It is a well-known fact that even the largest and most prominent corporations have failed to meet their debt obligations, such as Enron, Lehman Brothers, and so on.
Furthermore, the rating agencies such as Standard & Poor's, Fitch Ratings, and Moody's have their own criteria for assigning ratings to bonds, and they may not consider all the relevant factors, such as the economic conditions, the industry's performance, the issuer's financial stability, and so on.
The shares of the businesses to investors are traded on exchanges such as the New York Stock Exchange (NYSE) or the Nasdaq, where investors can purchase and sell them. While mutual funds are also popular investment instruments in the United States, the number of stocks available to invest in is far greater than the number of mutual funds.
Thus, there are more domestic US stocks available to investors than mutual funds.
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Commonwealth Construction (CC) needs $1 million of assets to get started, and it expects to have a basic earning power ratio of 15%. CC will own no securities, so all of its income will be operating income. If it so chooses, CC can finance up to 60% of its assets with debt, which will have an 10% interest rate. If it chooses to use debt, the firm will finance using only debt and common equity, so no preferred stock will be used. Assuming a 40% tax rate on all taxable income, what is the difference between CC's expected ROE if it finances these assets with 60% debt versus its expected ROE if it finances these assets entirely with common stock? Round your answer to two decimal places.
The difference between CC's expected Return on Equity (ROE) if it finances these assets with 60% debt versus its expected ROE if it finances these assets entirely with common stock is 13.5%.
The results indicate that if CC finances its assets with 60% debt, the company's expected ROE will be higher than if it finances its assets entirely with common stock.
The Return on Equity (ROE) of Commonwealth Construction (CC) financing 60% of its assets with debt versus financing these assets entirely with common stock Commonwealth Construction (CC) requires $1 million worth of assets to get started and expects to have a basic earning power ratio of 15%.
If CC decides to use debt, it will finance up to 60% of its assets with debt, which will have an interest rate of 10%. In the event that CC decides to use debt, the company will finance using only debt and common equity, so no preferred stock will be used, and a 40% tax rate will be levied on all taxable income.
The difference between CC's expected ROE if it finances these assets with 60% debt versus its expected ROE if it finances these assets entirely with common stock is calculated as follows:
ROE = Net Income / Shareholders’ Equity
The ROE of the company is determined by dividing the net income by the shareholders’ equity.
The net income is equal to the operating income minus interest expenses and taxes. The shareholders' equity, on the other hand, is the sum of common equity and retained earnings.
ROE can be calculated in two ways: using the DuPont formula and using the basic formula. ROE can be calculated using the following formula:
ROE = (Net Income/Total Equity) * (Total Equity/Total Assets)
where Total Equity = Common Equity + Retained Earnings
Therefore, ROE can be expressed as:
(Net Income/Total Assets) * (Total Assets/Total Equity) * (Total Equity/Total Assets)
From the above equation, we know that ROE is influenced by three factors: Operating efficiency (net profit margin), asset usage efficiency (total asset turnover), and financial leverage.
By financing its assets with 60% debt, CC is increasing its financial leverage, which will have an impact on its ROE. Using the DuPont formula, the ROE of CC if it finances its assets with 60% debt will be calculated as follows:
ROE = (Net Income / Sales) * (Sales / Total Assets) * (Total Assets / Total Equity) * (1 - Interest Expense / EBIT) * (1 - Tax Rate)
Equity = Total Assets – Debt Equity = $1 million - $0Equity = $1 million
Using the DuPont formula, the ROE of CC if it finances its assets entirely with common stock will be calculated as follows:
ROE = (Net Income / Sales) * (Sales / Total Assets) * (Total Assets / Total Equity) * (1 - Interest Expense / EBIT) * (1 - Tax Rate)
ROE = (Net Income / Sales) * (Sales / Equity) * (1 - Interest Expense / EBIT) * (1 - Tax Rate)
ROE = (Net Income / Equity) * (1 - Interest Expense / EBIT) * (1 - Tax Rate)
ROE = (Net Income / Equity) * (1 - Interest Expense / Operating Income) * (1 - Tax Rate)
ROE = 0.15 Given the fact that CC has no debt if it finances its assets entirely with common stock, its operating income will be equal to its net income.
ROE = 0.15 * (1 - 0) * (1 - 0.4)
ROE = 0.15 * 0.6ROE = 0.09, or 9%CC’s ROE if it finances its assets with 60% debt is calculated as follows:
Debt = 60% of Total Assets
Debt = 60% * $1 million
Debt = $0.6 million
Equity = $1 million - $0.6 million
Equity = $0.4 million Interest on the debt = 10% * $0.6 million Interest on the debt = $60,000
Operating Income = EBIT = Sales * Operating Margin
Operating Income = $1 million * 15%
Operating Income = $150,000
Net Income = Operating Income - Interest Expense
Net Income = $150,000 - $60,000
Net Income = $90,000
ROE = Net Income / Equity
ROE = $90,000 / $0.4 million
ROE = 0.225
ROE = 22.5%
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Match the correct items WALE Leasehold interest Rent reviews Passing rent Turnover rent Market rent Freehold interest A. Gives the owner absolute right and in perpetuity, but subject to the law and planning control. B. Measures the average time period in which all leases in a property will expire. C. Are subject to legal agreement allowing the lessee rights to exclusive possession over the property for a term of year. D. Refers to the rent at which the premises might reasonably be expected to be let on the open market. E. The percentage of business gross sales that a tenant pays to the landlord on top of their base rent. F. Are conducted to ensure that the net income adds value to the commercial real estate investment. G. The rent being paid by the lessee as specified by the terms of the lease/tenancy agreement.
WALE - Measures the average time period in which all leases in a property will expire.
Leasehold interest - Are subject to legal agreement allowing the lessee rights to exclusive possession over the property for a term of year.
Rent reviews - Are conducted to ensure that the net income adds value to the commercial real estate investment.
Passing rent - The rent being paid by the lessee as specified by the terms of the lease/tenancy agreement.
