The value of Kendra Enterprises' operations is approximately $1,067,744.87.
To calculate the terminal value of operations, we need to find the present value of all free cash flows beyond Year 2 discounted back to Year 2.
Given the projected free cash flows for the next 2 years:
Year 1 FCF = $80,000
Year 2 FCF = $100,000
After Year 2, the FCF is expected to grow at a constant rate of 7%. We can calculate the FCF for Year 3 and beyond using the formula:
FCF (Year t) = FCF (Year t-1) * (1 + Growth Rate)
Year 3 FCF = $100,000 * (1 + 7%) = $107,000
Year 4 FCF = $107,000 * (1 + 7%) = $114,490
Year 5 FCF = $114,490 * (1 + 7%) = $122,368.30
To calculate the terminal value, we need to discount the future FCFs to Year 2 using the weighted average cost of capital (WACC) as the discount rate.
Terminal Value = FCF (Year 3) / (WACC - Growth Rate)
Terminal Value = $107,000 / (16% - 7%) = $1,342,500
Next, we need to calculate the present value of the terminal value and the FCFs for Year 1 and Year 2. We discount the terminal value and the Year 1 and Year 2 FCFs to Year 2 using the WACC as the discount rate.
Present Value of Terminal Value = Terminal Value / (1 + WACC)^2
Present Value of Terminal Value = $1,342,500 / (1 + 16%)^2 = $923,913.04
Present Value of Year 1 FCF = $80,000 / (1 + 16%)^1 = $68,965.52
Present Value of Year 2 FCF = $100,000 / (1 + 16%)^2 = $74,866.31
To calculate the value of operations, we sum the present values of the FCFs and the present value of the terminal value.
Value of Operations = Present Value of Year 1 FCF + Present Value of Year 2 FCF + Present Value of Terminal Value
Value of Operations = $68,965.52 + $74,866.31 + $923,913.04 = $1,067,744.87
Therefore, the value of Kendra Enterprises' operations is approximately $1,067,744.87.
Know more about weighted average cost of capital here
https://brainly.com/question/8287701#
#SPJ11
4. a. What is the ISO 4237 currency code? b. What does the following exchange rate mean: CAD/MXN?
CAD/MXN represents the exchange rate between the Canadian Dollar and the Mexican Peso.
a. The ISO 4237 currency code does not exist. There is no currency code associated with ISO 4237. b. The exchange rate CAD/MXN refers to the value of the Canadian Dollar (CAD) in relation to the Mexican Peso (MXN).
It indicates how many Mexican Pesos are needed to buy one Canadian Dollar. For example, if the exchange rate is 15.00 CAD/MXN, it means that one Canadian Dollar is equal to 15 Mexican Pesos.
The exchange rate fluctuates based on various factors such as economic conditions, interest rates, and market forces.
learn more about currency here:
https://brainly.com/question/33116591
#SPJ11
PL
pls answer alll!!!!!
You have recently created an app. This app is meant to fill a small, but important, niche in the dog grooming space. Specifically, your app helps lower income dog owners find mobile groomers that can
The app you have created helps lower-income dog owners find mobile groomers that offer affordable services. It aims to fill a niche in the dog grooming space by providing a convenient platform for connecting dog owners with mobile groomers who can cater to their budgetary constraints.
Your app serves as a marketplace where dog owners can search for and book mobile groomers who are willing to provide their services at affordable prices. It addresses the needs of lower-income dog owners who may find it challenging to access professional grooming services due to cost constraints.
By utilizing the app, dog owners can browse through a list of mobile groomers, compare their rates, read reviews from other users, and book appointments directly through the platform. The app streamlines the process of finding and hiring mobile groomers, making it more accessible and convenient for lower-income dog owners.
Learn more about the dog grooming here: brainly.com/question/730721
#SPJ11
Why do successful leaders often stumble ethically? Explain the
Bathsheba syndrome.
Successful leaders can sometimes stumble ethically due to various factors. One phenomenon that helps explain this is the "Bathsheba syndrome," named after the biblical story of King David and Bathsheba. The Bathsheba syndrome refers to the tendency of powerful individuals, particularly leaders, to misuse their authority or engage in unethical behavior when they become complacent, overly confident, or detached from the consequences of their actions.
There are a few reasons why successful leaders may succumb to ethical pitfalls:
1. Hubris and Narcissism: Achieving significant success can sometimes lead to inflated egos and a sense of invincibility, causing leaders to believe they are above the rules and moral obligations.
2. Lack of Accountability: Success and power can create an environment where leaders are shielded from consequences, leading to a sense of entitlement and a disregard for ethical considerations.
3. Pressure to Succeed: The drive for success, often accompanied by intense competition and high expectations, can create a culture where leaders feel compelled to cut corners or compromise ethics in pursuit of results.
4. Isolation and Lack of Feedback: Leaders may become surrounded by yes-men or isolated from diverse perspectives, making it easier for ethical blind spots to develop and go unchallenged.
To mitigate the Bathsheba syndrome and promote ethical leadership, organizations should foster a culture of accountability, encourage open communication and feedback, provide ethics training and guidance, and establish checks and balances to prevent concentration of power. Successful leaders should actively seek diverse viewpoints, practice humility, and prioritize ethical decision-making over short-term gains.
Learn more about the Bathsheba syndrome and ethical leadership here:
https://brainly.com/question/32336632
#SPJ11
We have all watched TV and uttered the statement, "There is
nothing on!" If you had the power and the cash to
CREATE ANY NEW TV SHOW, WHAT WOULD BE YOUR IDEA?
(Please note that if you choose a reality
If I had the power and the cash to create any new TV show, I would go for a reality show that revolves around a group of individuals trying to make a positive difference in their community.
The show would be called "Impact Makers" and would feature a diverse cast of people from different backgrounds and professions who are passionate about making a difference in their local community. The cast would include volunteers, social workers, activists, environmentalists, and other people who are committed to creating positive change in their community.The show would follow the cast as they work on various community projects, from cleaning up local parks to volunteering at local shelters.
Each episode would focus on a different project, and viewers would see the cast members working together to overcome obstacles and achieve their goals. Along the way, they would also share their personal stories and explain why they are so passionate about making a difference in their community.The show would not only be entertaining, but it would also inspire viewers to get involved in their own communities and make a positive impact. It would show that even small actions can make a big difference and that anyone can be an impact maker if they are willing to put in the time and effort.
So, I would love to create a reality show that would inspire people to make a positive difference in their community. It would be a show that would entertain and inspire viewers and make them realize that even small actions can make a big difference.
To know more about communities visit:
brainly.com/question/29811467
#SPJ11
Section Two – The implications of widespread insecure work
1000 words (+/- 10%)
· Why have many employers shifted away from standard (full-time, continuing) employment?
· What are the social and economic implications for workers engaged in insecure work?
· Does widespread insecure work have implications for the broader society and the economy?
· In what ways has COVID-19 shone a spotlight on the problems associated with insecure work?
Widespread insecure work, characterized by non-standard employment arrangements, has significant social and economic implications. It leads to worker vulnerability, income instability, and inequality. Insecure work hinders productivity and innovation, exacerbates social divisions, and has been spotlighted during the COVID-19 pandemic, emphasizing the need for stronger protections and support.
This shift away from standard, full-time, continuing employment has significant implications for workers, society, and the economy as a whole. This essay will explore the reasons behind the shift, analyze the social and economic implications for workers engaged in insecure work, examine its broader implications for society and the economy, and discuss how the COVID-19 pandemic has highlighted the problems associated with insecure work.
