Answer:
[tex]\arge\boxed{\large\boxed{\$ 117,788}}[/tex]
Explanation:
Assume the cost equation to be:
[tex]Cost(x)=Fixed\text{ }costs+Variable\text{ }costs\\\\Cost(x)=A+Bx[/tex]
Where [tex]x[/tex] is the number of units (wooden baseball bats) produced.
The average cost per unit of production level is the total cost divided by the number of units produced:
[tex]Average\text{ }cost(x)=Cost(x)/x\\\\Average\text{ }cost(x)=(A+Bx)/x\\[/tex]
You are given that the average cost per unit of a production level of 7,700 bats is $14, then:
[tex]14=(A+7,700B)/7,700[/tex]
You are also given that the fixed costs are $22,500, thus A = 22,500. Hence, you can substitute the value of A in the previous equation and find B:
[tex]14=(22,500+7,700B)/7,700\\\\14\times 7,700=22,500+7,700B\\\\107,800-22,500=7,700B\\\\85,300/7,700=B\\\\B=11.08[/tex]
Now you can complete the cost equation:
[tex]Cost(x)=\$ 22,500+11.08x[/tex]
And to predict the total costs for 8,600 bats you must subsitute x with 8,600 in the previous equation:
[tex]Cost(8,600)=\$ 22,500+11.08(8,600)=\$ 117,788[/tex]
Inc. has a net profit margin of 5% on sales of $50 million. It has book value of equity of $40 million and total liabilities with a book value of $30 million. What is Ladders’ ROE? ROA?
Answer:
ROE = 6.25%
ROA = 3.57%
Explanation:
Sales = 50 million
Net Profit margin = 5%
Net profit = 50 million x 5% = 2.5 million
Total Assets = Total Equity + Total Liabilities
Total Assets = 40 million + 30 million = 70 million
Return on Equity = Net Profit / Total equity
Return on Equity = $2.5 million / $40 million = 0.0625 = 6.25%
Return on Assets = Net profit / total Asset
Return on Assets = 2.5 million / 70 million = 0.0357 = 3.57%
Inc.’s ROE would be approximately 6.25%, while the ROA would be about 3.57%. This is calculated by finding the net income first and then using appropriate formulas for ROE and ROA.
Explanation:The net income of Inc. can be calculated by multiplying its net profit margin of 5% with its sales of $50 million. Hence, the net income would be $2.5 million (0.05 * 50 million).
The Return on Equity (ROE) is calculated by dividing the net income by the book value of equity. Therefore, ROE would be 0.0625 or 6.25% (2.5 million / 40 million).
The Return on Assets (ROA) is calculated by dividing the net income by total assets. The total assets can be calculated by adding the book value of equity and total liabilities. Hence, total assets amount to $70 million (40 million + 30 million). The ROA hence would be approximately 0.0357 or 3.57% (2.5 million / 70 million).
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A portfolio management organization analyzes 60 stocks and constructs a mean-variance efficient portfolio using only these 60 securities.How many estimates of expected returns, variances, and covariances are needed to optimize this portfolio?If one could safely assume that stock market returns closely resemble a single-index structure, how many estimates would be needed?
Answer:
In a single index model:
ri - rf = α i + β i (r M - rf ) + e i
Equivalently, using excess returns:
R i = α i + β i R M + e i
The variance of the rate of return can be decomposed into the components:
The variance due to the common market factor
Bi^2stdvm^2
The variance due to firm specific unanticipated events
STDV^2(ei)
In this model
Cov(ri,rj) =BiBjSTDV
The number of parameter estimates is:
n = 60 estimates of the mean E(ri )
n = 60 estimates of the sensitivity coefficient β i
n = 60 estimates of the firm-specific variance σ2(ei )
1 estimate of the market mean E(rM )
1 estimate of the market variance
Therefore, in total, 182 estimates.
The single index model reduces the total number of required estimates from 1,890 to 182. In general, the number of parameter estimates is reduced from:
(n^2 +3n / 2) to (3n+2)
To optimize a portfolio with 60 stocks, 1890 estimates of expected returns, variances, and covariances are required. However, if a single-index model is assumed, only 121 estimates are needed. Portfolio diversification is crucial in optimizing returns while minimizing risk.
