1. The market price will remain at the equilibrium price of $0.75.
2. The price at which suppliers are willing to supply a quota limit quantity is called the quota price.
3. In the circular flow diagram, households receive money for selling resources, such as labor, in the factor market.
4. The marginal benefit and marginal cost, you can make an informed decision on whether it is beneficial to buy additional phones for the store.
1- In the given scenario, the government imposes a price floor of $0.60, which is below the equilibrium price of $0.75. In this case, the price floor is non-binding because it is set below the equilibrium price. A non-binding price floor does not have any impact on the market price or output. The market price will remain at the equilibrium price of $0.75, and the quantity traded will also remain the same as it was before the price floor was imposed.
2- The price at which suppliers are willing to supply a quota limit quantity is called quota price. A quota is a limit on the quantity that can be produced or imported, and the quota price is the price at which suppliers are willing to supply that limited quantity.
3- In the circular flow diagram, households receive money for selling resources, such as labor, in the factor market. The factor market is where households provide resources, such as labor and capital, to businesses in exchange for income.
4- As a manager at a Samsung store, when determining whether to buy additional phones for the store, you would choose at the margin by comparing two concepts: marginal benefit and marginal cost. Marginal benefit refers to the additional benefit or revenue that would be gained from buying an additional phone. Marginal cost refers to the additional cost that would be incurred from buying an additional phone. By comparing the marginal benefit and marginal cost, you can make an informed decision on whether it is beneficial to buy additional phones for the store.
To know more about market price, visit:
https://brainly.com/question/31964955
#SPJ11
7- Suppose you received a 4 percent increase in your nominal wage. Over the year, inflation ran about 4 percent. Which of the following is true?
Select one:
a.
Although your nominal wage increased, your real wage was unchanged.
b.
Both your nominal and real wages decreased.
c.
Both nominal and real wages increased, but the nominal wage increased more.
d.
Your nominal wage fell.
e.
Your real wage fell.
If you have received a 4 percent increase in your nominal wage and the inflation ran about 4 percent over the year, then your real wage is unchanged. Thus, option a is correct.What is nominal wage?Nominal wages refer to an employee's earnings that are not adjusted for inflation.
It represents the number of dollars an employee receives for their services. How to calculate real wages Real wages are calculated by taking the ratio of nominal wages to the price level index. The formula for real wages is Real Wages = Nominal Wages / Price Level IndeX If the value of the real wage remains the same after an increase in nominal wages, then it can be said that the inflation rate and the nominal wage growth rate are the same.
In this situation, the inflation rate was 4 percent, and the nominal wage growth rate was also 4 percent, which implies that there has been no real wage increase. Therefore, your real wage is unchanged (Option a is correct).Option b is incorrect because, if the nominal and real wages both decrease, then that would mean that the inflation rate is greater than the nominal wage growth rate. Option c is incorrect because the nominal wage increased by 4 percent, and the inflation rate was also 4 percent.
To know more about increase visit:
https://brainly.com/question/16029306
#SPJ11
October 1: Campbell's owners invested $40,000 cash into the business in exchange for common stock. October 1: Purchased equipment for $7,500 cash October 2: Campbell prepaid four months of rent for $16,000 cash. October 2: Purchased 800 units of inventory for $10 /unit on account. October 6: Sold 350 units of inventory to customers. Customers paid $15/ unit in cash. October 8: Paid suppliers $5,000 for inventory previously purchased. October 9: Purchased office supplies valued at $2,000 on account. October 12: Purchased 300 units of inventory for $12 /unit with cash October 16: Paid employee salaries of $2,000 October 20: Sold 400 units of inventory for $16 /unit on account. October 21: Paid suppliers $1,000 for inventory previously purchased on account. October 23: customers paid $3,400 for amounts due on their accounts. October 26: Sold 100 units of inventory for $16 /unit. Customers paid cash for their purchases. October 29: Paid suppliers $600 for supplies previously purchased on account. October 31: Sold $3,000 in gift certificates to customers. October 31: Purchased 250 units of inventory for $13 /unit on account. Additional information: Campbell prepares monthly financial statements. Campbell depreciates all depreciable fixed assets using the straight-line method and assumes a five-year useful life with no salvage value. Campbell determines COST OF GOODS SOLD at the end of the fiscal period based on the number of units that remain in inventory and uses the FIFO method of inventory costing. Campbell counted 300 units in its inventory on October 31. Additionally, Campbell determined that supplies valued at $500 remained on hand at the end of October. Campbell uses the percentage of sales method to estimate bad debts, and it estimates that 5% of credit sales will ultimately go uncollected. Campbell incurred $2,250 of salaries in October that will be paid in November.
Campbell's Owners' Equity TransactionsThe owner's equity transactions for Campbell's business in October are as follows:October 1: Campbell's owners invested $40,000 cash into the business in exchange for common stock.
Journal entry: Cash (Assets) is debited for $40,000, and Common stock (Owners' Equity) is credited for $40,000.October 6: Sold 350 units of inventory to customers. Customers paid $15/ unit in cash.Journal entry: Cash (Assets) is debited for $5,250, and Sales revenue (Revenue) is credited for $5,250.October 20: Sold 400 units of inventory for $16 /unit on account.
The total cost of inventory sold is (350 × $10) + (400 × $10) + (100 × $12) = $8,900. The cost of goods sold for October is $8,900 using the FIFO method of inventory costing.Journal entry: Cost of goods sold (Expense) is debited for $8,900, and Inventory (Assets) is credited for $8,900.Estimation of Bad DebtsCampbell uses the percentage of sales method to estimate bad debts, and it estimates that 5% of credit sales will ultimately go uncollected.
To know more about transactions visit:
https://brainly.com/question/24730931
#SPJ11
Christain Business Ethics] Case study
apply Christian principles and scripture and analyze the questions with the Holiness-Justice-Love framework from Alec Hill
Although many large public companies still operate after filing for bankruptcy, many employees lose their jobs, and the other stakeholders suffer the consequences noted. However, some employees actually get cash bonuses, and typically, the only employees in the "some" category are executives. Such decisions are made by the company’s boards of directors, as one of their key responsibilities is to determine the compensation of top executives. Some boards of directors decide before filing to pay the CEO, and occasionally other executives, large cash bonuses. For instance, during the economic devastation due to COVID-19, J. C. Penny paid its CEO $4.5 million; Whiting Petroleum paid $6.4 million to its CEO and nearly $15 million to other executives; Neiman Marcus' CEO received $2 million, and Hertz paid $16.2 million to 340 director-level and above executives, and $700,000 to its CEO. It is worth noting that the actual practices are legal and have been common for years. Nearly one-third of large companies filing for bankruptcy due to the coronavirus awarded bonuses to executives within a month of filing for bankruptcy
1. Since the practice is so common, do you think executives even see this as a potential ethical issue? Why or why not?
2. What is the responsibility of an executive receiving such a bonus?
3. Consider a CEO who has accepted a pre-bankruptcy bonus and assume that this same CEO thinks that this practice is inappropriate. Now analyze that CEO in terms of Kohlberg’s Model of Moral Development
4. Repeat #2 but assume the CEO thinks the proactive is inappropriate. How does your moral development analysis change?
1. Yes, some executives may perceive this as an ethical issue, while others may not.
2. The responsibility of an executive receiving such a bonus is to consider the ethical implications and act in alignment with Christian principles.
