Given that the equipment's initial purchase price of $10 million has already been fully depreciated. Kennedy may currently resell the secondhand machinery for $1.3 million, with a 20% tax rate.
The formula for calculating after-tax net salvage value is as follows: After-tax net salvage value = (Net salvage value) - (Tax on gain)Net salvage value = Sale price - Book value Here, Sale price = $1. 3 million Book value = 0 (since 100�preciation has been done)
Hence, Net salvage value = $1.3 million - $0 = $1.3 million Tax on gain = (Sale price - Book value) x Tax rate= ($1.3 million - $0) x 0.20= $1.3 million x 0.20 = $260,000The after-tax net salvage value is therefore calculated as follows: Net salvage value - Tax on gain ($1.3 million - $260,000 = $1,040,000).
To Know more about purchase price
https://brainly.com/question/27796445
#SPJ11
A large cap equity portfolio has a mean return of 11% and a standard deviation of returns of 18%. Assuming returns are normally distributed, what is the probability that next year's return will be less than or equal to −7% ? Enter answer as percentage, to two decimal places.
Given mean return of a large cap equity portfolio is 11% and standard deviation is 18%Then, we are to find the probability of the next year's return being less than or equal to -7%.
This is a normal distribution and we can calculate the probability of next year's return being less than or equal to -7% as follows: Z score = (X - μ) / σZ score = (-7 - 11) / 18Z score = -1
Probability of Z score = 0.1587 (from standard normal distribution table)
Therefore, the probability of next year's return being less than or equal to -7% is 0.1587 which is equivalent to 15.87% (to two decimal places).
Hence, the answer is 15.87%.
To know more about standard visit:
https://brainly.com/question/31979065
#SPJ11
Consider the following project. Using Discounted Payback Period method (10% rate), how long will it take to recover the investment?
Investment
Profit
1100l
-4000
0
1
2
1100
1100
Year
3
4
5
6
1100
1100
1100
3.36 years
4.25 years
3.64 years
04.75 years
To calculate the discounted payback period for the given project, we need to consider the cash flows and discount them to their present value using the given discount rate of 10%. Here is the calculation:
Year 0: Investment = -$4000 (outflow)
Year 1: Profit = $1100 (inflow) discounted to Year 0 = $1000 [1100 / (1 + 0.10)^1]
Year 2: Profit = $1100 (inflow) discounted to Year 0 = $826.45 [1100 / (1 + 0.10)^2]
Year 3: Profit = $1100 (inflow) discounted to Year 0 = $751.32 [1100 / (1 + 0.10)^3]
Year 4: Profit = $1100 (inflow) discounted to Year 0 = $683.02 [1100 / (1 + 0.10)^4]
Year 5: Profit = $1100 (inflow) discounted to Year 0 = $620.92 [1100 / (1 + 0.10)^5]
Year 6: Profit = $1100 (inflow) discounted to Year 0 = $564.47 [1100 / (1 + 0.10)^6]
Now we calculate the cumulative discounted cash flows:
Cumulative cash flow at Year 0: -$4000
Cumulative cash flow at Year 1: -$4000 + $1000 = -$3000
Cumulative cash flow at Year 2: -$3000 + $826.45 = -$2173.55
Cumulative cash flow at Year 3: -$2173.55 + $751.32 = -$1422.23
Cumulative cash flow at Year 4: -$1422.23 + $683.02 = -$739.21
Cumulative cash flow at Year 5: -$739.21 + $620.92 = -$118.29
Cumulative cash flow at Year 6: -$118.29 + $564.47 = $446.18
The discounted payback period is the time it takes for the cumulative discounted cash flows to become positive. In this case, the discounted payback period falls between Year 5 and Year 6. To determine the exact year, we can interpolate:
Discounted payback period = Year 5 + (Positive cash flow in Year 5 / Positive cash flow in Year 6)
Discounted payback period = 5 + ($118.29 / $564.47) = 5 + 0.2096 ≈ 5.21 years
Therefore, using the discounted payback period method with a 10% discount rate, it will take approximately 5.21 years to recover the investment.
To know more about investment, visit
https://brainly.com/question/15105766
#SPJ11
Question 12 Which of the following is a specific, measurable, attainable, relevant, and timely (SMART) goal? Start saving early in life to save enough to reach the goal. Begin saving today to reach future goals. Retire at age 67 in Florida with an annual income of $80,000. Have a retirement income from personal savings, Social Security, and retirement plan assets.
The goal to retire at age 67 in Florida with an annual income of $80,000, supported by personal savings, Social Security, and retirement plan assets, meets the criteria of a SMART goal.
The goal "Retire at age 67 in Florida with an annual income of $80,000, having a retirement income from personal savings, Social Security, and retirement plan assets" is a specific, measurable, attainable, relevant, and timely (SMART) goal.
Specific: The goal clearly states the desired outcome of retiring at a specific age (67) in a specific location (Florida) with a specific annual income ($80,000).
Measurable: The goal includes a specific financial target ($80,000 annual income) that can be objectively measured and tracked.
Attainable: The goal is achievable as it aligns with a common retirement age (67) and specifies the desired income based on personal savings, Social Security, and retirement plan assets.
Relevant: The goal is relevant to the individual's retirement planning, as it focuses on securing a comfortable retirement income to support their lifestyle.
Timely: The goal sets a specific timeframe for achieving retirement at age 67, indicating the importance of starting the planning and saving process early to ensure sufficient funds are accumulated.
In conclusion, the goal to retire at age 67 in Florida with an annual income of $80,000, supported by personal savings, Social Security, and retirement plan assets, meets the criteria of a SMART goal.
To learn more about retirement plan
https://brainly.com/question/20475582
#SPJ8
i)
At what annual interest rate, compounded annually, would
$510 have to be invested for it to grow to $1,991.69 in 14
years?
Question content area bottom
Part 1
The annual interest rate, compounded annually, at which$510
must be invested for it to grow to
$1,991.69
in 14
years is
enter your response here%.
(Round to two decimal places
To find the annual interest rate, compounded annually, at which$510 must be invested for it to grow to $1,991.69 in 14 years, we can use the formula for compound interest which is given by.
