Answer:
growth stock.
Explanation:
Growth stock is the title through which the company usually reinvests the profits that guarantee growth and this is manifested in the prices that are publicly traded.
Growth stocks are shares of companies that are growing and are usually from innovative or expanding sectors that, against the value actions, distribute very few dividends or none. By not distributing benefits does not decrease its equity value and, therefore, the behavior of the action if the company generates benefits is that its value must grow. Hence, its denomination. Naturally, these companies are less mature and stable and, in many cases, part of the value granted to them is in the perspectives that exist to generate benefits in the future but that have not yet been realized. Companies of new technologies, biotechnology or research and development of innovative projects are the most characteristic examples of this type of actions.
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.
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
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.
Compare and contrast anticipatory and response-based business models. Why has responsiveness become popular in supply chain collaborations?
Answer:
Forecast and planning
Explanation:
An anticipatory model is a model under which market forecast determines the production of products by the manufacturer, and purchases by retailers also determined by forecasts and promotional plans. Since the forecasts are wrong most of the times, anticipatory model usually leads to differences in the actual production of the firms and what they initially planned to produce.
Anticipatory Model is a risky model because anticipation of future events always determines the work to do by the firm.
On the contrary, the Responsive Business Model does not depend on forecasts, but ensure that what to be done are adequately planned and information among firms in the supply chain are properly exchanged. This makes the model not to be risky and ensure doing more than what has already been planned is avoided. Therefore, the aim of the responsive model which also known as Pull Model is to eliminate reliance on forecast.
The major reason the Responsive Model has become popular in supply chain collaborations is that it allows for the customization of products on smaller orders by customers. However, the Anticipatory Model does not give customers any choice or power but to buy or not buy.
Response-based strategy is the process of achieving positive change by changing the current state of affairs, perception of viewers in a good business understanding, enabling the company to execute its policy smoothly.
Why is a responsive supply chain important?
Because it enables manufacturers to reduce risk (the best performance of a provider saves costs and schedules online inefficient suppliers can be seen and managed).
The main difference between the anticipatory and response-based business models is:
In response-based business models predicting or anticipating consumer buying trends are eliminated by exchanging information between the parties involved in the supply chain. In the anticipatory business model, business operators share information to improve the efficiency and accuracy of supply chain operations. To clarify, managers can exchange information to predict future buying trends accurately or complete forecasts, thus coming up with the required amount of inventory to supply the market. The development of information technology has been the result of an increase in the transition from an anticipatory business model to responsive.This is because all parts of the supply chain can access and exchange information, thus avoiding matching processes.The response-based model has become popular for supply chain strategy and collaboration due to its ability to help organizations reduce operational costs.
It is possible to share information in the supply chain, thus developing designs to make it easier to eliminate costs associated with asset management.
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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.
An investment pays $400 in one year, X amount of dollars in two years, and $500 in three years. The total present value of all the cash flows (including X) is equal to $1,500. If i is 6 percent, what is X?
Answer:
X = 789.70
Explanation:
we solve for X considerign each deposit is discounted at the given rate using the lump sum formula:
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
[tex]\frac{400}{1.06}+\frac{X}{1.06^2} +\frac{500}{1.06^3} = 1,500\\X= (1,500 - \frac{400}{1.06} - \frac{500}{1.06^3}) \times 1.06^2[/tex]
X = 789.7018868
To find the cash flow amount in the second year (X) in this present value calculation, you should calculate the present values of the known cash flows for years 1 and 3, subtract that sum from the total present value, and then adjust for the present value calculation for year 2.
Explanation:This question involves the concept of present value in finance. The present value formula is a way to determine the current worth of a future sum of money, given a specified rate of return. This problem is asking you to find the amount in the second year (X) using the condition that the total present value is $1,500.