3. The CEO accepting the bonus but viewing it as inappropriate aligns with the post-conventional level of moral development.
4. If the CEO thinks the practice is inappropriate and refrains from accepting the bonus, their moral development analysis remains consistent with the post-conventional level.
1. Yes, executives may perceive the practice of receiving cash bonuses before or during bankruptcy as a potential ethical issue. However, due to its commonality and legal acceptance, some executives may not view it as problematic. They might consider it a standard part of their compensation package or perceive it as a reward for their performance regardless of the company's financial situation. Additionally, they may rationalize it by arguing that their responsibilities and contributions warrant the bonus.
2. The responsibility of an executive receiving such a bonus is to consider the ethical implications of accepting it. They should assess the potential harm it may cause to other stakeholders, such as employees who lose their jobs or shareholders who suffer financial losses. The executive should also evaluate whether accepting the bonus aligns with their personal values and the principles of Christian ethics. They have a duty to act in a just and loving manner, considering the well-being of all individuals affected by their decisions.
3. In terms of Kohlberg's Model of Moral Development, if a CEO accepts a pre-bankruptcy bonus but believes the practice is inappropriate, they may fall under the post-conventional level. At this stage, individuals recognize and adhere to ethical principles and societal norms beyond self-interest. The CEO might acknowledge the need for fairness, justice, and integrity in business practices, yet still conform to the prevailing system due to external pressures or a lack of viable alternatives.
4. If the CEO thinks the practice is inappropriate and refrains from accepting the bonus, their moral development analysis remains consistent with the post-conventional level. They exhibit a higher moral reasoning by prioritizing ethical principles over personal gain or external pressures. The CEO's decision demonstrates a commitment to acting in line with their convictions and upholding the values of honesty, fairness, and justice.
To learn more about Business Ethics, here
https://brainly.com/question/30397877
#SPJ4
Write a program that will calculate the cost of installing fiber optic cable at a cost of .87 per ft for a company. your program should display the company name and the total cost.
Total cost is the term used to describe the total cost of manufacturing, which includes both fixed and variable costs.
The cost necessary to manufacture a good is referred to as the whole cost in economics. The two components of the total cost are as follows: Fixed price: This expense will always exist.
Total cost, as used in economics, is the least expensive way to produce a certain amount of output. The two components of the total cost are as follows: Fixed price: This expense will always exist.
Learn more about the Total Cost here:
https://brainly.com/question/30355738
#SPJ4
Future Value of re-invested payments and number of bonds
An investor has the choice of purchasing a 12-year annual bond, that has annual coupon payment of $60, each year plus its par-value in the final year. The current price of the bond is $1,241.58. If the investor, believes they can re-invest the coupon payments at a 5.5% interest rate.
How much money will the investor have in 12 years? ( I have this answer, don't answer this. I need help on the second question)
1983.14 correct.
Suppose there is a zero-coupon bond, that has the same yield to maturity, and maturity date as the 12-year bond. How, many zero-coupon bonds would the investor need to purchase to have the same total cash flow, as the 12-year coupon paying bond. (Assume the investor can buy partial bonds.)
Please show your work in excel.
The investor would need to purchase approximately 1.72 zero-coupon bonds to have the same total cash flow as the 12-year coupon-paying bond, assuming the yield to maturity and maturity date are the same for both bonds.
To determine the number of zero-coupon bonds the investor would need to purchase to have the same total cash flow as the 12-year coupon-paying bond, we need to calculate the cash flow of the coupon bond and compare it to the cash flow of the zero-coupon bonds.
The coupon bond has 12 coupon payments of $60 each and a par value payment in the final year. The total cash flow from the coupon bond can be calculated as follows:
Coupon Payments: 12 * $60 = $720
Par Value Payment: $1,000 (assuming the par value is $1,000)
Total Cash Flow from Coupon Bond: $720 + $1,000 = $1,720
Now, let's calculate the cash flow of the zero-coupon bond. Since it is a zero-coupon bond, there are no coupon payments, only the par value payment.
Total Cash Flow from Zero-Coupon Bond: $1,000
To find the number of zero-coupon bonds needed, we divide the total cash flow of the coupon bond by the cash flow of the zero-coupon bond:
Number of Zero-Coupon Bonds = Total Cash Flow from Coupon Bond / Total Cash Flow from Zero-Coupon Bond
Number of Zero-Coupon Bonds = $1,720 / $1,000
Number of Zero-Coupon Bonds = 1.72
Since we can buy partial bonds, the investor would need to purchase approximately 1.72 zero-coupon bonds to have the same total cash flow as the 12-year coupon-paying bond.
Please note that the calculation is based on the assumption that the yield to maturity and maturity date are the same for both the coupon bond and the zero-coupon bond.
Learn more about zero-coupon bonds
https://brainly.com/question/21014163
#SPJ11
Show with evidence the relationship between Environmental Economics and Sustainable Development
Environmental Economics is the study of the impact of economic policies and practices on the environment. The primary goal of environmental economics is to reduce the negative impact of human activity on the environment, while ensuring that economic growth and development are not compromised.
Sustainable development, on the other hand, is a concept that emphasizes the need to balance economic, social, and environmental factors to achieve long-term prosperity and wellbeing. The relationship between environmental economics and sustainable development is one of interdependence.
Environmental economics provides the analytical framework and tools necessary to evaluate the costs and benefits of different policy options, and to identify the most efficient and effective ways to reduce the negative impact of economic activity on the environment. Sustainable development, in turn, provides the broader context for environmental economics by emphasizing the need to integrate environmental concerns into economic decision-making processes at all levels, from local to global.