To construct a mean-variance efficient portfolio with 60 securities, there are three types of estimations needed: expected returns, variances, and covariances. The number of expected returns estimates matches the number of securities, thus we need 60 estimates for the expected returns. For variances, we also need 60 estimates, as there is one variance per stock. The covariance estimates, however, are required for each pair of stocks. In a portfolio of 60 stocks, the number of unique pairs can be calculated using the combination formula C(n, 2) = n(n-1)/2, where 'n' is the number of stocks. Therefore, we need 60(60-1)/2 = 1770 covariance estimates. In total, optimizing this portfolio requires 60 (expected returns) + 60 (variances) + 1770 (covariances) = 1890 estimates.
If we assume that stock market returns follow a single-index structure, the calculations simplify. In a single-index model, each stock's return is related to the return of a common index, and the unique risk for each stock. Hence, each security would require one estimate for sensitivity to the index (beta), one estimate for the expected return of the index, and one estimate for the individual stock's variance not explained by the index (unique or idiosyncratic variance). Therefore, 60 beta estimates, one index return estimate, and 60 unique variance estimates are needed, totaling to 121 estimates when the single-index model is applied.
Investing in a diversified portfolio is a fundamental principle of Optimal Portfolio Theory to minimize risk and optimize returns.
During the Zhou Dynasty, merchants were Group of answer choices independent operators who were vital to the economy. interested only in trading domestic goods. the property of the local lord and could sometimes be bought and sold. were originally slave owners but later freed their slaves. the funders and sponsors of massive irrigation projects.
The property of the local lord and could sometimes be bought and sold
Answer: Option 3.
Explanation:
The Zhou dynasty expanded economic production by developing new iron tools that helped produce more food. They grew new crops and organized large-scale irrigation works. They expanded commerce by using money.
During the Eastern Zhou Dynasty ancient shamanist practices were forged into a system of moral beliefs for daily life that later became Confucianism (See Confucianism, Religion). The Zhou also refined writing. It said people in the Zhou Dynasty had also learned to grow fruit trees in orchards.
At the end of each of the past 14 years, Vanessa deposited $450 in an account that earned 8 percent compounded annually. (a) How much is in the account today? (b) How much would be in the account if the deposits were made at the beginning each year rather than at the end of each year?
Answer:
a) = $10,896.71
b) = $11,768.45
Explanation:
The question is divided into 2 parts
Part a) Amount in the account today
The formula to use is as follows:
FV of Annuity= P(1+r)∧n - 1)/r
P= Periodic Payment = $450
r= Rate of each period= 8%
n= the number of periods= 14
The account today is as follows:
FV = 450 x (1+0.08)∧14-1]/0.08
= $10,896.71
Part b) The formula to use is as follows:
FV = Future value = (1+r) * P * [ (1+r)n -1] / r
P= Periodic Payment = $450
r= Rate of each period= 8%
n= the number of periods= 14
= Fv= (1+0.08) * 450 * [ (1+0.08)^14 - 1] / 0.08
= $11,768.45
The opportunity cost of attending college is likely to be highest for a high school graduate _______A. who can immediately take over the family business.B. who has access to student loans.C. who is very intelligent.D. whose family is extremely wealthy.
Answer:
who can immediately take over the family business.
Explanation:
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
For a student who chooses to go to college, his opportunity cost is the opportunity of running the family business he forgoed when he decided to go to college.
I hope my answer helps you
You just signed a business consulting contract with one of your clients. The client will pay you $50,000 a year for five years for the service you will provide over this period. You anticipate the general inflation rate over this period to be 6%. If your desired inflation-free interest rate (real interest rate) is to be 4%, what is the worth of the fifth payment in present dollars? The client will pay the consulting fee at the end of each year.
Final answer:
The worth of the fifth payment in present dollars, given a 6% inflation rate and a 4% desired real interest rate, is approximately $31,046 after accounting for the effect of nominal interest of 10% over five years.
Explanation:
To calculate the worth of the fifth payment in present dollars considering an inflation rate of 6% and a real interest rate of 4%, we use the formula for the present value of a future payment:
Begin with the future value of the payment: $50,000.
Calculate the nominal interest rate, which is the sum of the real interest rate and the expected inflation rate. This gives us a nominal interest rate of 4% + 6% = 10%.
Adjust the future payment to present value using the formula Present Value = Future Value / (1 + Nominal Interest Rate)^Number of Periods.
For the fifth payment, Number of Periods is 5. Therefore, the present value of the fifth $50,000 payment is $50,000 / (1 + 0.10)^5.
Perform the calculation: Present Value = $50,000 / (1.10)^5 = $50,000 / 1.61051 ≈ $31,046.
Therefore, the worth of the fifth payment in present dollars is approximately $31,046.