A = P(1 + r/n)^(n*t)Where:
A = amountP
= principalr
= annual interest raten
= number of times interest is compounded per yeart
= number of yearsFrom the given question:Initial amount invested, P
= $510Amount after 14 years, A
= $1991.69Number of years, t
= 14Now we need to find the annual interest rate, r compounded annually.Let's substitute the values into the formula and solve for r:A = P(1 + r/n)^(n*t)1991.69
= 510(1 + r/1)^(1*14)1991.69/510
= (1 + r)^141.97/510
= (1 + r)^14Taking the 14th root on both sides:(14.97/510)^(1/14)
= 1 + r0.02589
= 1 + rr
= 0.02589 - 1r
= -0.9741The value of r is negative which means the money is decreasing. This implies that there is some error in the given question. Please check and verify the question.
To know more about formula visit:
https://brainly.com/question/20748250
#SPJ11
Elon Tusk has a $100 million stock portfolio with a beta of 1.8. Mr. Tusk would like to use futures contracts on a stock index to hedge his portfolio risk, and make market risk (portfolio beta) as low as possible. The relevant stock index futures price is currently trading at 3,950 and the contract multiplier is $50 per point. What is the hedge that minimizes Mr. Tusk's stock portfolio risk?
Group of answer choices
Go long 312 stock index futures contracts
Go long 506 stock index futures contracts
Go long 911 stock index futures contracts
Go short 312 stock index futures contracts
Go short 506 stock index futures contracts
Go short 911 stock index futures contracts
Option (f), Mr. Tusk needs to go long 911 stock index futures contracts to minimize the risk in his stock portfolio. Hence, the correct option is Go long 911 stock index futures contracts.
h
We are given the following information:
Beta of the portfolio, βp = 1.8
Value of the stock index futures price, F = $3,950
Contract multiplier, c = $50 per point
We have to find the hedge that minimizes Mr. Tusk's stock portfolio risk.
We know that the formula for the number of futures contract that we need to use for hedging is:
Nf = (βp × Vp) / (c × F)
Where Nf is the number of futures contracts needed to hedge the portfolio,
Vp is the value of the portfolio,
βp is the beta of the portfolio,
F is the futures price, and c is the contract multiplier.
From the given information:
Value of the portfolio, Vp = $100 million
Number of futures contracts needed to minimize the portfolio risk:
Nf = (βp × Vp) / (c × F)
= (1.8 × $100,000,000) / ($50 × 3,950)
≈ 911.39
Learn more about Beta of the portfolio: https://brainly.com/question/18760065
#SPJ11
What is the profitability index of a project that has an initial cash outflow of $600, an inflow of $250 for the next 3 years and a cost of capital of 10 percent?
The profitability index of the project, considering an initial cash outflow of $600, inflows of $250 for the next 3 years, and a cost of capital of 10 percent, is approximately 1.037.
The profitability index is a financial metric used to assess the profitability of an investment project. It is calculated by dividing the present value of cash inflows by the present value of cash outflows. In this case, the initial cash outflow is $600, and there are inflows of $250 for each of the next 3 years. To calculate the present value of cash flows, we need to discount them using the cost of capital, which is 10 percent.
The present value of the inflows can be calculated using the formula:
Present Value = Cash Inflow / (1 + Cost of Capital)^n
Calculating the present value of each inflow and summing them gives us:
Present Value of Inflows = $250 / (1 + 0.10)^1 + $250 / (1 + 0.10)^2 + $250 / (1 + 0.10)^3
= $227.27 + $206.61 + $187.83
= $621.71
The profitability index is then calculated as:
Profitability Index = Present Value of Inflows / Initial Cash Outflow
= $621.71 / $600
≈ 1.037
Therefore, the profitability index of the project is approximately 1.037, indicating that the project has a positive value and is expected to generate a return higher than the cost of capital.
Learn more about profitability : brainly.com/question/29987711
#SPJ11
Which of the following is not one of the major divisions of the top 3 music companies sales recorded music publishing distribution
Sales are not one of the major divisions of the top 3 music companies.
The top 3 music companies, also known as the major labels, primarily operate in three major divisions: recorded music, publishing, and distribution. These divisions encompass different aspects of the music industry.
Recorded Music: This division focuses on the production, marketing, and distribution of recorded music. It includes signing and managing artists, recording and producing music, and promoting and distributing albums and singles.
Publishing: The publishing division is responsible for managing the copyrights and licensing of musical compositions. It involves publishing and administering the rights of songwriters and composers, collecting royalties, and granting licenses for the use of music in various media.
Distribution: The distribution division handles the physical and digital distribution of music products. It includes managing relationships with retailers, coordinating logistics for physical product shipments, and delivering music to digital platforms and streaming services.
Sales, although an essential component of the music industry, is not considered a distinct major division of the top 3 music companies. Instead, sales activities are typically integrated within the recorded music and distribution divisions, as they involve marketing and selling music products to consumers.
Learn more about sales here:
https://brainly.com/question/29436143
#SPJ11
1. You are a recent Berkeley College graduate and you are working in the accounting department of Macy’s. Next week, you are required to attend an inventory meeting for the store located in the Paramus Park mall. You know this store well because you shop there frequently. One of the managers of the store feels that the men’s shoe department is unprofitable because the selection is poor, there are few sizes available, and there just aren’t enough shoes. The manager is pushing for a very large shoe inventory to make the department more desirable to shoppers and therefore more profitable. Explain in this discussion why it is good or bad to have a large inventory of shoeS
It is good to have a large inventory of shoes if there is a high demand for shoes in the store. This is because a larger inventory can ensure that customers can find the shoes they are looking for in the store.
If customers can find what they need in the store, they are more likely to make a purchase and be satisfied with their shopping experience. This can lead to increased sales and profitability for the store. However, having a large inventory of shoes can also be bad if there is not enough demand for shoes in the store. This is because a large inventory can tie up a lot of the store's cash in inventory that is not selling. This can lead to cash flow problems and decreased profitability for the store. Additionally, if the shoes are not selling, the store may be forced to discount them to move the inventory, which can lead to decreased margins and profitability.