To know more about study visit:
https://brainly.com/question/17344576
#SPJ11
Under U.S. GAAP, what is similar about the accounting for cash and trade discounts? They are accounted for almost identically. They are not accounted for in the same way. They are accounted for when the sale is made. They are almost always accounted for using the net methods.
Under U.S. GAAP (Generally Accepted Accounting Principles), the similar aspect between the accounting for cash and trade discounts is that they are almost always accounted for using the net methods.
This means that the discounts are deducted from the original sales amount to arrive at the net amount that is recorded in the financial statements. Both cash discounts and trade discounts are commonly accounted for in this manner to reflect the reduced amount of revenue or cost associated with the transaction. However, it's important to note that while they share this similarity in accounting treatment, cash discounts specifically involve offering a reduction in price for early payment, while trade discounts are more commonly used to adjust the listed price for different customers or quantities.
To learn more about Principles
https://brainly.com/question/28072798
#SPJ11
Black Stone Mines stock returned 9, 16, -7, and 13% over the past four years, respectively. What is the geometric average return?
Select one:
a. 7.75%
b. 9.94%
c. 6.21%
d. 7.36%
e. 10.33%
The geometric average return for Black Stone Mines stock over the past four years is approximately 9.94%.
To calculate the geometric average return, we need to multiply the individual returns and then take the nth root of the product, where n is the number of years.
The given returns are 9%, 16%, -7%, and 13% over the past four years.
First, we convert the negative return to a positive value by adding 100% to it. So, -7% becomes 93%.
Next, we multiply the returns:
9% * 16% * 93% * 13% = 0.0936
To find the geometric average return, we take the fourth root of the product:
(0.0936)^(1/4) ≈ 0.994
Finally, we convert the result to a percentage:
0.994 * 100% ≈ 9.94%
The correct answer is b. 9.94%.
Learn more about geometric
https://brainly.com/question/29170212
#SPJ11
Managers are constantly making decisions arid those decisions have significant implications for employees, the organization, and its stakeholders. Many times these decisions must be made without having complete information. If you were a manager, what strategy would you use to provide assurance that the action you take has minimal impact on people and the organization? Provide specific examples and discuss how you would develop a solution.
The strategy for minimal impact decision-making involves transparent communication, seeking diverse perspectives, thorough scenario analysis, adaptability, and a commitment to continuous learning and improvement.
As a manager faced with the challenge of making decisions without complete information, I would employ a strategy centered around effective communication, collaboration, and proactive problem-solving.
Here is an outline of the approach I would take:
1. Transparent Communication: Openly communicate with employees and stakeholders about the decision-making process, emphasizing the need to make informed choices despite limited information.
Clearly explain the factors considered, potential risks, and the rationale behind the decision.
Example: Hold a team meeting or send out a detailed email communication outlining the decision, its context, and the reasons behind it. Encourage employees to ask questions and provide feedback.
2. Seek Diverse Perspectives: Engage key stakeholders and employees in the decision-making process to gain diverse perspectives and insights.
Encourage their input, ideas, and concerns to ensure a more comprehensive understanding of the situation.
Example: Organize cross-functional team discussions or brainstorming sessions to gather input from different departments or teams.
Consider conducting surveys or seeking anonymous feedback to ensure a safe space for open dialogue.
3. Scenario Analysis and Risk Assessment: Conduct thorough scenario analysis to anticipate potential outcomes and risks associated with the decision.
Evaluate the impact on people, the organization, and stakeholders under different scenarios and identify potential mitigating actions.
Example: Create a risk matrix or decision tree to assess potential outcomes and their associated risks.
Identify actions that can minimize negative impacts and develop contingency plans to address any potential issues.
4. Agile Decision-Making and Adaptability: Implement an iterative decision-making approach that allows for flexibility and adaptation based on new information or changing circumstances. Monitor the situation closely and be willing to adjust the course of action as needed.
Example: Set up regular check-ins or review points to assess the impact of the decision and gather additional information. Stay open to feedback and be willing to pivot or modify the approach if necessary.
5. Continuous Learning and Improvement: Foster a culture of continuous learning and improvement, encouraging employees to provide feedback and suggestions for future decision-making processes.
Evaluate the outcomes of decisions and incorporate lessons learned into future practices.
Example: Conduct post-implementation reviews or retrospectives to assess the impact of decisions and identify areas for improvement.
Use feedback mechanisms such as surveys or suggestion boxes to gather input from employees on how decision-making processes can be enhanced.
By employing these strategies, I would aim to provide assurance that the actions taken have minimal impact on people and the organization.
Transparent communication, inclusive decision-making, thorough analysis, adaptability, and a commitment to continuous improvement would help mitigate risks and enhance the overall decision-making process.
Learn more about decision-making from the given link
https://brainly.com/question/1249089
#SPJ11
What is the ending balance in finished goods inventory using variable costing if units are sold?
By deducting the variable cost of products sold from the variable cost of goods made, the ending balance in completed goods inventory using variable costing is determined if units are sold.
Costs are the amount of money that was spent on the making or providing of an item or service but is no longer being utilised for accounting, retail, research, or accounting. The complete amount of money spent on a purchase, if it occurs in the context of business, would be considered the cost.
The input required in this instance for receiving the object is money. The cost of production incurred by the original producer as well as any additional transactional expenses incurred by the acquirer above and above the amount paid to the producer may be included in this acquisition cost.
Learn more about cost here:
brainly.com/question/17120857
#SPJ4
Ritchie Manufacturing Company makes a product that it sells for $180 per unit. The company incurs variable manufacturing costs of $79 per unit. Variable selling expenses are $20 per unit, annual fixed manufacturing costs are $500,000, and fixed selling and administrative costs are $245,200 per year. Required Determine the break-even point in units and dollars using each of the following approaches: a. Use the equation method. b. Use the contribution margin per unit approach. c. Prepare a contribution margin income statement for the break-even sales volume. Complete this question by entering your answers in the tabs below. Req A to B Reqc Determine the break-even point in units and dollars using the equation method, the contribution margin per unit approach and the contribution margin ratio approach. a. Break-even point in units Break-even point in dollars Contribution margin per unit Break-even point in units Break-even point in dollars
Ritchie Manufacturing Company, sales volume needed to cover both fixed and variable costs, as well as the corresponding dollar amount. using all three approaches, the break-even point for Ritchie Manufacturing Company is 9,200 units or $1,656,000 in dollars.
a. Equation Method:
The equation method uses the formula: Break-even point (in units) = Fixed Costs / Contribution Margin per Unit.