The PCI Council was formed in 2006 to create safeguards designed to protect credit card data. Any merchant or service provider who accepts credit cards must follow the safeguards. True False
Answer:
True
Explanation:
In order to protect businesses who accept credit cards from their customers as forms of payment, the Payment Card Industry Security Standards Council (PCI SSC) also known as the Payment Card Industry Data Security Standard (PCI DSS) it was established in 2006 by American Express. It helps in strengthening credit card holder data security to mitigate the credit card risks. The standard presents a benchmark against which businesses can compare and measure their own security policies
The King Corporation has ending inventory of $483,824, and cost of goods sold for the year just ended was $4,233,460. a. What is the inventory turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) b. What is the days' sales in inventory? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) c. How long on average did a unit of inventory sit on the shelf before it was sold? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a. 8.75 times
b. 41.71 days
c. 41.71 days
Explanation:
The computation is shown below:
a. Inventory Turnover = Cost of Goods Sold ÷ Inventory
= $4,233,460 ÷ $483,824
= 8.75 times
b. Days' sales in inventory = 365 ÷ Inventory Turnover
= 365 ÷ 8.75 times
= 41.71 days
c. Number of days for the unit of inventory sit on the shelf would be equal to the days' sales in inventory i.e 41.71 days
The inventory turnover of the King Corporation is 8.75 times. The days' sales in inventory or how long on average did a unit of inventory sit on the shelf before it was sold is roughly 41.71 days.
Explanation:To calculate the inventory turnover, we use the formula Inventory Turnover = Cost of Goods Sold / Average Inventory. However, in this case, we are only given the ending inventory, so we will use that as an approximation for the average inventory. Therefore, Inventory Turnover = $4,233,460 / $483,824 = 8.75 times. This suggests that the inventory turned over 8.75 times in the year.
Next, to calculate days' sales in inventory, we use the formula Days' Sales Inventory = 365 days / Inventory Turnover. Using the inventory turnover we calculated, Days' Sales in Inventory = 365 / 8.75 = 41.71 days. This suggests that on average, inventory stays in stock for about 41.71 days before it is sold.
Finally, the answer to the third question on how long an average unit of inventory sat on the shelf before being sold is the same as the days' sales in inventory, which is 41.71 days.
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What is the present worth of these future payments? (a) $25,500 eight years from now at 12% com-pounded annually. (b) $58,000 twelve years from now at 4% com-pounded annually. (c) $25,000 nine years from now at 6% compounded annually. (d) $35,000 four years from now at 9% compounded annually.
Answer:
a. PV = $10,299.02
b. PV = $36,226.63
c. PV = $14,797.46
d. PV = $24,794.88
Explanation:
To solve this question, we use present value formula
PV = C/(1+r)^n
Where PV = Present value of a lump sum
C = Future amount to be discounted
r = Interest rate
n = Number of years
a. PV = C/(1+r)^n
C = $25,500
r = 12%
n = 8
PV = $25,500 /(1+12%)^8
PV = $25,500 /(1+0.12)^8
PV = $25,500 /(1.12)^8
PV = $25,500 /2.475963176
PV = $10,299.02231
PV = $10,299.02
b. PV = C/(1+r)^n
C = $58,000
r = 4%
n = 12
PV = $58,000 /(1+4%)^12
PV = $58,000 /(1+0.04)^12
PV = $58,000 /(1.04)^12
PV = $58,000 /1.601032219
PV = $36,226.62888
PV = $36,226.63
c. PV = C/(1+r)^n
C = $25,000
r = 6%
n = 9
PV = $25,000 /(1+6%)^9
PV = $25,000 /(1+0.06)^9
PV = $25,000 /(1.06)^9
PV = $25,000 /1.689478959
PV = $14,797.46159
PV = $14,797.46
c. PV = C/(1+r)^n
C = $35,000
r = 9%
n = 4
PV = $35,000 /(1+9%)^4
PV = $35,000 /(1+0.09)^4
PV = $35,000 /(1.09)^4
PV = $35,000 /1.41158161
PV = $24,794.88239
PV = $24,794.88
