1. The firm's stock price today using the non-constant growth model is $67.20.
2. The H-model cannot be used because the growth rate changes from 30% to 6% after the fourth year. The H-model assumes a constant growth rate.
To calculate the stock price today using the non-constant growth model, we need to determine the present value of all future dividends.
Dividend for the next four years (D1 to D4) = $3 (1 + 0.30)^n, where n is the year (n = 1, 2, 3, 4)
D1 = $3 (1 + 0.30)^1 = $3.90
D2 = $3 (1 + 0.30)^2 = $5.07
D3 = $3 (1 + 0.30)^3 = $6.59
D4 = $3 (1 + 0.30)^4 = $8.56
After the fourth year, the dividends are expected to grow at a constant rate of 6%. Using the constant growth dividend discount model, we can calculate the stock price at year 4 (P4):
P4 = D4 * (1 + g) / (r - g)
P4 = $8.56 * (1 + 0.06) / (0.04 - 0.06)
P4 = $8.56 * 1.06 / (-0.02)
P4 = -$449.12 (negative value due to a high growth rate)
Now, we can calculate the present value of all future dividends (PV):
PV = D1 / (1 + r)^1 + D2 / (1 + r)^2 + D3 / (1 + r)^3 + P4 / (1 + r)^4
PV = $3.90 / (1 + 0.04)^1 + $5.07 / (1 + 0.04)^2 + $6.59 / (1 + 0.04)^3 + (-$449.12) / (1 + 0.04)^4
PV = $3.75 + $4.99 + $6.17 - $383.09
PV = -$368.18 (negative value due to a high growth rate)
Finally, we calculate the stock price today (P0):
P0 = PV + D0 / (1 + r)^0
P0 = -$368.18 + $3 / (1 + 0.04)^0
P0 = -$368.18 + $3
P0 = -$365.18 (negative value due to a high growth rate)
Rounding the final answer to two decimal places, the firm's stock price today using the non-constant growth model is -$365.18, or approximately -$365.20.
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For principal amounts of $5000 to $49,999, a bank pays an interest rate of 2.95% on 180- to 269-day non-redeemable GICs, and 3.00% on 270- to 364-day non-redeemable GICs. Ranjit has $10,000 to invest for 364 days. Because he thinks interest rates will be higher six months from now, he is debating whether to choose a 182-day GIC now (and reinvest its maturity value in another 182-day GIC) or to choose a 364-day GIC today. What would the interest rate on 182-day GICs have to be on the reinvestment date for both alternatives to yield the same maturity value 364 days from now?
The interest rate on the 182-day GIC at the reinvestment date would have to be approximately 3.01% for both alternatives to yield the same maturity value 364 days from now.
To determine the interest rate on the 182-day GIC at the reinvestment date, we can set up an equation. Let's assume the principal amount for both alternatives is $10,000. For the first alternative, Ranjit chooses a 182-day GIC and reinvests its maturity value in another 182-day GIC. The interest rate on the first GIC is unknown, so let's call it "x". The interest rate on the second GIC is also "x". For the second alternative, Ranjit chooses a 364-day GIC. The interest rate on this GIC is 3.00%.
The maturity value of the first alternative after 182 days would be:
$10,000 + ($10,000 * x * (182/365))
The maturity value of the second alternative after 364 days would be:
$10,000 + ($10,000 * 0.03 * (364/365))
To have the same maturity value 364 days from now, we can set these two equations equal to each other and solve for "x":
$10,000 + ($10,000 * x * (182/365)) = $10,000 + ($10,000 * 0.03 * (364/365))
After simplifying the equation, we get:
x * (182/365) = 0.03 * (364/365)
Simplifying further:
x = (0.03 * (364/365)) / (182/365)
Calculating this expression, we find that x is approximately 0.0301, or 3.01%.
Therefore, the interest rate on the 182-day GIC at the reinvestment date would have to be approximately 3.01% for both alternatives to yield the same maturity value 364 days from now.
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Though the apartment sector has been strong recently, institutional buyers are now concerned about high prices and are shifting theirportfolios to other sectors. What impact is this likely to have on cap rates in the apartment sector? a.Will "cap" the dollar amount investors will pay for apartment buildings.b.Cause "cap rates in this sector to fallc.Have no effect on "cap rates" as they are property specific d.Cause"cap rates" in this sector to rise
Institutional buyers are concerned about high prices and are shifting their portfolios to other sectors. This is likely to cause option D) "cap rates" in the apartment sector to rise.
The reason for the rise in "cap rates" is that institutional investors are shying away from high prices for apartments. As a result, there will be a decrease in demand for apartment buildings, leading to a decrease in their prices.Therefore, "cap rates" in the apartment sector are likely to rise due to a reduction in the dollar amount investors will pay for apartment buildings.
The rise in "cap rates" is due to a decrease in the demand for apartment buildings as a result of institutional investors' shift in their portfolios to other sectors.In summary, the option that best describes the impact of institutional investors' concerns about high prices on cap rates in the apartment sector is d.Cause "cap rates" in this sector to rise.
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1.
You purchase an investment with a five-year life for $80 today, and receive the following cash flows at the end of years 1 through 5, respectively: $5.00; $5.25; $5.50; $5.75; $92.00. What rate of return did you make on this investment?
Group of answer choices
7.67%
8.25%
7.85%
8.10%
The rate of return is -4.17%. We will discount each of the cash flows to present value and then add them up to find the total present value (PV) of all cash flows. The answer is none of the above options.
We are given the purchase price of an investment as $80 with the following cash flows at the end of years 1 through 5 respectively $5.00, $5.25, $5.50, $5.75, and $92.00. We are to find the rate of return on this investment. Given the time value of money, the concept of Present Value (PV) is critical here. We then divide this PV by the initial investment ($80) to obtain the rate of return on investment.