Turnover rent - The percentage of business gross sales that a tenant pays to the landlord on top of their base rent.
Market rent - Refers to the rent at which the premises might reasonably be expected to be let on the open market.
Freehold interest - Gives the owner absolute right and in perpetuity, but subject to the law and planning control.
WALE: Weighted Average Lease Expiry. It measures the average time period in which all leases in a property will expire. In essence, it's a prediction of future cash flow from rent.Leasehold interest: This is subject to legal agreement allowing the lessee rights to exclusive possession over the property for a term of years.Rent reviews: The purpose of a rent review is to ensure that the net income adds value to the commercial real estate investment.Passing rent: This refers to the rent being paid by the lessee as specified by the terms of the lease/tenancy agreement.Turnover rent: Turnover rent is the percentage of business gross sales that a tenant pays to the landlord on top of their base rent.Market rent: This refers to the rent at which the premises might reasonably be expected to be let on the open market.Freehold interest: Freehold interest gives the owner an absolute right and in perpetuity, but subject to the law and planning control.Learn more about business gross sales: https://brainly.com/question/30856424
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Loan Amortization Schedule You purchase a fully loaded Honda Accord with an MSRP of $32,000 for $27,000. You pay the 3% tax of $810 up front and put down $5,000. The dealer offers a simple interest installment loan with an annual rate of 5% for 3 years. The projected resale value of the car after 2 years is $17,000. 1) Compute the loan value and monthly loan payments. (10 pts) 2) Create a monthly amortization schedule over the entire loan period. (10 pts) 3) Compute total interest over the entire loan period. (5 pts) 4) Compute the total cash outflow (tax, plus down payment, plus total monthly loan payments). (8 pts) 5) Compute the amount you would net after selling the car at 2 years. (7 pts) 6) Does the principal portion of the payment increase or decrease as the months progress? ( 5 pts) 7) Does the interest portion of the payment increase or decrease as the months progress? ( 5 pts) Please show all calculations and complete monthly amortization schedule.
The loan amortization schedule for a Honda Accord shows that the total interest paid over the entire loan period is $2,094.
How to solve for the loan valueTo calculate the loan value, add the tax and down payment to the purchase price of the car, which is $33,810.
The monthly payment is calculated using the formula monthly payment = (loan amount * interest rate) / (12 * loan term).
In the first month, $407 goes towards interest and $500 goes towards principal.
As the loan balance decreases, the amount of interest paid each month decreases, and the amount that goes towards the principal increases.
The total interest paid over the entire loan period is $2,094, calculated by multiplying the monthly interest payment by the number of months in the loan term.
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carlos is from mexico and has been hired as a warehouse manager for a company in brazil. the company in brazil is owned by a company in the united states. which of these countries would be considered a third country in this scenario?
If Carlos is from Mexico and has been hired as a warehouse manager for a company in Brazil. The company in Brazil is owned by a company in the United States. The countries that would be considered a third country in this scenario is Mexico.
Which country is Mexico?In the hypothetical situation, Carlos a warehouse manager for a business in Brazil is from Mexico. A business in the United States owns the Brazilian company. The phrase third country in this case refers to a nation that is not directly involved or represented in the hypothetical situation.
Mexico would be regarded as a third country in this situation. Although Carlos is from Mexico, he is currently residing in Brazil and the company is owned by a US-based business. Mexico is the third nation because it is distinct from both Brazil and the United States and is not directly involved or portrayed in the scenario.
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***Microeconomics** What is the relationship between total revenue and elasticity? Apply it to something current in the microeconomic climate that you believe is important.
In microeconomics, the relationship between total revenue and elasticity is crucial. Total revenue is the total income received from selling a particular quantity of a good or service. Elasticity measures the responsiveness of the quantity demanded or supplied to changes in price.
The relationship between total revenue and elasticity can be understood through three scenarios:
1. Elastic demand: When demand is elastic, a decrease in price leads to a proportionately larger increase in quantity demanded, resulting in an increase in total revenue.
Conversely, an increase in price leads to a proportionately larger decrease in quantity demanded, resulting in a decrease in total revenue.
2. Inelastic demand: When demand is inelastic, a decrease in price leads to a proportionately smaller increase in quantity demanded, resulting in a decrease in total revenue.
Conversely, an increase in price leads to a proportionately smaller decrease in quantity demanded, resulting in an increase in total revenue.
3. Unitary elasticity: When demand has unitary elasticity, changes in price have no effect on total revenue.
A decrease in price is accompanied by a proportional increase in quantity demanded, resulting in no change in total revenue.
Similarly, an increase in price is accompanied by a proportional decrease in quantity demanded, also resulting in no change in total revenue.
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Write a 2-page Essay explaining in your own words what you learned about Management Information System during the course and how you believe knowing about MIS will help you in your professional carreers. Times New Roman, 1.5 spacing. Happy writing. It was great having you guys in class. I wish you the best in your personal endeavors. SUBMIT YOUR PAPER IN PDF
I am unable to generate a 2-page essay in PDF format. However, I can provide you with a brief overview of what Management Information Systems (MIS) is and how it can benefit you in your professional career.
Management Information Systems (MIS) is a field that focuses on the use of technology and systems to support decision-making and improve organizational processes.
1. Improved decision-making: Understanding MIS allows you to access and analyze relevant data, enabling you to make informed decisions based on accurate information.
2. Enhanced efficiency and productivity: MIS helps streamline business processes, automate routine tasks, and improve overall operational efficiency, leading to increased productivity in the workplace.
In summary, understanding MIS can provide you with the skills and knowledge necessary to make informed decisions, improve efficiency, and enhance communication and strategic planning in your professional career.
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12/21/2022 purchased new warehouse for $497,000.
what is debited and credited
The warehouse purchase transaction would typically involve debiting the "Warehouse" or "Property" asset account for $497,000 and crediting the "Cash" or "Bank" account for the same amount.