Big Thumbs Company manufactures portable flash drives for computers. Big Thumbs incurs monthly depreciation costs of $15,000 on its plant equipment. Also, each drive requires materials and manufacturing overhead resources. On average, the company uses 10,000 ounces of materials to manufacture 5,000 flash drives per month. Each ounce of material costs $3.00. In addition, manufacturing overhead resources are driven by machine hours. On average, the company incurs $22,500 of variable manufacturing overhead resources to produce 5,000 flash drives per month.In your calculations, round variable rate per flash drive to the nearest cent.Required:1. Create a formula for the monthly cost of flash drives for Big Thumbs.Total cost of flash drives = Fixed cost + (Variable rate x Number of flash drives)Total cost of flash drives = $ + ($ x Number of flash drives)2. If the department expects to manufacture 6,000 flash drives next month, what is the expected fixed cost (assume that 6,000 units is within the company's current relevant range)?$What is the total variable cost (assume that 6,000 units is within the company's current relevant range)?$What is the total manufacturing cost (i.e., both fixed and variable) (assume that 6,000 units is within the company's current relevant range)?$
Answer:
1.TC = $15,000 + (10.50 x number of of drives)
2.TFC = $15,000
3.Total Variable Cost = $63,000
4. Total Manufacturing. Cost = $78,000
Explanation:
Big Thumbs incurs monthly depreciation costs of $15,000 on its plant equipment
-it uses 10000 ounces of materials to manufacture 5000 flash drives
-
total cost
1.TC = $15,000 + (10.50 x number of of drives)
2. The total fixed cost will still be
TFC = $15,000
3.Total variable cost
10.5*6000 units of flash drives
Total Variable Cost = $63,000
4. total manufacturing cost
fixed cost +variable cost
$15000+$63000
Total Manufacturing. Cost = $78,000
The total monthly cost for flash drives at Big Thumbs consists of a fixed cost of $15,000 and a variable cost of $10.50 per flash drive. If the company plans to produce 6,000 flash drives, the total variable cost is $63,000 and the total manufacturing cost is $78,000.
Explanation:The total cost of flash drives for Big Thumbs consists of fixed and variable costs. The fixed cost, which includes the monthly depreciation costs of the plant equipment, is $15,000. This amount remains the same regardless of the number of flash drives manufactured.
To calculate the variable rate per flash drive, we first identify the variable costs. The company uses 10,000 ounces of materials per month to manufacture 5,000 flash drives, and each ounce of material costs $3.00, yielding a material cost of $30,000. The variable manufacturing overhead resources amount to $22,500. Therefore, the total variable cost per month is the sum of these two costs, which equals $52,500. Since this cost is incurred to produce 5,000 flash drives, the variable cost per flash drive is $52,500 divided by 5,000, or $10.50.
If the department expects to manufacture 6,000 flash drives next month, the fixed cost remains at $15,000, while the total variable cost increases to $10.50 times 6,000, or $63,000. Thus, the total manufacturing cost, which is the sum of the fixed and variable costs, is $15,000 plus $63,000, totaling $78,000.
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. Due to a car accident you receive a settlement from insurance of $50 a month for the next ten years. What is that worth to you today, assuming a 3% inflation rate?
Answer:
Worth of Insurance settlement $426.5
Explanation:
Present value of Insurance settlement = P [ ( 1 - ( 1+r )^-n ) / r ]
Present value of Insurance settlement = 50 [ ( 1 - ( 1 + 3% )^-10 ) / 3%]
Present value of Insurance settlement = 50 [ ( 1 - ( 1 + 0.03 )^-10 ) / 0.03]
Present value of Insurance settlement = 50 [ ( 1 - ( 1 .03 )^-10 ) / 0.03]
Present value of Insurance settlement = 50 [ ( 1 - ( 1 .03 )^-10 ) / 0.03]
Present value of Insurance settlement = 50 [ ( 1 - 0.7441 ) / 0.03]
Present value of Insurance settlement = 50 [ 0.2559 / 0.03]
Present value of Insurance settlement = 50 x 8.53
Present value of Insurance settlement = 426.5
By the late 1800s, soft coal miners earned a higher hourly wage than other industrial workers of similar skill levels. The mining wage is an example of a. wage discrimination. b. a monopsony market. c. a compensating wage differential. d. an efficiency wage.
Answer: c. a compensating wage differential
Explanation: since different jobs in the labour market are characterised by different wages, workers do have different preferences as do firms who employ these workers have different conditions wherein they work. Soft coal miners earned a higher hourly wage than other industrial workers of similar skill levels due to compensating wage differentials. This is the additional amount of income that a worker must be offered in order to motivate them to accept a given job (often undesirable and collectively known as nonwage characteristics of the job), relative to other jobs that the same worker could perform.
For unpleasant jobs, firms often offer higher wages in order to attract workers. The reverse is also true.