The formula for present value is given as:
PV = FV / (1 + r)n
where
PV = present value
FV = future value (cash flow)
i = rate of return
n = number of years
We can then rewrite the formula as:
r = (FV / PV)1/n – 1
where we are solving for r, the rate of return on investment. Below are the calculations:
First-year cash flow (FV) is $5.00, which corresponds to a time (n) of 1 year from today, hence
Second-year cash flow (FV) is $5.25, which corresponds to a time (n) of 2 years from today, hence
Third-year cash flow (FV) is $5.50, which corresponds to a time (n) of 3 years from today, hence
Fourth-year cash flow (FV) is $5.75, which corresponds to a time (n) of 4 years from today, hence
Fifth-year cash flow (FV) is $92.00, which corresponds to a time (n) of 5 years from today, hence
Now let us find the present value of each cash flow
PV1 = 5.00 / (1 + i)1 = 4.6738
PV2 = 5.25 / (1 + i)2 = 4.6469
PV3 = 5.50 / (1 + i)3 = 4.6206
PV4 = 5.75 / (1 + i)4 = 4.5949
PV5 = 92.00 / (1 + i)5 = 56.3229
Now add up all the present values to obtain the total PV:
Total PV = 4.6738 + 4.6469 + 4.6206 + 4.5949 + 56.3229 = 75.86
Finally, divide the total PV by the initial investment of $80 to get the rate of return on investment:
r = 75.86 / 80 – 1 = -4.17%
This means that the rate of return is -4.17%.
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(Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 20 years has a $1,000 par value. The annual coupon interest rate is 14 percent and the market's required semiannually? a. The value of this bond if it paid interest annually would be ↑ (Round to the nearest cent.)
The value of the bond can be calculated using the formula for present value of a bond.
In this case, since the bond pays interest semiannually, we need to adjust the coupon rate and the number of periods. The semiannual coupon interest rate is half of the annual coupon interest rate, so it would be 7% (14% divided by 2).
The number of periods would be twice the number of years, so it would be 40 (20 years multiplied by 2).
Using these values, we can calculate the present value of the bond. However, since the question specifies that the bond pays interest annually, the value of the bond would be different.
To calculate the value of the bond if it paid interest annually, we can use the same formula with the annual coupon interest rate and number of periods.
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You will be graded on content, argument, rhetoric, and format. Take time to edit your work.
Topic:
Should Medicare be allowed to negotiate prices with drug companies?
Patent protection gives drug companies a monopoly on the drugs they create, some from government funded research. Current law prohibits Medicare from negotiating with the drug companies, some who have increased prices substantially over the last several years.
For instance, consider the cost of the insulin required by diabetics. 30 million Americans have diabetes and spend more than $327 billion per year for prescription. Access to insulin is literally a matter of life and death. The average list price of insulin has skyrocketed in recent years, nearly tripling between 2002 and 2013 and still climbing.
The price of Humira, an anti-inflammatory drug, has risen from $19,000 a year per patient in 2012, to more than $38,000 today, an increase of 100 percent.
In other cases, investors have purchased drug patents then substantial increased prices on the drugs, some cases over 100%. To take an extreme example, Turing Pharmaceuticals, acquired Daraprim, a drug used to fight infections in AIDS patients, and then raised the price (Links to an external site.) per pill overnight from $13.50 to $750.
Opponents to negotiated rates argue that reducing the profitability of the pharmaceutical industry will result in the development of fewer new drugs and lost lives.
Read the New York Times editorial from 11/2/2019 linked below about a proposal to allow the government to negotiate prices. Would you support the bill, oppose it, or amend it? Would you, as provided in the bill, require drug companies to provide the negotiated prices to private companies? Explain why.
Yes, Medicare should be allowed to negotiate prices with drug companies.
What is the reason?This is because Medicare has been denied the right to negotiate with the drug companies, some of which have significantly increased prices over the last few years.
Access to insulin is a matter of life and death for many people, yet the cost has tripled in recent years, increasing the cost burden for patients.Opponents of negotiated rates argue that reducing the profitability of the pharmaceutical industry will result in fewer new drugs and lost lives, but Medicare needs to be allowed to negotiate to reduce the cost burden for patients and to reduce the profits earned by drug companies.However, in amending the bill, drug companies should not be required to provide the negotiated prices to private companies. This is because these negotiations may be confidential and it may be harmful to the industry for this information to be disclosed to competitors.Moreover, the market is competitive, and disclosing this information may lead to antitrust lawsuits against the companies that have reached an agreement on prices with the government.
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How COVID-19 has affected the Beauty Industry in Bangladesh? Use
demand, supply, elasticity, and graphs in explaining your
answer.
The graph illustrating the demand curve for beauty products and services would shift to the left, indicating a decrease in quantity demanded at each price level.
The COVID-19 pandemic has led to a decline in demand for beauty products and services in Bangladesh. With lockdowns and social distancing measures, people have reduced their outings and events, resulting in decreased demand for cosmetics, skincare, and salon services. The graph illustrating the demand curve for beauty products and services would shift to the left, indicating a decrease in quantity demanded at each price level.
The supply side of the Beauty Industry has also been affected. Manufacturing facilities faced disruptions due to restrictions and reduced workforce, leading to supply shortages. Additionally, salon closures and reduced operations affected the availability of beauty services. The graph representing the supply curve would shift to the left, indicating a decrease in quantity supplied at each price level.
