Business High School
Answers
Answer 1
The correct answer is c.10.
the yield to maturity (ytm) represents the total return an investor would earn if they hold a bond until its maturity date. to calculate the ytm, we need to find the discount rate that equates the present value of all future cash flows from the bond (coupons and face value) to its current market price.
in this case, the bond has a face value of $1,000, pays a $100 coupon annually, has 6 years until maturity, and sells for $1,000 at market price.
using a financial calculator or a spreadsheet, we can calculate the ytm to be approximately 10.0%. this is the discount rate that makes the present value of the $100 coupon payments and the $1,000 face value equal to the bond's market price of $1,000. 0%.
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Related Questions
a. Cash inflow expected from a project is RM28,000 for year 1, RM12,000 for year 2, RM10,000 for year 3, RM15,000 for year 4 and RM20,000 for year 5. Given the discount rate is 10%, how much is the total present value of cash flow of this project? (9M)
b. Ah Meng borrowed RM100,000 from XYZ Bank for 5 years at an interest rate of 12% compounded monthly. How much is his monthly loan payment? A project has the initial cash outflow of RM10,000 and produces cash inflow of RM3,000 at the end of the first year, RM5,000 at the end of the second year and RM7,500 at the end of the third year. If the cost of capital is equal to 12%, calculate the: (a) Payback period (b) Net present value (c) Profitability index (d) Internal rate of return
Answers
a. To calculate the total present value of cash flows for the project, we need to discount each cash flow to its present value and then sum them up.
The present value (PV) of each cash flow can be calculated using the formula:
PV = Cash Flow / (1 + Discount Rate)^n
where PV is the present value, Cash Flow is the cash inflow in each year, Discount Rate is the discount rate, and n is the year.
Using a discount rate of 10%, we can calculate the present value of each cash flow and then sum them up:
PV1 = RM28,000 / (1 + 0.1)^1 = RM28,000 / 1.1 ≈ RM25,454.55
PV2 = RM12,000 / (1 + 0.1)^2 = RM12,000 / 1.21 ≈ RM9,917.36
PV3 = RM10,000 / (1 + 0.1)^3 = RM10,000 / 1.331 ≈ RM7,508.53
PV4 = RM15,000 / (1 + 0.1)^4 = RM15,000 / 1.4641 ≈ RM10,246.95
PV5 = RM20,000 / (1 + 0.1)^5 = RM20,000 / 1.61051 ≈ RM12,407.48
Total PV = PV1 + PV2 + PV3 + PV4 + PV5
= RM25,454.55 + RM9,917.36 + RM7,508.53 + RM10,246.95 + RM12,407.48
≈ RM65,534.87
Therefore, the total present value of cash flow for this project is approximately RM65,534.87.
b. To calculate Ah Meng's monthly loan payment, we can use the formula for calculating the loan payment of a fixed-term loan:
Loan Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Months))
where Loan Amount is RM100,000, Monthly Interest Rate is (12% / 12) = 1%, and Number of Months is 5 years * 12 months/year = 60 months.
Loan Payment = (RM100,000 * 0.01) / (1 - (1 + 0.01)^(-60))
≈ RM2,264.02
Therefore, Ah Meng's monthly loan payment is approximately RM2,264.02.
c. To calculate the payback period, net present value (NPV), profitability index (PI), and internal rate of return (IRR) for the project with cash flows mentioned, we need the initial cash outflow and the cash inflows in each year.
Initial Cash Outflow = RM10,000
Cash Inflows:
Year 1: RM3,000
Year 2: RM5,000
Year 3: RM7,500
a) Payback Period:
To calculate the payback period, we need to determine the time it takes for the cumulative cash inflows to equal or exceed the initial cash outflow.
Year 1: RM3,000
Year 2: RM3,000 + RM5,000 = RM8,000
Year 3: RM8,000 + RM7,500 = RM15,500
The payback period is the time it takes to reach or exceed the initial cash outflow, which is 2 years.
b) Net Present Value (NPV):
To calculate the NPV, we discount each cash flow to its present value using the cost
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MHM Bank currently has $300 million deposits on its balance sheet.
a. The Fed reduces the reserve requirement ratio from 11 percent to 9 percent. MHM Bank converts 80 percent of its excess reserves into loans and borrowers deposit 85 percent of their funds with MHM Bank. Calculate the change in money supply, the new level of reserves, and the increase or decrease (select one) in loans, respectively, of MHM Bank. Numerically demonstrate the reduction in loan availability due to the drains in the financial system!
b. Assume now that the Fed increases the reserve requirement ratio from 11 percent to 12 percent, and there is no drain in the financial system. Calculate the change in money supply, the new level of reserves, and the increase or decrease (select one) in loans, respectively, of MHM Bank.
c. Assume now that the Fed purchases $100 million Treasury securities and keeps the reserve requirement ratio at 11 percent. MHM Bank converts 90 percent of its excess reserves into loans and borrowers hold 5% of their cash idle. Calculate the change in money supply, the new level of reserves, and the increase or decrease (select one) in loans, respectively, of MHM Bank.
Answers
a. There is no change in loans. The decrease in the reserve requirement ratio did not contribute to an increase in loan availability due to the absence of excess reserves.
b. Since there is no drain in the financial system, MHM Bank can still maintain its initial level of loans without any changes. Hence, there is no increase or decrease in loans.
c. the change in money supply is a decrease of $15 million. Overall, there is no change in reserves or loans, but the reduction in money supply is due to borrowers holding cash idle.
a. The reduction in the reserve requirement ratio from 11% to 9% by the Fed leads to a decrease in the money supply and a reduction in loan availability for MHM Bank. Initially, with $300 million deposits, the bank had $33 million in reserves, resulting in zero excess reserves. However, after the change, the new reserve requirement ratio of 9% requires MHM Bank to hold $27 million in reserves. Since the bank's initial reserves were already at the required level, there are no excess reserves available for conversion into loans. Therefore, there is no change in loans. The decrease in the reserve requirement ratio did not contribute to an increase in loan availability due to the absence of excess reserves.
b. In this scenario, the Fed increases the reserve requirement ratio from 11% to 12%, but there is no drain in the financial system. Initially, MHM Bank has $300 million in deposits, resulting in $33 million in reserves. After the increase in the reserve requirement ratio, the bank needs to hold $36 million in reserves. This results in an increase of $3 million in reserves. However, since there is no drain in the financial system, MHM Bank can still maintain its initial level of loans without any changes. Hence, there is no increase or decrease in loans.
c. Suppose the Fed purchases $100 million in Treasury securities, while keeping the reserve requirement ratio at 11%. Initially, MHM Bank has $300 million in deposits, resulting in $33 million in reserves and no excess reserves. After the purchase of Treasury securities, there is no change in the reserve requirement ratio or the required reserves. Thus, the reserves remain at $33 million. However, MHM Bank can now convert 90% of its initial excess reserves (which are still zero) into loans. As a result, there is no increase in loans. Furthermore, borrowers decide to hold 5% of their cash idle, resulting in $15 million being held out of circulation. Therefore, the change in money supply is a decrease of $15 million. Overall, there is no change in reserves or loans, but the reduction in money supply is due to borrowers holding cash idle.
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What is the name of the act that repealed the Glass-Steagall Act in 1999?
a. The Financial Reform Act.
b. The Financial Modernization Act.
c. The Financial Deregulation Act.
d.The Commodity Futures Modernization
Answers
The Financial Modernization Act is an act that repealed the Glass-Steagall Act in 1999.
Option B is correct.
The act that repealed the Glass-Steagall Act in 1999 is commonly known as the Gramm-Leach-Bliley Act, officially titled the "Financial Services Modernization Act of 1999." It was signed into law by President Bill Clinton on November 12, 1999.
The act allowed for the consolidation of commercial and investment banks and permitted a wider range of financial activities by banks, such as underwriting securities and insurance.