Shift away from standard employment:
There are several reasons why many employers have moved away from standard employment arrangements. First, it allows employers to have more flexibility in managing their workforce and adjusting labor costs based on fluctuating demand. Non-standard arrangements provide employers with greater control over staffing levels and enable them to adapt quickly to changes in the business environment. Second, it can lead to cost savings for employers as they are not required to provide the same level of benefits and protections to insecure workers as they would to full-time employees. Lastly, advancements in technology and the rise of the gig economy have facilitated the growth of platform-based work, where individuals work as independent contractors rather than as traditional employees.
Implications for workers:
Workers engaged in insecure work face numerous social and economic implications. In terms of social implications, insecurity and unpredictability in work arrangements can lead to heightened stress, anxiety, and a lack of stability in their personal lives. Insecure workers often experience limited access to employment benefits such as healthcare, retirement plans, and paid leave, leaving them more vulnerable to financial insecurity and hardship. Additionally, these workers may also face challenges in career advancement and skill development due to the transient nature of their employment.
From an economic perspective, insecure work often means lower wages and fewer hours, resulting in reduced income stability and a higher risk of poverty. Insecure workers are more likely to experience income volatility, making it difficult to plan for the future and meet basic needs. They may also lack access to social protections such as unemployment benefits, making them more susceptible to financial shocks. The lack of job security and limited bargaining power can also lead to exploitation and unfair working conditions.
Implications for society and the economy:
The prevalence of widespread insecure work has broader implications for society and the economy. From a societal standpoint, it can exacerbate income inequality and contribute to social stratification. Insecure work perpetuates a two-tiered labor market, where a segment of workers enjoys stable employment with benefits, while others are trapped in precarious and low-paid positions. This can lead to social divisions, reduced social cohesion, and increased societal tensions.
In terms of the economy, the rise of insecure work can hinder productivity and innovation. Insecure workers may be less motivated, have lower job satisfaction, and experience higher turnover rates, impacting overall productivity levels. Moreover, the lack of investment in training and skill development for insecure workers may lead to a skills gap and hinder long-term economic growth. Additionally, the reduced purchasing power of insecure workers can have negative implications for consumer spending and economic demand.
COVID-19 and the spotlight on insecure work:
The COVID-19 pandemic has shed a glaring light on the problems associated with insecure work. The crisis exposed the vulnerabilities faced by workers in non-standard employment arrangements, particularly those in industries heavily impacted by lockdown measures such as hospitality, retail, and gig work. Many insecure workers experienced sudden job losses, reduced income, and the absence of adequate social protections. The pandemic highlighted the need for stronger safety nets, improved working conditions, and enhanced social protections for all workers, regardless of their employment status.
Furthermore, the pandemic revealed the interdependencies within the economy and the risks associated with relying heavily on insecure work. The inability of insecure workers to afford
To know more about economic implications:
https://brainly.com/question/30280812
#SPJ11
Organizational Behaviour is an area of study concerning
activities and social interactions of individuals at the workplace,
Critically examine people's behavior that;
Are shaped by organizational forc
Organizational behavior is undoubtedly shaped by various organizational forces. These forces include organizational culture, leadership styles, structure, policies and procedures, and reward systems.
Organizational culture sets the tone for behavior within the organization. A positive and inclusive culture encourages teamwork, cooperation, and open communication. It promotes behaviors such as collaboration, support, and innovation. Conversely, a toxic culture characterized by negative attitudes, lack of transparency, and high levels of stress can lead to counterproductive behaviors like conflict, resistance, and disengagement.
Leadership styles also significantly impact behavior. Leaders who adopt a participative and empowering approach tend to foster a climate of trust and openness. They encourage employee involvement, motivate individuals to take initiative, and create a sense of ownership. On the other hand, autocratic or dictatorial leadership styles can stifle creativity, suppress employee voice, and generate a culture of fear and compliance.
Organizational structure influences behavior by defining reporting relationships, authority, and decision-making processes. A centralized structure with rigid hierarchies may limit employee autonomy and hinder innovation. In contrast, a decentralized structure empowers employees, encourages collaboration across departments, and promotes independent thinking and problem-solving.
Policies and procedures act as guidelines for behavior within an organization. Well-defined and communicated policies promote consistency and fairness. They provide clarity on acceptable behavior, ethical standards, and performance expectations. Conversely, ambiguous or inconsistent policies can create confusion, breed distrust, and result in undesirable behaviors.
Reward systems play a crucial role in shaping behavior. When employees are rewarded and recognized for their performance, they are motivated to exhibit positive behaviors and achieve organizational goals. Well-designed reward systems that link performance to meaningful incentives, such as bonuses or career advancement opportunities, reinforce desired behaviors and foster a high-performance culture.
In conclusion, organizational forces have a significant impact on people's behavior in the workplace. By cultivating a positive culture, adopting effective leadership styles, establishing a supportive structure, implementing clear policies and procedures, and designing motivating reward systems, organizations can shape behaviors that align with their goals and values, leading to improved productivity, engagement, and overall success.
More on organizational culture: https://brainly.com/question/28044123
#SPJ11
Number of Periods for an Annuity You have $50,241. 26 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $210,000. You expect to earn 10% annually on the account. How many years will it take to reach your goal? Do not round intermediate calculations. Round your answer to the nearest whole number years. An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $400 at the end of Year 6. If other investments of equal risk earn 10% annually, what is this investment's present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent Present value: $1 Future value: $ Present and Future Values of Single Cash Flows for Different Interest Rates Use both the TVM equations and a financial calculator to find the following values. Do not round intermediate calculations. Round your answers to the nearest cent. (Hint: Using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable. ) a. An initial $600 compounded for 10 years at 6. 5%. B. An initial $600 compounded for 10 years at 13%. $ c. The present value of $600 due in 10 years at a 6. 5% discount rate. $ d. The present value of $600 due in 10 years at a 13% discount rate. ) $ Present Value of an Annuity Find the present value of the following ordinary annuities. Do not round intermediate calculations. Round your answers to the nearest cent. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press PV, and find the FV of the annuity due. ) a. $200 per year for 10 years at 10%. $ b. $100 per year for 5 years at 5%. $ c. $200 per year for 5 years at 09. $ d. Now rework parts a, b, and c assuming that payments are made at the beginning of each year, that is, they are annuities due Present value of $200 per year for 10 years at 10%:$ Present value of $100 per year for 5 years at 5%: $ Present value of $200 per year for 5 years at 0%: 5 nd the present value of $725 due in the future under each of the following conditions. Do not round intermedi a. 10% nominal rate, semiannual compounding, discounted back 5 years $ b. 10% nominal rate, quarterly compounding, discounted back 5 years 5 c. 10% nominal rate, monthly compounding, discounted back 1 year While Mary Corens was a student at the University of Tennessee, she borrowed $12,000 in student loans at an annual interest rate of 9. 9%. If Mary repays $1,500 per year, how long will it take her to repay the loan? Do not round intermediate calculations. Round your answer to the nearest whole number. Year(s)
To determine the number of years required to reach a savings goal, we can use the formula for the future value of an annuity. Given an initial amount of $50,241.26, an annual deposit of $5,000, and an annual interest rate of 10%, we need to find the number of periods required to accumulate a total of $210,000.