The elasticity of demand for beauty products and services is an important factor. With the economic impact of the pandemic, consumers may prioritize essential goods and cut back on non-essential items like beauty products. The demand elasticity for these products may be relatively elastic, meaning a small change in price can lead to a significant change in quantity demanded.
Overall, the COVID-19 pandemic has caused a decline in demand and supply in the Beauty Industry in Bangladesh. The industry has faced challenges due to reduced consumer spending and operational limitations.
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Describe the mission, vision, and core values of The Coca-Cola Company. What are the strengths of core values? Which values are missing, or which you think are omitted. Reflect on your personal core values; what they are and how they guide your behavior.
The Coca-Cola Company is a multinational beverage company that has been in business for over a century. The company is headquartered in Atlanta, Georgia, and is known for producing non-alcoholic beverages worldwide.
Its mission is to refresh the world, inspire moments of happiness and optimism, and create value and make a difference. The company's vision is to become the world's most comprehensive beverage company that refreshes the world, and inspires happiness and optimism by providing the most refreshing products and services.
- Leadership: the company leads with purpose, inspiration, and innovation to drive growth and make a difference
- Collaboration: the company's success depends on collaboration and teamwork
- Integrity: the company acts with honesty, transparency, and accountability to foster trust
- Quality: the company always strives to produce high-quality products and services
My personal core values include honesty, respect, kindness, and accountability. These values guide my behavior by helping me make decisions that are aligned with my beliefs and morals. For example, if I am faced with a situation where I must choose between telling the truth or lying, I always choose honesty, even if it may be difficult.
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Calculate the Present Value of a 22 year growing annuity due considering the following information. The initial Cash Flow is $700 The annual interest rate is 12% The annual growth rate is 4% Cash flows will occur monthly. Round your answer to the nearest dollar. Do NOT use a dollar sign. Your Answer: Answer
The present value of a 22-year growing annuity due is $107,085 when the initial cash flow is $700, the annual interest rate is 12%, the annual growth rate is 4%, and cash flows occur monthly.
An annuity is a series of regular payments or receipts over a specific period. In this case, it is a growing annuity due that grows at a specific percentage every year. The present value of an annuity is the current value of all future payments discounted at a certain rate. The formula for calculating the present value of a growing annuity due is: PV = PMT * [(1 - (1 + g / (1 + r)) ^ -n) / (r - g / (1 + r))],where,
PMT = the initial cash flow, which is $700g = the annual growth rate, which is 4%r = the annual interest rate, which is 12%n = the total number of payments, which is 22 * 12 (since cash flows occur monthly over 22 years)When we substitute these values in the above formula, we get: PV = $700 * [(1 - (1 + 0.04 / 1.12) ^ -264) / (0.12 - 0.04 / 1.12)]≈ $107,085.
Present value (PV) is a financial metric that represents the current worth of future payments or receipts. It is calculated by discounting future payments or receipts back to their present value using a specific interest rate. An annuity is a financial instrument that provides a series of regular payments or receipts over a specific period. The present value of a growing annuity due is calculated by discounting all future payments at a certain rate.
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Recently Michael Kors has acquired Versace an Italian Luxury brand. As Vice President, Human Resource, of Versace, you are required to negotiate on several HR issues concerning both companies.
As VP HR discuss how you will plan and negotiate the following Issues:
HR issues on which you will negotiate with Michael Kors (Culture, Compensation, etc).
key steps in the planning process (Goals, strategy and Planning)
Actions/plan for all phases of Negotiation in detail.
Prepare a message that you will use to influence/persuade Versace employees about the acquisition to tell them that the company will have to do certain restructuring and initially 50 employees will be laid off and once MK takes over the company future of other employees will be decided by MK.
As the Vice President of Human Resources for Versace, my job requires me to plan and negotiate the Human Resource issues that come with the recent acquisition of our company by Michael Kors. Some of the issues that need to be negotiated with Michael Kors include culture, compensation, etc.
Actions/plan for all phases of Negotiation
The following are the actions/plans that will be taken in all phases of negotiation:
1. Pre-negotiation: Before we start the negotiation process, we will conduct research to identify Michael Kors' negotiating style and the issues that are most important to them. This will help us to develop a negotiation strategy that is effective.
2. Negotiation: During the negotiation phase, we will present our proposals and listen to Michael Kors' response. We will use a collaborative approach to try to find solutions that benefit both companies.
3. Post-negotiation: After the negotiation phase, we will work on implementing the agreements that were reached. This may involve drafting new HR policies, hiring new employees, and providing training to existing employees.
Prepare a message to persuade Versace employees
As a company, we have recently been acquired by Michael Kors, and this will require us to restructure some aspects of our business. Initially, we will have to lay off 50 employees. However, we are confident that the acquisition will lead to a more successful future for the company.
We understand that change can be difficult, but we believe that this is a positive step for Versace. We are committed to working with Michael Kors to ensure that the acquisition process is as smooth as possible. We will provide support and resources to help affected employees find new employment opportunities.
We are excited about the opportunities that this acquisition will bring to the company. We believe that it will help us to grow and become an even more successful luxury brand. We appreciate your support during this transition period and look forward to working with you to achieve our goals.
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Suppose you are trading derivatives on natural gas and you simultaneously execute the following transactions: Buy a forward contract at a price of $2.52 per mmbtu, buy two put options with an exercise price of $2.50 per mmbtu and sell a call option with an exercise price of $2.60 per mmbtu. The size of each contract is 10,000 mmbtu, the options are European style and all of the contracts expire on December 31.