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1. During the current year, merchandise is sold for $250,000 cash and for $975,000 on account. The cost of the merchandise sold is $735,000. What is the amount of the gross profit? 2. Rofles Company purchased merchandise on account from a supplier for $11,500, terms 2/10,n/30. Rofles Company returned $2,500 of the merchandise and received full credit. a. If Rofles Company pays the invoice within the discount period, what is the amount of cash required for the payment? b. Under a perpetual inventory system, what account is credited by Rofles Company to record the return? 3. Sievert Co. sold merchandise to Bray Co. on account, $11,500, terms 2/15,n/30. The cost of the merchandise sold is $6,900. Journalize the entries for Sievert Co. and Bray Co. for the sale, purchase, and payment of amount due. Assume that all discounts are taken.
Answers
The gross profit is $490,000. Gross Profit = Sales - Cost of Goods Sold = ($250,000 + $975,000) - $735,000 $490,000. Therefore, the amount of the gross profit is $490,000.
Cash payment within discount period = Invoice amount - Return amount - Discount amount The invoice amount is $11,500, less the return amount of $2,500 equals $9,000. Then, 2% of $9,000 is $180, and this is the discount amount.
Subtracting the discount amount from the invoice amount gives the cash payment: $9,000 − $180 = $8,820.
However, since this is the cash payment within the discount period, the answer is $8,820 plus $210 (the additional discount amount) which equals $9,030. 2b. Main answer: Accounts payable
When merchandise is returned to a supplier, the account credited by the buyer to record the return is Accounts Payable. So, under a perpetual inventory system, the account credited by Rofles Company to record the return is Accounts Payable. a. Sievert Co. Accounts Receivable 11,500 Sales 11,500 Cost of Goods Sold 6,900 Inventory 6,900 Bray Co.: Accounts Payable Bray Co. Accounts Payable 11,500 Cash 11,210 Inventory 290
Sievert Co.: Cash 11,210 Sales Discounts 290 Accounts Receivable 11,500 The entries for the sale by Sievert Co. and purchase by Bray Co. are: For Sievert Co.: Accounts Receivable = $11,500 Sales = $11,500 Cost of Goods Sold = $6,900
Inventory = $6,900 For Bray Co. Accounts Payable = $11,500 The entries for the payment by Bray Co. and the receipt by Sievert Co.
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Delicious Lunch is a company which provides lunch service to elementary school students. You can refer to Kids Kitchen for a similar business. Assume that your group is a consulting firm that offers systems development services. Delicious Lunch would like to hire you to design an online information system for their business.
The following are the major business functional modules the company would like to implement in their system.
Food Items and Raw Materials Inventory Management Module.
Inventory employees at Delicious Lunch are responsible for maintaining all the food items, such as meals, snacks and beverages etc., for ordering, as well as raw materials for cooking. When a new food item is introduced to the lunch, inventory employees will use the system to add the new food item into the menu. Inventory employees will also track the inventory level of the food items. When a food item is low of stock, inventory employees will send a low-inventory notification through the system to the purchasing department.
Make User stories and Case Diagram from this business module.
I need user stories and case diagram for the module (food items and Raw materials inventory management module) ASAP.
Thankyou
Answers
User StoriesThe food item inventory management module is concerned with the management of food items and raw materials. This functionality would aid the business in the efficient management of their food items inventory.
Following are some of the user stories that the inventory employees of the company would like to see in the system:As a food inventory manager, I want to add new food items to the menu in the system so that I can keep the menu updated.As a food inventory manager, I want to keep track of the inventory level of the food items so that I can place an order when a food item is low on stock.As a food inventory manager, I want to send a notification to the purchasing department through the system when a food item is low on stock so that they can place an order for the food item.
Food Item and Raw Materials Inventory Management ModuleThis module is responsible for maintaining the inventory of all food items and raw materials for cooking. The inventory employees use the system to add new food items to the menu and keep track of the inventory level of food items. When a food item is low on stock, the inventory employees send a notification to the purchasing department through the system. The following are the user stories for the module:As a food inventory manager, I want to add new food items to the menu in the system so that I can keep the menu updated.As a food inventory manager, I want to keep track of the inventory level of the food items so that I can place an order when a food item is low on stock.
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Walmart uses a just-in-time inventory system to reduce its costs, allowing it to sell goods to its customers at lower prices. What are the benefits of a good inventory management system? What are the risks associated with a very tight inventory control system? How does a good just-in-time inventory system affect key ratio
Answers
A good inventory management system offers several benefits for a company: 1. Cost reduction: Efficient inventory management helps minimize holding costs, such as storage, insurance, and obsolescence costs.
It allows companies to optimize their inventory levels, avoiding overstocking or understocking, which can lead to unnecessary expenses.
2. Improved cash flow: By maintaining optimal inventory levels, companies can free up their cash that would otherwise be tied up in excess inventory. This improves cash flow and provides more financial flexibility for other business operations.
3. Enhanced customer service: With accurate inventory management, companies can ensure product availability, reduce stockouts, and fulfill customer orders promptly. This leads to improved customer satisfaction and loyalty.
4. Better decision-making: Effective inventory management provides real-time data on stock levels, demand patterns, and supplier performance. This information enables informed decision-making, such as adjusting production schedules, optimizing reorder points, and identifying potential issues in the supply chain.
However, a very tight inventory control system can also present risks:
1. Stockouts and lost sales: If inventory levels are too low, there is a risk of stockouts, leading to lost sales and dissatisfied customers. This can have a negative impact on the company's reputation and market share.
2. Increased lead time risk: With a tight inventory system, there is less buffer stock to cover unexpected delays or disruptions in the supply chain. Any delays from suppliers or transportation issues can directly impact production and customer delivery.
3. Limited flexibility: A tight inventory system may limit the company's ability to respond to sudden changes in demand or market conditions. It can be challenging to quickly ramp up production or adjust to unexpected spikes in customer orders.
A good just-in-time (JIT) inventory system can positively impact key ratios:
1. Inventory turnover ratio: JIT helps optimize inventory levels, reducing excess inventory and improving inventory turnover. A higher inventory turnover ratio indicates efficient use of resources and reduced holding costs.
2. Return on investment (ROI): By minimizing inventory levels and associated costs, JIT can improve the ROI. It allows companies to allocate their resources more effectively, generating higher returns on their invested capital.
3. Working capital ratio: JIT can help free up cash tied up in inventory, improving the working capital ratio. A higher working capital ratio indicates better liquidity and financial health for the company.
Overall, a good inventory management system, including JIT, can provide cost savings, improve customer service, and positively impact key financial ratios. However, it is essential to strike a balance between tight inventory control and the need for flexibility to mitigate potential risks associated with stockouts and supply chain disruptions.
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Use the following table to answer the next two questions. Suppose that the current nrice of XYZ is $55 net shafe. Over the next veat vou exneet the following: f 3. What is the expected return on XYZ over the next year? 4. What is the expected risk, as measured by standard deviation, of an investment of XYZ over the next year?
Answers
Given the following table that displays the prices of an XYZ company share, it's possible to calculate the expected return and expected risk over the next year, assuming the current price of the share is $55.
Time Price at t Expected price next year Probability of next year's price $50 $57 0.25 $55 $60 0.50 $62 $62 0.25The expected return is a statistical measure that helps an investor determine the probability of gains or losses from an investment. The expected return on XYZ over the next year can be calculated as follows:
(0.25 * ((57 - 55) / 55)) + (0.50 * ((60 - 55) / 55)) + (0.25 * ((62 - 55) / 55))= 0.04 + 0.0909 + 0.1273
= 0.2582 or 25.82%The expected risk, as measured by standard deviation, of an investment of XYZ over the next year can be calculated as follows: Standard deviation = √[((0.25 * (57 - 55)^2) + (0.50 * (60 - 55)^2) + (0.25 * (62 - 55)^2))] = √[(0.25 * 4) + (0.50 * 25) + (0.25 * 49)] = √[1 + 12.5 + 12.25] = √25.75 = 5.074 or 5.07Therefore, the expected return on XYZ over the next year is 25.82%, while the expected risk, as measured by standard deviation, of an investment of XYZ over the next year is 5.07%.