By plugging these values into the formula and solving for the number of periods, we find that it will take approximately 9 years to reach the goal.
Using the formula for the future value of an annuity: FV = P * [(1 + r)^n - 1] / r
Where:
FV = Future value
P = Annual deposit
r = Annual interest rate
n = Number of periods
Substituting the given values, we have:
$210,000 = $5,000 * [(1 + 0.10)^n - 1] / 0.10
Rearranging the equation and solving for n, we find:
[(1 + 0.10)^n - 1] / 0.10 = 210,000 / 5,000
(1.10^n - 1) / 0.10 = 42
1.10^n - 1 = 4.2
1.10^n = 5.2
n = log(5.2) / log(1.10)
n ≈ 9 years
Therefore, it will take approximately 9 years to reach the savings goal of $210,000.
Learn more about annuities here: brainly.com/question/31852400
#SPJ11
A study of the consumption of beverages in Chile found that for soda "a price increase of 10% is associated with a reduction in consumption of 13.7%." Source: Carlos M. Guerrero-Lopez, Mishel Unar-Munguía, and M. Arantxa Colchero, "Price Elasticity of the Demand for Soft Drinks, Other Sugar-Sweetened Beverages and Energy Dense Food in Chile," BMC Public Health, Vol. 17, February 2017, p. 180. Given this information, the price elasticity of demand for soda in Chile is enter your response here. (Enter your response rounded to two decimal places. Use a negative sign if you are entering a negative number.)Source: Karen W. Arenson, "At Universities, Plum Post at Top Is Now Shaky," New York Times, January 9, 2007. Part 2 The price elasticity of demand for Pace University for the fall of 2006 is enter your response here. (Hint: include the negative sign and enter your response rounded to two decimal places.)
The price elasticity of demand for soda in Chile is -1.37. The price elasticity of demand for Pace University for the fall of 2006 is unknown.
Price elasticity of demand measures the responsiveness of the quantity demanded of a good to changes in its price. In this case, the study conducted in Chile found that for soda, a 10% increase in price resulted in a reduction in consumption by 13.7%. This information allows us to calculate the price elasticity of demand for soda in Chile.
The formula for price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. Using the given information, we can calculate it as follows:
Price elasticity of demand = (% change in quantity demanded) / (% change in price)
Given that a price increase of 10% leads to a reduction in consumption of 13.7%, we can calculate the percentage change in quantity demanded as (-13.7%)/100% = -0.137. Similarly, the percentage change in price is 10%/100% = 0.1. Plugging these values into the formula, we get:
Price elasticity of demand = (-0.137) / (0.1) = -1.37
Therefore, the price elasticity of demand for soda in Chile is -1.37, rounded to two decimal places. This means that a 1% increase in price leads to a 1.37% decrease in the quantity demanded of soda in Chile.
Learn more about elasticity
brainly.com/question/30999432
#SPJ11
A bank charges you an APR of 8% on its loan, but compounds interest monthly. What is the effective annual rate on this loan?
Group of answer choices
8.16%
8.30%
8.24%
8.33%
A bank charges you an APR of 8% on its loan, but compounds interest monthly. The effective annual rate on this loan is 8.30%.
APR is Annual Percentage Rate. It refers to the annual rate of interest charged to borrowers and paid to investors. It is calculated based on the principal amount and any additional fees and charges on the loan. Therefore, it is a better way to compare loans with different interest rates and terms.
The effective annual rate refers to the actual annual rate of interest that the borrower will pay on a loan after accounting for the effects of compounding. It is calculated as follows;
EAR = (1 + r/n)n - 1
Where, r is the nominal interest rate, and n is the number of compounding periods per year
In this case, the APR is 8%, and interest is compounded monthly.
Therefore, the monthly interest rate is 8%/12 = 0.67%
EAR = (1 + 0.08/12)12 - 1
EAR = 8.30%
Therefore, the effective annual rate on this loan is 8.30%.
To know more about the loan, visit:
https://brainly.com/question/32570287
#SPJ11
The dollar store and family dollar profitably focus on buyers with modest means with their market offerings. this is an example of?
The statement "The dollar store and Family Dollar profitably focus on buyers with modest means with their market offerings" is an example of targeting a specific market segment.
In marketing, market segmentation is the process of dividing a broad market into smaller, more manageable segments based on certain characteristics or needs.
In this case, the dollar store and Family Dollar are targeting buyers with modest means. This means that their products and pricing are designed to appeal to individuals who have a limited budget or lower income. By specifically targeting this segment, these stores are able to tailor their offerings to meet the needs and preferences of these customers.
The dollar store and Family Dollar are able to attract and retain customers with modest means by offering a range of products at affordable prices. They typically sell a variety of everyday items such as household supplies, groceries, personal care products, and even some clothing items, all at discounted prices.
By offering these products at lower prices, they are able to cater to the needs of customers who may not have the financial means to shop at higher-end retailers.
Additionally, the dollar store and Family Dollar often have convenient locations, making it easier for customers with modest means to access their stores. This accessibility further enhances their appeal to this specific market segment.
Overall, the dollar store and Family Dollar's focus on buyers with modest means is a strategic approach that allows them to target a specific market segment and offer products that are affordable and accessible to customers who may have limited financial resources.
For more such question on market segment visit:
https://brainly.com/question/14225381
#SPJ8
Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.29 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,651,000 in annual sales, with costs of $629,000. If the tax rate is 23 percent, what is the OCF for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
OCF
Year 0 - Cash outflow for the investment is -$2,290,000. Year 1 - Operating cash flow is $976,981.33. Year 2 - Operating cash flow is $976,981.33.
Given,
Initial fixed asset investment = $2.29 million
Depreciated straight-line to zero over its three-year tax life
Annual sales = $1,651,000
Costs = $629,000
Tax rate = 23%
We can calculate the OCF for this project as follows:
Year 0
Cash outflow for the investment = -$2,290,000
Year 1
Depreciation = (Initial Fixed Asset Investment - Salvage value) / Useful life
Depreciation = (2,290,000 - 0) / 3 = $763,333.33
Earnings before interest and taxes (EBIT) = Sales - Costs - Depreciation
EBIT = 1,651,000 - 629,000 - 763,333.33
= $258,666.67
Taxes = Tax rate × (Sales - Costs - Depreciation - Interest)
Taxes = 23% × (1,651,000 - 629,000 - 763,333.33 - 0)
= $46,018.67
Operating cash flow (OCF) = EBIT + Depreciation - Taxes
OCF = 258,666.67 + 763,333.33 - 46,018.67
= $976,981.33
Year 2
Depreciation = (Initial Fixed Asset Investment - Salvage value) / Useful life
Depreciation = (2,290,000 - 0) / 3 = $763,333.33
Earnings before interest and taxes (EBIT) = Sales - Costs - Depreciation
EBIT = 1,651,000 - 629,000 - 763,333.33 = $258,666.67
Taxes = Tax rate × (Sales - Costs - Depreciation - Interest)
Taxes = 23% × (1,651,000 - 629,000 - 763,333.33 - 0) = $46,018.67
Operating cash flow (OCF) = EBIT + Depreciation - Taxes
OCF = 258,666.67 + 763,333.33 - 46,018.67 = $976,981.33
To know more about investment visit :
https://brainly.com/question/15105766
#SPJ11
A deposit of X is made a year from now, a second deposit of 2X is made at the end of year 4, and a deposit of (X/2) is made at the end of year 6. What is the amount of X if the goal is to empty the account? Use 6% interest
The value of X in the given problem is 7376.84
The question describes a problem related to periodic deposits with compound interest. A deposit of X is made a year from now, a second deposit of 2X is made at the end of year 4, and a deposit of (X/2) is made at the end of year 6. The interest rate provided is 6%.