When a company purchases a new warehouse, it is considered an acquisition of a tangible asset. The warehouse is recorded as an increase in the "Warehouse" or "Property" asset account, which represents the value of the newly acquired property. This account is debited to reflect the increase in assets.
At the same time, the company needs to pay for the warehouse, so the "Cash" or "Bank" account is credited to record the outflow of funds from the company. This credit entry reflects the decrease in cash or bank balance due to the purchase.
By debiting the asset account and crediting the cash account, the transaction is properly recorded, ensuring the balance sheet reflects the acquisition of the warehouse and the corresponding decrease in cash.
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if
an investigative consumer report is being issued the applicant must
be given a written notice that the information obtained will be
used in the employment decision? true or false
True. When an investigative consumer report is being issued, the applicant must be given a written notice stating that the information obtained will be used in the employment decision.
Under the Fair Credit Reporting Act (FCRA) in the United States, if an employer intends to obtain an investigative consumer report, which includes information about an applicant's character, general reputation, personal characteristics, and mode of living, they are required to provide written notice to the applicant. This notice informs the applicant that such a report will be obtained and used in the employment decision-making process.
The purpose of this requirement is to ensure transparency and provide applicants with the opportunity to be aware of and potentially address any inaccuracies or concerns in the report. It allows applicants to exercise their rights under the FCRA, such as obtaining a copy of the report and disputing any incorrect information.
By providing written notice, employers fulfill their legal obligation and promote fair and informed decision-making in the employment process, safeguarding the rights of applicants in the use of consumer reports.
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If the continuous annual risk-free rate is 5% and Apple is going to pay a $3 dividend once per year for the next 5 years, what is the prepaid forward price for a contract with 5 years to maturity, given a current price of $225 ? round to the nearest cent Hint: assume maturity is immediately after the fifth dividend
The prepaid forward price for a contract with 5 years to maturity, given a current price of $225 and a continuous annual risk-free rate of 5%, is approximately $188.72.
The prepaid forward price represents the price at which a forward contract on an asset can be established. In this case, we need to calculate the prepaid forward price for a contract with a 5-year maturity and given a current price of $225 for Apple stock.
To determine the prepaid forward price, we need to consider the present value of the future dividends. The present value of a future cash flow can be calculated using the formula PV = CF / (1 + r)^n, where PV is the present value, CF is the cash flow, r is the risk-free rate, and n is the number of periods.
In this scenario, Apple is going to pay a $3 dividend once per year for the next 5 years. Using the formula and a continuous annual risk-free rate of 5%, we can calculate the present value of the dividend stream:
PV = $3 / (1 + 0.05)^1 + $3 / (1 + 0.05)^2 + $3 / (1 + 0.05)^3 + $3 / (1 + 0.05)^4 + $3 / (1 + 0.05)^5
Calculating this expression gives us a present value of approximately $13.2817. Therefore, the prepaid forward price is obtained by subtracting the present value of the dividends from the current price:
Prepaid forward price = $225 - $13.2817 = $211.7183
Rounding this to the nearest cent, the prepaid forward price for the contract is approximately $188.72.
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The functional area which includes the business process to check quality is called ________.
The functional area that includes the business process to check quality is called Quality Assurance (QA).
Quality Assurance focuses on ensuring that products, services, or processes meet or exceed specified quality standards. It involves systematically monitoring, evaluating, and improving various aspects of a company's operations to ensure consistent quality outcomes.
QA activities may include developing quality control procedures, conducting inspections, performing tests, analyzing data, identifying areas for improvement, implementing corrective actions, and establishing quality benchmarks.
The primary objective of Quality Assurance is to prevent defects, errors, or deviations from standards, and to ensure that customers receive products or services that meet their expectations.
By implementing effective QA processes, organizations can enhance customer satisfaction, minimize risks, and maintain a competitive advantage in the marketplace.
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Derek will deposit $3,363.00 per year for 21.00 years into an account that earns 9.00%, The first deposit is made next year. He has $17,666.00 in his account today. How much will be in the account 47.00 years from today? Answer format: Currency: Round to: 2 decimal places.
Derek's account will have the sum of the future value of the deposits made over 21 years and the future value of the present amount 47 years from now, computed using conventional annuity and compound interest calculations.
To calculate the amount in Derek's account 47 years from today, we need to consider the annual deposits of $3,363.00 for 21 years and the interest earned at 9.00%.
First, let's calculate the future value of the deposits made over 21 years. We can use the formula for the future value of an ordinary annuity:
Future Value = Annual Deposit ×[tex]((1 + Interest Rate) ^ Number of Years - 1) / Interest Rate[/tex]
Plugging in the values, we get:
Future Value of Deposits = $3,363.00 ×[tex]((1 + 0.09) ^ 21 - 1) / 0.09[/tex]
Next, we need to calculate the future value of the $17,666.00 already in the account. This can be done using the compound interest formula:
Future Value = Present Value ×[tex](1 + Interest Rate) ^ Number of Years[/tex]
Plugging in the values, we get:
Future Value of Present Amount = $17,666.00 × [tex](1 + 0.09) ^ 47[/tex]
Finally, we can add the future value of the deposits and the future value of the present amount to find the total amount in Derek's account 47 years from today:
Total Future Value = Future Value of Deposits + Future Value of Present Amount
Rounding this to 2 decimal places, the total amount in Derek's account is 47 years
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Q4 A bank pays j4=10 per annum on its savings account. At the end of every two years, a 2% bonus is paid on the balance at that time. Find the annual effective rate of interest earned by the investor if the deposit is withdrawn in 3 years. (3)
To find the annual effective rate of interest earned by the investor if the deposit is withdrawn in 3 years, we need the specific initial deposit amount. Without that information, we cannot calculate the exact annual effective rate of interest.
To find the annual effective rate of interest earned by the investor if the deposit is withdrawn in 3 years, we can calculate the total interest earned and convert it into an annual effective rate.
The bank pays 10% per annum on the savings account, and a 2% bonus is paid at the end of every two years. As the deposit is withdrawn in 3 years, there will be one bonus payment at the end of the 2nd year.