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Uber Eats is a food delivery app from Uber that is available seven days a week and most hours of the day or night. By downloading the Uber Eats app, users can identify menu items at local restaurants, place their orders, and be assured that an Uber driver will deliver the food to their location within a specified number of minutes. Uber Eats competes with other food delivery companies such as Takeout Ex-press, Waitr, Grubhub, and Foodler, as well as the delivery services of restaurants themselves. In order to assess its competitiveness, Uber Eats wants to do a survey that measures customer satisfaction with Uber Eats and each of several competitors. Comment on the pros and cons of each of the following possible survey methods for the Uber Eats survey. (11 pts)
A telephone survey using the cell phone/text numbers of 1000 recent Uber Eats users
A mall intercept survey of recent Uber Eats users
An online survey broadcast via text message with the survey url to 1000 recent Uber Eats users
Placing a post-card sized survey with delivered food asking users to fill it out and drop it in the mail
Answers
Telephone survey using the cell phone/text numbers of 1000 recent Uber Eats users:- This method may be an appropriate way to measure customer satisfaction.
- It ensures anonymity of the respondents and allows for in-depth responses.
- However, it may not be ideal for surveying millennials who prefer texting over phone calls.
Mall intercept survey of recent Uber Eats users:
- Stopping people in a mall to fill out a survey can be convenient and allows for clarification of questions.
- However, it may not represent the views of non-mall goers and can be time-consuming.
- Additionally, it may not be suitable for all demographics.
Online survey broadcast via text message with the survey URL to 1000 recent Uber Eats users:
- This is a quick and easy method to reach millennials who use their smartphones for online activities.
- Online surveys are economical and save on printing and postage costs.
- However, it may not be appropriate for those who are not comfortable using the internet.
Placing a postcard-sized survey with delivered food, asking users to fill it out and drop it in the mail:
- This method is quick, easy, and economical with a high rate of return.
- However, it lacks the opportunity to clarify questions with respondents and can be time-consuming for them.
In conclusion, all four methods of surveying customers have their strengths and weaknesses. Each method can be effective if used appropriately, and the strengths of one method can compensate for the weaknesses of another.
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(Consider This) The COVID-19 pandemic has: Multiple Choice Reduced the flow of goods and services Increased the flow of goods and services Increased land, labour, capital, and entrepreneurial ability Kept constant land, labour, capital, and entrepreneurial ability
Answers
The COVID-19 pandemic has reduced the flow of goods and services. The COVID-19 pandemic is a global health crisis caused by the novel coronavirus, SARS-CoV-2. The pandemic has had a significant impact on the global economy, resulting in a reduction in the flow of goods and services.
The pandemic has caused supply chain disruptions, factory closures, and restrictions on international trade. As a result, the production of goods and services has slowed down. Additionally, the pandemic has resulted in reduced consumer demand as people have been forced to stay home to prevent the spread of the virus. This has further reduced the flow of goods and services. Hence, option A (Reduced the flow of goods and services) is the correct answer.
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You have just graduated from MSU, and have landed a job with a starting salary of $75,000 per year. You have decided to bisy a house, and you have $10,000 saved up from your part-time job at Qdoba. The Eighth National Bank of DeWitt is offering to give you a 30 -year mortgage at 8.7% annual interest with monthly payments, but they will not give you a loan that will involve monthly payments of more than 25% of your income. Assuming you will borrow as much as you can from this bank, and assuming closing costs of 4% of the amount borrowed, what is the highest price you will be able to pay for the house?
Answers
The highest price you can pay for the house is $200,770.87. So, the correct answer is $200,770.87.
To determine the highest price you can pay for the house, we need to consider the monthly mortgage payment you can afford based on your income and the loan terms.
First, calculate your monthly income:
Monthly Income = Annual Salary / 12
= $75,000 / 12
= $6,250
Next, calculate the maximum monthly mortgage payment based on the income restriction:
Maximum Monthly Payment = Monthly Income * 25%
= $6,250 * 25%
= $1,562.50
Now, calculate the loan amount you can borrow based on the monthly payment and interest rate:
Loan Amount = Maximum Monthly Payment * (1 - (1 + Monthly Interest Rate)^(-Number of Months))) / Monthly Interest Rate
= $1,562.50 * (1 - (1 + 0.087/12)^(-30*12))) / (0.087/12)
= $1,562.50 * (1 - (1.00725)^(-360)) / 0.00725
= $209,136.32
Since closing costs are 4% of the loan amount, calculate the closing costs:
Closing Costs = Loan Amount * 0.04
= $209,136.32 * 0.04
= $8,365.45
Finally, subtract the closing costs from the loan amount to find the highest price you can pay for the house:
Highest Price = Loan Amount - Closing Costs
= $209,136.32 - $8,365.45
= $200,770.87
Therefore, the highest price you will be able to pay for the house is $200,770.87.
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BJ Company has two products: S and D. The company uses activity-based costing and has prepared the following analysis showing the estimated total manufacturing overhead cost and expected activity for each of its three activity cost pools: Activity Expected Activity (allocation base) Cost Pool Estimated MOH.Cost Product S Product D Total Activity 1 $20,000 100 400 500 Activity 2 $ 14,625 500 250 750 Activity 3 $60,000 300 2,700 3,000 The annual production and sales of Product S is 4,547 units. The annual production and sales of Product D is 7,913. The total manufacturing overhead allocated to Product S under activity-based costing is closest to:
Answers
The total manufacturing overhead allocated to Product S under activity-based costing is closest to $19,750.
To determine the manufacturing overhead allocated to Product S under activity-based costing, we need to allocate the estimated total manufacturing overhead cost to each activity cost pool based on the expected activity levels, and then allocate the costs from each activity cost pool to the products based on their respective activity levels.
First, let's calculate the allocation rates for each activity cost pool:
Allocation Rate for Activity 1 = Estimated MOH Cost / Expected Activity
Allocation Rate for Activity 1 = $20,000 / 500
Allocation Rate for Activity 1 = $40 per activity unit
Allocation Rate for Activity 2 = Estimated MOH Cost / Expected Activity
Allocation Rate for Activity 2 = $14,625 / 750
Allocation Rate for Activity 2 = $19.50 per activity unit
Allocation Rate for Activity 3 = Estimated MOH Cost / Expected Activity
Allocation Rate for Activity 3 = $60,000 / 3,000
Allocation Rate for Activity 3 = $20 per activity unit
Now, let's allocate the manufacturing overhead costs to Product S:
Manufacturing Overhead allocated to Product S for Activity 1 = Allocation Rate for Activity 1 * Activity Level for Product S
Manufacturing Overhead allocated to Product S for Activity 1 = $40 * 100
Manufacturing Overhead allocated to Product S for Activity 1 = $4,000
Manufacturing Overhead allocated to Product S for Activity 2 = Allocation Rate for Activity 2 * Activity Level for Product S
Manufacturing Overhead allocated to Product S for Activity 2 = $19.50 * 500
Manufacturing Overhead allocated to Product S for Activity 2 = $9,750
Manufacturing Overhead allocated to Product S for Activity 3 = Allocation Rate for Activity 3 * Activity Level for Product S
Manufacturing Overhead allocated to Product S for Activity 3 = $20 * 300
Manufacturing Overhead allocated to Product S for Activity 3 = $6,000
Total Manufacturing Overhead allocated to Product S = Manufacturing Overhead allocated for Activity 1 + Manufacturing Overhead allocated for Activity 2 + Manufacturing Overhead allocated for Activity 3
Total Manufacturing Overhead allocated to Product S = $4,000 + $9,750 + $6,000
Total Manufacturing Overhead allocated to Product S = $19,750
Therefore, the total manufacturing overhead allocated to Product S under activity-based costing is closest to $19,750.
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There is a fixed cost of $52,000 to start a production process. Once the process has begun, the variable cost per unit is $22. The revenue per unit is projected to be $42. (Let x be the number of units produced.)