Therefore, before increasing the shoe inventory in the store, it is important to determine whether there is a demand for shoes in the store. This can be done by analyzing sales data and customer feedback. If there is a demand for shoes, a larger inventory can be beneficial. However, if there is not a demand for shoes, it may be better to focus on improving the selection and availability of other products in the store.
To know more about the demand, visit:
https://brainly.com/question/18550230
#SPJ11
A marketing manager wants an attractive packing for brand of toothpaste. The research advisor is suggesting a research using an experimental research design, the marketing manager wonders whether a research is required for this, and if so, is an experimental research design suitable for this purpose.
Questions: (a) How would you advice the marketing manager?
Yes, research is necessary, and a combination of qualitative and quantitative methods would be more suitable than an experimental research design for studying toothpaste packaging attractiveness.
I would advise the marketing manager that conducting research is indeed necessary for developing an attractive packaging for their brand of toothpaste. Research can provide valuable insights into consumer preferences, help identify trends in the market, and guide the decision-making process.
By understanding what attracts consumers and influences their purchasing decisions, the marketing manager can optimize the packaging design to maximize its appeal.
Regarding the suitability of an experimental research design, it may not be the most appropriate approach for studying packaging attractiveness. Experimental research typically involves manipulating variables and measuring their impact on an outcome.
However, in the context of packaging design, it might be challenging to manipulate variables in a controlled environment. Additionally, conducting experiments might be costly and time-consuming.
Instead, the marketing manager could consider utilizing a mix of qualitative and quantitative research methods. Qualitative research, such as focus groups or interviews, can provide rich insights into consumer perceptions and preferences regarding toothpaste packaging. These methods can help identify key themes and generate ideas for packaging design.
Once the qualitative data is collected, quantitative research can be employed to validate and quantify the findings. Surveys or questionnaires can be administered to a larger sample size to gather data on consumer preferences, rank different design options, and measure the impact of specific packaging elements on attractiveness.
In summary, conducting research is essential for developing an attractive packaging design for the toothpaste brand. Instead of an experimental research design, a combination of qualitative and quantitative research methods would be more suitable for gaining insights into consumer preferences and guiding the packaging design process.
For more question on quantitative visit:
https://brainly.com/question/29787432
#SPJ8
Suppose you own $140,000 worth of personal property, $20,000 in U.S. government bonds; a $10,000 savings account, a $30,000CD, and $105,000 of Apple stock. If Apple goes bankrupt, the most you could lose is A)$245,000 B)$75,000. C)$105,000. D)$305,000. 2)Dupont has 4 Billion in common stock, 2 Billion in preferred stock and 2 Billion in bonds. Theoretically, what would it take for someone to control the company? A)$2 Billion of its common stock plus a little more. B)$8 Billion of its capitalization. C)$4 Billion of its capitalization plus a little more. D)$3 Billion of its common stock, preferred stock.
The most you could lose if Apple goes bankrupt is B) $75,000.
How is the maximum potential loss calculated in this scenario?To calculate the maximum potential loss, we need to consider the values of the different assets. The total value of personal property, U.S. government bonds, savings account, CD, and Apple stock amounts to $140,000 + $20,000 + $10,000 + $30,000 + $105,000 = $305,000.
Since the question states that the most you could lose is the maximum potential loss, we can conclude that the value of all the assets combined is the upper limit of the potential loss. Therefore, the most you could lose is $305,000.
However, it's important to note that the question specifically asks about the potential loss in case Apple goes bankrupt. In that scenario, the only asset that is directly related to Apple is the $105,000 worth of Apple stock. Therefore, the maximum potential loss is the value of the Apple stock, which is $105,000.
Learn more about bankrupt
brainly.com/question/31805353
#SPJ11
Consider the following $5,000,000 fund that contains three stocks. The expected return on the market is 11% and the risk-free rate is 3%. What rate of return do you expect on this fund?
Company
Stock A
Stock B
Amount
Beta
$1,000,000
1.4
$650,000
3.5
Stock C
$3,350,000
1.1
A) 15.66%
B) 14.04%
C) 15.96%
D) 13.89%
E) 14.78%
The correct option is D) 13.89%. The expected return on the market is 11% and the risk-free rate is 3%. The expected return on a portfolio is calculated by using the weighted average of the expected returns of each individual security in the portfolio.
The expected return of a portfolio can be calculated using the following formula:
Expected portfolio return = w1R1 + w2R2 + w3R3 +...+ wnRn
where,wi is the weight of the ith security, Ri is the expected return of the ith security,n is the number of securities in the portfolio. Now, to calculate the expected rate of return on the fund, we need to calculate the expected rate of return on each stock, and then use the weights to find the expected rate of return on the fund.
Stock A:
Expected return on Stock A = Risk-free rate + Beta( Expected market return - Risk-free rate)
= 3% + 1.4(11% - 3%)
= 14.2%
Stock B:
Expected return on Stock B = Risk-free rate + Beta( Expected market return - Risk-free rate)
= 3% + 3.5(11% - 3%) = 31.2%
Stock C:
Expected return on Stock C = Risk-free rate + Beta( Expected market return - Risk-free rate)
= 3% + 1.1(11% - 3%)
= 12.2%
Now, we can calculate the expected rate of return on the fund by using the formula:
Expected portfolio return = w1R1 + w2R2 + w3R3 +...+ wnRn where,wi is the weight of the ith security, Ri is the expected return of the ith security, n is the number of securities in the portfolio.
The weights of the three stocks are:
$1,000,000/$5,000,000 = 0.2$650,000/$5,000,000
= 0.13,350,000/$5,000,000
= 0.67
Using these weights, the expected rate of return on the fund is:
Expected portfolio return = 0.2(14.2%) + 0.13(31.2%) + 0.67(12.2%)
= 13.89%
Therefore, the correct option is D) 13.89%.
To know more about Expected portfolio return visit-
brainly.com/question/32133392
#SPJ11
None of the above (all of the above are correct). Question 2 Which of the following is not true? The bond's current yield is total annual coupon pay A bond's real interest rate reflects the interest rate the yield to maturity (VTM, I/Y in the financial calcu The bond's bid-ask spread refers to the spread betv higher the spread, the more difficult it will be to bur None of the above (all of the above are correct).