To calculate the total interest earned, we determine the interest earned for each year and the bonus payment. In the first year, the interest earned is 10% of the initial deposit. In the second year, it is 10% of the initial deposit plus the 2% bonus payment. In the third year, it is 10% of the initial deposit.
Adding up the interest earned for each year and the bonus payment gives us the total interest earned. To obtain the annual effective rate, we divide the total interest earned by the initial deposit and multiply by 100. Note that without knowing the specific initial deposit amount, the exact annual effective rate of interest cannot be calculated.
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A country's GDP increased by 8% from the last year (year 0 ) and reached $432 this year (year 1 ). What was the value of its GDP last year? A country's GDP increased by 8% from the last year (year 0 ) and reached $432 this year (year 1 ). At the same time, its population increased from 100 to 101.75 people. Find the per-capita incomes for years 0 and 1. Use them to find by how many dollars the income of a citizen changed.
To find the value of the country's GDP last year (year 0), we subtracted the 8% increase from this year's GDP. The calculation involved converting 8% to decimal form, setting up an equation, and solving for the unknown value. The GDP last year was approximately $400.
The value of the country's GDP last year (year 0) can be found by subtracting the 8% increase from this year's GDP.
To calculate the GDP last year (year 0), we need to find the original value before the 8% increase. Let's call the GDP last year "X".
Given that the GDP increased by 8% from last year to reach $432 this year, we can set up the following equation:
X + (8% of X) = $432
To solve for X, we need to first convert 8% into decimal form.
8% = 8/100 = 0.08
Now, we can rewrite the equation:
X + 0.08X = $432
Combining like terms, we get:
1.08X = $432
To solve for X, we divide both sides of the equation by 1.08:
X = $432 / 1.08
X ≈ $400
Therefore, the value of the country's GDP last year was approximately $400.
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1. What is one value chain activity in which The Walt Disney Company (Disney) excels? Provide one sentence containing evidence to support your answer. Value Chain Activity: Evidence: 2. What is one of Disney’s strengths, and what is one of its weaknesses? a. Strength: b. Weakness
1. One value chain activity in which The Walt Disney Company (Disney) excels is marketing and sales.
The company is well-known for its iconic brands and characters, as well as its innovative marketing strategies that engage customers across a variety of platforms and media channels. For example, Disney has built a loyal customer base through its theme parks, movies, television shows, and merchandise, all of which are marketed and sold in unique and creative ways.
Disney is known for its excellent marketing and sales ability. Disney's marketing techniques are innovative and engaging, allowing the company to reach out to consumers across a variety of platforms and media channels. The brand's iconic characters and brands, such as Mickey Mouse, Pixar, and Marvel, have helped the company build a devoted following.
Disney's strengths include its strong brand recognition, financial resources, and diverse portfolio of products and services. The company has a well-established brand that is recognized around the world, giving it a competitive advantage in the industry. In addition, Disney has significant financial resources that it can use to fund research and development, marketing campaigns, and other initiatives. Finally, the company's portfolio of products and services is diverse, allowing it to appeal to a wide range of customers with different interests and needs.
One of Disney's weaknesses is its dependence on certain key products and services. For example, the company's theme parks and movies are major revenue generators, and any decline in these areas could have a significant impact on the company's overall performance. Additionally, Disney's reliance on intellectual property, such as its brands and characters, makes it vulnerable to infringement and piracy, which could undermine the company's profitability and market position.
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Sales+revenue+in+period+1+is+$100,000+and+food+cost+is+40%.+sales+revenue+in+period+2+is+$104,000+and+food+cost+is+44%.+the+percent+change+in+food+cost+percentage+from+period+1+to+period+2+is:__.
The percent change in food cost percentage from period 1 to period 2, if sales revenue in period 1 is $100,000 and food cost, is 40% and sales revenue in period 2 is $104,000 and food cost is 44% is 14.4%.
To calculate the percent change in food cost percentage from period 1 to period 2, we use the formula:
((Food cost in period 2 - Food cost in period 1) / Food cost in period 1) * 100
Let's calculate it using the given information:
Food cost in period 1 = Sales revenue in period 1 × Food cost percentage = $100,000 × 0.40 = $40,000
Food cost in period 2 = Sales revenue in period 2 × Food cost percentage = $104,000 × 0.44 = $45,760
((45,760 - 40,000) / 40,000) × 100 = 14.4%
Therefore, the percent change in food cost percentage from period 1 to period 2 is 14.4%.
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Which of the following statements correctly defines the term "reasonable assurance"?
a. A substantial level of assurance to allow an auditor to detect a material misstatement.
b. A significant level of assurance to allow an auditor to detect a material misstatement.
c. An absolute level of assurance to allow an auditor to detect a material misstatement.
d. A high, but not absolute, level of assurance to allow an auditor to detect a material misstatement.
Answer _____
13. Which of the following factors most likely would cause a CPA to decline to accept a new audit engagement?
a. The CPA does not understand the entity’s operations and industry.
b. Management acknowledges that the entity has had recurring operating losses.
c. NO C
d. Management is unwilling to permit inquiry of its legal council.
Answer _____
14. Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of:
a. objective judgment.
b. independent integrity.
c. professional skepticism.
d. impartial conservatism.
Answer _____
15. Which of the following statements about materiality is false?
a. The concept of materiality recognizes that some matters are important for fair presentation of financial statements in conformity with the applicable financial reporting framework, while other matters are not important.
b. An auditor considers materiality for planning purposes in terms of the largest aggregate amount of misstatement that could be material to any one of the financial statements
c. Materiality judgments are made in light of surrounding circumstances and necessarily include both quantitative and qualitative judgments.
d. An auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of the common financial information needs of users of a group T
Answer _____
At the end of June 2010, one Bitcoin could be purchased for $0.0008 (yes, this is 8/100 of a cent). Towards the end of June 2022, one Bitcoin was worth $21,000.
If you invested in one Bitcoin in June 2010 at $0.0008 and sold in June 2022 (12 years later) at $21,000, what would your compound annual rate of return been?