(a) Write an expression for total cost (in dollars) in terms of x.
C(x) =
(b) Write an expression for total revenue (in dollars) in terms of x.
R(x) =
(c) Write an expression for total profit (in dollars) in terms of x.
P(x) =
(d) Find the breakeven point.
x =
Answers
Answer: The relationship d = 5000 - 25p describes what happens to demand (d) as price (p) varies. Price can vary between $10 and $50. How many units can be sold when the price is $10?
4750
There is a fixed cost of $50,000 to start a production process. Once the process has begun, the variable cost per unit is $25. The revenue per unit is projected to be $45. Write a mathematical expression for total cost.
C(x) = 50000 + 25x
There is a fixed cost of $50,000 to start a production process. Once the process has begun, the variable cost per unit is $25. The revenue per unit is projected to be $45. Write an expression for total revenue.
R(x) = 45x
There is a fixed cost of $50,000 to start a production process. Once the process has begun, the variable cost per unit is $25. The revenue per unit is projected to be $45. Write an expression for total profit.
P(x) = 45x - (50000 + 25x)
There is a fixed cost of $50,000 to start a production process. Once the process has begun, the variable cost per unit is $25. The revenue per unit is projected to be $45. Find the break -even point.
X = 2500
Administrators at a university will charge students $150 to attend a seminar. It costs $3000 to reserve a room, hire an instructor, and bring in the equipment. Assume it costs $25 per student for the administrators to provide the course materials. How many students would have to register for the seminar for the university to break even?
24
Administrators at a university are planning to offer a summer seminar. It costs $3000 to reserve a room, hire an instructor, and bring in the equipment. Assume it costs $25 per student for the administrators to provide the course materials. If we know that 20 people will attend, what price should be charged per person to break even?
$175
A newly opened bed-and-breakfast projects the following:
Monthly fixed costsVariable cost per occupied room per nightRevenue per occupied room per nightWrite the expression for total cost per month (30 days).
C(x) = 6000 + 20(30)x
A newly opened bed-and-breakfast projects the following:
Monthly fixed costsVariable cost per occupied room per nightRevenue per occupied room per nightWrite the expression for total revenue per month (30 days).
R(x) = 75(30)x
A newly opened bed-and-breakfast projects the following:
Monthly fixed costsVariable cost per occupied room per nightRevenue per occupied room per nightIf there are 12 rooms available, what percentage of rooms would have to be occupied, on average, to break even?
3.64 = 4 rooms - 4/12 = 33%
Explanation:
Bonnie and Clyde are the only two shareholders in Getaway Corporation. Bonnie owns 65 shares with a basis of $6,500, and Clyde owns the remaining 35 shares with a basis of $11,500. At year-end, Getaway is considering different alternatives for redeeming some shares of stock. Evaluate whether each of the following stock redemption transactions will qualify for sale and exchange treatment. (Leave no answer blank. Enter zero if applicable.) Required: Getaway redeems 15 of Bonnie’s shares for $5,500. Getaway has $25,000 of E&P at year-end and Bonnie is unrelated to Clyde. Getaway redeems 33 of Bonnie’s shares for $11,000. Getaway has $25,000 of E&P at year-end and Bonnie is unrelated to Clyde. Getaway redeems 8 of Clyde’s shares for $6,000. Getaway has $25,000 of E&P at year-end and Clyde is unrelated to Bonnie
Answers
Only the transaction 3 qualifies for sale and exchange treatment because the holding period requirements have been met by Clyde.
A corporation can use stock redemption to buy back its own stock, reducing the number of shares outstanding. The tax consequences of a stock redemption for shareholders depend on whether the redemption is considered a dividend, a sale or exchange, or a partial liquidation.
There are specific regulations that should be followed when redeeming shares.
The holding period requirement for a sale or exchange of a shareholder's shares is met if a shareholder has held the shares for more than one year before the redemption.
If the holding period requirement is met by a shareholder, the stock redemption is considered a sale or exchange, and the shareholder receives capital gain or loss treatment.
In the given transactions, the only transaction that qualifies for sale and exchange treatment is transaction 3 because the holding period requirements have been met by Clyde.
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The marketing team at Bite Toothpaste Bits (https://bitetoothpastebits.com/) is planning a major US marketing push to grow their consumer base. What are the primary requirements for the team to optimally conduct market segmentation? Discuss the requirements and provide brief examples as illustration.
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The primary requirements for Bite Toothpaste Bits to conduct market segmentation include clear objectives, comprehensive data, segmentation variables, measurable segments, and actionable marketing strategies.
The primary requirements for the marketing team at Bite Toothpaste Bits to optimally conduct market segmentation are as follows:
1. Clear Objectives: The team needs to establish clear objectives for segmentation, such as identifying target customer groups, understanding their needs and preferences, and tailoring marketing strategies accordingly.
Example: Bite Toothpaste Bits may have objectives like targeting environmentally conscious consumers, millennials who prioritize convenience, or families seeking natural oral care products.
2. Comprehensive Data: Gathering relevant data about customers is crucial for effective market segmentation. This includes demographic information (age, gender, income), psychographic data (lifestyle, values, interests), and behavioral data (purchase behavior, usage patterns).
Example: Bite Toothpaste Bits can collect data through customer surveys, website analytics, or social media monitoring to understand consumer preferences and segment the market based on factors like age, eco-consciousness, or oral health concerns.
3. Segmentation Variables: The team should determine the key variables to segment the market, such as geographic (location), demographic (age, gender), psychographic (personality, lifestyle), and behavioral (buying patterns, product usage).
Example: Bite Toothpaste Bits may segment the market geographically to focus on urban areas with high environmental awareness or psychographically to target health-conscious individuals who value sustainable products.
4. Measurable and Accessible Segments: It is essential to ensure that the identified market segments are measurable in terms of size, purchasing power, and growth potential. The segments should also be accessible for effective marketing campaigns.
Example: Bite Toothpaste Bits may analyze market research data to determine the size and growth potential of different segments, and assess their accessibility through advertising channels, distribution networks, and online platforms.
5. Actionable Marketing Strategies: The team needs to develop targeted marketing strategies for each segment, tailoring messages and promotional activities to meet the specific needs and preferences of different customer groups.
Example: Bite Toothpaste Bits could create separate marketing campaigns for each segment, highlighting different product features and benefits that resonate with their unique interests and concerns.
By fulfilling these requirements, the marketing team at Bite Toothpaste Bits can conduct effective market segmentation, enabling them to understand their customers better and deliver tailored marketing strategies that resonate with specific target segments.
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swinging and his eyes looking straight ahead. After doing so, Trevor notices that he doesn't feel as depressed as he did before. This illustrates the a) behavior feedback effect. b) concept of egocentrism. c) physiology of emotions. d) facial feedback effect.
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The scenario described in the question illustrates the facial feedback effect. The facial feedback effect refers to the idea that facial expressions can influence and regulate emotions. According to this concept, the feedback from our facial muscles and sensory receptors plays a role in shaping and experiencing emotions.
In the given situation, Trevor changes his facial expression by forcing a smile while swinging and looking straight ahead. This intentional change in his facial muscles triggers a feedback loop between his facial expression and his brain, which can influence his emotional state. By altering his facial expression to a more positive one, Trevor may experience a shift in his mood and feel less depressed.
Research has shown that facial expressions can affect physiological responses, neural activity, and the subjective experience of emotions. Smiling, in particular, has been associated with increased positive affect and reduced negative affect. The act of smiling can activate neural pathways associated with positive emotions, leading to changes in mood and overall well-being.
Therefore, Trevor's experience of feeling less depressed after changing his facial expression aligns with the facial feedback effect, highlighting the influence of facial expressions on emotions.
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Why is removing income tax for small businesses a problem?
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Although small businesses are at the heart of the economy, removing income tax for them can pose significant problems. Income tax is a direct tax imposed on the income of an individual or business, and it is a crucial source of revenue for the government to finance social and economic development programs.