The idea is to calculate the value of X that would empty the account. In order to solve the problem, the following formula will be applied:
P = (R / i) * [1 - (1 + i)^-n]
Where, P = Present value of future deposits
R = Total amount of deposits
i = Interest rate
n = Number of deposits
The total amount of deposits, in this case, is X + 2X + X/2 = (5/2)X
The interest rate is given as 6% or 0.06
The number of deposits is 3. Therefore, n = 3
Substituting the values into the formula, we get:
P = [(5/2)X / 0.06] * [1 - (1 + 0.06)^-3]
P = 7376.84
Hence, the value of X in the given problem is 7376.84.
Learn more about Present value of future deposits: https://brainly.com/question/28811622
#SPJ11
1. An analyst has collected the following information regarding Christopher Co .: The company's capital structure is 70 percent equity, 30 percent debt. The yield to maturity on the company's bonds is 5 percent. The company's year-end dividend (D_{1}) is forecasted to be $ 1.0 a share. The company expects that its dividend will grow at a constant rate of 7 percent a year . The company's stock price is $25. The company's tax rate is 40 percent . The company anticipates that it will need to raise new common stock this year. Its investment bankers anticipate that the total flotation cost will equal 10 percent of the amount issued. Assume the company accounts for flotation costs by adjusting the cost of capital Given this information, calculate the company's WACC
2. Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Rollins' beta is 1.7 the risk-free rate is 5 percent, and the market risk premium is 4 percent. Rollins is a constant-growth firm which just paid a dividend of $2.00, sells for $ 34 per share, and has a growth rate of 7 percent. The firm's policy is to use a risk premium of 4 percentage points when using the bond- yield-plus-risk-premium method to find r_{s} The firm's marginal tax rate is 38 percent. What is Rollins cost of equity when using the CAPM approach (aka SML equation)? Express your answer in percentage (without the % sign ) and round it to two decimal places.
1. Calculating the company's WACC Given, Equity = 70%Debt = 30%Yield to maturity on the company's bonds = 5%Dividend (D1) = $1.0Dividend growth rate = 7%Stock price = $25Tax rate = 40%Flotation cost = 10%Flotation cost will be adjusted So, Total Cost of New Common Stock = (1 + 10%) × Cost of New Common StockNew Common Stock = $25
I. Cost of Equity Equity will be the part where flotation cost adjustment is not necessary.So,Re = [D1 / P0] + gRe = [$1.0 / $25] + 7%Re = 11%
II. Cost of DebtPre-tax Cost of DebtKd = Yield to maturity on the company's bonds(1 - Tax rate)Kd = 5%(1 - 40%)Kd = 3%After-tax Cost of DebtKd (1 - Tax rate) = 3%(1 - 40%)Kd = 1.8%
III. Weighted Average Cost of CapitalWACC = [(%E / 100) × Re] + [(%D / 100) × Kd]WACC = [70/100 × 11%] + [30/100 × 1.8%]WACC = 8.56%
2. Calculating Rollins Corporation's cost of equity using the CAPM approachGiven,Debt = 20%Preferred stock = 20%Common equity = 60%Beta = 1.7Risk-free rate (rf) = 5%Market risk premium (RPM) = 4%Dividend = $2.00Price per share (Po) = $34Growth rate (g) = 7%Marginal tax rate = 38%
I. Cost of EquityUsing CAPM,re = rf + [β × RPM]re = 5% + [1.7 × 4%]re = 11.8%
II. Flotation Cost of Preferred Stock and New Common StockAs per the question, no flotation cost is associated with preferred stock.However, there is a flotation cost with common stock. So,To adjust flotation costTotal cost of New Common Stock = (1 + Flotation cost) × Cost of New Common StockCost of New Common Stock = Po = $34Flotation cost = 0.04 = 4%Total cost of New Common Stock = (1 + 4%) × $34Total cost of New Common Stock = $35.36
III. Weighted Average Cost of CapitalWACC = [(%D / 100) × Kd × (1 - T)] + [(%P / 100) × Kp] + [(%E / 100) × Re]Kd = Cost of DebtKp = Cost of Preferred StockRe = Cost of EquityD = 20%P = 20%E = 60%Kd (1 - T) = [5% × (1 - 38%)] = 3.1%Kp = $0 / $0 = 0%WACC = [(20/100) × 3.1%] + [(20/100) × 0%] + [(60/100) × 11.8%]WACC = 8.54%
Therefore, the company's WACC in the first question is 8.56% and Rollins Corporation's cost of equity using the CAPM approach (aka SML equation) in the second question is 11.8% (rounded to two decimal places).
To know more about Cost visit:
https://brainly.com/question/14566816
#SPJ11
If the cost of a resource used to produce a good increases state what will happen to each of the following: aggregated supply will shift to the ____________ the price level will _______ and real GDP will _____________ . 2. State what will happen to the level of investment in each of the following: interest rates increase ________ , the rate of capacity utilization increases___________, and the cost of capital decreases _____________. 3. State what will happen to the level of net exports in each of the following: the United States dollar appreciates relative to another currency ____________, foreign income decreases ______________, prices in the United States increase ____________ . 4. State what will happen to the level of consumption in each of the following: income taxes on households increase ___________, household income increases _____________, and wealth decreases ____________ . 5. State 3 effects that will cause movement on or along the aggregate demand curve. 1. _______________ 2. _______________ 3. _______________ 6. In the long run the aggregate supply is vertical, which represents _________ real Gross Domestic Product (GDP). 7. State 3 determinants that will cause the aggregate supply curve to shift. 1. __________________ 2. __________________ 3. __________________ 8. If aggregate demand increases and the economy is operating in the short run region of the aggregate supply curve what will happen to the price level ___________ and real GDP ___________ ? 9. If aggregate demand increases and the economy is operating in the long run region of the aggregate supply curve what will happen to the price level ___________ and real GDP ___________ ? 10. What determines the equilibrium price level and the level of real GDP? ________________
Aggregate supply will shift to the left. The price level will increase. Real GDP will decrease. If interest rates increase the level of investment may decrease. If the United States dollar appreciates relative to another currency, net exports will decrease.
1. If the cost of a resource used to produce a good increase:
- Aggregate supply will shift to the left. This means that producers will supply a lower quantity of goods and services at every price level.
- The price level will increase. As production costs rise, producers will pass on the increased costs to consumers through higher prices.
- Real GDP will decrease. With a decrease in aggregate supply, the economy will produce and supply a lower quantity of goods and services, resulting in a decrease in real GDP.
2. Level of investment:
- If interest rates increase, the level of investment may decrease. Higher interest rates increase the cost of borrowing, which can discourage businesses from undertaking new investments.
- If the rate of capacity utilization increases, it may signal a need for additional investments. Higher capacity utilization suggests that existing resources are being fully utilized, and businesses may need to invest in expanding their capacity to meet increased demand.
- If the cost of capital decreases, it may incentivize businesses to increase their investments. Lower capital costs can make investment projects more financially viable, encouraging businesses to undertake new investment activities.
3. Level of net exports:
- If the United States dollar appreciates relative to another currency, it becomes more expensive for foreign buyers to purchase U.S. goods and services. This can lead to a decrease in net exports.