3 years ago and at that time recorded goodwill of $300,000. The Johnson Division's net assets, including the good amount of $650,000. The fair value of the division is estimated to be $620,000 and the implied goodwill is $270,000 Prepare Ayayai journal entry to record impairment of the goodwill. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit
Answer:
Explanation:
Since the fair value is less than the carrying value so the journal entry is recorded.
The journal entry is shown below:
Loss on impairment A/c Dr $30,000
To Goodwill A/c $30,000
(Being loss on impairment is recorded)
Impairment = Initial goodwill - Implied goodwill
= $300,000 - $270,000
= $30,000
Leo is 34 years old. He contributed $3,000 to a Roth IRA in 2015 and $2,000 in 2016. In 2018, he withdrew the entire balance, which had grown to $5,466. How much of Leo's withdrawal is taxable and subject to penalty?
Answer:
$466 is taxable and subject to penalty
Explanation:
The question is to determine the part of Leo's withdrawal that is taxable and then subject to penalty
Step 1:
What is Leo's contribution in 2015 = $3,000
What is his contribution in 2016 = $2,000
His total contribution = $3,000 + $2,000= $5,000
Step 2: We know that in 2018, Leo withdrew his entire balance which is = $5,466
This means, the excess on his contribution is interest
Leo's interest =$5,466 - $5,000= $466
Step 3:
The interest of $466, therefore, represents the interest on the $5,000 contributed and as such, since he withdrew the whole amount, the interest or the gain of $466 is taxable and the same $466 is subject to penalty
After 15 years of employment in the airline industry, John started his own consulting company to use physical and computer simulation in the analysis of commercial airport accidents on runways. He estimates his average cost of new capital at 9% per year for physical simulation projects, that is, where he physically reconstructs the accident using scale versions of planes, buildings, vehicles, etc. He has established 18% per year as the MARR. What net rate of return on capital investments for physical simulation does he expect?
Answer:
9%
Explanation:
The first step is to understand the relevant terms in the question
Average Cost of New Capital
The cost of capital represents a required return rate (in percentage) an organisation or an individual ( in the case of John) will need to make a capital project advantageous, worthwhile or profitable.
In the case of John, the Average Cost of New Capital is 9%
MARR - Minimum Acceptable Rate of Return
This rate also in percentage represents the lowest or minimum rate of return a business or an individual is able to accept in order to start a given project. It is usually based on the risk of the project as well as the alternate benefit foregone if other projects were accepted.
It is also called the Hurdle rate, or the cutoff rate.
John's MARR is 18%
Based on these,
John's Net rate of return is calculated as follows
Minimum Acceptable Rate of Return - Average Cost of the New Capital
= 18% - 9% = 9%
Fourteen million office workers in the US have their online activities under constant surveillance, according to the Denver-based Privacy Foundation. Worldwide, it reckons the number of employees under such surveillance totals around 27 million people. According to the foundation's Workplace Surveillance Project the low cost of snooping technology is the main reason why employers are employing a _____approach to management. Herzberg Theory X Theory Y Theory Z scientific management 4
Answer:
The correct answer is letter "A": Theory X.
Explanation:
American economist Douglas McGregor (1906-1964) in Theory X and Theory Y tried to define employees' motivation at work. Theory X implies managers having the idea workers do not like being at work so they have to be constantly motivated and supervised to accomplish their duties effectively.
Marigold Corp. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Marigold $5 each. Marigold estimates that 40 percent of the coupons will be redeemed. Data for 2020 and 2021 are as follows: 2020 2021 Bags of dog food sold 480000 590000 Leashes purchased 19000 22000 Coupons redeemed 100000 150000 The premium liability at December 31, 2021 is
Answer:
Explanation:
Premium liability of 2020
(480000 x .4 - 100000)x 1/8 x 5
= 57500
Premium liability of 2021
(590000 x .4 - 150000) x 1/8 x 5
= 53750
Total liability at 2021
= 57500 + 53750
= 111250
Regarding the AQCD criteria, strive to include all high quality factors in an external assessment for a firm. A high quality factor will meet ______ of the AQCD criteria; a low quality factor will meet ______ of the AQCD criteria. A. 3; 1 B. 3 or 4; 2 or fewer C. 3 or 4; 0 D. 4; 0 E. All; none
Answer:
Option B) 3 or 4; 2 or fewer
Explanation:
A high quality factor will not meet 3 or 4 and low quality factor will not meet 1 or 0 so option A, C and D are incorrect.