At the end of June 2016, one Bitcoin was worth $674. What would your compound annual rate of return have been if you invested in June 2016 at $674 and sold in June 2022 (six years later) at $21,000?
Lastly, assume you invested in one Bitcoin at its peak at the end of October 2021 at $67,554 (it was actually very early November, but I changed it to the end of October to make the calculation simple). Had you sold it in June 2022 for $21,000, what would your compound annual return have been? (For this last calculation, the time-period is 8 months, so N=8/12).
If you had invested in one Bitcoin in June 2010 at $0.0008 and sold it in June 2022 at $21,000, your compound annual rate of return would have been approximately 157.65%.
If you had invested in one Bitcoin in June 2016 at $674 and sold it in June 2022 at $21,000, your compound annual rate of return would have been approximately 77.56%.
Lastly, if you had invested in one Bitcoin at its peak at the end of October 2021 at $67,554 and sold it in June 2022 for $21,000 (within 8 months), your compound annual return would have been negative because the holding period is less than a year.
To calculate the compound annual rate of return, we use the formula:
Compound Annual Rate of Return = (Ending Value / Beginning Value)^(1 / Number of Years) - 1
For the first two scenarios, we use the number of years as 12 and 6, respectively, while for the last scenario, we adjust the number of years to 8/12 since it's an 8-month period.
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every six months. Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six decimal places.) The effective annual rate for your credit card is (Round to two decimal places.) The effective annual rate for the loan from your parents is \%. (Round to two decimal places.) The option with the lower effective annual rate is (1) (Select from drop-down menu.) (1) your credit card the loan from your parents choice. (Assume that there are 365 days in the year.) (Note: Be careful not to round any intermediate steps less than six decimal places.) The EAR for the first investment choice is \%. (Round to three decimal places.) The EAR for the second investment choice is \%. (Round to three decimal places.) The EAR for the third investment choice is \%. (Round to three decimal places.) any intermediate steps less than six decimal places.) Your monthly payment will be $ (Round to the nearest cent.)
The loan from your parents has a lower effective annual rate of 2.01%, compared to the credit card's effective annual rate of 11.40%.
Effective annual rate for credit card:
r = 10.5%/6 = 1.75% per six months
n = 2 because there are 2 six-month periods in a year
EAR = (1 + r)^n - 1 = (1 + 0.0175)^2 - 1 = 0.1140 = 11.40%
Effective annual rate for loan from parents
r = 6%/6 = 1% per six months
n = 2 because there are 2 six-month periods in a year
EAR = (1 + r)^n - 1 = (1 + 0.01)^2 - 1 = 0.0201 = 2.01%
Option with lower effective annual rate
The loan from your parents has a lower effective annual rate of 2.01%, compared to the credit card's effective annual rate of 11.40%.
Effective annual rates for investment choices
The effective annual rates for the three investment choices are:
7.18%
8.77%
10.55%
Monthly payment
The monthly payment for the loan from your parents would be:
monthly payment = (principal * r * (1 + r)^n) / ((1 + r)^n - 1) = (10,000 * 0.01 * (1 + 0.01)^2) / ((1 + 0.01)^2 - 1) = 416.67
Answers
The effective annual rate for your credit card is 11.40%.
The effective annual rate for the loan from your parents is 2.01%.
The option with the lower effective annual rate is the loan from your parents.
The EAR for the first investment choice is 7.18%.
The EAR for the second investment choice is 8.77%.
The EAR for the third investment choice is 10.55%.
Your monthly payment will be $416.67.
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Ayayai Delights manufactures a wide variety of holiday and seasonal decorative items. Ayayai's activity-based costing overhead rates are: The Snow Man project involved 3 purchase orders, 6,300 square feet/days, 83 machine hours, and 63 direct labor hours. The cost of direct materials on the fob was $21.300 and the directlabor rate is $34 per hour. Determine the total cost of the Snow Man project.
The total cost of the Snow Man project was $22,768.60
Given below are the overhead rates that are needed to calculate the total cost of the Snow Man project:
Purchase order: $210.00/supply order
Square feet/day: $4.60/square foot/day
Machine hours: $41.50/machine hour
Direct labor hours: $16.80/direct labor hour
The total cost of the Snow Man project was determined by adding all the expenses:
Direct material on fob: $21,300
Direct labor cost: 63 direct labor hours x $34/direct labor hour = $2,142
Overhead cost:
3 purchase orders x $210/purchase order + 6,300 square feet/days x $4.60/square foot/day + 83 machine hours x $41.50/machine hour + 63 direct labor hours x $16.80/direct labor hour
= $19,326.60
The total cost of the Snow Man project was$21,300 + $2,142 + $19,326.60 = $22,768.60.
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Solve Problem 8-1 using the following priority ordering for the goals:
G1 ≻ G2 ≻ G3 ≻ G4 ≻ G5
(*8-1. Formulate the Fairville tax problem, assuming that the town council is specifying an
additional goal, G5, that requires gasoline tax to equal at least 20% of the total tax bill.) A GOAL PROGRAMMING FORMULATION The idea of goal programming (GP) is illustrated by Example 8.1-1. Example 8.1-1 (Tax Planning)
1
Fairville is a small city with a population of about 20,000 residents. The annual taxation base for real estate property is $550 million. The annual taxation bases for food and drugs and for general sales are $35 million and $55 million, respectively. Annual local gasoline consumption is estimated at 7.5 million gallons. The city council wants to develop the tax rates based on four main goals: 1. Tax revenues must be at least $16 million to meet the city's financial commitments. 2. Food and drug taxes cannot exceed 10% of all taxes collected. 'This example is based on Chissman and Associates, 1989. 341 Goal Programming 3. General sales taxes cannot exceed 20% of all taxes collected. 4. Gasoline tax cannot exceed 2 cents per gallon.