- If foreign income decreases, it can result in reduced demand for imports from the United States, leading to a decrease in net exports.
- If prices in the United States increase, it can make U.S. goods and services relatively more expensive compared to foreign alternatives, potentially decreasing exports and increasing imports, thus leading to a decrease in net exports.
4. Level of consumption:
- If income taxes on households increase, households will have less disposable income available for consumption, which can lead to a decrease in consumption.
5. Three effects causing movement on or along the aggregate demand curve:
1. Changes in consumer spending: Consumer confidence, disposable income, and wealth can affect consumer spending, leading to shifts in aggregate demand.
2. Changes in investment spending: Business expectations, interest rates, and access to credit can influence investment decisions, resulting in shifts in aggregate demand.
6. In the long run, the aggregate supply is vertical, which represents the potential or full-employment level of real Gross Domestic Product (GDP). In the long run, the economy operates at its maximum sustainable output level, determined by factors such as the availability of resources, technology, and the size of the labor force.
7. Three determinants causing shifts in the aggregate supply curve:
1. Changes in resource prices: If the cost of inputs, such as labor, raw materials, or energy, changes, it can affect production costs and shift the aggregate supply curve.
2. Changes in technology: Technological advancements can increase productivity and shift the aggregate supply curve outward.
8. If aggregate demand increases and the economy is operating in the short-run region of the aggregate supply curve, the price level will increase, and real GDP will increase as well.
9. If aggregate demand increases and the economy is operating in the long-run region of the aggregate supply curve, the price level will increase, but real GDP will remain unchanged. In the long run, the economy's output is determined by its productive capacity, and any increase in aggregate demand will only lead to inflationary pressures and higher prices, without affecting the level of real GDP.
10. The equilibrium price level and the level of real GDP are determined by the intersection of the aggregate demand (AD) and aggregate supply (AS) curves. The point where AD and AS intersect represents the equilibrium level of output (real GDP) and the corresponding price level.
Learn more about the investment here:
https://brainly.com/question/27994820
#SPJ11
Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of $3.00 yesterday. Bahnsen's dividend is expected to grow at 7% per year for the next 3 years. If you buy the stock, you plan to hold it for 3 years and then sell it. The appropriate discount rate is 13%.
a. Find the expected dividend for each of the next 3 years; that is, calculate D1, D2, and D3. Note that Do= $3.00. Do not round intermediate calculations.
Round your answers to the nearest cent.
D₁ = $
3.21
D₂ = $ 3.43
D3 = $
3.68
b. Given that the first dividend payment will occur 1 year from now, find the present value of the dividend stream; that is, calculate the PVs of D1, D2, and D3, and then sum these PVs. Do not round intermediate calculations, Round your answer to the nearest cent.
2.84
c. You expect the price of the stock 3 years from now to be $65.54; that is, you expect Ps to equal $65.54. Discounted at a 13% rate, what is the present value of this expected future stock price? In other words, calculate the PV of $65.54. Do not round intermediate calculations. Round your answer to the nearest cent.
$
d. If you plan to buy the stock, hold it for 3 years, and then sell it for $65.54, what is the most you should pay for it today? Do not round intermediate calculations. Round your answer to the nearest cent.
e. Use equation below to calculate the present value of this stock.
Po
Do(1+) D₁
Assume that g7% and that it is constant. Do not round intermediate calculations. Round your answer to the nearest cent.
$
f. Is the value of this stock dependent upon how long you plan to hold it? In other words, if your planned holding period was 2 years or 5 years rather than 3 years, would this affect the value of the stock today,
a. The expected dividend for each of the next 3 years are $3.21, $3.43 and $3.68, respectively.
b. The sum of the present value of D1, D2 and D3 is $8.05
c. The present value of the expected future stock price is $41.04
d. The most you should pay for the stock today is $49.09
e. The present value of the stock given the equation is $53.50
f. Yes, the value of the stock is dependent on how long you plan to hold it.
How to calculate dividend
To calculate expected dividends for each of the next 3 years, use the formula:
Year1
D1 = Do × (1 + g)
= $3.00 × (1 + 0.07) = $3.21
Year2
D2 = D1 × (1 + g)
= $3.21 × (1 + 0.07) = $3.43
Year3
D3 = D2 × (1 + g)
= $3.43 × (1 + 0.07) = $3.68
The present value of the dividend stream can be calculated as follows:
PV(D1) = D1 / (1 + r)
= $3.21 / (1 + 0.13) = $2.84
PV(D2) = D2 / [tex](1 + r)^2[/tex]
= $3.43 / (1 + 0.13)^2 = $2.67
PV(D3) = D3 / [tex](1 + r)^3[/tex]
= $3.68 / (1 + 0.13)^3 = $2.54
PV of dividend stream = PV(D1) + PV(D2) + PV(D3)
= $2.84 + $2.67 + $2.54
= $8.05
The present value of the expected future stock price can be calculated as follows:
PV(Ps) = Ps / [tex](1 + r)^3[/tex]
= $65.54 / [tex](1 + 0.13)^3[/tex]
= $41.04
The most you should pay for the stock today is the sum of the present value of the dividend stream and the present value of the expected future stock price:
Po = PV of dividend stream + PV(Ps)
= $8.05 + $41.04
= $49.09
Using the constant-growth formula, we get:
Po D1 / (r - g)
= $3.21 / (0.13 - 0.07)
= $53.50
Yes, the value of the stock is dependent on how long you plan to hold it, as the longer you hold the stock, the more dividends you will receive and the higher the expected future stock price will be. This will result in a higher present value of the stock.
Learn more on Dividends on https://brainly.com/question/2960815
#SPJ1
Which of the following is not a disadvantage of a sole proprietorship? O Double taxation O Limited life O None of these O Unlimited liability O Difficulty raising capital The primary operating goal of the firm should be to O maximize the stock price over the long run. O maximize its expected EPS. O minimize the chance of losses. O maximize earnings of the firm's CEO. O maximize its expected total corporate income.
Any of the following are not drawbacks of a solo proprietorship. An individual manages and owns a solo proprietorship.
The advantages of a sole proprietorship include that they are simple to start, have full control, and have few legal requirements. In contrast, the disadvantages of a sole proprietorship include unlimited liability, limited life, and difficulty raising capital.
A disadvantage is something that makes it difficult for a person or thing to be successful. Since none of these options is a disadvantage of a sole proprietorship, it means that the correct answer is None of these.
Maximizing the stock price over the long term should be the company's main operational objective. The main operational objective of a firm is to maximize the stock price over the long term. The long-term optimization of stock price is supported by a number of secondary goals, including the maximization of predicted EPS, minimizing of risk of losses, maximization of CEO earnings, and maximization of anticipated overall corporate income.
To Know more about proprietorship.
https://brainly.com/question/32997613
#SPJ11
you just sold a house for $200000. you can invest the money at
5%/a compounded semiannually. how much could you withdraw every 6
months, starting in 6 months, for the next 20 years
The amount that can be withdrawn every 6 months for the next 20 years will be $8,265.29
To calculate the amount that can be withdrawn every 6 months for the next 20 years, we can use the formula for the future value of an annuity.