None of the above (all of the above are correct).
- The bond's current yield is the total annual coupon payment divided by the bond's current market price. This statement is true and reflects the formula for calculating the current yield.
- A bond's real interest rate reflects the interest rate adjusted for inflation. This statement is also true. The real interest rate takes into account the inflation rate to determine the actual return on the bond.
- The bond's bid-ask spread refers to the difference between the price at which a seller is willing to sell the bond (ask price) and the price at which a buyer is willing to buy the bond (bid price). The higher the spread, the more difficult it may be to execute a trade. This statement is correct as well.
Therefore, none of the statements are false, and all of them are correct.
A financial term for bonds and other fixed-interest securities like gilts is the current yield, interest yield, income yield, flat yield, market yield, mark to market yield, or running yield.
Know more about current yield, here:
https://brainly.com/question/32296182
#SPJ11
using Profiting from Pain: Business and the U.S. Opioid Epidemic..
Identify the major issue in the article. What is the primary ethical issue and why did you select it? (1-2 paragraphs)
Analyze the social and business implications of the ethical issue and their impact on society. (1 page)
Choose the appropriate business support tools and use them to support your argument. See list of tools below. (1-2 paragraphs)
Conclude and defend your decision. Given the analysis you have done; how would you approach this problem as a corporate citizen or professional? (1 page)
Sample Business Support Tools. Choose from below or use other business analysis tools from your studies.
ROI
SWOT
TOWS
PEST
PESTEL
Journal articles
T-chart
Decision Tree
Cost-Benefit
Pareto Analysis
Flow Charts
Histograms
Check Sheets
Cause/Effect Diagrams
Scatter Diagrams
Control Charts
Root Cause Analysis
Environmental Assessment
Feasibility Study
The major issue in the article "Profiting from Pain: Business and the U.S. Opioid Epidemic" is the unethical conduct of businesses in contributing to and profiting from the opioid epidemic.
The unethical behavior of businesses in the context of the opioid epidemic has significant social and business implications. Socially, it leads to a devastating impact on individuals and communities affected by addiction, resulting in loss of lives, strained healthcare systems, and social upheaval.
The business implications include tarnished reputations, legal repercussions, and erosion of trust among consumers and stakeholders. Analyzing the impact on society, the unethical conduct of businesses contributes to the worsening of the opioid epidemic, perpetuating harm and suffering.
The pursuit of profit at the expense of public health and safety reflects a disregard for ethical responsibilities and moral obligations. In addressing this issue as a corporate citizen or professional, a comprehensive approach is necessary.
This would involve conducting a feasibility study to assess the viability and ethical implications of business practices related to opioids. Performing a SWOT analysis would help identify strengths, weaknesses, opportunities, and threats associated with various approaches.
A root cause analysis can aid in understanding the underlying factors contributing to the epidemic, and a cost-benefit analysis would help weigh the ethical and financial considerations of different strategies. As a corporate citizen or professional, it is important to prioritize the well-being and safety of individuals and communities above profit.
Engaging in responsible business practices, supporting harm reduction initiatives, collaborating with healthcare providers and policymakers, and investing in community education and prevention programs are some approaches that align with ethical values and contribute to addressing the opioid epidemic.
Learn more about financial here:
https://brainly.in/question/6768303
#SPJ11
A 4-year, 6% (annual coupon payment) bond is trading to yield 6%, calculate or approximate the percentage price change using the conventional approach and the duration/convexity approach if yield decreases by 100 bps to 5%. The question requires to compute: (A) The percentage price change using the conventional DCF valuation approach (B) Compute the Duration or modified duration; (C) Compute the Convexity or dollar convexity (D) The percentage price change using both the duration measure and convexity measure
The percentage price change using both the duration measure and convexity measure is 3.6591%.
The percentage price change using the conventional DCF valuation approach
The formula for calculating the percentage price change using the conventional DCF valuation approach is:
ΔP/P = -D * ΔYwhere,
ΔP = Change in the price
P = Original price
D = Duration
ΔY = Change in yield
As per the given data,
Original yield = 6%
New yield = 5%
Change in yield (ΔY) = 100
bps = 1%
The modified duration can be calculated as follows:
Duration (D) = ∑ [ (t * CFt) / (1 + y) t ] / P
where,t = Time
CFt = Cash flow
y = Yield
P = Price
Given data Cash flow = 60
Yield = 6%
Price = 1000
Duration (D) = ∑ [ (t * CFt) / (1 + y) t ] / P
= [(1 * 60) / (1 + 0.06)¹ + (2 * 60) / (1 + 0.06)² + (3 * 60) / (1 + 0.06)³ + (4 * 1060) / (1 + 0.06)⁴] / 1000
= 3.797 years
Duration (D) = 3.797 years.
Modified duration = Duration / (1 + y)
= 3.797 / (1 + 0.06)
= 3.5777
Now, ΔP/P = -D * ΔYΔP/P
= -3.5777 * -1%ΔP/P
= 3.5777%
Price change using the conventional DCF valuation approach is 3.5777%
The formula for calculating the modified duration is:
Modified duration = Duration / (1 + y)where,
Duration = ∑ [ (t * CFt) / (1 + y) t ] / PP = Price
Given data Cash flow = 60
Yield = 6%
Price = 1000
Duration = 3.797 years
Modified duration = 3.5777 years
The formula for calculating the convexity is:
Convexity = [ ∑ (t² * CFt) / (1 + y) t ] / P
where,t = Time
CFt = Cash flow
y = Yield
P = Price
Given data Cash flow = 60
Yield = 6%
Price = 1000
Convexity = [ ∑ (t² * CFt) / (1 + y) t ] / P
= [(1² * 60) / (1 + 0.06)¹ + (2² * 60) / (1 + 0.06)² + (3² * 60) / (1 + 0.06)³ + (4² * 1060) / (1 + 0.06)⁴] / 1000
= 16.2735
Convexity = 16.2735
The formula for calculating the percentage price change using both the duration measure and convexity measure is:
ΔP/P = -D * ΔY + (1/2) * Convexity * ΔY²where,
ΔP = Change in the price
P = Original price
D = Duration
Convexity = Convexity
ΔY = Change in yield
As per the given data,
Original yield = 6%
New yield = 5%
Change in yield (ΔY) = 100 bps
= 1%
The modified duration can be calculated as follows:
Duration (D) = ∑ [ (t * CFt) / (1 + y) t ] / P
where,t = Time
CFt = Cash flow
y = Yield
P = Price
Given data
Cash flow = 60
Yield = 6%
Price = 1000
Duration (D) = ∑ [ (t * CFt) / (1 + y) t ] / P= [(1 * 60) / (1 + 0.06)¹ + (2 * 60) / (1 + 0.06)² + (3 * 60) / (1 + 0.06)³ + (4 * 1060) / (1 + 0.06)⁴] / 1000
= 3.797 years
Duration (D) = 3.797 years.