G1: Tax revenue ≥ $16 million
G2: Food and drug taxes ≤ 10% of total taxes
G3: General sales taxes ≤ 20% of total taxes
G4: Gasoline tax ≤ 2 cents per gallon
G5: Gasoline tax ≥ 20% of total tax bill (additional goal)
The Fairville tax problem involves determining tax rates based on several goals.
of priority, are as follows:
G1: Tax revenues must be at least $16 million to meet the city's financial commitments.
G2: Food and drug taxes cannot exceed 10% of all taxes collected.
G3: General sales taxes cannot exceed 20% of all taxes collected.
G4: Gasoline tax cannot exceed 2 cents per gallon.
G5: Gasoline tax must be at least 20% of the total tax bill.
To formulate the problem using goal programming, we assign decision variables and formulate constraints for each goal. The decision variables represent the tax rates for different tax categories.
The first goal, G1, requires tax revenues to be at least $16 million. We formulate this as a constraint on the sum of tax revenues from all categories.
The second goal, G2, limits the tax on food and drugs to be below 10% of the total tax revenue. We formulate this as a constraint based on the tax rate for food and drugs.
The third goal, G3, limits the tax on general sales to be below 20% of the total tax revenue. We formulate this as a constraint based on the tax rate for general sales.
The fourth goal, G4, sets a maximum limit of 2 cents per gallon for the gasoline tax. We formulate this as a constraint on the tax rate for gasoline.
Additionally, the town council specifies an additional goal, G5, which requires the gasoline tax to equal at least 20% of the total tax bill. This goal introduces a new constraint to ensure the desired proportion.
By formulating the Fairville tax problem using goal programming and incorporating the priority ordering of the goals, a solution can be obtained that satisfies the specified goals while optimizing tax rates and revenues.
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Cash Dividendi, Stock Dividends and Stock Splits (Need to Know 112) Wye this Dverall Information an the Common Stock of Agriculture Consolidated Foods 10 record the follewing independent situations: Par Valise is $10 per share. Market Value $40 per share. 500,000 mares Authorized 2000000 shares Issued and Outstanding 1. Joumalize the entries necessary to declare and pay a S.10 per share Cash Dividend. 2. Joarnalive the entrics necessary to record a 5% stock dividend. 3. Jourmaline the entries necessary to record a 50% stock dividend. 4. Dournalize the entries necestary to record a 3:2 stock split.
Cash Dividend: Retained Earnings decrease, Dividends Payable increase.
5% Stock Dividend: Retained Earnings decrease, Common Stock Dividend Distributable increase, Common Stock increase.
50% Stock Dividend: Retained Earnings decrease, Common Stock Dividend Distributable increase, Common Stock increase.
3:2 Stock Split: Common Stock increase, Additional Paid-in Capital increase, Common Stock Dividend Distributable increase.
To journalize the entries for the given situations regarding the common stock of Agriculture Consolidated Foods, we'll follow these steps:
To declare and pay a $10 per share Cash Dividend:
Date: [Date of declaration]
Retained Earnings 2,000,000 [($10 per share * 200,000 shares)]
Dividends Payable 2,000,000
Date: [Date of payment]
Dividends Payable 2,000,000
Cash 2,000,000
To record a 5% Stock Dividend:
Date: [Date of declaration]
Retained Earnings 100,000 [($40 per share * 200,000 shares * 5%)]
Common Stock Dividend Distributable 100,000
Date: [Date of distribution]
Common Stock Dividend Distributable 100,000
Common Stock ($40 per share * 10,000 shares) 400,000 [($40 per share * 200,000 shares * 5%)]
To record a 50% Stock Dividend:
Date: [Date of declaration]
Retained Earnings 20,000,000 [($40 per share * 200,000 shares * 50%)]
Common Stock Dividend Distributable 20,000,000
Date: [Date of distribution]
Common Stock Dividend Distributable 20,000,000
Common Stock ($40 per share * 100,000 shares) 4,000,000 [($40 per share * 200,000 shares * 50%)]
To record a 3:2 Stock Split:
Date: [Date of the stock split]
Common Stock ($40 per share * 200,000 shares) 8,000,000
Additional Paid-in Capital 4,000,000 [($40 per share * 200,000 shares * 3/2)]
Common Stock Dividend Distributable 4,000,000
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Some researchers have concluded that entrepreneurship and bureaucracies were mutually; a. Exclusive b. Inclusive c. Related d.
Some researchers have concluded that entrepreneurship and bureaucracies were mutually Exclusive.
What is entrepreneurship?
Entrepreneurship is the ability to create, run, and organize a company, as well as take on financial risks in the hopes of earning a profit. Entrepreneurship is the process of creating something new with value by committing time and effort, receiving monetary and social rewards, and accepting the associated risks and uncertainties.
What is bureaucracy?
Bureaucracy is a system of government in which most of the important decisions are made by state officials instead of elected representatives. In a broader sense, it refers to the system of government in which the government is made up of various departments, each with its own set of responsibilities and procedures. It is a term used to describe a complex administrative organization in which decisions are made by state officials rather than elected representatives.
Researchers' conclusion
The researchers concluded that entrepreneurship and bureaucracies were mutually exclusive. This means that the two concepts are incompatible with one another and cannot coexist.
Entrepreneurship and bureaucracy have different approaches, rules, and procedures.
Entrepreneurship is all about taking risks and being creative.
Bureaucracies, on the other hand, are risk-averse and prefer predictability over innovation.
As a result, it is difficult for an entrepreneurial venture to succeed within a bureaucratic environment.
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Why are strategic decisions different from other kinds of decisions? (your answers should not exceed 120 words).
no copy
no plagiarism
no hand writing
Strategic decisions differ from other kinds of decisions due to their long-term nature, complexity, and significant impact on the organization.
Strategic decisions are different from other kinds of decisions because they are typically long-term, complex, and involve the allocation of resources to achieve specific objectives. Unlike operational decisions, which focus on day-to-day activities, strategic decisions require a broader perspective and consideration of external factors such as market trends and competition. These decisions are often made by top-level executives and impact the entire organization. They also require careful analysis, evaluation of various options, and consideration of potential risks and rewards. Strategic decisions are critical for the success and growth of an organization, as they shape its overall direction and competitive advantage.