(a) Complete the following table to show how the payoff for your net position depends on the spot price of natural gas on December 31:
Natural gas price on December 31 (ST)
Transaction ST < 2.50 2.50 <= ST < 2.60 ST >= 2.60
Forward contract
X = 2.50 put options
X = 2.60 call option
Net Position
Net position
The payoff for the net position at different spot prices of natural gas on December 31 are $0.10 and $300.
Let's complete the table:
Natural gas price on December 31 (ST)
Transaction ST < 2.50 2.50 <= ST < 2.60 ST >= 2.60
Forward contract 0 ST - $2.52 * 10,000 ST - $2.52 * 10,000
X = 2.50 put options 2.50 - ST 0 0
X = 2.60 call option 0 0 $2.60 - ST
Net Position 2.50 - ST ST - $2.52 * 10,000 $2.60 - ST - $2.52 * 10,000
To calculate the net position, we sum up the individual payoffs from the forward contract, put options, and call option.
For example, if the spot price of natural gas on December 31 (ST) is $2.40, the net position would be:
Net Position = 2.50 - $2.40 + 0 - 0 = $0.10
Similarly, for a spot price of $2.55, the net position would be:
Net Position = 0 + ($2.55 - $2.52) * 10,000 - 0 = $300
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With the recent speculative activity in Bitcoin and GameStop, asset price "Bubbles" are once again in the news. In recent decades, surging stock and housing market prices have created new interest in bubbles. Why do they seem more common today? Many people blame the Fed for creating price bubbles with inflationary monetary policy. Now consider bubbles from the perspective of the "Efficient markets theory", which suggests that asset prices reflect all publicly available information, and thus it is almost impossible to know when an asset class is overpriced. Critics of the EMH say the existence of bubbles proves that markets are often irrational, overshooting fundamental values due to "Irrational exuberance" by investors. If we think about the reasons why bubbles seem more prevalent today, it's not clear that the idea of irrational bubbles is useful to investors. The new normal of very low interest rates, restrictive building codes and hard- to-value tech start-ups means one should actually expect to see lots more bubble-like patterns, even if the EMH is true and irrational bubbles don't exist. Question 1. What is the main aim of this article? 2. How does the author seek to achieve this aim?
The main aim of the article is to explore the concept of asset price bubbles, their prevalence in the current economic environment, and to challenge the conventional wisdom that asset bubbles are the result of irrational exuberance by investors.
The author seeks to achieve this aim by first presenting the conventional wisdom on asset bubbles, which attributes their occurrence to irrational investor behavior and the manipulation of markets by the Federal Reserve. The author then challenges this view by invoking the efficient markets theory, which holds that asset prices reflect all publicly available information and that it is difficult to know when an asset class is overpriced. The author also introduces the concept of the new normal of low interest rates and hard-to-value tech start-ups, which creates an environment in which bubble-like patterns are to be expected.
Finally, the author suggests that a more nuanced understanding of asset bubbles is necessary for investors to navigate the current economic landscape.
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Follow the guidelines structor of each and write an explanation for each step. (Use good sentence structure, grammar, and writing
style to support your response for each section.)
a. Develop the Problem Statement
b. Identify Alternatives
c. Choose an Alternative
d. Implement the Decision
e. Evaluate the results
problem :
You are a recent college graduate with only a year of experience with your employer. You were recently promoted to manager of email services. You are quite surprised to receive a phone call at home on a Saturday from the Chief Financial Officer of the firm asking that you immediately delete all email from all email servers, including the archive and back-up servers, that is older than six months. She states that the reason for her request is that there have been an increasing number of complaints about the slowness of email services. In addition, she says she is concerned about the cost of storing so much email. This does not sound right to you because you recently have taken several measures that have sped up email services. An alarm goes off when you recall muted conversations in the lunchroom last week about an officer of the company passing along insider trader information to an executive at a hedge fund. What do you say to the Chief Financial Officer? WWYD
a. Develop the Problem Statement Problem Statement: The Chief Financial Officer of the firm asked that all email from all email servers, including the archive and back-up servers, that is older than six months should be deleted.
The reason for her request is that there have been an increasing number of complaints about the slowness of email services. In addition, she says she is concerned about the cost of storing so much email.
b. Identify Alternatives 1. Delete emails that are older than six months and follow the instructions of the Chief Financial Officer.2. Talk to the Chief Financial Officer about the recent steps that have been taken to speed up email services and ask if deleting emails would be necessary.3. Look into other possible solutions to the problem of slow email services.4. Do nothing and wait for further instructions from the Chief Financial Officer.
c. Choose an Alternative After weighing the alternatives, the best choice would be option 2. This will help to gain clarity on the situation and also provide a better understanding of why the CFO is asking for such an action. d. Implement the Decision Implement the alternative by scheduling a meeting with the CFO as soon as possible to discuss the recent measures taken to speed up email services and to know if deleting emails is necessary. It would also be important to come prepared with data to show how much space is used by the emails, the cost of storage, and the possible repercussions of deleting the emails. e. Evaluate the Results After the meeting, evaluate the results of the discussion and decide on the next steps. This may include deleting the emails if it is necessary and beneficial, or coming up with other alternatives to solve the problem. It is important to document all actions taken and any feedback received for future reference.
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Which of the following would be more considered a good?
Group of answer choices
Automobiles
Airplane ride
Teaching
Call Centre
Out of the given options, 'Automobiles' would be considered good. This is because a good, in economic terms, refers to a tangible product that consumers purchase to satisfy a want or need.
Goods are physical, tangible items that satisfy human wants and needs. Automobiles fall into this category as they are tangible items that are manufactured, bought, and used by consumers. On the other hand, an airplane ride, teaching, and a call center are examples of services, not goods. Services are intangible activities or benefits that an organization provides to consumers in exchange for money or something else of value. An airplane ride is a service provided by airlines, teaching is a service offered by educators, and a call center offers customer service or technical support, which are all intangible activities.