The fixed costs for Ritchie Manufacturing Company are the sum of annual fixed manufacturing costs and fixed selling and administrative costs, which is $500,000 + $245,200 = $745,200. The contribution margin per unit is the selling price per unit minus the variable manufacturing costs and variable selling expenses, which is $180 - $79 - $20 = $81.
Using the formula, the break-even point in units is: $745,200 / $81 = 9,200 units.
To calculate the break-even point in dollars, we multiply the break-even point in units by the selling price per unit: 9,200 units * $180 = $1,656,000.
b. Contribution Margin per Unit Approach:
The contribution margin per unit is the selling price per unit minus the variable manufacturing costs and variable selling expenses, which is $180 - $79 - $20 = $81.
To determine the break-even point in units, we divide the fixed costs by the contribution margin per unit: $745,200 / $81 = 9,200 units.
The break-even point in dollars can be calculated by multiplying the break-even point in units by the selling price per unit: 9,200 units * $180 = $1,656,000.
c. Contribution Margin Ratio Approach:
The contribution margin ratio is the contribution margin per unit divided by the selling price per unit. In this case, it is $81 / $180 = 0.45 or 45%.
To find the break-even point in dollars, we divide the fixed costs by the contribution margin ratio: $745,200 / 0.45 = $1,656,000.
To determine the break-even point in units, we divide the break-even point in dollars by the selling price per unit: $1,656,000 / $180 = 9,200 units.
Therefore, using all three approaches, the break-even point for Ritchie Manufacturing Company is 9,200 units or $1,656,000 in dollars.
know more about break-even point :brainly.com/question/32507413
#SPJ11
Your retired client has accumulated investment and retirement assets totaling $3,747,000 and is happy with an after-tax lifestyle of $180,000 a year. He is going to spend this amount every year forever. Leaving aside issues of inflation, what should his after-tax current yield be to covers his cost of living? Please write the percent sign in the Units box. Round the answer to two decimal places.
To determine the after-tax current yield that would cover your retired client's cost of living, we can use the following formula:
After-Tax Current Yield = Annual Cost of Living / Total Investment and Retirement Assets
Given:
Annual Cost of Living = $180,000
Total Investment and Retirement Assets = $3,747,000
After-Tax Current Yield = $180,000 / $3,747,000
After calculating the division, the after-tax current yield is approximately 4.81%.
Learn more about cost here :
https://brainly.com/question/33365600
#SPJ11
DIY Pty Ltd has made an investment in another company that will guarantee it a cash flow of $21846 each year for the next 5 years. If the company uses a discount rate of 10 per cent on its investments, what is the present value of this investment? 7B Cecilia Fortuna plans to invest $23004 a year at the end of each year for the next 7 years in an investment that will pay her a rate of return of 12.5 per cent per annum. How much money will Cecilia have at the end of 7 years?
7A. The present value of the investment is $8291.724 if the corporation uses a 10% discount rate on its investments.
7B. Cecilia will have $178870.218 at the end of 7 years.
7A. To calculate the present value of the investment, we must utilise the annuity present value formula. PV = CF * (1 - (1 + r)(-n)) / r, where PV is present value, CF is cash flow, r is the discount rate, and n is the number of years.
Plugging in the given values, PV = 21846 * (1 - [tex](1 + 0.1)^{-5[/tex]) / 0.1.
Simplifying the equation, PV = 21846 * (1 - 0.620921) / 0.1.
PV = 21846 * 0.379079 / 0.1.
PV = 8291.724.
Therefore, the present value of the investment is $8291.724.
7B. To figure out how much money Cecilia will have after 7 years, we'll need to utilise the annuity future value calculation. FV = CF * ([tex](1 + r)^n[/tex] - 1) / r, where FV represents future value, CF is cash flow, r is the rate of return, and n is the number of years.
Plugging in the given values, FV = 23004 * ([tex](1 + 0.125)^7[/tex] - 1) / 0.125.
Simplifying the equation, FV = 23004 * (1.971246 - 1) / 0.125.
FV = 23004 * 0.971246 / 0.125.
FV = 178870.218.
Therefore, Cecilia will have $178870.218 at the end of 7 years.
To know more about investments refer here:
https://brainly.com/question/15105766#
#SPJ11
1
and 2
Which of the following is a money markat instrument? Fideral fund US. Trasury Notes Municpal bond Cominor stack Corporate bond Question 2 The duration of a 10 -year zero coupon bond is not calculable
"Federal fund." The Federal fund is a money market instrument used by banks to borrow and lend funds overnight to meet reserve requirements.
Money market instruments are short-term debt securities that have high liquidity and low risk. They are typically used by investors and institutions to park their excess cash or meet short-term funding needs. In the given options, the Federal fund stands out as a money market instrument. It refers to the funds held by commercial banks at the Federal Reserve Bank to meet their reserve requirements. Banks lend these funds to each other overnight, and the interest rate on these transactions is known as the federal funds rate.
On the other hand, the other options mentioned are not money market instruments. U.S. Treasury Notes, municipal bonds, corporate bonds, and Cominor stack are all types of bonds, but they belong to the broader category of fixed-income securities. The duration of a bond represents the weighted average time until all the bond's cash flows are received. While the duration of a zero coupon bond can be calculated, it is not applicable in this scenario as the duration calculation requires periodic coupon payments.
To learn more about Federal fund click here
brainly.com/question/31232170
#SPJ11
Complete Question
Which of the following is a money market instrument? Federal fund US. Treasury Notes Municipal bond Cominor stack Corporate bond Question 2 The duration of a 10-year zero coupon bond is not calculable
If individuals decide to save more, the ____ of funds will ____.
a. supply; increase
b. supply; decrease
c. demand; increase
d. demand; decrease
2. If the Fed purchases $100 of bonds from a firm, ultimately the money supply should increase by ____.
a. $0
b. $100
c. $1,000
d. 10%
If individuals decide to save more, the (a) supply of funds will (b) increase. If the Fed purchases $100 of bonds from a firm, ultimately the money supply should increase by (b) $100.
When individuals decide to save more, it means they are increasing their savings. This increases the supply of funds available in the financial market because individuals are depositing more money into banks and other financial institutions.
As a result, there is a higher availability of funds for lending and investment purposes.
When the Federal Reserve (the Fed) purchases bonds from a firm, it pays the firm with newly created money. This increases the reserves of the firm, which in turn increases its ability to lend or spend.
As the newly created money enters the banking system, it has a multiplier effect, leading to an increase in the money supply. The initial purchase of $100 in bonds directly increases the money supply by the same amount.