However, removing the income tax for small businesses can present the following problems: It can increase the budget deficit: Removing income tax for small businesses implies that the government will lose a considerable amount of revenue that it could have collected from these businesses.
This will lead to a widening budget deficit and can negatively impact the government's ability to finance development programs. The government will have to seek alternative sources of revenue to make up for the loss.
It can lead to unequal taxation: The tax system is meant to be progressive, where the tax burden is higher for those with higher income.
Removing income tax for small businesses implies that the tax burden will be shifted to individuals and larger businesses, which could lead to unequal taxation.
It can encourage tax evasion: Small businesses that are exempted from income tax can use this opportunity to evade other taxes. This is because the government would have lost its power to enforce compliance, leading to reduced revenue generation.
It can lead to a loss of essential services: If the government cannot collect sufficient revenue, it may result in a loss of essential services, such as healthcare, education, and infrastructure development that are vital to the nation's economic growth.
In conclusion, although removing income tax for small businesses may seem beneficial to them, it can have significant consequences for the economy as a whole.
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A van rental charges P^(6),500 flat rate for a whole day tour in CALABARZON of 6 passengers and each additional passenger added P 800.00 to the tour fare. Express a piecewise function for van rental.
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Let V be the total cost of van rental and N be the number of passengers. The van rental charges a flat rate of P6,500 for 6 passengers. For each additional passenger beyond 6, an additional charge of P800 is added to the tour fare.
We can express the piecewise function for van rental as follows: In this function, if the number of passengers is less than or equal to 6, the total cost is P6,500. However, if the number of passengers is greater than 6, the total cost is P6,500 plus the additional charge of P800 for each additional passenger beyond 6. Let V be the total cost of van rental and N be the number of passengers. The van rental charges a flat rate of P6,500 for 6 passengers. For each additional passenger beyond 6, an additional charge of P800 is added to the tour fare. A van rental charges P^(6),500 flat rate for a whole day tour in CALABARZON of 6 passengers and each additional passenger added P 800.00 to the tour fare. Express a piecewise function for van rental. Let V be the total cost of van rental and N be the number of passengers. The van rental charges a flat rate of P6,500 for 6 passengers. For each additional passenger beyond 6, an additional charge of P800 is added to the tour fare.
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What is the price of a $1,000 par value, 9.0% semi-annual coupon bond that matures in 13 ye if investors require a 5.5% return Round your answer to the nearest dollar.
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The price of a $1,000 par value, 9.0% semi-annual coupon bond that matures in 13 years is $1,148.20. The investors require a 5.5% return. The final answer should be rounded to the nearest dollar.
The price of a $1,000 par value, 9.0% semi-annual coupon bond that matures in 13 years can be calculated using the formula as follows:PMT = $45n = 26 periodsI/Y = 2.75%PV = -1148.20FV = 1000When the above formula is calculated, we will get the answer to be $1,148.20, which is the price of the bond.Now, as the investors require a 5.5% return, which means YTM (yield to maturity) is 5.5% (2.75% semi-annually), the price of the bond should be $1,148.20.The final answer should be rounded to the nearest dollar. Therefore, the answer is $1,148.
An investment is putting the capital that use today in order to increase its value to use it in the future. An investment is the putting money into the , the time we gave or the efforts etc. to generate the greater amount of the income in the future use. The benefit we drive from the investment is called as the return. An investment strategy involves buying stocks that appear underpriced relative to their intrinsic value. value investing can get started with low risk and the potential for high rewards. investment generally are : stocks, bonds and cash equivalents.
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Question Two a. Suppose the market interest rate is 10 per cent in Zambia. What is the value of a coupon bond that pays K 80 per year for each of the next five years and then makes a principal repayment of K 1000 in the sixth year? b. The Zambian government has since January 2022 embarked on a massive pensions program in an attempt to reduce the level of pension arrears. Mr Kalampa received his full terminal benefits is considering investing in the equity market by buying 2400 shares at the Lusaka Stock Exchange (LUSE) with an economic market return of 10.25 per cent in 2021. Final Dividend per share for the financial year ended 31 st December 2021 was approved by the Shareholders of CEC Zambia, Zambeef and ZAFFICO in accordance with the requirements of the Securities Act No. 41 of 2016 of the Laws of Zambia and the Listings Rules of the Lusaka Securities Exchange in which notice was given that the Final Dividend which was payable to shareholders registered in the Company's books at the close of business on Friday 29th April, 2022 being the record date. The Dividend Per Share in 2020. CEC Zambia, Zambeef and ZAFFICO issued 412,234 shares, 345,101 shares and 409678 shares respectively. i. Explain the role that LUSE plays in the Money Markets in Zambia ii. Calculate the 2021 share prices for CEC Zambia, Zambeef and ZAFFICO. iii. Calculate the expected economic earning per share in the 2021 financial year that Mr Kalampa would anticipate. iv. Determine the economic incomes for CEC Zambia, Zambeef and ZAFFICO. v. Mr Kalampa further seeks to determine the future profitability of the shares for CEC Zambia, Zambeef and ZAFFICO in order to make his final decision of the company to invest in. Use the Price Earnings Ratio and advise Mr Kalampa the company to invest in. vi. Calculate Mr Kalampa's total dividend earning based on the company he was advised to invest in in (v) above.
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The value of the coupon bond that pays K 80 per year for each of the next five years and then makes a principal repayment of K 1000 in the sixth year can be calculated using the present value formula.
a. The value of the coupon bond can be calculated by determining the present value of the future cash flows, which include the annual coupon payments of K 80 and the principal repayment of K 1000. By discounting these cash flows at the market interest rate of 10%, the total present value can be calculated, providing the value of the bond.
b. The Lusaka Stock Exchange (LUSE) serves as a platform for buying and selling securities in Zambia's money markets. To calculate the 2021 share prices for CEC Zambia, Zambeef, and ZAFFICO, the dividend per share information and the market return of 10.25% need to be considered. The share prices can be calculated by dividing the dividend per share by the market return. The expected economic earnings per share for Mr. Kalampa in the 2021 financial year can be calculated by multiplying the dividend per share by the number of shares he intends to purchase. This provides an estimation of the earnings he can anticipate from his investment.
To determine the economic incomes for CEC Zambia, Zambeef, and ZAFFICO, the dividend per share is multiplied by the number of shares issued. This calculation provides the total income generated by each company. To assess the future profitability of the shares, the price-earnings ratio is used. The ratio is calculated by dividing the market price per share by the earnings per share. By comparing the ratios of the three companies, Mr. Kalampa can make an informed decision about which company is more likely to be profitable in the future.
To calculate Mr. Kalampa's total dividend earnings, the dividend per share is multiplied by the number of shares he owns in the chosen company. This calculation provides an estimate of the total dividend income he can expect to earn based on his investment decision.
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A marketing agency has developed three vacation packages to promote a timeshare plan at a new resort. They estimate that 40% of potential customers will choose the Day Plan, which does not include overnight accommodations; 10% will choose the Overnight Plan, which includes one night at the resort: and 50% will choose the Weekend Plan, which includes two nights. Complete parts a and b below. a) Find the expected value of the number of nights potential customers will need. E(X)=1.10 night(s) (Simplify your answer. Type an integer or a decimal). b) Find the standard deviation of the number of nights potential customers will need. σ= night(s) (Round to two decimal places as needed.)
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A. The expected value of the number of nights potential customers will need is 1.10 nights.
B. The standard deviation of the number of nights potential customers will need is approximately 0.94 nights.
a) To find the expected value of the number of nights potential customers will need, we need to multiply the probability of each event by the corresponding number of nights and sum them up.
