 and variable costs per dollar of sales is$0.62.
Instructions
1. Waht is the break-even point per month in sales? 2. What level of slea is needed for a monthly profit of $24,000.
3. For the month of July, the company anticipates sales of $240,000. What is the expected levle of profit?
1. Break-even point per month in sales: $213,947.
2. Sales needed for a monthly profit of $24,000 is $298,684.
3. Expected level of profit for July with sales of $240,000 is $10,100.
To solve the given questions, we need to use the break-even analysis formulas. Let's calculate each requirement step by step:
1. Break-even point per month in sales:
The formula to calculate the break-even point is:
Break-even point (in sales) = Fixed costs / Contribution margin ratio
Given information:
Fixed costs per month = $81,100
Variable costs per dollar of sales = $0.62
To calculate the contribution margin ratio, we subtract the variable costs per dollar of sales from 1:
Contribution margin ratio = 1 - Variable costs per dollar of sales
Contribution margin ratio = 1 - $0.62 = $0.38
Now, we can calculate the break-even point per month in sales:
Break-even point = $81,100 / $0.38
Break-even point ≈ $213,947
Therefore, the break-even point per month in sales is approximately $213,947.
2. Sales needed for a monthly profit of $24,000:
The formula to calculate the sales needed for a desired profit is:
Sales needed = (Fixed costs + Desired profit) / Contribution margin ratio
Given information:
Fixed costs per month = $81,100
Desired profit = $24,000
Contribution margin ratio = $0.38
Sales needed =[tex](\$81,100 + \$24,000) / \$0.38[/tex]
Sales needed ≈ $298,684
Therefore, a sales level of approximately $298,684 is needed for a monthly profit of $24,000.
3. Expected level of profit for July with sales of $240,000:
To calculate the expected level of profit, we need to subtract the total costs from the sales.
Total costs = Fixed costs + (Variable costs per dollar of sales * Sales)
Given information:
Fixed costs per month = $81,100
Variable costs per dollar of sales = $0.62
Sales for July = $240,000
Total costs = [tex]\$81,100 + (\$0.62 * \$240,000)[/tex]
Total costs = [tex]\$81,100 + \$148,800[/tex]
Total costs = $229,900
The expected level of profit = Sales - Total costs
The expected level of profit =[tex]\$240,000 - \$229,900[/tex]
Expected level of profit = $10,100
Therefore, the expected level of profit for July with sales of $240,000 is $10,100.
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the internal revenue service determined that covington ltd. should have been using a transfer price of $400 for the purchase of goods from its u.s. subsidiary but had set the price at $50. what is the rate of penalty that the irs can impose on the taxpayer?
The rate of penalty that the IRS can impose on the taxpayer is 40% of the amount of taxes underpaid.
What is the rate of penalty for underpaid taxes by Covington Ltd?The IRS will impose a penalty rate of 40% on Covington Ltd for underpaying taxes. This penalty is calculated based on the amount of taxes that were not properly paid.
In this case, the difference between the transfer price of $400 determined by the IRS and the actual price of $50 set by Covington Ltd. The penalty serves as deterrent to ensure compliance with tax regulations and to discourage taxpayers from underreporting or manipulating their financial transactions.
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Which of the following exchange rate system is effective to fight inflation? I. Floating exchange rate system II. Pegged exchange rate system III. Currency board Group of answer choices Only I I and II II and III Only II
The exchange rate system that is effective to fight inflation is the currency board. The main answer in 3 lines is:Currency board is the exchange rate system that is effective to fight inflation.
Under a currency board, the monetary authority of the country commits to back the domestic currency with a foreign reserve in a fixed exchange rate regime. The country’s central bank can only issue domestic currency up to the limit of foreign exchange reserves held.
The currency board is mandated to maintain the currency at par with the reserve currency. The system works as a hard peg to the reserve currency, ensuring stability of the exchange rate. It is an effective way to control inflation.
Under a floating exchange rate system, the exchange rate is determined by the market forces of supply and demand. Thus, the exchange rate is likely to be volatile.
The pegged exchange rate system is an exchange rate regime in which the value of the currency is fixed in terms of a basket of other currencies, or in terms of gold or another commodity.
The central bank has the responsibility of maintaining the fixed exchange rate. This system is not effective in fighting inflation because it does not provide any mechanism to limit the supply of money, hence it can lead to an increase in inflation.