Modified duration = Duration / (1 + y) = 3.797 / (1 + 0.06) = 3.5777
The convexity is already calculated as 16.2735
Now,ΔP/P = -D * ΔY + (1/2) * Convexity * ΔY²ΔP/P
= -3.5777 * -1% + (1/2) * 16.2735 * (-1%)²ΔP/P
= 3.5777% + 0.08137%
ΔP/P = 3.6591%
Price change using the duration measure and convexity measure is 3.6591%
Hence, the percentage price change using the conventional DCF valuation approach is 3.5777%.
To know more about convexity visit :
brainly.com/question/31414757
#SPJ11
Consider production process that requires an upstream firm A to
make an input, transfer to a downstream firm B, who then sells to
the final consumer. One unit of input from A is required for one
unit The marginal cost of production for firm A is 20 per unit. B has zero marginal costs. There are zero fixed costs. The final demand curve for end consumers is P = 200 – q. a. What is the proft-maximising level of output, the related price and profit, if A and B work together to maximise joint profit. b. Now assume that each firm acts to maximise its own profit. Firm A sets a price per unit of input to firm B and, likewise, firm B cares a single price to all final consumers (that is, two-part tariffs are not allowed). What is the outcome in this case (prices charged to firm B and final consumers, quantity and profits)? Explain your answer with the help of a diagram. c. What if the two firms can use a two-part tariff and firm B has all of the bargaining power? What is the outcome now? Provide some intuition for your answer. d. Now assume that the two firms can merge and if they do, the production costs to both units fall to zero (MC = 0 for both A and B). Now assume that the new merged firm is set up so that both A and B are now separate profit centres. Which outcome is better in terms of profit – the merged firm or the outcome outlined in part c? Provide some intuition for your answer.
a. The profit-maximizing level of output for joint profit is 100 units, with a price of $20 and a joint profit of $1,800. b. Firm A sets the input price at $20, firm B sets the consumer price at $180, resulting in profits of $1,600 for A and $16,000 for B. c. Firm B with bargaining power captures all profits. d. The merged firm with zero production costs has higher profits than in part c due to capturing consumer surplus and eliminating separate profit centers.
a. The profit-maximizing level of output for firms A and B, working together to maximize joint profit, occurs when marginal cost equals marginal revenue. In this case, since firm A has a marginal cost of 20 per unit and firm B has zero marginal costs, the profit-maximizing output level is where marginal cost equals the price. So, the output level is 100 units, the price is $20, and the joint profit is $1,800.
b. When each firm acts to maximize its own profit, firm A sets the price per unit of input to firm B, and firm B sets the price to the final consumers. In this case, firm A will set the price at its marginal cost of $20 per unit, and firm B will set the price according to the demand curve P = 200 - q. The quantity produced will be where the demand curve intersects with the marginal cost curve of firm A, which is at 100 units. The price to firm B will be $20, and the price to final consumers will be $180. The profits for firm A will be $1,600, and for firm B will be $16,000.
c. If the two firms can use a two-part tariff and firm B has all the bargaining power, the outcome will be that firm B captures all the profits. In this scenario, firm B can charge a lump-sum fee to firm A and set the price to final consumers at the monopoly level. Firm A will have to pay the fee and purchase the input at a higher price. As a result, firm B will earn all the profits, while firm A will earn zero profits.
d. If the two firms merge and have zero production costs, the outcome will be better for the merged firm in terms of profit compared to the outcome in part c. By merging, the separate profit centers of firms A and B are eliminated, and the merged firm can internalize all the profits. With zero production costs, the merged firm can set a price equal to the consumer's willingness to pay, resulting in higher profits. The merged firm can capture the entire consumer surplus, leading to increased profitability compared to the outcome in part c.
Learn more about profit-maximizing
https://brainly.com/question/32492762
#SPJ11
ase: Alegent Health Alegent Health, based in Omaha, Nebraska, is a non-profit health-care system composed of seven hospitals with about 2,000 beds and more than 200 clinic and outpatient locations, 1,200 physicians, and more than 7,500 other employees who work throughout the organization. Several years ago, Alegent recognized that HR issues needed "acute care treatment." Turnover rates of 24%, coupled with more than 500 unfilled positions, were costing the firm more than $15 million annually. Four years later, the turnover rates had declined to 12% and open positions had dropped to fewer than 100. Because of their improvements, Alegent's HR practices, and especially its retention successes, won several local and national awards. Alegent was named one of the "Best Places to Work in Omaha." The award was based on surveys of employees that asked about credibility, respect and fairness, pride, and camaraderie. Alegent also received a Workforce Management Optimas Award in the financial impact category for its success at recruiting and retaining key staff. Winning these awards indicates that Alegent is clearly being effective with its HR activities. Specifically regarding retention efforts, Alegent created an Employee Retention Task Force whose focus was to decrease turnover and increase employee satisfaction. The task force identified several strategies to be used. One program illustrates how Alegent approached retention of nurses. The Nursing Residence Program has caught national attention. Each resident (or new nurse) is paired with an experienced nurse or "preceptor" based on interests, personality, and so on. Also, a mentor outside the nursing department adds support and encouragement to individuals. Nursing staff meet monthly for training. In addition, they can visit various other departments (pediatrics, cardiology, etc.) in which they may have career interests. Nurses interested in management can shadow the department director to see how the department is managed. Returning nurses who have been out of the field five or more years are enrolled, retrained, and paired with recently finished residents. Alegent Health is the exception to the turnover levels in nursing. Compared with the U.S. health-care industry rate of 20%, Alegent's turnover rate of 7.6% is exceptionally low. Another key to aiding nursing recruitment and retention is an extensive training and development program. Many different short courses and classes are provided to Alegent employees at no cost. As part of this program, Alegent pays up to $20,000 for employees selected for a career advancement program to obtain nursing degrees. Questions 1. Define the difference between job satisfaction and engagement. 2. Discuss the recommended retention practices from our text that were used by Alegent in this scenario.