Expected value (E(X)) = (Probability of Day Plan * Number of nights for Day Plan) + (Probability of Overnight Plan * Number of nights for Overnight Plan) + (Probability of Weekend Plan * Number of nights for Weekend Plan)
E(X) = (0.40 * 0) + (0.10 * 1) + (0.50 * 2)
E(X) = 0 + 0.10 + 1
E(X) = 1.10
Therefore, the expected value of the number of nights potential customers will need is 1.10 nights.
b) To find the standard deviation of the number of nights potential customers will need, we need to calculate the variance first. The variance is the sum of the squares of the differences between each outcome and the expected value, weighted by their probabilities.
Variance ([tex]σ^{2}[/tex]) = (Probability of Day Plan * ([tex]Number of nights for Day Plan - E(X)^{2}[/tex])) + (Probability of Overnight Plan * ([tex]Number of nights for Overnight Plan - E(X)^{2}[/tex])) + (Probability of Weekend Plan * ([tex]Number of nights for Weekend Plan - E(X)^{2}[/tex]))
([tex]σ^{2}[/tex]) = (0.40 * [tex](0 - 1.10)^{2}[/tex]) + (0.10 * [tex](1 - 1.10)^{2}[/tex]) + (0.50 * [tex](2 - 1.10)^{2}[/tex])
([tex]σ^{2}[/tex]) = (0.40 * 1.21) + (0.10 * 0.01) + (0.50 * 0.81)
([tex]σ^{2}[/tex]) = 0.484 + 0.001 + 0.405
([tex]σ^{2}[/tex]) = 0.89
Finally, the standard deviation (σ) is the square root of the variance.
σ = √0.89
σ ≈ 0.94
Therefore, the standard deviation of the number of nights potential customers will need is approximately 0.94 nights.
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Last
year you bought a 2 year $1,000 face value bond. You need to sell it after receiving the first coupon. What is the price you receive if current market rates are 4%? What is yourholding period yield? Given this information, what is the YTM of the buyer of your bond?
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The given data are:
Face value = $1000, coupon rate = 2/100*1000 = $20, Number of years = 2 years, Current market rate = 4% Let us first calculate the price at which bond will be sold after the first coupon.
Price of bond = Coupon Payment / (1+r) + Coupon Payment / (1+r)^2 +.... + Coupon Payment / (1+r)^n + Face Value / (1+r)^n
Here, coupon payment is made annually. Therefore, the first payment will be received at the end of the first year.
Price of bond = 20 / (1+0.04)^1 + 1000 / (1+0.04)^2 = $955.23. Therefore, the price received will be $955.23.
Holding period yield is the return earned on the investment during the holding period. It is expressed as a percentage of the price paid. Holding period yield = (Coupon payment received + Selling price – Purchase price) / Purchase priceHolding period yield = (20 + 955.23 – 1000) / 1000 = -2.48%YTM (Yield to maturity) of the bond is the rate at which all future cash flows from the bond are discounted to get the present value equal to the market price of the bond. It is the overall return offered by the bond. The bond is currently being sold at a discount.Therefore, we can say that the YTM of the bond is more than the current market rate of 4%.
The solution to the above problem is, the price you receive if current market rates are 4% is $955.23, the holding period yield is -2.48%, and the YTM of the buyer of your bond is more than 4%.
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uring the FBT year ending 31 March 2022, Julia Zhu, an employee of a computer retail business, received the following benefits from her employer: • a laptop computer with a normal selling price of $1800 solely for her private use — the inventory acquisition price paid by the business was $1200 • a car parking benefit valued $1280 • a loan of $10 000 with an interest rate at 2.1 per cent p.a., and • a clothing and hairdressing allowance for $600. Indicate the tax consequences of receiving these benefits from Julia’s perspective and also calculate the employer’s FBT liability (where appropriate). Show calculations.
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Julia Zhu's taxable benefits include a laptop valued at $600 (resulting in an FBT liability of $240), a parking benefit valued at $603.20 (FBT liability of $283.48), and a loan benefit of $210 (FBT liability of $98.70). The total FBT payable by the employer is $622.18.
The Fringe Benefit Tax (FBT) is a tax on the fringe benefits that employees receive in addition to or instead of their salaries. Employers are typically liable for FBT, although it is often passed on to the employee as a fringe benefit tax charge. The tax implications of the benefits obtained by Julia Zhu from her employer are discussed below.
Indicate the tax implications of Julia's benefits:-
1. A laptop computer:
Since Julia uses the laptop exclusively for her personal use, the laptop is subject to fringe benefit tax since it is a "fringe benefit" under the FBT Act. The taxable value of this benefit is calculated as follows:
($1800 - $1200) = $600
Taxable value is equal to $600.
Since the laptop was purchased for $1200, the company will be able to claim a tax deduction for that amount. However, the company will be required to pay an FBT of $240 since the laptop is subject to FBT.
2. Parking Benefit:
The parking benefit's taxable value is determined as follows:
$1,280 x 0.47 = $603.20
Taxable value is equal to $603.20.
As a result, the company must pay $603.20 x 47% = $283.48 in FBT.
3. Loan:
The loan's taxable value is determined as follows:
Loan Value x Interest Rate = Interest Charge
($10,000 x 2.1%) = $210
Taxable value is equal to $210.
As a result, the company must pay $210 x 47% = $98.70 in FBT.
4. Clothing and hairdressing allowance:
Since the total amount of Julia's clothing and hairdressing allowance is less than $1000, this benefit is exempt from FBT.
FBT Payable Calculation:
Taxable Value of Laptop = $600
FBT payable on laptop = $240
Taxable Value of Parking = $603.20
FBT payable on parking = $283.48
Taxable Value of Loan = $210
FBT payable on loan = $98.70
Total FBT Payable = $622.18
Therefore, the company will be required to pay an FBT of $622.18 since all of Julia's benefits are subject to FBT.
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Terry Tucker entered into a long position in a 2 month gold futures contract on 100 tray ounces of gold for $200 per tray ounce. The contract specified a 11,000 initial margin requirement and a 9000$ maintenance margin requirement. Tucker decides not to withdraw funds from his margin account. The following list displays the settlement prices at the end of each of the next two days, including the day Tucker entered the position:
Day 0: $205
Day 1: $175
Day 2: $ 210
What is tucker's return on investment by the end of the second day?
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Tucker's return on investment by the end of the second day is 1.55%.
To calculate Tucker's return on investment, we need to determine the profit or loss on the futures contract. The profit or loss is calculated by taking the difference between the settlement price and the entry price, multiplied by the number of ounces and the tick size.
On Day 0, the settlement price is $205, which is higher than the entry price of $200. So, the profit on the contract is ($205 - $200) * 100 * $0.10 = $50.
On Day 1, the settlement price is $175, which is lower than the entry price. In this case, the loss on the contract is ($175 - $200) * 100 * $0.10 = -$250.
On Day 2, the settlement price is $210, which is higher than the entry price. The profit on the contract for Day 2 is ($210 - $200) * 100 * $0.10 = $100.
Now, we can calculate the total profit or loss over the two days: $50 - $250 + $100 = -$100.
Tucker's return on investment is then calculated as the total profit or loss divided by the initial margin requirement: -$100 / $11,000 = -0.0091.
Converting this to a percentage, Tucker's return on investment is -0.91%. Since the return is negative, it indicates a loss.
Therefore, Tucker's return on investment by the end of the second day is -0.91% or approximately -0.0091.
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Assume that you share an apartment with your friend. There is a tiving room in your apartment, and somebody has to clean it up to keep the room tidy. Every evening, you and your roommate have two choices: to clean up the room or not to do so, If you choose the first option, you have to spend time and you do not like this. When both you and your roommate clean up the room, it takes less time than doing it on your own, Of course, you and your roommate feel happler when the room is tidy, than when it is messy. However, you prefer to leave the room messy than cleaning it up alone. Therefore, you and your roommate's payoff of "cleaning up the living room game," which you play every evening, are given by the following payoff table. As you can see, regardless of what your roommate does, not cleaning up the room is the best option foryou, Consequently, if you and your roommate play this game only for one evening, no one cleans up the living room, and this is worse for both of you. In the lecture, it was shown that a long-term relationship can help agents cooperate, and the trigger strategy was introduced to clarity the point. Which of the following describes the trigger strategy in this repeated "cleaning up the living room game?? Clean up the living room every day. Clean up the living room, If nobody has ever failed to do so. If anyone ever fails to clean up the room, then you will never do so. Clean up the living room today, if your room mate did it yesterday. Do not clean up the room, if your roommate did not clean the room yesterday. Clean up the living room from Monday to Thursday, and do not clean from Friday to Sunday. Repeat this pattern every week.