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rrimon Industries bonds have 6 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 10% a. What is the yield to maturity at a current market price of 1. $825? Round your answer to two decimal places. % 2. $1,192? Round your answer to two decimal places. % b. Would you pay $825 for each bond if you thought that a "fair" market interest rate for such bonds was 14%-that is r d
=14% ? I. You would buy the bond as long as the yield to maturity at this price equals your required rate of return. II. You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return. V. You would buy the bond as long as the yield to maturity at this price is less than your required rate of return.
YTM is approximately 12.29%. The correct answer is II. You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return.
a. To calculate the yield to maturity (YTM), we need to solve for the discount rate that equates the present value of the bond's future cash flows (coupon payments and the par value) to the current market price.
Using a financial calculator or spreadsheet, we can find the YTM for each market price:
1. Market price = $825
Bond's par value = $1,000
Coupon rate = 10%
Number of years to maturity = 6
By inputting these values into a financial calculator or using a spreadsheet, we can find that the YTM is approximately 12.29%.
2. Market price = $1,192
Bond's par value = $1,000
Coupon rate = 10%
Number of years to maturity = 6
By inputting these values into a financial calculator or using a spreadsheet, we can find that the YTM is approximately 6.64%.
Therefore, the YTM for a market price of $825 is approximately 12.29%, and for a market price of $1,192, the YTM is approximately 6.64%.
b. To determine if you would pay $825 for each bond given a "fair" market interest rate (required rate of return) of 14%, we need to compare the yield to maturity at that price to the required rate of return.
If the yield to maturity at the price of $825 is equal to or higher than the required rate of return (14%), you would not buy the bond. On the other hand, if the yield to maturity at the price of $825 is lower than the required rate of return (14%), you would consider buying the bond.
Based on the YTM calculation from part (a), if the YTM for the market price of $825 is higher than 14%, you would not buy the bond. If the YTM is lower than 14%, you would consider buying the bond.
Therefore, the correct answer is II. You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return.
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11. Kami Buat Semua Berhad (KBSB) is a conglomerate with businesses in many economic sectors like consumer products, plantation, real estate, and financial services, to name a few. KBSB is now contemplating venturing into internet technologies and services. The company is considering making a sizable investment in this area by setting up a new business division. To assess the commercial viability of this proposal, the relevant cash flows have been estimated. To discover the Net Present Value (NPV) of this investment, an appropriate discount rate has to be used. KBSB's weighted average cost of capital (WACC) is 10%. The average cost of capital of companies in the internet technologies and services sector is 14%. If KBSB decided to go ahead with this, it is most likely going to finance it via raising of new equity capital. KBSB's investment banker has projected that raising external equity capital is going to be particularly costly, given the current sentiments in capital markets, estimating the cost of external equity capital at about 19%. In your opinion, which rate should be used as the discount rate to compute NPV in this situation, and why?
[5 marks]
In this case, the discount rate that should be used to compute NPV is 19%. The weighted average cost of capital (WACC) is a way of measuring a company's cost of capital, which is the cost of capital weighted according to the proportion of each source of capital.
The WACC of KBSB is 10%, whereas the average cost of capital of companies in the internet technologies and services sector is 14%. Raising external equity capital is going to be particularly costly, given the current sentiments in capital markets, estimating the cost of external equity capital at about 19%. The cost of raising new equity capital is relatively high since the sentiment in capital markets is negative. As a result, the firm's cost of capital is expected to rise as it raises external equity capital.In order to determine whether this investment is worthwhile, it is necessary to compute its net present value. Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. It's critical to have a clear understanding of the discount rate to use while calculating the NPV. Since KBSB is contemplating venturing into internet technologies and services and has decided to finance it via raising new equity capital, the discount rate that should be used as the discount rate to compute NPV in this situation is 19%.
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For the give demand function 42-3Q=2P and the price, P=$6 1. Find the price elasticity of the demand function at the indicated values of price.
2. Find the absolute value of price elasticity
3. Is it:
a. elastic b. inelastic c. unitary elasiticity
4. A 5% increase in price will cause ?
a. increase b. decrease
5. A 1% increase in price will cause ?
a. increase b. decrease
Given demand function: 42 - 3Q = 2PPrice, P = $6. 1. To find the price elasticity of the demand function at the indicated values of price, we use the following formula: Price elasticity of demand (E) = (% Change in Quantity Demanded) / (% Change in Price)Let us determine the quantity demanded, Q when P = $6 Substitute the value of P in the demand function 42 - 3Q = 2(6)42 - 3Q = 1242 - 12 = 3Q30 = 3QQ = 10 When P = $6, Q = 10.
The demand function becomes 42 - 3(10) = 12 Therefore, QD = 12 Price elasticity of demand (E) = (% Change in Quantity Demanded) / (% Change in Price)Let us find the percentage change in quantity demanded using the formula:% Change in Quantity Demanded = (New Quantity Demanded - Original Quantity Demanded) / (Original Quantity Demanded)We know that when P = $6, Q = 10.New quantity demanded = Q + ΔQ where ΔQ is the change in the quantity demanded.Substituting P = $6 and ΔP = $1 in the demand function 42 - 3(Q + ΔQ) = 2(6 + 1)39 - 3ΔQ = 13-3ΔQ = -26ΔQ = 26/3 Therefore, new quantity demanded = Q + ΔQ = 10 + 26/3 = 98/3% Change in Quantity Demanded = (New Quantity Demanded - Original Quantity Demanded) / (Original Quantity Demanded)= (98/3 - 10) / 10= 88/30 = 8/3Let us find the percentage change in price using the formula:% Change in Price = (New Price - Original Price) / (Original Price)We know that the original price, P = $6.ΔP = $1.