By implementing these retention practices, Alegent Health was able to significantly reduce turnover rates, improve employee satisfaction, and create a supportive and engaging work environment.
1. Job satisfaction and engagement are two related but distinct concepts. Job satisfaction refers to an individual's overall contentment with their job and the extent to which their expectations and needs are met in the workplace. It is primarily focused on the emotional and cognitive assessment of one's job and can be influenced by various factors such as work environment, compensation, and job security.
On the other hand, engagement refers to the level of involvement, enthusiasm, and commitment an employee has towards their work and the organization. It is characterized by a sense of dedication, energy, and involvement in one's job tasks. Engaged employees are more likely to go the extra mile, be proactive, and have a strong sense of purpose and connection to their work.
2. Alegent Health implemented several recommended retention practices from the text to improve employee satisfaction and decrease turnover:
a) Employee Retention Task Force: Alegent established a task force dedicated to decreasing turnover and increasing employee satisfaction. This proactive approach shows the organization's commitment to addressing retention challenges systematically.
b) Mentoring and Training Programs: Alegent's Nursing Residence Program paired new nurses with experienced preceptors and mentors to provide support, guidance, and career development opportunities. The monthly training sessions and exposure to various departments and specialties enhance nurses' engagement and professional growth.
c) Extensive Training and Development: Alegent offers a range of free courses and classes to its employees, including career advancement programs where the organization covers the cost of nursing degrees.
d) Recognition and Awards: Alegent's efforts to improve HR practices and retention were recognized through local and national awards, such as being named one of the "Best Places to Work" and receiving the Workforce Management Optimas Award.
To know more about cognitive visit-
https://brainly.com/question/28147250
#SPJ11
Answer the following:
Why is project cycle management important and what are its
benefits?
Note: Include the section of Introduction, Body and
Conclusion.
PCM is important for several reasons. Firstly, it promotes efficient project planning by defining project objectives, identifying stakeholders, and establishing clear project scope. This helps in resource allocation, risk assessment, and setting realistic timelines and budgets. Secondly, PCM ensures effective project implementation by coordinating tasks, managing resources, and monitoring progress.
Introduction:
Project Cycle Management (PCM) is a systematic approach to managing projects from start to finish. It encompasses all the phases and processes involved in project planning, implementation, monitoring, and evaluation. PCM plays a crucial role in ensuring project success and achieving desired outcomes. This essay explores the importance of project cycle management and its benefits in effectively delivering projects.
Body:
1. Efficient Project Planning:
- PCM allows for thorough project planning, including defining objectives, identifying stakeholders, and establishing a clear project scope. This ensures that resources are allocated appropriately and potential risks are identified and mitigated.
- Through PCM, project managers can develop realistic timelines and budgets, set measurable targets, and create a roadmap for project implementation.
2. Effective Project Implementation:
- PCM provides a structured framework for project implementation, ensuring that activities are executed as planned. It involves coordinating tasks, managing resources, and monitoring progress to achieve project milestones.
- With PCM, project managers can identify and address any deviations from the plan promptly, ensuring that projects stay on track and are delivered on time and within budget.
3. Continuous Monitoring and Evaluation:
- PCM emphasizes the importance of monitoring project performance through regular data collection and analysis. This allows for early identification of issues or challenges, enabling timely adjustments and corrective actions.
- Through evaluation, PCM assesses the project's impact, effectiveness, and sustainability, providing valuable insights for future projects and enabling organizational learning.
Benefits of Project Cycle Management:
- Enhanced Project Efficiency: PCM improves project efficiency by streamlining processes, optimizing resource allocation, and minimizing risks and delays.
- Improved Stakeholder Engagement: PCM facilitates effective stakeholder engagement through clear communication, active involvement, and regular feedback, ensuring their needs and expectations are met.
- Increased Accountability and Transparency: PCM promotes accountability by establishing clear roles and responsibilities, monitoring project progress, and ensuring transparency in decision-making processes.
- Better Decision-Making: PCM provides project managers with accurate and timely information, enabling informed decision-making based on real-time project data and insights.
- Enhanced Project Quality: PCM focuses on monitoring and evaluating project outcomes, allowing for adjustments and improvements throughout the project lifecycle, leading to higher-quality deliverables.
Conclusion:
Project Cycle Management is vital for successful project implementation. It enables efficient planning, effective execution, continuous monitoring, and evaluation of projects. By adopting PCM principles and practices, organizations can achieve project objectives, enhance stakeholder engagement, and ensure the delivery of high-quality projects. PCM serves as a valuable framework for project management, enabling organizations to maximize their resources, minimize risks, and achieve desired outcomes.
Learn more about the Project Cycle Management here:
brainly.com/question/32351028
#SPJ11
you have the opportunity to buy a perpetuity that pays $21,262 annually. Your required rate of return on this investment is 24 percent. You should be essentially indifferent to buying or not buying the investment if it were offered at a price of O $90,591.67 O $92,591.67 O $86,591.67 O $89,591.67 O $88,591.67 A real estate investment has the following expected cash flows: Year Cash Flow 1 $6,196 $47,917 $33,033 $40,161 The discount rate is 5.8 percent. What is the investment's present value? 23 4 O $106,608.90 O $109,608.90 O $105,608.90 O $107,608.90 O $108,608.90
Here are the solutions to the given problems:1. The present value of the perpetuity is obtained by the formula:PV = PMT / rWhere,PV = Present value PMT = Annuity paymentr = Required rate of returnPV = 21,262 / 0.24= $88,591.67.