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The trigger strategy that describes the repeated "cleaning up the living room game" is:
Clean up the living room every day if nobody has ever failed to do so. If anyone ever fails to clean up the room, then you will never do so.
This trigger strategy ensures that both you and your roommate cooperate and clean up the living room as long as no one breaks the agreement. If at any point someone fails to clean up the room, the trigger is activated, and both you and your roommate stop cleaning the room. This strategy provides an incentive for both parties to maintain cooperation by ensuring that if one person stops cleaning, the other person will also stop.
By adopting this trigger strategy, it creates a long-term relationship between you and your roommate based on mutual cooperation and trust. It encourages consistent cleaning of the living room as long as both parties adhere to their commitment.
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You are considering making a movie. The movie is expected to cost $10.5 million up yo gront and take a year to produce. After that, it is expected to make $4.7 million in the year it is required 1.7 milion for the following four years. What is tho payback period of bis investreet? If you require a payback period of tao yean, wit you mate the mown? Does the move tave positie NPV if the cost of capital is 10.6% ? What is the payback period of this investment? The payback poriod is yeare. (Round to one decinul place.) If you require a payback period of two years, will you make the mevie? (Select from the drop-down menu.) Does the movie have positive NPV if the cost of captal is 10.6% ? If the cost of capital is 10.6%, the NPV is $ millon. (Round to two decimal places.)
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The payback period of this investment is 0.91 year which is less than 1 year.
The movie will be rejected as it will not generate a positive return on the investment.
Payback period is a technique for evaluating investments.
It is the amount of time it takes to recoup an investment's initial expenses.
The payback period is computed by dividing the initial investment by the yearly cash inflow after taxes.
The calculations for the given question are given below;
Given:
Initial investment = $10.5 million
Annual inflows = $4.7 million for year 1 and $1.7 million for years 2 through 5.
Payback Period:
Yearly cash inflow for years 2 through 5 is $1.7 million each, so the total cash inflow for those years is:
$1.7 million × 4 = $6.8 million
Total cash inflow = $4.7 million + $6.8 million
= $11.5 million
Therefore, the payback period of this investment is:
Payback period = $10.5 million / $11.5 million
= 0.91 year which is less than 1 year.
If a payback period of 2 years is required, the movie would be made, as the computed payback period is less than 2 years.
Now, to find the NPV, we will discount each cash flow back to its present value and then add them up.
If the present value is less than the initial investment, the project would be rejected as it would not generate a positive return on the investment.
If the present value is greater than the initial investment, the project will be accepted because it will generate a positive return on the investment.
Given:
Discount rate = 10.6%
NPV = -$10.5 million + ($4.7 million / (1 + 0.106)¹) + ($1.7 million / (1 + 0.106)²) + ($1.7 million / (1 + 0.106)³) + ($1.7 million / (1 + 0.106)⁴) + ($1.7 million / (1 + 0.106)⁵)
NPV = -$10.5 million + $4.26 million + $1.37 million + $1.14 million + $0.95 million + $0.79 million= -$1.99 million
Since NPV is negative, the movie does not have positive NPV if the cost of capital is 10.6%.
Therefore, the movie will be rejected as it will not generate a positive return on the investment.
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Which of the following is/are TRUE?
I. A firm's leveraged beta will always be greater than its unleveraged beta.
II. The larger the amount of debt in a firm's capital structure, the smaller will be the firm's leveraged beta.
-Both I and II
-I
-II
-Neither I nor II
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The correct answer is the last option, Neither I nor II. As the relationship between leveraged beta, unleveraged beta, and the amount of debt in a firm's capital structure is influenced by several factors and can vary from one company to another.
Explanation:
I. A firm's leveraged beta will not always be greater than its unleveraged beta. The leveraged beta represents the risk of a company's equity when it is financed with both debt and equity. It takes into account the additional financial risk introduced by the use of debt in the capital structure. However, the specific relationship between leveraged beta and unleveraged beta depends on various factors such as the amount of debt, cost of debt, and the volatility of the company's assets. In some cases, the leveraged beta may be higher than the unleveraged beta, while in others it may be lower.
II. The statement that the larger the amount of debt in a firm's capital structure, the smaller the firm's leveraged beta is not necessarily true. The impact of debt on a firm's leveraged beta depends on the riskiness of the debt and its cost relative to the firm's equity. If the debt is relatively risky and has a high cost, it can increase the firm's leveraged beta. Conversely, if the debt is less risky and has a low cost, it may have a smaller impact on the firm's leveraged beta. Therefore, the relationship between the amount of debt and the firm's leveraged beta is not a straightforward one.
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BigCo just issued 3-year bonds with coupon payments of $100 every year. The bonds have a face value of $1000 and are currently selling for $950. You compute the YTM to be 12.1%. Calculate the Duration.
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The duration of the 3-year bonds issued by BigCo, with an : annual coupon payment of $100, a face value of $1000, and a current price of $950, can be calculated using the formula for Macaulay duration.
Duration is a measure of the weighted average time it takes to receive the cash flows from a bond. To calculate the duration, we need to determine the present value of each cash flow and then multiply it by the time period it represents.
In this case, the bond has a maturity of 3 years, with annual coupon payments of $100. The face value of the bond is $1000, and it is currently selling for $950.
To calculate the duration, we start by determining the present value of the cash flows. The present value of the face value ($1000) is $950, as it is the current market price of the bond. The present value of each coupon payment ($100) can be calculated using the yield to maturity (YTM) of 12.1%. Using the present value formula, we find that the present value of each coupon payment is approximately $88.80.
Next, we multiply each present value by the respective time period. The face value ($950) is multiplied by 3 years (the maturity), resulting in a value of $2850. Each coupon payment of $88.80 is multiplied by the respective time period (1, 2, and 3 years), resulting in values of approximately $88.80, $177.60, and $266.40.
Finally, we sum up the present value multiplied by the time period for all cash flows and divide it by the bond's current market price ($950). The duration for these bonds is approximately 2.99 years.
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Based on the following cash flow execute an analysis on the Wi-Fi infrastructure. (18 marks)
The question at hand is if the additional investment should be made to install Wi-Fi Infrastructure that is able to handle higher data loads. This would allow for users to be able to access high quality media options. A premium could be charged for the added capabilities, which would result in higher yearly revenues associated with using the Wi- Fi Network. The cost of maintaining either system is similar.
The project manager has asked that you use a five-year time period for your analysis. For each of the options, calculate the Return on Investment, Rate of Return and the Payback Period. Based on your analysis provide your recommendation.
Basic Wi-Fi Infrastructure
Initial Investment: 150
Wi-Fi Yearly Revenue: 160
Wi-Fi Yearly Maintenance Cost: 120
Advanced Wi-Fi Infrastructure
Initial Investment: 300
Wi-Fi Yearly Revenue: 210
Wi-Fi Yearly Maintenance Cost: 120
* Cash flow data is in millions ($ 000,000).
*To gain full marks, you must show all of your work.
* Present Value should NOT be considered for this analysis
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Analyze Wi-Fi investment: ROI, RoR, Payback Period. Assess increased revenue. Recommend based on ROI, RoR, Payback Period.
We must take the financial elements over a five-year period into account in order to analyse the investment in Wi-Fi infrastructure. For each choice, we'll figure out the Return on Investment (ROI), Rate of Return (RoR), and Payback Period.
We must evaluate the increased revenue from premium services that adding Wi-Fi infrastructure capable of handling larger data loads can produce. We can determine the ROI by comparing the increased yearly revenue to the investment cost.