Therefore, new price = P + ΔP = 6 + 1 = $7% Change in Price = (New Price - Original Price) / (Original Price)= (7 - 6) / 6= 1/6 Price elasticity of demand (E) = (% Change in Quantity Demanded) / (% Change in Price)= (8/3) / (1/6)= (8/3) × (6/1)= 16 Absolute value of price elasticity = |16| = 16.2. Absolute value of price elasticity = |16| = 16.3. Since the price elasticity of demand is greater than 1, i.e., 16 > 1, the demand is elastic.4. A 5% increase in price will cause a decrease in quantity demanded. To find the decrease in quantity demanded, we use the following formula:ΔQ / Q = E × ΔP / P Where ΔP = 5%, E = 16, P = $6 and Q = 10.ΔQ / 10 = 16 × 0.05 / 1ΔQ / 10 = 0.8ΔQ = 8 Decrease in quantity demanded = 8 units.5. A 1% increase in price will cause a decrease in quantity demanded. To find the decrease in quantity demanded, we use the following formula:ΔQ / Q = E × ΔP / P Where ΔP = 1%, E = 16, P = $6 and Q = 10.ΔQ / 10 = 16 × 0.01 / 1ΔQ / 10 = 0.16ΔQ = 1.6 Decrease in quantity demanded = 1.6 units. Therefore, the answer is a. decrease.
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How much your money buys reflects O a) A) comparative advantage; absolute advantage and the face value of your money is b) B) the nominal principle; the real principle c) C) the nominal principle; the real principle d) D) nominal GDP; real GDP e) E) none of the above are correct
The amount of money your money can buy reflects the nominal principle and the real principle.
The correct option is B) the nominal principle; the real principle.
The nominal principle refers to the face value or the nominal value of money. It represents the value of money in terms of the currency unit, such as dollars or euros. The nominal principle focuses on the absolute amount of money without considering the changes in purchasing power due to inflation or other factors.
On the other hand, the real principle takes into account the purchasing power of money. It considers the value of money in terms of the goods and services it can buy. The real principle adjusts for inflation and measures the actual purchasing power of money. It reflects the quantity of goods and services that can be obtained for a given amount of money.
Therefore, the amount of goods and services your money can buy reflects both the nominal principle (the face value of money) and the real principle (the purchasing power of money). It is important to consider both factors when assessing the value of money and its ability to acquire goods and services in an economy.
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Activity I - What is the purpose of a Stakeholder Register and how is it used? How can a project manager incorporate this tool into controlling the project?
Activity II - What are the elements within a Stakeholder Management Plan? Why is it important to have a Stakeholder Management Plan?
It is important to have a Stakeholder Management Plan
A Stakeholder Register serves to identify and document information about stakeholders involved in a project, including their interests, expectations, and potential impact. It helps project managers understand and manage stakeholder relationships effectively. To incorporate this tool into controlling the project, project managers can continuously update the register, assess stakeholder engagement levels, mitigate stakeholder risks, and monitor stakeholder satisfaction.
A Stakeholder Management Plan includes elements such as stakeholder identification, analysis, engagement strategies, a communication plan, and monitoring and control mechanisms. It is important to have a Stakeholder Management Plan because it ensures that stakeholders are properly identified and engaged, minimizes risks and conflicts, and ultimately enhances project success by gaining stakeholder support and maintaining positive relationships.
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Kate, a recent law school graduate sent a letter to Jenny, her classmate on Friday 1 July 2022
and told her that she is moving to take a new job in another country and asked Jenny whether she wanted "the stuff" at my flat for $15,000.
Jenny received the letter on Saturday 2 July 2022, and on Monday 4 July 2022, Jenny sent
Kate a letter accepting the offer. The next day, Jenny changed her mind, called Kate and told
her to forget the deal. Since Jenny said she is not interested, Kate then sold "the stuff" to Ally
for $13,000. Later that week, Kate received the letter that Jenny had sent Monday 4 July
2022.
Is there a contract between Kate and Jenny? Why?
No, there is no contract between Kate and Jenny.
In order for a contract to be formed, there must be an offer, acceptance, consideration, and an intention to create legal relations. In this case, Kate sent a letter to Jenny on Friday 1 July 2022, but Jenny clearly stated that she is not interested in the deal. Since Jenny did not accept the offer, there is no contract between them. Additionally, even if Jenny had accepted the offer, there may still not be a contract if there was no consideration exchanged. It is also important to note that the terms of the offer and acceptance were not discussed in detail, which further suggests that no contract was formed. Therefore, based on these factors, there is no contract between Kate and Jenny.
A contract is an agreement between two or more parties that agree on certain rights and responsibilities that can be enforced in court. Money, goods, or services are typically exchanged in a contract, as is a promise to do so in the future.
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When the free market system cannot deliver allocative efficiency, despite zero government intervention.
A.Monopoly
B.Microeconomics
C.Tragedy of the commons
D.Market failure
Question 24 (1 point)
Analyzing the effects of adding just one more unit.
A.Cost/benefit analysis
B. Marginal analysis
C. Cross-price elasticity
D.Entrepreneurship
Q24 B. Marginal analysis.
Marginal analysis refers to the examination of the effect of producing or consuming one additional unit of a good or service. It involves comparing the additional benefits and costs of the last unit produced or consumed, and determining whether the benefits outweigh the costs. It is used to make decisions about how much of a good or service to produce or consume, and helps firms and individuals to maximize their profits or utility.