The correct option is B. 3 or 4; 2 or fewer as a high quality factor will meet three or four of the AQCD criteria; a low quality factor will meet two or fewer of the AQCD critieria.
A marketing researcher is most likely to serve as a _____ in a new product development team. functional representative process manager scientific advisor project leader
Answer:
The correct answer is letter "A": functional representative.
Explanation:
Market Research is the process a company uses to assess the viability of a new product or service. It reveals the details of a company's target market and what consumers think about a product before it is widely released. Researchers are the key functional characters in this process because thanks to them the information needed to know consumers' preferences and behaviors is unveiled by them.
An In the News article titled "Perpetuating Poverty: Lotteries Prey on the Poor" reports that poor people spend a larger percentage of their income on government-promoted gambling than do rich people. On the basis of this information, we can conclude that lotteries function as:_________.
A) An income tax.
B) A progressive tax.
C) A property tax.
D) A regressive tax.
Answer:
D) A regressive tax.
Explanation:
A regressive tax is one in which as the amount being taxed increases the tax on it reduces. Being regressive implies that there is reduction in the tax as the taxable amount increases.
In this case poor people are spending a larger percentage of their income on government promoted gambling than the percentage spent by rich people. So lotteries function as regressive tax tool.
Investors in closed-end funds who wish to liquidate their positions must a.sell their shares to other investors. b.sell their shares to the issuer at a discount to Net Asset Value. c.sell their shares to the issuer at a premium to Net Asset Value. d.sell their shares to the issuer for Net Asset Value. e.hold their shares to maturity
Answer:
The correct answer is letter "A": sell their shares to other investors.
Explanation:
Closed-end funds are pools of assets that at the beginning raise a fixed amount of income thanks to an Initial Public Offering (IPO) and later on trades in a public stock exchange. Close-end funds are said to provide higher returns than open-end funds. When investors have a position with a closed-end fund, to exit it the number of shares held must be sold to another investor.
"Thomson Trucking has $21 billion in assets, and its tax rate is 30%. Its basic earning power (BEP) ratio is 11%, and its return on assets (ROA) is 5%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places."
Answer:
2.85
Explanation:
Given that,
Assets value = $21 billion
Tax rate = 30%
Basic earning power (BEP) ratio = 11%
Return on assets (ROA) = 5%
Basic earning power (BEP) ratio = EBIT ÷ Total assets
11% = EBIT ÷ $21 billion
EBIT = 11% × $21 billion
= $2.31 billion
ROA = Net Income ÷ Total Assets
5% = Net Income ÷ $21 billion
Net Income = 5% × $21 billion
= $1.05 billion
Earnings before tax:
= Net income ÷ (1 - tax)
= $1.05 billion ÷ (1 - 0.3)
= $1.5 billion
Interest Expense = EBIT - EBT
= $2.31 billion - $1.5 billion
= $0.81 billion
Therefore,
Times-interest-earned (TIE) ratio:
= EBIT ÷ Interest expense
= $2.31 billion ÷ $0.81 billion
= 2.85
Assume that you have a subsidiary in Australia. The subsidiary sells mobile homes to local consumers in Australia, who buy the homes using mostly borrowed funds from local banks. Your subsidiary purchases all of its materials from Hong Kong and pays Hong Kong dollar. The Hong Kong dollar is tied to the U.S. dollar. Your subsidiary borrowed funds from the U.S. parent, and must pay the parent $100,000 in interest each month. Australia has just raised its interest rate in order to boost the value of its currency (Australian dollar). The subsidiary’s cost of purchasing materials measured in Australian dollar will ____________. A. increase B. decrease C. not change
Answer:
B. decrease
Explanation:
The subsidiary's cost of purchasing materials measured in Australian dollar will decrease. The subsidiary in Australia sells mobile homes. It borrows funds from local bank and purchases material from Hong Kong and pays Hong Kong in HK$ which is tied to US dollar. So when Australian dollar appreciates against the Hong Kong dollar, it will appreciate against US dollar as the Hong Kong dollar is tied to US dollar. The subsidiary will pay decreased cost of purchasing material due to appreciations of A$ by increasing interest rate in Australia.
The cost of purchasing materials measured in Australian dollars will increase for the subsidiary. This is due to the rise in interest rates in Australia, which boosts the value of the Australian Dollar. As the Australian dollar gets stronger, it will require more dollars to purchase the same amount of Hong Kong dollars (linked to U.S. dollar).