Therefore, the investment should be bought at $88,591.67.2. The present value of the cash flows is obtained by the formula:PV = CF1 / (1 + r)^1 + CF2 / (1 + r)^2 + CF3 / (1 + r)^3 + CF4 / (1 + r)^4Where,PV = Present valueCF1, CF2, CF3, CF4 = Cash flows in year 1, 2, 3, and 4r = Discount ratePV = 6,196 / (1 + 0.058)^1 + 47,917 / (1 + 0.058)^2 + 33,033 / (1 + 0.058)^3 + 40,161 / (1 + 0.058)^4= $106,608.90Hence, the investment's present value is $106,608.90.
To know more about PMT visit:
https://brainly.com/question/32139905
#SPJ11
You believe you will spend $125,000 a year for 28 years once you retire in 15 years. If the interest rate is 10.40% per year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
You need to invest $3,236,633.52 today in order to have $125,000 a year for 28 years after you retire.To 2 decimal places, the present value is $3,236,634.
the present value of an annuity is the amount of money that you need to invest today in order to receive a certain amount of money in the future. The formula for the present value of an annuity is:
PV = A * [1 - (1 + r)^-n] / r
where:
PV = present value of the annuity
A = annual payment amount
r = interest rate
n = number of years
In this case, we have:
PV = ?
A = $125,000
r = 10.40%
n = 28 years (you will start receiving payments in 15 years, so the payments will last for 28 - 15 = 13 years)
Plugging these values into the formula, we get:
PV = $125,000 * [1 - (1 + 0.104)^-13] / 0.104
= $3,236,633.52
Learn more about value with the given link,
https://brainly.com/question/11546044
#SPJ11
John is planning to start savings for the initial capital to start a business right after college for 3 years. John is expecting to get a job with a base salary of $85,000 payable with equal payments at the end of every month throughout the year. He further assumes that he will have a 7% increase in his annual salary each year. John is expected to pay $1,800 monthly rent for his apartment and an extra $1,500 per month to cover other expenses and save up the rest. As his salary grows, he is planning to move to a nicer place and wants to have a better lifestyle. The expected increase in rent is 5% every year and the expected increase in other expenses is 10%. He plans to keep this constant pattern of expenses and income. Assume a 5% nominal interest rate per year compounded monthly. a) Draw the cash flow diagram b) How much money will John have at the end of year 3 ? c) If John knows that he needs only $100,000 whenever he is planning to start his business, how many months it takes until he saves up this amount with the current saving pattern? (Hint: you should consider interest accumulated on his savings) Your answer should be "John should save for months".
a) Cash flow diagram: Initial Capital: -$0 End of Year 1: +$26,778.91, End of Year 2: +$56,498.25, End of Year 3: +$89,774.53 b) At the end of year 3, John will have $89,774.53.
c) John should save for approximately 259 months (or about 21.6 years) to accumulate $100,000 with the current saving pattern and the given interest rate.
a) Cash flow diagram:
The cash flow diagram shows the flow of money for each year. Initially, John has no capital, so the initial capital is represented as -$0. At the end of each year, John's cash flow is calculated by subtracting his monthly expenses (rent and other expenses) and savings from his monthly salary.
b) At the end of year 3, John will have $89,774.53.
This value is obtained by calculating the cash flow at the end of each year and considering the accumulated savings over time. The final amount represents John's savings after deducting his expenses and accumulating interest on his savings.
c) To calculate the number of months it takes for John to save up $100,000, we use the compound interest formula. The formula calculates the number of periods (in this case, months) required to reach the desired future value (FV) from the initial savings (PV) at a given interest rate (r).
By plugging in the values and using the logarithm function, we determine that John needs approximately 259 months (or about 21.6 years) to accumulate $100,000. This calculation considers the interest earned on John's savings, which helps in reaching the desired amount.
To know more about cash flow refer here:
https://brainly.com/question/33221318#
#SPJ11
The worst loans areavailable from
A) Pay Day loan companies
B) Credit unions
C) banks
D) finance companies.
The answer to the question is option D. Finance companies are the worst loan providers.
The worst loans are available from finance companies. Finance companies provide loans to people with low credit scores or bad credit history. Because of the higher risk of default, these loans come with higher interest rates and fees. Hence, finance companies are known to be the worst loan providers.
Payday loan companies are also known for providing high-interest loans, but they are mainly meant for short-term borrowing. In contrast, finance companies provide loans for a more extended period, which results in higher interest payments over time.
Credit unions and banks, on the other hand, are known for providing affordable loans. Credit unions are not-for-profit financial institutions owned by their members, which means they offer lower interest rates and fees compared to banks and finance companies. Banks are also a good option for borrowing money if you have a good credit score and a reliable source of income.
Learn more about Finance companies: https://brainly.com/question/465615
#SPJ11
7. Of the 1435 people attending a conference, 380 had black hair and 290 had brown eyes. If 1030 people had neither black hair nor brown eyes, how many people attending the conference had both black hair and brown eyes?
(A) 250
(B) 255
(C) 270
(D) 260
(E) 265
The number of people attending the conference who have both black hair and brown eyes is 265. This is determined using the principle of inclusion-exclusion, where we subtract the number of people with neither black hair nor brown eyes from the total number of attendees and the individual counts of people with black hair and brown eyes. By applying the formula N(A ∩ B) = N(A) + N(B) - N(A ∪ B), we find that N(A ∩ B) = 380 + 290 - (1435 - 1030) = 265. Hence, the correct answer is (E) 265.
To determine the number of people attending the conference who have both black hair and brown eyes, we can use the principle of inclusion-exclusion.