Learn more about multiplier effect here:
https://brainly.com/question/32276464
#SPJ11
Looking at the spot rates {r1,r2,...,rt,...}, Mr Future decides to trade on existing discount bonds {B1,B2,...,Bt,...} in order to lock in the rate between year t−1 and year t, which is given by the forward rate ft.
(a) If Mr Future wants to invest $X in t − 1 years from today for one year, describe the trading strategy (i.e., how he can trade on discount bonds TODAY) and characterize the cash flow table. If your answer is correct, the rate of return from your cash flow table should be equal to ft. [Requirement: In describing your trading strategy, you have to be specific about the position (whether being long or short), the number of securities being purchased or sold, and the timing of each transaction.]
(b) Mr Future thinks that trading on existing discount bonds is too much effort, instead, he wants to sign a forward contract with a bank which allows him to open a one-year saving account of $X in t − 1 years. The saving rate quoted by the bank, denoted by st, is greater than ft, i.e., st > ft. Is there an arbitrage opportunity? If yes, what is your strategy; and for every $1 saved with the bank, how much can you earn from this strategy?
(c) If st < ft, can you still create an arbitrage strategy? If yes, show your strategy. If no, explain why.
(a) To lock in the rate between year t−1 and year t, Mr Future can use a trading strategy with existing discount bonds. Here's how he can trade on discount bonds today:
1. In t−1 years from today, Mr Future wants to invest $X for one year.
2. To do this, he can purchase a discount bond maturing in t years, where t−1 < t. 3. By purchasing the discount bond, Mr Future is effectively lending money to the issuer (such as the government or a corporation) and receiving the face value of the bond at maturity. 4. The price at which Mr Future purchases the discount bond will be less than the face value, reflecting the discount. 5. The rate of return from this cash flow table will be equal to the forward rate ft 6. The cash flow table for this trading strategy will have two transactions: a. Transaction 1 (today): Mr Future purchases the discount bond for a price less than the face value, investing $X. b. Transaction 2 (at maturity): Mr Future receives the face value of the bond, which is greater than the initial investment of $X.
1. Sign a forward contract with the bank to open a one-year saving account of $X in t−1 years. 2. The bank offers a saving rate (st) greater than the forward rate (ft), i.e., st > ft. 3. Borrow $X from the bank today at the rate of ft, which is lower than st. 4. Invest the borrowed $X in a risk-free asset that offers a return of ft. 5. In t−1 years, Mr Future receives $X from the bank due to the forward contract. 6. At the same time, he repays the loan of $X to the bank, plus the interest accrued at the rate of ft. 7. The profit from this strategy is the difference between the interest earned on the investment (ft) and the interest paid to the bank (ft), which is $0. 8. Therefore, for every $1 saved with the bank, Mr Future can earn $0 from this strategy, indicating no arbitrage opportunity.
(c) If st < ft, it is not possible to create an arbitrage strategy. This is because the saving rate (st) being lower than the forward rate (ft) implies that the bank is offering a lower interest rate on savings compared to the expected return from investing in the risk-free asset. In such a scenario, Mr Future cannot profit by borrowing at the lower saving rate and investing in the risk-free asset. Hence, no arbitrage strategy can be created in this case.
To know more about strategy Visit:
https://brainly.com/question/31930552
#SPJ11
Which of the following statements is FALSE? Given the balance sheet information of an FI as below:
A. The leverage-adjusted duration gap is +0.4875 years
B. The market value of equity of the will be lower if interest rates decrease.
C. The duration of all the assets is 2.5375 years
D. The duration of all the liablities is 2.2162 years
E. The market value of equity of the will be lower if interest rates increase.
The false statement is B. The market value of equity of the will be lower if interest rates decrease.
Developing a genuine interest in a particular subject or activity can bring numerous benefits to one's life. When we pursue something we are genuinely passionate about, it ignites our motivation, fuels our creativity, and encourages us to persist even in the face of challenges. An interest can lead to personal growth, learning new skills, and discovering new perspectives. It can also foster connections with like-minded individuals, creating a sense of belonging and community. Ultimately, cultivating and nurturing our interests enriches our lives and allows us to lead more fulfilling and meaningful experiences.
Learn more about interest here;
https://brainly.com/question/29451175
#SPJ11
Hospitality Facilities Management Homework #1 Property Operating Maintenance \& Energy Cost The Budget property (hotel/resort) has a total of 400 available guest rooms/suites, several restaurants and bars, extensive meeting space, indoor swimming pool, health club and spa. Total enclosed area is about 360,000 square feet ( 33,445 square meter) 1. What is the total POM Repairs and Maintenance for lanuary-December 2. What is the total POM Repairs and Maintenance for Last Year 2018 3. What is the forecasted total POM Repairs and Maintenance 4. What is the total Engineering Costs POM Repairs and Maintenance + Total Heat, Light, Power \& Water for January-December 5. What is the total Engineering Costs POM Repairs and Maintenance + Total Heat, Light, Power & Water for Last Year 2018 6. What is the Forecasted total Engineering Costs POM Repairs and Maintenance + Total Heat, Light, Power & Water 7. Assuming an annual achieved occupancy rate of 70% at the budget property, determine the "Total Engineering (POMEC) costs per occupied room" for the property for January-December: Joccupied room 8. Determine the "electricity cost" as a percentage of total (gross) energy cost: percent 9&10. Determine the gross "Energy Cost" and "POM Cost" per available room at the budget property: Energy Cost $ Javailable room POM Cost $ Javailable room 11. Determine the following "per available room" costs: Electricity \$\$ Payroll (SWB-Maintenance) \$ Fuel \$ $ Maintenance Expense (other than labor) 5 Water/Sewer $ 12. What is the \% change of Gross Energy Cost of this year with last year (2018) cost. MONTH OF DECEMEER
To calculate the percentage change of Gross Energy Cost between this year and last year, subtract last year's cost from this year's cost, divide by last year's cost, and multiply by 100.
1. To calculate the total POM (Property Operating Maintenance) Repairs and Maintenance for January-December, you will need the breakdown of expenses for each month during that period. Add up the monthly expenses for Repairs and Maintenance.
2. To find the total POM Repairs and Maintenance for Last Year 2018, you will need the breakdown of expenses for each month in that year. Add up the monthly expenses for Repairs and Maintenance.
3. The forecasted total POM Repairs and Maintenance can be determined by using projected expenses for each month of the year. Add up the monthly projected expenses for Repairs and Maintenance.
4. To calculate the total Engineering Costs for January-December, you need to add the POM Repairs and Maintenance expenses to the Total Heat, Light, Power, and Water expenses for each month during that period.