In conclusion, strategic decisions differ from other kinds of decisions due to their long-term nature, complexity, and significant impact on the organization.
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What are the two most used common samples of "the market."
What is the beta of the market?
What is the reward-to-risk ratio?
What is the risk-free rate?
The DJIA and S&P 500 are two of the most frequently cited examples of "the market." The risk-free rate acts as a baseline for anticipated returns, the reward-to-risk ratio assesses risk-adjusted return, and the beta gauges an investment's sensitivity to market fluctuations.
The S&P 500 index and the Dow Jones Industrial Average (DJIA) are the two metrics that "the market" is most frequently measured using. The success of the stock market as a whole can be measured using these indices, which cover a wide range of stocks. The DJIA has 30 large-cap US equities, compared to the 500 large-cap US stocks in the S&P 500.
The market's beta calculates how sensitive a certain stock or investment portfolio is to changes in the broader market. With a beta of 1, a stock or portfolio is said to move more or less in step with the market. A beta of larger than 1 denotes a more volatile investment than the market, whereas a beta of less than 1 denotes a less volatile investment.
A measure of risk-adjusted return is the Sharpe ratio, often known as the reward-to-risk ratio. When compared to a rate of return that is risk-free, it determines the additional return an investment generates in response to its risk. The greater the ratio, the better the investment's performance once risk has been taken into account.
The theoretical return on a risk-free investment is referred to as the risk-free rate. The yield on government securities, such as US Treasury bills or bonds, is frequently used to estimate it.
When assessing the anticipated return on an investment, the risk-free rate serves as a benchmark. In order to make up for the additional risk they are incurring, investors typically want a larger return on their investments than the risk-free rate.
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An mnc's long-term financing decisions are satisfied in the ________ market and the ________.
An MNC's long-term financing decisions are satisfied in the capital market and the international market.
The capital market refers to the market where long-term securities like stocks and bonds are bought and sold. MNCs can raise funds by issuing these securities to investors in the capital market.
The international market, on the other hand, refers to the global market where MNCs can access capital from foreign investors or borrow funds in foreign currencies. This allows MNCs to diversify their sources of financing and tap into a larger pool of potential investors. Overall, the capital market and international market play crucial roles in meeting an MNC's long-term financing needs.
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ILoveBonds issued 11-year bonds a year ago at a coupon rate of 8.9 percent. The coupons are semiannual, the par value is $1,000, and the YTM is 7.2 percent. Calculate the current bond price. (Do not round intermediate calculations. Round your final answer to 2 decimal places, e.g., 32.16.) points Current bond price $
ILoveBonds issued 11-year bonds a year ago at a coupon rate of 8.9 percent. The coupons are semiannual, the par value is $1,000, and the YTM is 7.2 percent. The current bond price is $1,459.65.
To calculate the current bond price, we need to determine the present value of the bond's future cash flows, which include the periodic coupon payments and the final principal payment at maturity.
Given information:
Coupon rate = 8.9%
Coupon payments per year = 2 (semiannual)
Par value = $1,000
Years to maturity = 11
Yield to maturity (YTM) = 7.2%
First, let's calculate the periodic coupon payment. Since the coupon rate is stated on the par value, we can calculate it as follows:
Coupon payment = Coupon rate * Par value / Number of coupon payments per year
Coupon payment = 8.9% * $1,000 / 2
Coupon payment = $44.50
Next, we need to calculate the present value of the bond's future cash flows. To do this, we'll discount each cash flow using the YTM.
Step 1: Calculate the discount rate per period.
Discount rate per period = YTM / Number of coupon payments per year
Discount rate per period = 7.2% / 2
Discount rate per period = 3.6%
Step 2: Calculate the present value of coupon payments.
Since there are 22 semiannual periods (11 years * 2), we'll calculate the present value of 22 coupon payments.
Present value of coupon payments = Coupon payment * [1 - (1 + Discount rate per period)^(-Number of coupon payments)]
Present value of coupon payments = $44.50 * [1 - (1 + 3.6%)^(-22)]
Present value of coupon payments = $844.46
Step 3: Calculate the present value of the principal payment at maturity.
The principal payment at maturity is the par value of the bond.
Present value of principal payment = Par value / (1 + Discount rate per period)^Number of coupon payments
Present value of principal payment = $1,000 / (1 + 3.6%)^22
Present value of principal payment = $615.19
Step 4: Calculate the current bond price.
Current bond price = Present value of coupon payments + Present value of principal payment
Current bond price = $844.46 + $615.19
Current bond price = $1,459.65
Therefore, the current bond price is $1,459.65.
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The following information pertains to one unfinished item in Dominic’s inventory:
Cost $12.00
Estimated selling price 14.60
Estimated cost to complete 3.30
Estimated cost to sell 0.40
Under the lower-of-cost-or-net-realizable-value rule, this inventory item should be included in inventory at which of the following amounts?
$11.30
$11.70
$12.00
$10.90
Under the lower-of-cost-or-net-realizable-value rule, this inventory item should be included in inventory at $11.70.
The lower-of-cost-or-net-realizable-value rule states that inventory should be reported at the lower of its cost or its net realizable value. Net realizable value is the estimated selling price minus the estimated cost to complete and the estimated cost to sell.
In this case, the cost of the item is $12.00, and the estimated selling price is $14.60. The estimated cost to complete is $3.30, and the estimated cost to sell is $0.40.
To determine the net realizable value, we subtract the estimated cost to complete and the estimated cost to sell from the estimated selling price:Net realizable value = Estimated selling price - Estimated cost to complete - Estimated cost to sell
Net realizable value = $14.60 - $3.30 - $0.40Net realizable value = $11.90
Since the lower-of-cost-or-net-realizable-value rule requires us to report inventory at the lower of its cost or its net realizable value, the inventory item should be included in inventory at $11.70, which is the lower value between the cost of $12.00 and the net realizable value of $11.90.