Using the Present Value (PV) formula PV = CF / (1 + r)^n where CF is cash flow, r is rate of interest, and n is number of years, the given conditions can be written as follows:
PV for year 1: 400 / (1 + 0.06)^1PV for year 2: X / (1 + 0.06)^2PV for year 3: 500 / (1 + 0.06)^3
The sum of these present values should be $1,500, so to find X, you should sum the PVs for years 1 and 3, subtract that sum from $1,500, and then adjust for the present value calculation for year 2. So, X = [$1,500 - (PV for year 1 + PV for year 3)] x (1 + 0.06)^2
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Premium Company makes cardboard boxes. During the most recent accounting period Premium paid $60,000 for raw materials, $48,000 for labor, and $52,000 for overhead costs that were incurred to make boxes. Premium Company started and completed 400,000 boxes. Premium desires to earn a gross margin that is equal to 40% of product cost. Based on this information the selling price per box is: a. $0.40 b. $0.56 c. $0.50 d. $0.70
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Raw material= $60,000
Direct labor= $48,000
Overhead= $52,000
Premium Company started and completed 400,000 boxes.
First, we need to calculate the total manufacturing cost and unitary cost:
Total cost= Direct material + direct labor + overhead
Total cost= 60,000 + 48,000 + 52,000= 160,000
Unitary cost= 160,000/400,000= $0.4 per box
Now, we can calculate the selling price:
Selling price= Unitary cost*mark up= 0.4*1.40= $0.56
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.
The threat from substitutes is high when: a. switching costs are high. b. the substitute product's price is lower than the industry product's price. c. the quality of the substitute product is lower than the quality of the industry's product. d. the substitute product stimulates new process innovations within the industry.
Answer:
Option (b) is correct.
Explanation:
Substitute goods refers to the goods which are having positive cross price elasticity of demand. This means that there is a direct relationship between the price of one good and the quantity demanded for its substitute good.
Therefore, the threat from substitutes is high when the price of substitute is lower the price of particular good because by offering a lower price for the same product induces consumers to buy product from this seller.
The substitute goods are having the similar characterstics and provide same level of satisfaction. That's why the consumers easily switch to the product with a lower price.
Answer:
The correct answer is letter "B": the substitute product's price is lower than the industry product's price.
Explanation:
Threats are all external factors that potentially represent a disadvantage for firms. When it comes to competition between companies, if one of them decides to set the price of their goods or services below the industry's standard, the scenario represents a threat for the competitors since consumers are price-driven which means more of them will prefer to purchase the products of the company offering at lower prices.
Brangelina Adoption Agency’s general ledger shows a cash balance of $4,583. The balance of cash in the March-end bank statementis $7,325. The bank statement reveals the following information: checks outstanding of $2,793, bank service fees of $75, and interest earned of $24. Calculate the correct balance of cash at the end-of March.
Answer:
The correct cash balance is $7,325
Explanation:
When preparing bank reconciliation,some items are added while some are subtracted depending on which balance is started with.
In this case, the cash balance will be started with and adjusted to the correct balance at the end of March
$
Cash balance as per ledger 4,583
Add: interest earned 24
Less: Bank service fee (75)
Adjusted cash balance 4,532
Add back outstanding check 2,793
Correct cash balance as at end of March 7,325
Final answer:
To reconcile the Brangelina Adoption Agency's cash balance, various adjustments are made to the bank statement balance, including deducting outstanding checks and service fees and adding interest earned, resulting in an adjusted bank balance of $4,481.
Explanation:
To calculate the correct balance of cash at the end of March for the Brangelina Adoption Agency, we need to reconcile the general ledger balance with the bank statement balance. The reconciliation process includes adjusting the bank statement balance with the outstanding checks, bank service fees, and interest earned.
Bank Statement Balance: $7,325
Less: Checks Outstanding: -$2,793
Less: Bank Service Fees: -$75
Add: Interest Earned: $24
Now we can calculate the adjusted bank balance:
$7,325 (Bank Statement Balance) - $2,793 (Checks Outstanding) - $75 (Bank Service Fees) + $24 (Interest Earned) = $4,481 (Adjusted Bank Balance)
The general ledger shows a cash balance of $4,583. The bank statement adjusted balance is $4,481. There might be a discrepancy due to unrecorded transactions in the general ledger or bank statement. However, based on the information given, the correct cash balance at the end of March would be $4,481.
Cash Received from Customers—Direct Method
Sales reported on the income statement were $112,000. The accounts receivable balance decreased $10,500 over the year.
Determine the amount of cash received from customers.