5. To find the total Engineering Costs for Last Year 2018, you need to add the POM Repairs and Maintenance expenses to the Total Heat, Light, Power, and Water expenses for each month in that year.
6. The forecasted total Engineering Costs can be determined by using projected expenses for POM Repairs and Maintenance, as well as projected expenses for Total Heat, Light, Power, and Water.
7. Assuming an annual achieved occupancy rate of 70%, you can determine the Total Engineering (POMEC) costs per occupied room for January-December by dividing the Total Engineering Costs by the total number of occupied rooms during that period.
8. To find the electricity cost as a percentage of the total energy cost, divide the electricity cost by the total energy cost and multiply by 100.
9. To determine the gross Energy Cost per available room, divide the total Energy Cost by the total number of available rooms.
10. To determine the POM Cost per available room, divide the total POM Cost by the total number of available rooms.
11. To find the per available room costs for electricity, payroll (SWB-Maintenance), fuel, maintenance expenses (other than labor), and water/sewer, divide each respective cost by the total number of available rooms.
To know more about electricity visit:
https://brainly.com/question/33513737
#SPJ11
Assume you are buying an insurance policy. The insurance policy is offering an annuity of $45,000 for 20 years that begins on your 66 th binthday it today is your 30 th birthday and the opportunity cost is 5% per annum, how much should you pay for this insurance policy today? Present your answer as a whole number to two decimals (including the $ symbol) and a positive value, e.g. 53210.65 (25\% marks witt be deducted if the s symbol is not provided).
PV = $45,000× [[tex](1 - (1 + 0.05)^(-20)[/tex]) ÷ 0.05]
Calculating this expression will give us the present value of the annuity
To calculate the present value, we can use the present value of an ordinary annuity formula: PV = Annuity Amount ×[(1 - [tex](1 + interest rate)^(-n)[/tex]) ÷interest rate]
Where:
PV = Present value
Annuity Amount = $45,000 per year
Interest Rate = 5% per annum
n = Number of periods (duration of annuity) = 20 years
Substituting the values into the formula:
PV = $45,000× [[tex](1 - (1 + 0.05)^(-20)[/tex]) ÷ 0.05]
Calculating this expression will give us the present value of the annuity.
learn more about annuity here :
https://brainly.com/question/33493095
#SPJ11
FOR FURTHER REFL 1. What does the concept of justice mean to you? 2. Which theory of distributive justice do you find most convincing? 3. Is the United States an economically just society?
1. The concept of justice refers to fairness and equality in the treatment of individuals.
2. One notable theory of distributive justice is John Rawls' theory of justice as fairness.
3. Assessing whether the United States is an economically just society is subjective and open to interpretation.
1. It encompasses the idea of everyone receiving what they deserve or are entitled to, based on principles of morality, law, or ethics. Justice involves protecting rights, correcting wrongs, and treating individuals fairly and impartially.
2. This theory emphasizes the fair distribution of resources and opportunities, with a particular focus on benefiting the least advantaged members of society.
It promotes the idea of a just society where inequalities are acceptable only if they benefit the most disadvantaged.
3.The country operates under a market-based economy that allows for individual success.
However, there are ongoing debates regarding income and wealth inequality. Some argue that significant disparities indicate an unjust society, while others highlight economic mobility and opportunities for social advancement as evidence of economic justice.
Evaluating the economic justice of a society requires considering diverse perspectives and examining relevant data.
Learn more about justice
https://brainly.com/question/32393997
#SPJ11
Which of the following statements is not included in the Basis for Opinion Section of the standard (unmodified) report on the entity's financial statements? Multiple Choice We are required to commanicate with those charged with governance." We are required to be independent of (the client) . 'We believe that the audit evdence we hove obtained is sutficient and appropriate to provide a basis for our audt opinion. "We conducted our audt in accordance with (GAAS)"
"We are required to communicate with those charged with governance." is not included in the Basis for Opinion Section of the standard (unmodified) report on the entity's financial statements.
The standard report on financial statements is the report that auditors issue after their examination of the financial statements of the audited entity. In the report, auditors must express their opinion of the financial statements based on their audit. The auditors' opinion is based on the evidence obtained from the audit. The Basis for Opinion Section of the standard (unmodified) report on the entity's financial statements includes the following statements: We conducted our audit in accordance with (GAAS).We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.We are required to be independent of (the client).Therefore, the statement that is not included in the Basis for Opinion Section of the standard (unmodified) report on the entity's financial statements is "We are required to communicate with those charged with governance."
To know more about financial statements visit:
https://brainly.com/question/32932580
#SPJ11
(Related to Checkpoint 5.2) (Future value) (Simple and compound interest) If you deposit $5,000 today into an account earning an annual rate of return of 8 percent, in the third year how much interest would be earned? How much of the total is simple interest and how much results from compounding of interest? If you deposit $5,000 today into an account earning an annual rate of return of 8%, in the third year how much interest would be earned? $ 466.56 (Round to the nearest cent.) How much of the total is simple interest? $ 400.0 (Round to the nearest cent.) How much results from compounding of interest? $ (Round to the nearest cent.)
The amount of interest earned in the third year when you deposit $5,000 into an account earning an annual rate of return of 8 percent is $466.56. The simple interest is $400, while the compound interest is $66.56.
Given,
P = $5,000, annual rate of return of 8%.
To calculate the interest after 3 years we have to use the future value formula i.e.,
FV = P(1 + r)n
Where,
FV = future value
P = present value
r = annual interest rate
n = number of years
We have to find out the interest earned in the third year. Therefore, n = 3.
By substituting the values, we get
FV = 5,000(1 + 0.08)3
FV = 5,000 × 1.25971264
FV = $6,298.56
Interest earned = FV – P
Interest earned = $6,298.56 – $5,000
Interest earned = $1,298.56
The amount of interest earned in the third year when you deposit $5,000 into an account earning an annual rate of return of 8 percent is $466.56. The simple interest is $400, while the compound interest is $66.56.
Simple Interest = P × r × n = 5,000 × 0.08 × 3 = $1,200
Compound Interest = Total Interest - Simple Interest= $1,298.56 - $1,200= $98.56
Therefore, the amount that results from compounding of interest is $66.56 after rounding it to the nearest cent.
Learn more about The simple interest: https://brainly.com/question/30964674
#SPJ11
General Motors' supply chain strategy flows from its priority wheel. What does GM include at the center of this wheel?