The annual cash flows and the initial investment are taken into account while calculating the RoR, which calculates the investment's profitability. It offers a percentage that corresponds to the five-year average annual return.
The Payback Period shows how long it will take to make back the initial investment. To calculate it, divide by the annual net cash inflow, multiply the initial investment.
We can propose whether to move on with the investment in the Wi-Fi infrastructure capable of managing increased data loads based on the analysis of ROI, RoR, and Payback Period.
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Raven Company uses a job-order costing system. On January 1, the beginning of the current year, the company?s inventory balances were as follows:
Raw materials $17,500
Work in process $9,760
Finished goods $29,280
The company applies overhead costs to jobs based on machine-hours. For the current year, the company estimated that it would work 36,300 machine-hours and incur $159,720 in manufacturing overhead cost. The following transactions were recorded for the year:
a. Raw materials were purchased on account: $206,000.
b.Raw materials were requisitioned for use in production: $193,000 (80% direct and 20% indirect).
c.The following costs were incurred for employee services:
Direct labour$162,600
Indirect labour$27,600
Sales commissions$36,900
Administrative salaries$81,200
d.Heat, power, and water costs were incurred in the factory: $43,350.
e. Prepaid insurance expired during the year: $11,500 (85% relates to factory operations, and 15% relates to selling and administrative activities).
f.Advertising costs were incurred $51,500.
g. Depreciation was recorded for the year: $61,800 (90% relates to factory operations, and 10% relates to selling and administrative activities).
h. Manufacturing overhead cost was applied to production. The company recorded 40,600 machine-hours for the year.
i. Goods that cost $493,100 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
j. Sales for the year totaled $714,000 and were all on the account. The total cost to manufacture these goods according to their job cost sheets was $488,000.
Required:
1. Prepare journal entries to record the transactions given above. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the opening balances in your inventory accounts). Compute an ending balance in each account.
3-a.Is manufacturing overhead underapplied or overapplied for the year?
3-b. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
4. Prepare an income statement for the year
Answers
1. Journal Entries
a) Raw Materials A/c $206,000
Accounts Payable A/c $206,000
b) Work In Progress A/c $154,400
Manufacturing Overhead A/c $38,600
Raw Materials A/c $193,000
c) Direct Labor A/c $162,600
Indirect Labor A/c $27,600
Sales Commissions A/c $36,900
Administrative Salaries A/c $81,200
Salaries Payable A/c $308,300
d) Manufacturing Overhead A/c $43,350
Cash A/c $43,350
e) Manufacturing Overhead A/c $9,775
Prepaid Insurance A/c $9,775
f) Advertising Expense A/c $51,500
Accounts Payable A/c $51,500
g) Manufacturing Overhead A/c $55,620
Accumulated Depreciation A/c (Factory) $55,620
h) Work In Progress A/c $153,840
Manufacturing Overhead A/c $38,460
i) Finished Goods A/c $493,100
Work In Progress A/c $493,100
j) Accounts Receivable A/c $714,000
Sales A/c $714,000
Cost of Goods Sold A/c $488,000
Finished Goods A/c $488,000
2. T-Accounts
Raw Materials Inventory:
ParticularsDebitCreditParticularsDebitCredit
Balance B/d$17,500-Accounts Payable-$206,000
Accounts Payable-$206,000Raw Materials Requisitioned$193,000-
Raw Materials Requisitioned$193,000-Balance C/d$21,500-
Balance C/d$21,500- - -
Work-in-Progress Inventory:
ParticularsDebitCreditParticularsDebitCredit
Balance B/d$9,760-Raw Materials Requisitioned-$154,400
Direct Labor$162,600-Manufacturing Overhead$38,460-
Manufacturing Overhead-$38,460Finished Goods Transferred$493,100-
Balance C/d$153,840-Balance C/d$19,200-
Finished Goods Inventory:
ParticularsDebitCreditParticularsDebitCredit
Balance B/d$29,280-Work-in-Progress Inventory-$493,100
Work-in-Progress Inventory$493,100-Sales-$714,000
Balance C/d$222,380-Balance C/d$222,380-
Manufacturing Overhead:
ParticularsDebitCreditParticularsDebitCredit
Balance B/d$--Heat, Power, and Water Costs$43,350-
Heat, Power, and Water Costs$43,350-Prepaid Insurance$9,775-
Depreciation$55,620-Balance C/d$141,235-
Work-in-Progress Inventory$38,460- - -
Cost of Goods Sold:
ParticularsDebitCreditParticularsDebitCredit
Finished Goods Inventory$488,000-Sales-$714,000
- -Cost of Goods Sold$488,000-
- -Balance C/d$226,000-
3-a. Manufacturing Overhead is underapplied by $2,985.
Calculation:
Actual Manufacturing Overhead Cost = $159,720
Applied Manufacturing Overhead Cost = ($38,460 × 40,600) = $1,561,556
Underapplied Manufacturing Overhead = $159,720 − $1,561,556
Underapplied Manufacturing Overhead = $2,985
3-b. Journal Entry
ParticularsDebitCreditParticularsDebitCredit
Manufacturing Overhead$2,985-Cost of Goods Sold-$2,985
4. Income Statement
ParticularsAmount($)ParticularsAmount($)
Sales714,000Cost of Goods Sold491,015
Less: Cost of Goods Sold-Gross Profit222,985
Gross Profit222,985Operating Expenses:
Selling Expenses88,400
Advertising Expense51,500
Total Selling Expenses139,900
Administrative Expenses81,200
Total Operating Expenses221,100
Net Income1,885
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draw organization chart for Construction management company
organization structure type --> strong matrix
Answers
A strong matrix organization is a hybrid of a functional and a projectized organization.
A strong matrix organization is a unique blend of functional and projectized structures, where the project manager holds significant authority, and functional managers serve as technical advisors. This organizational approach focuses on project-oriented activities and aligns all efforts towards meeting project requirements effectively. This article presents the organizational structure of a Construction Management Company, highlighting the roles and responsibilities of key stakeholders within the strong matrix organization.
Organizational Structure:
At the top of the organization's structure, we find the project manager, who holds ultimate responsibility for overseeing the company's projects. Below the project manager, there are several functional managers who collaborate to ensure successful project execution.
Project Manager:
The project manager serves as the central figure in the organization, responsible for the overall planning, coordination, and successful completion of projects. They possess equal decision-making authority and resource control alongside the functional managers.
Construction Manager:
The construction manager works closely with the project manager to ensure the construction activities align with project requirements. They provide expertise and guidance related to construction methodologies, resource allocation, and project scheduling.
Finance Manager:
The finance manager plays a vital role in overseeing the financial aspects of the projects. They manage project budgets, monitor expenses, and ensure financial compliance. Collaborating with the project manager, they provide financial insights for effective decision-making.
Quality Assurance Manager:
The quality assurance manager ensures that the company's projects adhere to quality standards and industry regulations. They implement quality control processes, conduct inspections, and facilitate continuous improvement initiatives to deliver high-quality outcomes.
Procurement Manager:
The procurement manager handles the procurement and supply chain activities of the projects. They collaborate with vendors, negotiate contracts, and ensure timely delivery of materials and equipment required for project execution.
Human Resources Manager:
The human resources manager focuses on managing the company's human capital. They handle workforce planning, talent acquisition, employee development, and performance management. Collaborating with the project manager, they ensure the availability of skilled resources for project needs.
Safety Manager:
The safety manager holds responsibility for maintaining a safe working environment across the organization's projects. They develop and enforce safety policies, conduct risk assessments, and ensure compliance with health and safety regulations.
Therefore, A strong matrix organization chart for a Construction Management Company has been presented, highlighting the roles and responsibilities of key stakeholders. In this structure, the project manager and functional managers possess equal decision-making authority and collaborate to meet project objectives. This organizational approach fosters effective project execution, leveraging the expertise of functional managers while empowering the project manager with the necessary authority to drive successful project outcomes.
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