In conclusion, the currency board is the exchange rate system that is effective to fight inflation. It provides a system of rules to limit the supply of domestic currency by ensuring that the domestic currency is backed by foreign reserves.
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The textbook has suggested a list of six best practices for online discussions on all platforms, including sticking to the topic, searching before posting, using good grammar and capitalization, no feeding the trolls, do not post repetitively (or double-post), and no sock puppets. Based on your use experience with online discussions, do you think the list is complete? Is there anything else that you would like to add to the list?
Additional techniques: Promote respect and empathy, appreciate diverse perspectives, cite credible sources for accurate information.
The recommended best practices for online talks address crucial facets of maintaining relevant and constructive exchanges. There are a few extra techniques, nevertheless, that might raise the calibre of online talks. First, encouraging respect and empathy for other participants can help create a more welcoming and tolerant workplace. Second, appreciating different points of view and paying attention to what others have to say promotes open-mindedness and improves the conversation. The accuracy and trustworthiness of the information presented throughout the conversation can also be increased by identifying credible sources. Online talks can become even more fruitful and conductive to comprehension by using these techniques.
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please show all work (not in excel)
Question 24 Consider a growing annuity that starts with a payment of $67,000 at the end of year 1 with a constant growth rate of 3%. The growing annuity lasts for a total of 45 years and has an appropriate discount rate of 8%.
What is the present value of this growing annuity?
The formula for the present value of a growing annuity is:PVGA = PMT1 / (r - g) × [1 - (1 + g / (1 + r))t-n]Where,PMT1 is the first payment of the growing annuity, g is the growth rate of the annuity, r is the discount rate of the annuity, t is the time period, and n is the number of periods.
PMT1 = $67,000g
= 3%
r = 8%
t = 1
n = 45We can calculate the present value of this growing annuity as follows:
PVGA = 67,000 / (8% - 3%) × [1 - (1 + 3% / (1 + 8%))45]
PVGA = 67,000 / 5% × [1 - (1 + 3%)45 / (1 + 8%)45]PVGA = $1,340,000 × [1 - 0.1236]
PVGA = 1,169,656.88
Therefore, the present value of this growing annuity is 1,169,656.88.
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2. You believe a company will deliver Enterprise Free Cash Flows of £90 Mn at the end of the current year, £102 Mn at the end of the year after and thereafter you expect the cash flows to grow at 6%. If the current price of the 200 Mn shares in issue is £8.00, the company’s debt is valued at £1,200 Mn and its cost of capital is 10%, then you believe that:
a) the shares are overvalued by 50% b) the shares are overvalued by 33.3% c) the shares are correctly valued d) the shares are undervalued by 33.3% e) the shares are undervalued by 50%
The correct option is b) the shares are overvalued by 33.3% To calculate whether the shares are overvalued, undervalued, or correctly valued, we can calculate the present value of the expected cash flows (Enterprise Free Cash Flows) and compare it with the current market value of the shares and debt given in the question. Using the formula for present value of cash flows, we have:
PV = (CF1 / (1 + r)) + (CF2 / (1 + r)²) + ... + (CFn / (1 + r)^n)where PV is the present value of the cash flowsCF1 is the cash flow at the end of the current yearCF2 is the cash flow at the end of the year after that and so on...r is the cost of capitaln is the total number of periods. Here, we have n = ∞ (since cash flows are expected to grow at a constant rate forever), and r = 10% (given in the question).Therefore, the present value of the expected cash flows is:
PV = (£90 / 1.1) + (£102 / 1.1²) + [(£102 * 1.06) / (1.1³ - 1.1²)] = £1,169.26 million, Now, we can find the value of the equity by subtracting the value of the debt from the value of the enterprise:
Equity value = Enterprise value - Debt value= (£1,169.26 + £1,200) million - £1,200 million= £1,169.26 million, Since there are 200 million shares in issue, the value per share is: Value per share = Equity value / Number of shares= £1,169.26 million / 200 million= £5.8463 per share Comparing this with the current market value of the shares (£8.00 per share), we can say that the shares are overvalued by:
Overvaluation = [(Market value - Value per share) / Value per share] x 100%=[(£8.00 - £5.8463) / £5.8463] x 100% = 36.89%≈ 33.3%Therefore, the correct option is b) the shares are overvalued by 33.3%.
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