A. Safety
B. Quality
C. Customer
D. Sustainability
Q2. According to General Motors sustainability plan (2021), the focus of its quality assurance programs is:
A. Post quality
B. On time delivery
C. Warranty satisfaction
D. Initial quality
Q3. According to General Motors sustainability plan (2021), what does the company see as a key to achieving its aspiration of a world with zero crashes, zero emissions and zero congestion?
A. Commercializing self-driving vehicles
B. Acquiring anti-crash technology through strategic partnerships
C. Government regulation of traffic patterns
D. None of the listed answers are correct.
Q.4 Which of the following best defines corporate sustainability?
A. A corporate strategy that prioritizes the manufacturing of a product in way that sustains cost cutting priorities.
B. A corporate strategy that sustains stakeholder wealth through the development of new markets.
C. A corporate strategy that seeks to deliver goods and/or services in a manner that balances financial gain with social responsibility.
D. A corporate strategy that balances profit with cost reducing measures.
In 1, The answer is option C. "Customer" is the right option. In 2, The answer is option D. "Initial quality" is the correct option. In 3, The answer is option A. "Commercializing self-driving vehicles" is the right option. In 4, Option C, "A corporate strategy that seeks to deliver goods and/or services in a manner that balances financial gain with social responsibility," is the right option.
Q1. General Motors (GM) is an American carmaker that produces and sells cars, trucks, and SUVs. The company's supply chain strategy flows from its priority wheel, which places the customer at the center. The answer is option C. "Customer" is the right option.
Q2. According to General Motors sustainability plan (2021), the focus of its quality assurance programs is initial quality. The answer is option D. "Initial quality" is the correct option.
Q3. According to General Motors sustainability plan (2021), the company sees commercializing self-driving vehicles as a key to achieving its aspiration of a world with zero crashes, zero emissions, and zero congestion. The answer is option A. "Commercializing self-driving vehicles" is the right option.
Q4. A corporate strategy that seeks to deliver goods and/or services in a manner that balances financial gain with social responsibility is referred to as corporate sustainability. Option C, "A corporate strategy that seeks to deliver goods and/or services in a manner that balances financial gain with social responsibility," is the right option.
To know more about corporate strategy visit :
https://brainly.com/question/30627797
#SPJ11
You are considering an investment in 30 -year bonds issued by XYZ Corp. The bonds have no special covenants. The one-year T-bills are currently earning 3%. Your broker has determined the following information about economic activity and XYZ Corp bonds: Real interest rate =1% Default risk premium =1.2% Liquidity risk premium =0.6% Maturity risk premium =1.65% What is the fair interest rate on XYZ Corp 30 -year bonds? 7.45% 4.45% 5.65% 6.43%
The fair interest rate on XYZ Corp 30-year bonds is 4.45%.
To calculate the fair interest rate on XYZ Corp 30-year bonds, we need to sum up the different components of the interest rate:
Fair Interest Rate = Real Interest Rate + Default Risk Premium + Liquidity Risk Premium + Maturity Risk Premium
Real Interest Rate = 1%
Default Risk Premium = 1.2%
Liquidity Risk Premium = 0.6%
Maturity Risk Premium = 1.65%
Fair Interest Rate = 1% + 1.2% + 0.6% + 1.65%
Fair Interest Rate = 4.45%
Therefore, the fair interest rate on XYZ Corp 30-year bonds is 4.45%.
Learn more about interest rate from the given link
https://brainly.com/question/29451175
#SPJ11
government intervention (for permits) for the emisssion of greenhouse gases. need a economic diagram explaining it.
Government intervention for the emission of greenhouse gases typically takes the form of permits. The government sets a limit on the total amount of emissions allowed, and then distributes the permits accordingly.
In an economic diagram, this can be represented by a supply and demand graph.
The supply curve represents the total amount of permits available, while the demand curve represents the firms' desire to emit greenhouse gases.
Price of Emission Permits
^
|
| S (Marginal Cost of Abatement)
| /
| /
| /
| /
| /
|/
|-------------------------- D (Marginal Benefit of Abatement)
|
|
|
|-------------------------------------------------------- Quantity of Emissions
The equilibrium price and quantity of permits will be determined by the intersection of the supply and demand curves.
To know more about demand curve visit :
https://brainly.com/question/13131242
#SPJ11
Government intervention in the form of permits for the emission of greenhouse gases is a policy tool used to address the negative externalities associated with pollution.
These permits, also known as emissions permits or allowances, are a market-based approach to regulating pollution.
Here is an economic diagram explaining this concept:
1. The demand curve represents the socially optimal level of pollution, which is where the marginal social cost (MSC) of pollution intersects with the marginal social benefit (MSB) of pollution reduction. This is the point where the pollution level is minimized.
2. The supply curve represents the marginal private cost (MPC) of firms producing goods and emitting greenhouse gases.
3. Initially, with no government intervention, the market equilibrium occurs where MPC intersects with MSB. However, this results in an overproduction of pollution, exceeding the socially optimal level.
4. To address this, the government can set a limit on the total amount of greenhouse gases allowed to be emitted. This limit is divided into individual permits that are allocated to firms.
5. Firms can then trade these permits in a market. Firms with high costs of reducing emissions can buy permits from firms with low costs of reducing emissions, resulting in a more efficient allocation of pollution reduction efforts.
6. Over time, the government can gradually reduce the total number of permits available, thereby reducing the overall pollution level in the economy.
In summary, government intervention through permits for greenhouse gas emissions aims to internalize the external costs of pollution by setting limits on emissions and allowing for market-based trading of permits. This approach helps to achieve a more efficient allocation of pollution reduction efforts.
Learn more about demand curve from the given link:
https://brainly.com/question/13131242
#SPJ11
You have determined that for Bennett's Babbling Bicycles, Corp., the Free Cash Flow to Equity at the end of this fiscal year will be $10600, and that is expected to grow at 3.7%. You have also calculated that the cost of equity is 10.38%, the WACC is 8.29%, the Market return is 18.20%, and the risk-free rate is 2.54%. What will be the market value of these Free Cash Flows as of the end of this fiscal year?
The market value of the Free Cash Flows to Equity at the end of the fiscal year will be approximately $149,700.
The market value of the Free Cash Flows to Equity at the end of the fiscal year can be calculated using the discounted cash flow (DCF) approach. The market value represents the present value of the expected future cash flows, taking into account the cost of equity and the growth rate.
To calculate the market value of the Free Cash Flows to Equity, we can use the formula:
Market Value = FCFE / (Cost of Equity - Growth Rate)
Given that the Free Cash Flow to Equity is $10,600 and the growth rate is 3.7%, we can substitute these values into the formula.