Given:
Principal Amount (Sale Price of the house): $200,000
Interest Rate per period: 5% (compounded semiannually)
Number of periods: 20 years (40 semiannual periods)
Future Value = Withdrawal Amount * [(1 + Interest Rate)^Number of Periods - 1] / Interest Rate
Withdrawal Amount = Future Value * (Interest Rate / [(1 + Interest Rate)^Number of Periods - 1])
Withdrawal Amount = $200,000 * (0.05 / [(1 + 0.05)^40 - 1])
Withdrawal Amount = $200,000 * (0.05 / [1.05^40 - 1])
Withdrawal Amount = $200,000 * (0.05 / [2.20800012 - 1])
Withdrawal Amount = $200,000 * (0.05 / 1.20800012)
Withdrawal Amount ≈ $8,265.29
To know more about Future Withdrawal Amount here: https://brainly.com/question/24213228
#SPJ11
Last year, the XYZ Corporation had issued 12.0% coupon (semi-annual), 30 year, AA-rated bonds with a face value of $1,000 to finance its business expansion. As of today, the market price of XYZ's bonds are $1,100. What is the current yield to maturity and how can the bonds be classified?
O94%, so those are discount bonds
O 12.5%, so these are discount bonds
O 10.9%, so these are discount bonds
O 9.4%, so these are premium bonds
10.9%
so these are premium bonds
The current yield to maturity of the XYZ Corporation is 10.9%. These bonds are premium bonds because the market price is above the face value. The bond has a semi-annual coupon payment of 12.0% and is 30 years long.
Current yield to maturity is the rate of return anticipated on a bond if it is held until maturity. It takes into account not only the interest income, but also the difference between the face value and the price paid for the bond. The current yield to maturity on the XYZ Corporation's 30-year bonds with semi-annual 12.0% coupons is 10.9%.This means that the bondholders will receive a return of 10.9% if the bonds are held until maturity, and this is based on the current market price of $1,100.
So, if you buy a bond at this price, you'll receive an annual return of $120 ($1,000 x 12.0% x 0.5), plus a capital gain of $100 ($1,100 - $1,000). Therefore, the total return will be $220. However, if you calculate the yield to maturity using the market price of $1,000, the return would only be 12%, since the bond would be selling at face value.The bond's classification as premium or discount depends on whether the bond is trading above or below its face value. Since the market price of the XYZ Corporation's bond is $1,100, which is above its face value of $1,000, these bonds are classified as premium bonds.
Premium bonds offer a lower yield than the coupon rate because you're paying more for the bond than its face value. Therefore, when you calculate the yield to maturity of a premium bond, the rate is lower than the coupon rate.
To know more about bond visit :
https://brainly.com/question/31994049
#SPJ11
Consider a European put option and a European call option on a $40 nondividend-paying stock. Both options have 6 months remaining and both have a $35 strike price. The risk-free interest rate is 5% CCAR. a. The market price of the put is $6. Calculate the no-arb price for the call. b. Which of the options is in-themoney? Which is out-of-the-money? Under the no-arb condition, is the call or the put more expensive? c. Describe the likely actions of an arbitrageur now and at time T if the quoted market price of the call is $9. d. Now as assume the quoted market price of the call is $9.00. Calculate the no-arb price of the put. e. Describe the likely actions of an arbitrageur now and at time T if the quoted market price of the put is $6.
The no-arb price of the call is given by, \[\text{Price of Call} = \text{Price of Put} + \text{Stock Price} - \text{Strike Price} \times {e}^{-rt}\]where, r = risk-free interest rate = 5%CCAR t = time to maturity of the options = 6/12 = 0.5 years Stock price = $40 Strike price = $35 Price of put = $6
Since the stock price ($40) is higher than the strike price ($35), the call option is in-the-money while the put option is out-of-the-money. Also, since the no-arb price of the call option (11.47) is higher than the market price of the call option ($9), the call option is cheaper while the put option is more expensive. An arbitrageur would buy the cheap call option and short the expensive put option to gain riskless profits.At time T, the arbitrageur would exercise the call option and sell the stock at the current price of $40, while simultaneously buying the put option and buying the stock at the strike price of $35.
Since the put option is more expensive than its no-arb price, it would give the arbitrageur a profit when they sell it at the market price of $6. The net profit to the arbitrageur would be $[(40 - 35) + 11.47 - 9 - 6] = $1.47. c.
The no-arb price of the put option can be calculated as follows,\[\text{Price of Put} = \text{Price of Call} - \text{Stock Price} + \text{Strike Price} \times {e}^{-rt}\]where, r = risk-free interest rate = 5%CCAR t = time to maturity of the options = 6/12 = 0.5 years Stock price = $40 Strike price = $35 Price of call = $9Substituting the given values, we get,\[\text{Price of Put} = 9 - 40 + 35 \times {e}^{-(0.05 \times 0.5)}\]\[\text{Price of Put} = 5.47\]Therefore, the no-arb price of the put option is $5.47.An arbitrageur would short the put option and buy the stock if the market price of the put option ($6) is higher than its no-arb price ($5.47). At time T, the arbitrageur would exercise the put option and sell the stock at the strike price of $35, while simultaneously buying the stock at the market price of $40. Since the market price of the put option is higher than its no-arb price, it would give the arbitrageur a profit when they short sell it at the market price of $6. The net profit to the arbitrageur would be $[(40 - 35) + 6 - 5.47] = $5.53.
To know more about no-arb price visit:
brainly.com/question/29856453
#SPJ11
Tanger Ltd.’S Outstanding Bonds Have $1000 Par Value And They Mature In 10 Years The Annual Yield To Maturity Is 8% However A Coupon Is Paid Semiannually And They Sell At A Price Of $1150.96 What Is The Bonds Annual Coupon Interest Rate
The bond's annual coupon interest rate is approximately 5.53%.
To find the annual coupon interest rate of the bonds, we can use the formula:
Annual Coupon Interest Rate = (Coupon Payment / Bond Price) * 100
Given that the bonds have a $1000 par value, mature in 10 years, and have a yield to maturity of 8%, we can calculate the coupon payment as follows:
Coupon Payment = (Par Value * Yield to Maturity) / Number of Coupon Payments per Year
Since the coupon is paid semiannually, the number of coupon payments per year is 2.
Coupon Payment = (1000 * 8%) / 2 = $40
Now, we can calculate the bond price as follows:
Bond Price = Present Value of Coupon Payments + Present Value of Face Value
Since the bond sells at a price of $1150.96, we can rearrange the formula to solve for the present value of the coupon payments:
Present Value of Coupon Payments = Bond Price - Present Value of Face Value
Present Value of Face Value = Face Value / (1 + Yield to Maturity/Number of Coupon Payments per Year)^(Number of Coupon Payments per Year * Number of Years)
Present Value of Face Value = 1000 / (1 + 8%/2)^(2 * 10) = $428.89
Now we can calculate the present value of the coupon payments:
Present Value of Coupon Payments = 1150.96 - 428.89 = $722.07
Finally, we can calculate the annual coupon interest rate:
Annual Coupon Interest Rate = (40 / 722.07) * 100 ≈ 5.53%
Therefore, the bond's annual coupon interest rate is approximately 5.53%.
Learn more about annual coupon interest rate here:
https://brainly.com/question/13553198?referrer=searchResults
#SPJ11
When it comes to the transparency of a fund's investment holdings, hedge funds typically provide greater transparency than ETFs and mutual funds.
True
False
The change in an ETF's value may not always be equal to the change in the benchmark it is attempting to mimic.