Explanation:The subsidiary's cost of purchasing materials measured in Australian dollars would increase. This is due to the fact that Australia has raised its interest rates, which consequently would lead to a boost in the value of its currency (Australian dollar). In monetary value terms, as the Australian dollar gets stronger, you will require more dollars to purchase the same amount of Hong Kong dollars (which is linked to the U.S. dollar). Consequently, the rate of exchange between the Australian dollar and the Hong Kong dollar will change, more specifically it will increase. As a result, it will cost more in terms of the Australian dollar to buy the same amount of materials from Hong Kong.
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The fifteen-year bond yields 6.7% and has a coupon of 8.7%. If this yield to maturity remains unchanged, what will be its price one year hence? Assume annual coupon payments and a face value of $100.
Answer:
The price of the bond in year's time is $117.81
Explanation:
In calculating the value in a year's time I used the financial function present value in excel
The inputs required are:
rate=yield=6.7%
interest on par value at 8.7%=100*8.7%=8.7
Face value=$100
Number of years is 14years(15-1), it is assumed that calculation is done a year from now.
The formula for present value in excel =PV(rate,nper,pmt,(fv),(type))
By slotting the variables as above, the pv is $117.81 as found in the attached
Final answer:
Explanation of bond pricing when yield to maturity is unchanged with a detailed formula application.
Explanation:
The present value of the coupon payments should indeed be calculated using the full remaining maturity of the bond, which is 15 years. Let's correct the calculation accordingly:
Given:
- Coupon rate (C) = 8.7%
- Yield to maturity (YTM) = 6.7%
- Face value (FV) = $100
- Time to maturity (n) = 15 years
After one year, the bond will have 14 years remaining until maturity.
1. Calculate the coupon payment one year from now:
Coupon payment = Coupon rate * Face value
= 8.7% * $100
= $8.70
2. Calculate the present value of the coupon payments:
PV of coupons = Coupon payment * [(1 - (1 + YTM)^-n) / YTM]
= $8.70 * [(1 - (1 + 0.067)^-15) / 0.067]
≈ $72.97
3. Calculate the present value of the face value received at maturity:
Since the face value is received at maturity (15 years from now), its present value is simply $100 discounted back by 14 years:
PV of face value = Face value / (1 + YTM)^n
= $100 / (1 + 0.067)^15
≈ $48.37
Now, sum up the present values of the coupon payments and the face value to find the price of the bond one year hence:
Price = PV of coupons + PV of face value
≈ $72.97 + $48.37
≈ $121.34
To buy your first home, you take out a 15 year (fully amortizing) mortgage for $400,000 which requires equal yearly payments. The effective annual interest rate is 3.6%. How much principal do you pay off in year 2?
a. $13,659.21
b. $21,318.27
c. $34,977.48
d. $41,895.75
e. None of the above
Answer:
The principal paid off in year two $21,318.27
Explanation:
The arrangement for equal amount payable yearly to pay off the entire loan obligation (principal plus interest) is an annuity for 15years at 3.6%.
An annuity is a series of equal payment payable annually for certain number of years where interest is charged at a particular rate.
We can work out the annual equal installment using the Present Value (PV) annuity formula below:
PV = A ×( (1- (1+r)^(-n))/r)
So we can apply this formula to the question
PV - 400,000, r =3.6%= 0.036, n -15, A is equal instalment, not given.
400,000 = A ×( 1- (1.036)^(-15))/0.036
400,000 = A × 11.4359
A= 400,000/11.4359
A =34,977.47
Equal annual installment =$34,977.47
Now with the help of an amortization table we ascertain the amount of principal paid off in year 2:
Amortization Schedule
Bal @ beginning Interest Installment Principal Paid Principal bal.
A B = A *3.6% C D= C - B E =A-D
400,000.00 14,400.00 34,977.48 20,577.48 379,422.52
379,422.52 13,659.21 34,977.48 21,318.27
The amortization table is a schedule showing how the loan would be paid over the loan period.
Note that the columns are labelled as A, B, C, D and E starting from the left hand-side respectively
The principal paid off in year two is $21,318.27 which is the bolded figure in column D,
If countries are first ranked by level or real GDP per capita, and then by the value of the Human Development Index, would you expect the ranking of countries to be similar or different? Explain Shocks to an economy, such as wars, famines, or the unification of two economies. often generate large one-time flows of workers across borders. What are the short-run and long-run effects on an economy of a one-time permanent increase in the stock of labor? Use a diagram to guide your arguments.