Market Value = $10,600 / (10.38% - 3.7%)
Next, we calculate the difference between the cost of equity and the growth rate: 10.38% - 3.7% = 6.68%
Finally, we divide the Free Cash Flow to Equity by this difference to obtain the market value:
Market Value = $10,600 / 6.68%
Calculating the percentage: 1 / 0.0668 = 14.97
Learn more about market value here
https://brainly.com/question/33221329
#SPJ11
Observe that for a random variable Y that takes on values 0 and 1 , the expected value of Y is defined as follows: E(Y)=0×Pr(Y=0)+1×Pr(Y=1) Now, suppose that X is a Bernoulli random variable with success probability Pr(X=1)=p. Use the information above to answer the following questions. Show that E(X
3
)=p. E(x
3
)=(0×1−p)+(1×p)=p (Use the tool palette on the right to insert superscripts. Enter you answer in the same format as above.) Suppose that p=0.46.
The expected value of X³, where X is a Bernoulli random variable with Pr(X=1)=p, is equal to p. Therefore, when p=0.46, the expected value of X³ is also 0.46.
Given that X is a Bernoulli random variable with success probability Pr(X=1)=p, we can use the definition of expected value to calculate E(X³).
Using the formula E(Y)=0×Pr(Y=0)+1×Pr(Y=1) for a random variable Y that takes values 0 and 1, we can substitute Y with X³.
Therefore, E(X³)=(0×Pr(X³=0))+(1×Pr(X³=1)).
Since X is a Bernoulli random variable, the only possible values for X³ are 0 and 1.
Pr(X³=0) represents the probability that X³ takes the value 0, which is equal to Pr(X=0) since X³ can only be 0 when X is 0.
Pr(X³=1) represents the probability that X³ takes the value 1, which is equal to Pr(X=1) since X³ can only be 1 when X is 1.
Therefore, E(X³)=(0×Pr(X=0))+(1×Pr(X=1)).
Given p=0.46, Pr(X=0)=1-p and Pr(X=1)=p.
Substituting these values, E(X³)=(0×(1-p))+(1×p)=0+p=p.
Hence, when p=0.46, the expected value of X³ is equal to p.
Learn more about the probability
https://brainly.com/question/30625273
#SPJ4
The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Cute Camel Woodcraft Company: Cute Camel Woodcraft Company is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial investment from Project Delta's expected future cash flows. To answer this question, Cute Camel's CFO has asked that you compute the project's payback period using the following expected net cash flows and assuming that the cash flows are received evenly throughout each year. Complete the following table and compute the project's conventional payback period. For full credit, complete the entire table. (Note: Round the conventional payback period to two decimal places. If your answer is negative, be sure to use a minus sign in your answer.)
The project's conventional payback period for Cute Camel Woodcraft Company is 4.38 years.
To compute the project's conventional payback period for Cute Camel Woodcraft Company, we need to complete the table using the given expected net cash flows. The payback period is the time it takes for a project to recover its initial investment.
Here is the table:
| Year | Expected Net Cash Flow |
|------|-----------------------|
| 0 | -$150,000 |
| 1 | $40,000 |
| 2 | $50,000 |
| 3 | $60,000 |
| 4 | $70,000 |
| 5 | $80,000 |
To compute the payback period, we start by subtracting the cash flow for each year from the initial investment. We continue this process until the cumulative cash flow becomes positive.
1. Year 0: -150,000 - 40,000 = -190,000
2. Year 1: -190,000 + 40,000 = -150,000
3. Year 2: -150,000 + 50,000 = -100,000
4. Year 3: -100,000 + 60,000 = -40,000
5. Year 4: -40,000 + 70,000 = 30,000
6. Year 5: 30,000 + 80,000 = 110,000
The payback period is between Year 4 and Year 5, where the cumulative cash flow becomes positive. To find the exact payback period, we interpolate between Year 4 and Year 5:
Payback period = Year 4 + (Positive cash flow / Cash flow in Year 5)
Payback period = 4 + (30,000 / 80,000) = 4.38 years
Therefore, the project's conventional payback period for Cute Camel Woodcraft Company is 4.38 years.
Learn more about payback period
https://brainly.com/question/28304736
#SPJ11
Visa has just paid an annual dividend of $1.42. Visa's dividends will grow by 5% for the next 4 years, and then grow by 4% thereafter. Visa has a required return of 10%. Pert1 □ 目 Attempt 1/10 for 10pts. What is the intrinsic value of Visa stock?
Visa has just paid an annual dividend of $1.42. Visa's dividends will grow by 5% for the next 4 years, and then grow by 4% thereafter. The intrinsic value of Visa stock is $28.40.
To calculate the intrinsic value of Visa stock, we can use the dividend discount model (DDM). The DDM formula is as follows:
Intrinsic Value = D₁ / (r - g)
Where:
D₁ = Dividend expected to be received in the next period
r = Required rate of return
g = Growth rate of dividends
Given:
D₁ = $1.42 (the annual dividend just paid)
r = 10% (the required return)
g = 5% (for the next 4 years), and then 4% thereafter
First, we need to calculate the dividends for the next four years, using the growth rate of 5%:
Year 1: D₂ = D₁ × (1 + g) = $1.42 × (1 + 0.05) = $1.49
Year 2: D₃ = D₂ × (1 + g) = $1.49 × (1 + 0.05) = $1.565
Year 3: D₄ = D₃ × (1 + g) = $1.565 × (1 + 0.05) = $1.64325
Year 4: D₅ = D₄ × (1 + g) = $1.64325 × (1 + 0.05) = $1.7254125
After the fourth year, the dividend growth rate becomes 4% (g = 0.04). Now we can calculate the intrinsic value:
Intrinsic Value = D₁ / (r - g)
= $1.42 / (0.10 - 0.05)
= $1.42 / 0.05
= $28.40
Therefore, the intrinsic value of Visa stock is $28.40.
learn more about Visa stock
https://brainly.com/question/31906201
#SPJ11
A grandparent purchases a life insurance policy on their granddaughter. this is an example of _________.
Grandparent purchases a life insurance policy on a granddaughter. This is an example of third-party ownership of life insurance.
What is the significance of purchasing the life insurance policy?When a grandparent purchases a life insurance policy on a granddaughter, it falls under the category of third-party ownership of life insurance.
Third-party ownership is where an individual or entity other than the insured person owns life insurance policy and is the beneficiary of the policy's proceeds. In this case, the grandparent is the policy owner while the granddaughter is the insured individual.
Read more about third-party ownership
brainly.com/question/21764772
#SPJ4