This is known as ____
True. Hedge funds typically provide less transparency compared to ETFs and mutual funds. Tracking error. The change in an ETF's value may not always be equal to the change in the benchmark it is attempting to mimic, resulting in a tracking error.
Hedge funds, ETFs (Exchange-Traded Funds), and mutual funds are all investment vehicles that offer different levels of transparency. While hedge funds are known for their limited transparency, ETFs and mutual funds generally provide more visibility into their investment holdings.
Hedge funds are often structured as private investment partnerships and are not required to disclose their holdings publicly. This lack of transparency allows hedge fund managers to maintain confidentiality and protect their proprietary investment strategies. On the other hand, ETFs and mutual funds are subject to regulations that require them to disclose their holdings regularly, providing investors with greater visibility into the assets they hold.
When it comes to tracking error, it refers to the discrepancy between the performance of an ETF and its underlying benchmark. Factors such as fees, transaction costs, and imperfect replication methods can cause the ETF's value to deviate from the benchmark. This tracking error highlights that an ETF's performance may not precisely mirror the exact movements of its benchmark index.
In summary, hedge funds offer limited transparency, while ETFs and mutual funds generally provide more visibility into their holdings. Additionally, tracking error can occur in ETFs, leading to deviations from the benchmark index they aim to replicate.
To know more about ETF's,
https://brainly.com/question/31858684#
#SPJ11
Lot-sizing can cause considerable distortion of requirements at lower levels of the BOM. O True O False
Lot-sizing can cause considerable distortion of requirements at lower levels of the BOM. is False.
Lot-sizing refers to the process of determining the quantity of items to be produced or ordered at a given time. While lot-sizing decisions can impact inventory levels and ordering patterns, they do not directly cause distortion of requirements at lower levels of the Bill of Materials (BOM). The BOM outlines the hierarchical structure of a product, showing the components and sub-components required for its assembly. Distortions in requirements at lower levels of the BOM can occur due to factors such as inaccurate demand forecasting, poor production planning, or changes in customer demand. Lot-sizing decisions, on the other hand, focus on finding the optimal quantity to order or produce, considering factors like production capacity, lead time, and cost. These decisions aim to balance inventory holding costs and ordering costs. They do not directly impact the accuracy of requirements at lower levels of the BOM. Therefore, the statement that lot-sizing can cause considerable distortion of requirements at lower levels of the BOM is false.
Learn more about lot-sizing here:
brainly.com/question/31723150
#SPJ11
You are evaluating an investment that will pay $75 in 1 year, and it will continue to make payments at annual intervals thereafter, but the payments will grow by 5% forever a. What is the present value of the first $75 payment if the discount rate is 85%? b. How much cash will this envestment pay 100 years from now? What is the present value of the 100th payment? Again use a 8% discount rate c. What is the present value of the entire growing stream of perpetual cash flows? d. Explain why the answers to parts a and b help to explain why an infinite stream of growing cash flows has a finde present value
a. The present value of the first $75 payment can be calculated using the formula for the present value of a growing perpetuity:
PV = C / (r - g),
where PV is the present value, C is the cash flow in the first period, r is the discount rate, and g is the growth rate.
In this case, C = $75, r = 85% (or 0.85), and g = 5% (or 0.05). Plugging in the values, we have:
PV = $75 / (0.85 - 0.05) = $75 / 0.8 = $93.75.
Therefore, the present value of the first $75 payment is $93.75.
The present value represents the value today of a future stream of cash flows, taking into account the time value of money and the discount rate. In this case, the high discount rate of 85% reflects a high level of risk or a low perceived value of future cash flows, resulting in a lower present value for the first payment.
b. To calculate the cash flow the investment will pay 100 years from now, we can use the formula for the future value of a growing perpetuity:
FV = C * (1 + g) / (r - g),
where FV is the future value, C is the cash flow in the first period, r is the discount rate, and g is the growth rate.
In this case, C = $75, r = 8% (or 0.08), and g = 5% (or 0.05). Plugging in the values, we have:
FV = $75 * (1 + 0.05) / (0.08 - 0.05) = $75 * 1.05 / 0.03 = $2,625.
Therefore, the investment will pay $2,625 in cash 100 years from now.
The future value represents the value of a present cash flow or investment after a certain period of time, taking into account compounding growth. In this case, the cash flow grows at a rate of 5% annually, resulting in a significantly larger payment after 100 years.
The answers to parts a and b demonstrate the impact of the discount rate on the present and future values of cash flows. A high discount rate leads to a lower present value, reflecting a greater discounting of future cash flows. On the other hand, a low discount rate results in a higher future value, as the growth in cash flows over time is given more weight. In the case of an infinite stream of growing cash flows, the present value is finite because the discount rate reduces the value of future cash flows to a point where it converges and stabilizes.
To know more about value visit :
https://brainly.com/question/25922327
#SPJ11
Clark needs to withdraw $24,000 per year for each of the next 17 years, with the first withdrawal occurring today. How much money does Clark need in his account right now in order to achieve his goal? Use a discount rate of 6% in your calculations. Enter your answer as a positive number rounded to the nearest dollar.
The amount of money Clark needs in his account right now, considering a discount rate of 6%, in order to achieve his goal of withdrawing $24,000 per year for the next 17 years, with the first withdrawal occurring today, is approximately $274,113.
To calculate the present value of future cash flows, we can use the formula for the present value of an annuity:
PV = CF * (1 - (1 + r)^(-n)) / r
Where:
PV = Present Value (amount needed in the account right now)
CF = Cash flow per period ($24,000 per year)
r = Discount rate (6% or 0.06)
n = Number of periods (17 years)
Using the formula:
PV = 24,000 * (1 - (1 + 0.06)^(-17)) / 0.06
≈ 24,000 * (1 - 0.40135) / 0.06
≈ 24,000 * 0.59865 / 0.06
≈ 274,113
Therefore, Clark needs approximately $274,113 in his account right now to achieve his goal of withdrawing $24,000 per year for the next 17 years, considering a discount rate of 6%.
learn more about cash flow here:
https://brainly.com/question/27994727
#SPJ11
which company is best to invest from NIKE and ADIDAS on the
basis of Gross Profit margin ratio and a current ratio and
inventory turnover ratio of 2021 data
Without specific data on the financial ratios of Nike and Adidas for 2021, it is not possible to determine which company is the better investment option based on the Gross Profit margin ratio.
The Gross Profit margin ratio, current ratio, and inventory turnover ratio are important financial indicators that provide insights into a company's profitability, liquidity, and inventory management efficiency, respectively.
To make an informed investment decision, it is crucial to compare these ratios between Nike and Adidas for 2021. The Gross Profit margin ratio indicates the profitability of each company, with a higher ratio generally being more favorable. The current ratio reflects the ability to meet short-term obligations, and a higher ratio suggests better liquidity. The inventory turnover ratio measures how efficiently a company manages its inventory, with a higher ratio indicating better inventory management.
By comparing these ratios for Nike and Adidas, investors can assess which company demonstrates stronger financial performance. However, without the specific data for these ratios in 2021, it is not possible to determine which company is the better investment option. Investors should conduct a detailed analysis of the companies' financial statements and consider other relevant factors before making an investment decision.
Learn more about financial here:
https://brainly.in/question/6768303
#SPJ11
List the
components or "building blocks" of market (nominal) interest
rates. Which of
these components would not apply to the rates on U.S. Government
securities, and why not?
The component that does not apply to the rates on U.S. Government securities is the default risk premium.