Answer:
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Explanation:
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The ranking of countries by real GDP per capita may differ from their ranking by Human Development Index as HDI considers broader development indicators. Short-run effects of an increased labor stock may include lower wages and higher unemployment, while long-run effects could lead to economic growth if paired with sufficient capital and technology.
When countries are ranked by real GDP per capita and then by the value of the Human Development Index (HDI), the rankings might differ because real GDP per capita is a measure of economic output adjusted for population, while HDI considers more nuanced aspects of development such as education, life expectancy, and income levels. An economy's performance in terms of GDP per capita may not fully capture the well-being of its people, which is why HDI rankings can diverge from GDP per capita rankings.
Shocks to an economy such as wars, famines, or unifications can lead to significant migration, impacting the labor market. A one-time permanent increase in the stock of labor in the short-run may cause wages to fall due to increased supply, potentially leading to higher unemployment if labor demand is static. In the long-run, however, the economy may adjust, and the additional labor can contribute to economic growth if accompanied by adequate capital and technological advancement.
According to the law of comparative advantage, both individuals and nations will be able to produce a larger joint output if each productive activity is undertaken by Question 22 options: the high opportunity cost producer. the low opportunity cost producer. the producer who is able to hire workers at the lowest wage. the party that can complete the productive activity most rapidly.
Answer:
the low opportunity cost producer.
Explanation:
A person or nation has comparative advantage in production if it produces at a lower opportunity cost when compared with other countries or people.
For example, let's assume country x produces either 10 Apples or 5 oranges in 1 hour while country y produces either 20 Apples or 2 oranges in one hour. The opportunity cost for country x of producing apples and oranges are 0.5 and 2 respectively. While for country y, the oopportunity cost of producing apples and oranges are 0.1 and 10 respectively.
Country y has an opportunity cost and comparative advantage in the production of Apples while country x has a comparative advantage in production of oranges.
I hope my answer helps you
Calculate the future value in six years of $5,000 received today if your investments pay (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
Future Value
a. 5 percent compounded annually $
b. 7 percent compounded annually
c. 9 percent compounded annually
d. 9 percent compounded semiannually
e. 9 percent compounded quarterly
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
The future value in six years of $5,000 received today:
A) i=0.05 annually
FV= PV*(1+i)^n
FV= 5,000*(1.05)^6= $6,700.48
B) i=0.07 annually
FV= 5,000*(1.07)^6= $7,503.65
C) i=0.09 annually
FV= 5,000*(1.09)^6= $8,385.50
D) i= 0.09 semiannually= 0.045
FV= 5,000*(1.045)^12= $8,479.41
E) i=0.09 quaterly= 0.0225
n= 6*4= 24
FV= 5,000*(1.0225)^24= $8,528.83
Boulevard, Inc. uses the direct method to prepare its statement of cash flows. Use the following information reported for 2019: Sales Revenue, $ 40 comma 000 Interest Revenue, $ 700 Accounts Receivable, beginning balance, $ 13 comma 500 Accounts Receivable, ending balance, $ 30 comma 000 There were no amounts reported for Interest Receivable. Compute the total cash receipts.A.$25,900B.$53,200C.$28,000D.$13,200
Answer:
Total cash receipts is $24,200. This is not given as an option.
Explanation:
The accounts receivable balance represents the balance from sales yet to be settled by the customer. Interest receivable is the interest yet to be received from investment.
Given that for 2019:
Sales Revenue = $40,000
Interest Revenue = $700
Accounts Receivable(beginning balance) = $13,500
Accounts Receivable (ending balance) = $30,000
There were no amounts reported for Interest Receivable.
Since there is an Accounts receivable balance at the end of the year, it means that not all revenue was collected from customers. Similarly, since the interest receivables ending balance is nil, all the interest was collected.
Let the cash collected from sales to customers be t
As such,
$13,500 + $40,000 - t = $30,000
t = $13,500 + $40,000 - $30,000
t = $23,500
Total cash receipt = $23,500 + $700 = $24,200
1. Determine the utilization and the efficiency for each of these situations: a. A loan processing operation that processes an average of 7 loans per day. The operation has a design capacity of 10 loans per day and an effective capacity of 8 loans per day.
Answer:
Efficiency is 87.50% and Utilization is 70%
Explanation:
Actual ouput = 7 loans per day
Effective capacity = 8 loans per day
Design capacity = 10 loans per day
Therefore,
Efficiency = actual output÷effective capacity×100%
= 7 ÷ 8 × 100%
Efficiency = 87.50%
Utilization = actual output÷design capacity×100%
= 7 ÷ 10 × 100%
Utilization = 70%