Answer:
The cash received or collected from the customers amounts to $122,500
Explanation:
Cash receipts is the sum of all the cash amounts collected or received from the sale of the goods and on accounts receivable.
Cash received or collected from the customer is computed as:
Cash collected from customer = Sales + Decrease in accounts receivable
where
Sales amounts to $112,000
Decrease in accounts receivable amounts to $10,500
Putting the values above:
= $112,000 + $10,500
= $122,500
Therefore, the cash amounts to $122,500, received from customers.
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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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
"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
A variable annuity is a: A face amount certificate company B management company C fixed unit investment trust D participating unit investment trust
Answer:
D participating unit investment trust
Explanation:
A variable annuity is a contract between you and an insurance company. It serves as an investment account that may grow on a tax-deferred basis and includes certain insurance features, such as the ability to turn your account into a stream of periodic payments. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments.
A variable annuity offers a range of investment options. The value of your contract will vary depending on the performance of the investment options you choose. The investment options for a variable annuity are typically mutual funds that invest in stocks, bonds, money market instruments, or some combination of the three.
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.
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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
All-Star Automotive Company experienced the following accounting events during 2018:
Performed services for $14,200 cash.
Purchased land for $7,200 cash.
Hired an accountant to keep the books.
Received $32,000 cash from the issue of common stock.
Borrowed $8,400 cash from State Bank.
Paid $4,200 cash for salary expense.
Sold land for $8,400 cash.
Paid $3,200 cash on the loan from State Bank.
Paid $4,400 cash for utilities expense.
Paid a cash dividend of $1,200 to the stockholders.
Prepare a statement of cash flows for 2018. Assume All-Star Automotive company had a beginning cash balance of $9,200 on January 1, 2018.
Answer:
Explanation:
The preparation of the Cash Flows from three Activities is presented below:
a. Cash flow from Operating activities
Performed services for cash $14,200
Less: Cash paid for salary expenses -$4,200
Less: Cash paid for utilities expenses -$4,400
Net Cash flow from Operating activities $5,600
b. Cash flow from Investing activities
Purchase of land - $7,200
Proceeds from the sale of land $8,400
Net Cash flow from Investing activities $1,200
c. Cash flow from Financing activities
Cash receipt from the issuance of common stock $32,000
Borrowed cash from state bank $8,400
Les: Paid cash on the loan from state bank -$4,400
Less: cash dividend paid -$1,200
Net Cash flow from Financing activities $34,800
Net Cash flow from Operating activities $5,600
Net Cash flow from Investing activities $1,200
Net Cash flow from Financing activities $34,800
Add: Beginning cash balance $9,200
Ending cash balance $50,800
On February 1, 2017, Pat Weaver Inc. (PWI) issued 10%, $1,000,000 bonds for $1,116,000. PWI retired all of these bonds on January 1, 2018, at 102 for total proceeds of $1,020,000. Unamortized bond premium on that date was $92,800. How much gain or loss should be recognized on this bond retirement
Answer:
$72,800
Explanation:
Book value:
= Value of bonds + Unamortized bond premium
= $1,000,000 + $92,800
= $1,092,800
Paid at redemption:
= 102% of value of bonds
= 102% × $1,000,000
= $1,020,000
Gain on bond retirement:
= Book value - Paid at redemption
= $1,092,800 - $1,020,000
= $72,800
Therefore, gain should be recognized on this bond retirement will be $72,800.