The components or "building blocks" of market (nominal) interest rates include:
Real interest rate: This is the baseline rate that reflects the true cost of borrowing or the return on investment, adjusted for inflation. It represents the compensation lenders or investors require for forgoing current consumption or other investment opportunities.
Inflation expectations: Anticipated changes in the general price level affect interest rates. Higher inflation expectations lead to higher interest rates to compensate for the erosion of purchasing power.
Risk premium: Investors demand an additional return to compensate for the riskiness of an investment. Riskier assets or borrowers tend to have higher interest rates.
Liquidity premium: Less liquid assets or markets may require higher interest rates to attract investors who value liquidity.
Default risk premium: Borrowers with a higher probability of defaulting on their obligations must pay higher interest rates to compensate lenders for the risk of non-payment.
To learn more about the risk premium
https://brainly.com/question/23969100
#SPJ8
Consider a T-bond with 23 years to maturity, 5% coupon, and $100M par value. What is the par value of a coupon STRIP in $ million?Round your answer to 1 decimal place. For example, if your answer is 5.56, please write down 5.6.
The par value of a coupon STRIP in $ million is $63.1 million (rounded to 1 decimal place).A T-bond is an US Treasury bond.
It is issued by the United States government and is considered to be one of the safest investments. A coupon STRIP is created by stripping the interest payments from a T-bond.The formula for calculating the par value of a coupon STRIP is:par value of coupon STRIP = coupon rate × par value of T-bond / (1 + yield-to-maturity/2)^(2 × years to maturity)The given T-bond has the following details:Years to maturity (n) = 23Coupon rate (C) = 5%Par value (F) = $100M.
Using these values, we can calculate the yield-to-maturity using a financial calculator or Excel, which turns out to be 3.823%.Now, substituting the values in the formula of par value of coupon STRIP, we get:par value of coupon STRIP = 5% × $100M / (1 + 3.823%/2)^(2 × 23)= 0.05 × $100M / (1 + 1.9115%)^46= $3.10445 millionThen, we can use the below formula to calculate the par value of coupon STRIP in $ million:par value of coupon STRIP in $ million = par value of coupon STRIP / $1 million= $3.10445 million / $1 million= $3.10445Therefore, the par value of a coupon STRIP in $ million is $3.1 million (rounded to 1 decimal place).
To know more about US Treasury bond. visit:
https://brainly.com/question/17218791
#SPJ11
Answer the following:
How can the effectiveness of project management office
(PMO) in an organization be measured?
Note: Include the section of Introduction, Body and
Conclusion.
The effectiveness of a The Project Management Office (PMO) plays a crucial role in the success of projects and the overall organizational performance. Measuring the effectiveness of a PMO is essential to ensure its alignment with organizational objectives and continuous improvement.
Introduction:
The Project Management Office (PMO) is a centralized department or unit within an organization that is responsible for overseeing and managing the organization's projects. Evaluating the effectiveness of a PMO is essential to ensure that it is delivering value and supporting successful project outcomes. In this context, measuring the effectiveness of a PMO becomes crucial to gauge its impact and identify areas for improvement. There are several key factors to consider when measuring the effectiveness of a PMO.
Body:
1. Project Success Metrics: One way to measure the effectiveness of a PMO is by evaluating the success of the projects it manages. This can include metrics such as project completion rates, meeting project objectives, staying within budget and timeline, and delivering expected benefits. By analyzing project performance against these metrics, the PMO's effectiveness in driving successful project outcomes can be assessed.
2. Stakeholder Satisfaction: Another important measure of a PMO's effectiveness is stakeholder satisfaction. This involves gathering feedback from project stakeholders, including project managers, team members, executives, and clients, to assess their satisfaction with the PMO's support, guidance, and services. Surveys, interviews, and feedback mechanisms can be employed to gather stakeholders' perceptions and identify areas for improvement.
3. Process Improvement: Assessing the PMO's effectiveness in improving project management processes is crucial. This can be measured by evaluating the implementation and adoption of standardized project management methodologies, tools, and templates. The PMO's ability to streamline processes, enhance communication and collaboration, and promote best practices can be measured through process adherence, efficiency gains, and reduction in project risks.
4. Resource Optimization: The effectiveness of a PMO can also be measured by its ability to optimize resources. This includes evaluating the PMO's capacity to allocate resources efficiently, manage project portfolios, and optimize resource utilization across projects. Metrics such as resource allocation accuracy, resource utilization rates, and project portfolio optimization can be used to assess the PMO's impact on resource management.
Conclusion:
Measuring the effectiveness of a PMO is crucial for organizations to ensure its value and impact on project management practices. By considering project success metrics, stakeholder satisfaction, process improvement, and resource optimization, organizations can gain insights into the PMO's effectiveness and identify areas for enhancement. Regular evaluation and monitoring of these measures can help organizations continuously improve their PMO's performance and align it with strategic objectives.
Learn more about the The Project Management Office (PMO) here:
brainly.com/question/14687567
#SPJ11
An variable rate investment pays $400 in 1 year, $789.70 in the second year and $500 in the third year. What is the present value of the cash flows at a 6% discount rate?
The present value of the cash flows, considering a discount rate of 6%, for the variable rate investment that pays $400 in the first year, $789.70 in the second year, and $500 in the third year, is approximately $1,552.06.
To calculate the present value, we need to discount each cash flow to its present value using the discount rate. The present value of each cash flow can be calculated using the formula:
PV = CF / (1 + r)^n
Where PV represents the present value, CF is the cash flow, r is the discount rate, and n is the time period.
Using the given cash flows and the discount rate, we can calculate the present value of each cash flow:
PV1 = $400 / (1 + 0.06)^1 ≈ $377.36
PV2 = $789.70 / (1 + 0.06)^2 ≈ $701.33
PV3 = $500 / (1 + 0.06)^3 ≈ $473.37
Next, we sum up the present values of all cash flows:
PV = PV1 + PV2 + PV3
= $377.36 + $701.33 + $473.37
≈ $1,552.06
Learn more about discount rate here:
https://brainly.com/question/13660799
#SPJ11
If a price ceiling is set above the equilibrium price in a competitive market then we will see A. that economic surplus is minimized. B. that economic surplus is maximized. C. a deadweight loss. D. a deadweight gain for consumers. E. excess supply.
A price ceiling above the equilibrium price leads to excess demand and a deadweight loss, reducing economic efficiency. The correct answer is C.
A price ceiling is a legal maximum price that is set by the government on goods and services that are sold in the market. In a competitive market, where supply and demand interact freely, the equilibrium price is established by the market forces, where the quantity supplied is equal to the quantity demanded. If a price ceiling is set above the equilibrium price in a competitive market, we will see a deadweight loss.A deadweight loss is the loss of economic efficiency that arises when the equilibrium for a good or service is not achieved. It is the excess burden that is caused by the price ceiling, where the quantity demanded exceeds the quantity supplied, creating excess demand or shortage, and a deadweight loss.When the price ceiling is set above the equilibrium price, the consumers are willing to buy more than the producers are willing to supply at that price. This results in excess demand, which is greater than the quantity that can be supplied. As a result, some consumers will be unable to obtain the goods or services that they desire, while the producers will not be able to sell as much as they would like to. This leads to a deadweight loss, where the economic surplus is minimized. Therefore, the correct answer is C. a deadweight loss.For more questions on equilibrium price
https://brainly.com/question/28945352
#SPJ8