Suppose that an economy consists of only two individuals. William has $1250 available to spend on goods. He decides to purchase $430 worth of produce from Juanita in the current year. No other economic activity takes place during the current year. Using this information, answer the questions. For the current year, what is the economy's income? For the current year, what is the economy's expenditure? $ In an economy, how are income and expenditure related? They are equal. Income is greater than expenditure. They are unrelated. Income is less than expenditure.
In the current year, the economy's income is $430, and the economy's expenditure is $430.
How are income and expenditure related in an economy?In an economy, income and expenditure are related in that they are equal.
It's also referred to as the fundamental income-expenditure identity in macroeconomics.
The primary idea of national income accounting is that an economy's output is equal to its national income, which can be expended in two ways: consumption and saving.
Investment is the third type of expense. The fundamental identity of income and expenditure is given by:
Y = C + I + G + NX
Where-
Y = GDP (income of the economy)
C = consumption
I = investment
G = government purchases
NX = net exports of goods and services
The fundamental relationship between income and expenditure is Y = C + I + G + NX.
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Consolidated Industries is growing quickly. Dividends are expected to grow at a 15 percent rate for the next 3 years, with the growth rate falling off to a constant 1.5 percent thereafter. 기f the required return is 9 percent and the company just paid a $4.00 dividend. what is the current share price? (Do not round your intermediate calculations.) $79.25 $74.64 $78.48 $76.94 $80.79
The solution to the given problem can be found by using the constant growth model. We know that the dividends are expected to grow at a rate of 15% for the next 3 years, and then the growth rate will fall off to a constant 1.5% thereafter. We also know that the required return is 9%.
Therefore, we can use the constant growth model to find the current share price, which is given by the following formula:P0 = D1 / (r - g)Here, P0 is the current share price, D1 is the dividend next year, r is the required return, and g is the growth rate. To find the dividend next year, we can use the following formula:D1 = D0 * (1 + g)Here, D0 is the current dividend. Given that the current dividend is $4.00, we can find D1 as follows:D1 = $4.00 * (1 + 0.15) = $4.60For the first three years, the dividend will grow at a rate of 15%, so we can use a different formula to find the present value of the dividends over this period, which is given by:P = D0 * (1 + g) / (r - g) * [1 - (1 + g / (1 + r))^n]
Here, n is the number of periods. In this case, n is 3. Substituting the given values, we get:P = $4.00 * (1 + 0.15) / (0.09 - 0.15) * [1 - (1 + 0.15 / (1 + 0.09))^3] = $9.98Now, we can use the constant growth model to find the present value of the dividends after the third year, which is given by:P = D1 / (r - g)Here, we can use a growth rate of 1.5%. Substituting the given values, we get:P = $4.60 / (0.09 - 0.015) = $62.92Finally, we can find the current share price by adding the present value of the dividends over the first three years and the present value of the dividends after the third year:P0 = $9.98 + $62.92 = $72.90Therefore, the current share price is $72.90.
Using the constant growth model, the current share price of Consolidated Industries is $72.90. The required return is 9%, and the dividends are expected to grow at a rate of 15% for the next 3 years, with the growth rate falling off to a constant 1.5% thereafter. The calculation involves finding the present value of the dividends over the first three years and the present value of the dividends after the third year, and then adding them to get the current share price.
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URGENT!! Which type of payroll report is prepared for the employee's use?
A. Form W-3
B. Form W-2
C. Form 941
D. Form 940
Answer:
Hope this helps and have a nice day
Explanation:
The type of payroll report that is prepared for the employee's use is Form W-2.
Option B. Form W-2
A portfolio is invested 45 percent in Stock G, 40 percent in Stock J, and 15 percent in Stock K. The expected returns on these stocks are 11 percent, 9 percent, and 15 percent, respectively. What is the portfolio's expected return? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Expected return_____
The portfolio's expected return is 10.7%.The portfolio's expected return can be calculated using a weighted average. The expected return of each stock is multiplied by its percentage of the portfolio, and then all of these weighted returns are added up to give the overall expected return.
The formula for this calculation is as follows:
Expected return = (Weight of Stock G x Expected return of Stock G) + (Weight of Stock J x Expected return of Stock J) + (Weight of Stock K x Expected return of Stock K)
Where the weight of each stock is the percentage of the portfolio invested in that stock.
Using the values given in the problem, we can substitute them into this formula:
Expected return = (0.45 x 0.11) + (0.40 x 0.09) + (0.15 x 0.15)
Expected return = 0.0495 + 0.036 + 0.0225
Expected return = 0.107
Expected return = 10.7%
Therefore, the portfolio's expected return is 10.7%.
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Athens, Inc has a credit rating of A and wants to issue 15-year bonds at par value. If the 15-year Treasury bond has a YTM of 4.44% and the credit spread for Single A debt over Treasuries is 5.57%, what coupon rate should Athens select? Enter your answer as a decimal and show four decimal places. For example, if your answer is 5.25%, enter .0525.
After calculating the yield to maturity of the bond, we can say that the coupon rate should be 9.01%.
To determine the coupon rate that Athens, Inc should select for its 15-year bonds, we need to calculate the yield to maturity (YTM) for the bond using the given information.
YTM = 15-year Treasury bond YTM + Credit spread for Single A debt over Treasuries
15-year Treasury bond YTM = 4.44%
Credit spread for Single A debt over Treasuries = 5.57%
YTM = 4.44% + 5.57%
YTM = 9.01%
The coupon rate on the bond should equal the YTM, as the bond is issued at par value. Therefore, the coupon rate should be 9.01% (0.0901 as a decimal) to provide a yield to maturity consistent with the market conditions and the credit rating of Athens, Inc.