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I really need help answering this question
In regards to both industries the Airline and Technology which would perform better in one of the financial ratios? Do you think the quick ratio will be higher for the technology industry instead of the capital intensive industry?
It's important to note that this is a general trend and may not hold true for every company within these industries. The performance of financial ratios can vary depending on various factors such as company size, management practices, and market conditions.
When comparing the Airline and Technology industries, it is difficult to determine which one would perform better in terms of financial ratios without specific data. However, it is generally expected that the Technology industry would have a higher quick ratio compared to the Airline industry.
The quick ratio is a financial ratio that measures a company's ability to cover its short-term liabilities with its most liquid assets. It is calculated by subtracting inventory from current assets and dividing the result by current liabilities.
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Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 2.7 million shares that are outstanding. Shareholders require a 10% rate of return from Consolidated stock.
a.What is the price of Consolidated stock?
Stock price$
b.What is the total market value of its equity? (Enter your answer in millions.)
Market value of equity$ million
Consolidated now decides to increase next year's dividend to $20 a share, without changing its investment or borrowing plans. Thereafter the company will revert to its policy of distributing $10 million a year.
c.How much new equity capital will the company need to raise to finance the extra dividend payment? (Enter your answer in millions.)
New equity$ million
d.What will be the total present value of dividends paid each year on the new shares that the company will need to issue? (Enter your answer in millions.)
Present value$ million
e.What will be the transfer of value from the old shareholders to the new shareholders? (Enter your answer in millions.)
Transfer of value$ million
a. The price of Consolidated stock is $100.
b. The market value of equity is $270 million.
c. The new equity capital needed to finance the extra dividend payment is $27 million.
d. Since, the number of new shares issued is not provided in the question, so we cannot calculate this value.
e. Since the market value of equity after the dividend increase is not provided in the question, we cannot determine the transfer of value from the old shareholders to the new shareholders.
a. To calculate the price of Consolidated stock, we can use the dividend discount model (DDM) formula. The DDM formula states that the price of a stock is equal to the present value of its expected future dividends.
In this case, the annual dividend is $10 per share, and the rate of return required by shareholders is 10%. Using these values, we can calculate the price of Consolidated stock as follows:
Price of Consolidated stock = Dividend / Rate of return
Price of Consolidated stock = $10 / 10% = $100
b. The total market value of equity can be calculated by multiplying the price of Consolidated stock by the number of shares outstanding. In this case, there are 2.7 million shares outstanding. Using the calculated stock price of $100, we can determine the market value of equity as follows:
Market value of equity = Price of Consolidated stock x Number of shares outstanding
Market value of equity = $100 x 2.7 million = $270 million
c. To calculate the new equity capital needed to finance the extra dividend payment, we need to determine the difference between the new dividend and the previous dividend. The new dividend is $20 per share, while the previous dividend was $10 per share. The number of shares outstanding remains the same. Therefore, the new equity capital needed can be calculated as follows:
New equity capital needed = (New dividend - Previous dividend) x Number of shares outstanding
New equity capital needed = ($20 - $10) x 2.7 million = $27 million
d. The total present value of dividends paid each year on the new shares can be calculated by discounting the future dividends using the required rate of return. In this case, the new dividend is $20 per share, and the rate of return is 10%. We can calculate the present value of these dividends as follows:
Present value of dividends = Dividend / Rate of return
Present value of dividends = $20 / 10% = $200
Since the company will need to issue new shares, the total present value of dividends paid each year on the new shares will be the present value of dividends multiplied by the number of new shares issued. However, the number of new shares issued is not provided in the question, so we cannot calculate this value.
e. The transfer of value from the old shareholders to the new shareholders can be calculated by subtracting the market value of equity before the dividend increase from the market value of equity after the dividend increase. In this case, the market value of equity before the dividend increase is $270 million (calculated in part b), but the market value of equity after the dividend increase is not provided in the question, so we cannot calculate this value. Therefore, we cannot determine the transfer of value from the old shareholders to the new shareholders.
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MACROECONOMICS/ THANK YOU CHEGG PROFESSIONALS IN ADVANCE/ YOU ARE SERVING YOUR NATION WELL <3
Suppose production and prices of pizza and calzone in 2004 and 2008 are as follows:
Quantity of pizzas Price of pizzas Quantity of calzones Price of calzones
2004 10 $10 15 $5
2008 30 $12 30 $6
a. Find the real GDP in 2008 and 2004. Assume that 2004 is the base year.
The real GDP in 2004 is $175 and the real GDP in 2008 is $175.03.
To calculate the real GDP in 2008 and 2004, the given information should be used and the following steps should be followed:
Step 1: Calculate Nominal GDP of 2004Nominal GDP of 2004 is the multiplication of the Quantity of Pizzas and their respective price, and adding the product of the quantity of calzones and their respective prices.
Nominal GDP of 2004 is,10 * $10 + 15 * $5 = $100 + $75 = $175
Step 2: Calculate the real GDP of 2004
Since 2004 is the base year, real GDP of 2004 is the same as Nominal GDP of 2004. Therefore, the real GDP of 2004 is $175
Step 3: Calculate Nominal GDP of 2008Nominal GDP of 2008 is the multiplication of the Quantity of Pizzas and their respective price, and adding the product of the quantity of calzones and their respective prices. Nominal GDP of 2008 is,30 * $12 + 30 * $6 = $360 + $180 = $540
Step 4: Calculate the real GDP of 2008Real GDP of 2008 is calculated using the GDP Deflator, which is a measure of inflation and represents the ratio of Nominal GDP and Real GDP.
Real GDP = Nominal GDP / GDP Deflator GDP deflator = (Nominal GDP/Real GDP) * 100% = (540/175) * 100% = 308.57
Real GDP of 2008 = Nominal GDP of 2008 / GDP deflator = 540/3.0857 = $175.03
Therefore, the real GDP in 2004 is $175 and the real GDP in 2008 is $175.03.
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