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%
J. Morgan and M. Halsted are partners who share income and loss in a 3:1 ratio. After several unprofitable periods, the two partners decided to liquidate their partnership. The current period's income or loss is closed to the partners' capital accounts according to the sharing agreement. Immediately before liquidation, the partnership balance sheet shows: land, $100,000; accounts payable, $80,000; J. Morgan, Capital, $15,000; and M. Halsted, Capital, $5,000. On January 15, the land was sold for $110,000 cash. On January 16, the partnership settled its liabilities. On January 31, the remaining cash was distributed to the partners. Prepare the January 15 journal entry for the partnership to record the sale of the land. Note: Enter debits before credits. Date General Journal Debit C
Answer:
cash 110,000 debit
land 100,000 credit
gain at disposal 10,000 credit
--to reocrd teh sale of land--
accounts payable 80,000 debit
cash 80,000 credit
--to record the payment of liabilities--
gain at disposal 10,000 debit
Morgan 7,500 credit
Halsted 2,500 credit
--to distribute the gain from sale--
Morgan 22,500
Haslted 7,500
Cash 30,000
--to liquidate the partnership--
Explanation:
ratio 3:1 (3+1=4)
Morgan 15000 share of 3/4 = 75%
Halsted 5000 share of 1/4 = 25%
there is gain of 10,000 in the sale distribute as follow
Morgan 10,000 x 75% = 7,500
Halsted 10,000 x 75% = 2,500
Now we close the account against cash
You are evaluating the balance sheet for Cypress Corporation. From the balance sheet you find the following balances:Cash and marketable securities = $610,000, Accounts receivable = $810,000, Inventory = $510,000, Accrued wages and taxes = $51,000, Accounts payable = $201,000, and Notes payable = $1,010,000. What is Cypress's net working capital?
Final answer:
Cypress Corporation's net working capital is calculated by subtracting its current liabilities from its current assets, resulting in a net working capital amount of $668,000.
Explanation:
To calculate the net working capital for Cypress Corporation, we need to subtract the current liabilities from the current assets. The current assets are the sum of cash and marketable securities ($610,000), accounts receivable ($810,000), and inventory ($510,000), which totals to $1,930,000. The current liabilities are the sum of accrued wages and taxes ($51,000), accounts payable ($201,000), and notes payable ($1,010,000), amounting to $1,262,000. Therefore, the net working capital for Cypress Corporation is $1,930,000 - $1,262,000 = $668,000.
Net working capital is an important measure of a company's liquidity and its ability to meet short-term obligations. It is calculated as current assets minus current liabilities.
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
Which of the following statements is true about market value ratios? High P/E ratios could mean that the company has a great deal of uncertainty in its future earnings. Low P/E ratios could mean that the company has a great deal of uncertainty in its future earnings.
Market value ratios, such as the P/E ratio, reflect the market's perception of a company's future earnings. A high P/E ratio suggests positive expectations, while a low P/E ratio may indicate concerns about future earnings.
Explanation:Market value ratios provide investors with insights into the market's perception of a company's value. One common market value ratio is the Price-to-Earnings (P/E) ratio. A high P/E ratio suggests that the market has a positive view of the company's future earnings potential, as investors are willing to pay a higher price for each unit of earnings. On the other hand, a low P/E ratio may indicate that the market has concerns about the company's future earnings, potentially due to uncertainty or poor performance.
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Kinglinks, a cereal manufacturer, wants to promote its new line of protein bars to its target customers using a nonpersonal form of communication.
Kinglinks is least likely to rely on _____ as a means of communication.
A. advertising
B. direct marketing
C. sales promotion
D. public relations
Answer:
B. direct marketing
Explanation:
A non personal form of communication is a type of marketing that directed information to the public (non one to one communication) without a means of feedback.
Advertising is a marketing strategy directed to the public (target customers) letting them aware of the new products or an existing products to enhance increase in purchase.
Direct marketing is a one to one form of marketing which Kinglinks will not be doing.
Therefore, Kinglinks is least likely to rely on direct marketing as a means of communication.
Country Furniture Company manufactures furniture at its? Akron, Ohio, factory. Some of its costs from the past year? include:
Depreciation on sales office
?$ ? 9,000
Depreciation on factory equipment
? 16,000
Factory supervisor salary
? 50,500
Sales commissions
? 23,000
Lubricants used in factory equipment
? 3,000
Insurance costs for factory
? 21,000
Wages paid to maintenance workers
? 115,000
Fabric used to upholster furniture
? 10,000
Freightminus?in
?(on raw? materials)
? 3,000
Costs of delivery to customers
? 9,000
Wages paid to
assemblyminus?line
workers
? 155,500
Lumber used to build product
? 82,000
Utilities in factory
? 54,500
Utilities in sales office
? 26,500
Product costs for Country Furniture Company totaled
A.
?$370,000.
Your answer is not correct.
B.
?$486,500.
C.
?$526,500.
D.
?$510,500.
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
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
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,
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%