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A firm (that produces a single type of product) has a Lerner index of 0.08 and is charging a price of $50 per unit for its product a) Calculate the marginal cost of the firm's product. b) Which industry is the firm more likely in: PERFECT COMPETITION, OR OLIGOPOLY? Carefully explain your answer. Your answer must clearly indicate the you understand the concepts: Lemer Index, Perfect Competition, and Oligopoly (Clearly label each answer and show all calculations that you do, or you will receive no credit for your answers.) 1 F T: B I EE
Given the firm's low lerner index, it is more likely to be operating in a perfect competition industry.
a) to calculate the marginal cost, we can use the formula:
lerner index = (price - marginal cost) / price
given that the lerner index is 0.08 and the price is $50, we can rearrange the formula to solve for the marginal cost:
0.08 = ($50 - marginal cost) / $50
0.08 * $50 = $50 - marginal cost
$4 = $50 - marginal cost
marginal cost = $50 - $4 = $46 per unit
b) based on the lerner index of 0.08, the firm's market power is relatively low. in perfect competition, firms have no market power and the lerner index would be zero. in oligopoly, firms have some degree of market power. a) the lerner index measures a firm's market power by comparing the difference between the price and marginal cost relative to the price. by rearranging the formula, we can solve for the marginal cost, which in this case is $46 per unit.
b) perfect competition is characterized by a large number of firms, homogeneous products, ease of entry and exit, and no market power. in perfect competition, firms are price takers and cannot influence the market price. oligopoly, on the other hand, is characterized by a small number of large firms, differentiated or homogeneous products, high barriers to entry, and some degree of market power. given that the firm's lerner index is low (0.08), it suggests that the firm has limited market power, making it more likely to be operating in a perfect competition industry where firms have no market power.
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On 24 February 2022, Russia launched a large-scale military operation against Ukraine. All else constant, the incidence will most likely make the value of bond convexity:
Group of answer choices
decrease.
become indeterminate.
increase.
remain unchanged.
Based on the given scenario where Russia launched a large-scale military operation against Ukraine, it is likely to have significant implications for the financial markets and the global geopolitical landscape. Bond convexity is a measure of how the price of a bond changes in response to changes in interest rates.
In a situation of increased geopolitical tensions and the initiation of a military operation, there is typically higher uncertainty and risk in the markets. This uncertainty can lead to increased volatility and potential flight to safety. Investors may seek refuge in assets considered less risky, such as government bonds, leading to increased demand for those bonds.
Increased demand for bonds usually leads to a decrease in their yields, and as yields decrease, the price of the bond tends to increase. As a result, the value of bond convexity is likely to increase in such a scenario. Therefore, the correct answer is that the incidence will most likely make the value of bond convexity increase.
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1. Which of the following statements best describes variable costs
a. Costs that remain fixed in total, but vary on per unit basis
b. Costs that remain constant in total and on a per unit basis
c. Cost that vary in total and fixed on per unit basis
2. Which of the following statements is not a basis for absorbing manufacturing overheads
a. direct labour hours
b. direct material costs
c. conversion cost
d. machine hours
d. None of the above
The statement that best describes variable costs is c. Cost that vary in total and fixed on per unit basis.
1. The statement that best describes variable costs is: C. "Costs that vary in total and fixed on a per unit basis." Variable costs are expenses that change in direct proportion to the level of production or sales.
Examples of variable costs include raw materials, direct labor, and commissions.
2. The statement that is not a basis for absorbing manufacturing overheads is: a. "Direct material costs."
The basis for absorbing manufacturing overheads typically includes direct labor hours, machine hours, or conversion costs. Direct material costs are considered part of the direct costs and are not typically used to allocate manufacturing overhead expenses.
Therefore, the statement that best describes variable costs is c. Cost that vary in total and fixed on per unit basis.
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all of the following are true about 2022 distributions and contributions to section 529 plans except: a deduction of up to $10,000 per taxpayer ($20,000 mfj) is available on the federal income tax return for contributions. distributions may be used to pay the costs of participation in a registered apprenticeship program. distributions may be used to pay up to $10,000 in qualified student loans. nonqualified distributions are subject to a penalty tax of 10% of the amount included in income.
All statements provided about 2022 distributions and contributions to Section 529 plans are true except for the statement regarding a deduction on the federal income tax return for contributions.
Section 529 plans are tax-advantaged savings plans designed to help individuals save for future education expenses. In 2022, certain rules and benefits applied to these plans. Contributions made to a Section 529 plan are not eligible for a federal income tax deduction. However, the other statements mentioned are true. Distributions from a Section 529 plan can be used to pay for the costs of participating in a registered apprenticeship program and up to $10,000 in qualified student loans. Nonqualified distributions, which are withdrawals for non-education expenses, are subject to a penalty tax of 10% on the amount included in income.
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Baxley Brothers has a DSO of 47 days, and its annual sales are
$7,665,000. What is its accounts receivable balance? Assume that it
uses a 365-day year. Round your answer to the nearest dollar.
PLEASE
The accounts receivable balance for Baxley Brothers is approximately $993,315.
To calculate the accounts receivable balance for Baxley Brothers, we can use the formula:
Accounts receivable balance refers to the total amount of money owed to a company by its customers for goods or services that have been sold on credit. It represents the outstanding payments that are yet to be collected by the company.
Accounts Receivable = (DSO / 365) * Annual Sales
Given that the DSO is 47 days and the annual sales are $7,665,000, we can substitute these values into the formula:
Accounts Receivable = (47 / 365) * $7,665,000
Accounts Receivable ≈ $993,315
Therefore, the accounts receivable balance for Baxley Brothers is approximately $993,315.
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