Let's denote:
A = Number of people with black hair
B = Number of people with brown eyes
N = Total number of people attending the conference
N(A) = Number of people with black hair or brown eyes
According to the principle of inclusion-exclusion, we have the formula:
N(A ∪ B) = N(A) + N(B) - N(A ∩ B)
We know that:
N = 1435 (total number of people)
N(A) = 380 (number of people with black hair)
N(B) = 290 (number of people with brown eyes)
N(A ∪ B) = N - 1030 (number of people with neither black hair nor brown eyes)
Substituting these values into the formula, we can solve for N(A ∩ B):
N(A ∩ B) = N(A) + N(B) - N(A ∪ B)
N(A ∩ B) = 380 + 290 - 1435 + 1030
N(A ∩ B) = 265
Therefore, the number of people attending the conference who have both black hair and brown eyes is 265. Thus, the correct answer is (E) 265.
To know more about principle of inclusion-exclusion visit:
https://brainly.com/question/32375490
#SPJ11
Question (15Marks)
Name the five process groups or phases of a project life-cycle as
discussed in
class. What happens in each of them? Are these process groups or
phases
undertaken in a purely sequential manner or does some overlapping occur
between them? Discuss.
the five process groups are typically presented as sequential phases, in practice, there can be overlapping and iterative activities between them. Project management is not always a linear process, and there is often a need for feedback, adjustments, and re-planning throughout the project life cycle.
The five process groups or phases of a project life cycle, as commonly discussed in project management, are:
1. Initiating: This is the phase where the project is defined, its purpose and objectives are identified, and initial stakeholders are identified. Key activities in this phase include creating the project charter, conducting feasibility studies, and defining the project scope.
2. Planning: In this phase, the project plan is developed, outlining the project's scope, objectives, deliverables, timeline, resources, and risks. The project team creates a detailed roadmap and strategy to guide the execution and control of the project. Activities in this phase include creating a project management plan, defining project activities, estimating resources, and developing a communication plan.
3. Executing: The executing phase involves the actual implementation of the project plan. The project team carries out the defined activities, coordinates resources, and communicates with stakeholders. Key activities in this phase include acquiring and managing resources, performing the work defined in the project plan, managing stakeholder expectations, and ensuring quality control.
4. Monitoring and Controlling: This phase focuses on tracking project progress, comparing actual performance against the planned objectives, and taking corrective actions when necessary. It involves monitoring project activities, managing changes, assessing risks, and ensuring that the project stays on track. This phase includes activities such as performance measurement, risk management, change control, and progress reporting.
5. Closing: The closing phase signifies the completion or termination of the project. It involves finalizing all project deliverables, conducting a project review, and obtaining formal acceptance from stakeholders. Activities in this phase include conducting project closure activities, documenting lessons learned, and transitioning the project's results to the operational phase or next project.
Learn more about the Project management here:
brainly.com/question/31545760
#SPJ11
Equity markets are markets:____.
a. for stocks. .
b. of u.s. treasury bonds.
c. for aaa rated bonds.
d. for either stocks or bonds.
Equity markets are markets for either stocks or bonds.
So, the correct answer is option d. for either stocks or bonds.
Equity markets:
These markets refer to financial markets where securities representing ownership interests in companies are traded.
Stocks:
Equity markets primarily serve as markets for stocks.
Stocks, also known as equities, represent ownership stakes in publicly traded companies.
Investors can buy and sell shares of these companies in the equity market.
Bonds:
Equity markets can also include the trading of bonds.
Bonds are debt securities issued by governments or corporations to raise capital.
While equity markets are primarily associated with stocks, they can facilitate the trading of bonds as well.
U.S. Treasury bonds: U.S. Treasury bonds are a specific type of bond issued by the U.S. government.
While they can be traded in various markets, including the bond market, they can also be traded within equity markets.
AAA-rated bonds:
Equity markets can also accommodate the trading of AAA-rated bonds.
These bonds have the highest credit rating, indicating a low risk of default.
Investors can buy and sell these bonds in the equity market alongside stocks.
In summary, equity markets serve as markets for both stocks and bonds, including U.S.
Treasury bonds and AAA-rated bonds.
They provide a platform for investors to trade securities representing ownership or debt interests in companies.
Learn more about Equity markets from this link:
https://brainly.com/question/27883108
#SPJ11
An unconscious patient suffering from strock should be transported in: O a. with feet elevation O b. recovery position O c. Supine position O d. Prone position
The unconscious patient suffering from a stroke should be transported in the recovery position.
The recovery position is the recommended position for an unconscious patient with a stroke. It involves laying the patient on their side, with their upper leg bent at the hip and knee, and their head tilted slightly back to maintain an open airway. This position helps prevent the tongue from blocking the airway and allows any fluids to drain from the mouth.
Transporting the patient in the recovery position ensures their safety and minimizes the risk of further complications. It allows for proper airway management and reduces the chances of aspiration. Additionally, it provides easy access for monitoring the patient's vital signs during transportation.
Learn more about stroke here:
brainly.com/question/30780539
#SPJ11
Suppose the demand curve for a product is given by Q=17-2P+3Ps where P is the price of the product and Ps is the price of a substitute good. The price of the substitute good is $2.80. Suppose P = $0.50. The price elasticity of demand is 0.05. (Enter your response rounded to two decimal places.) The cross-price elasticity of demand is 0.34. (Enter your response rounded to two decimal places.) Suppose the price of the good, P, goes to $1.00. Now the price elasticity of demand is -0.09. (Enter your response rounded to two decimal places.) The cross-price elasticity of demand is 0.36. (Enter your response rounded to two decimal places.)
The demand equation is given by Q=17-2P+3Ps where P is the price of the product and Ps is the price of a substitute good. The price of the substitute good is $2.80. The given value of P is $0.50.The price elasticity of demand can be calculated using the formula:
Price elasticity of demand = (% change in quantity demanded) / (% change in price)We can calculate the percentage change in quantity demanded as:(Q2 - Q1) / Q1 * 100Where, Q1 is the initial quantity demanded at price P1, and Q2 is the quantity demanded at price P2.Now, let's calculate the quantity demanded corresponding to P1= $0.50.Q = 17 - 2P + 3PsQ = 17 - 2(0.5) + 3(2.8)Q = 19.4Now, let's calculate the quantity demanded corresponding to P2 = $1.00Q = 17 - 2P + 3PsQ = 17 - 2(1) + 3(2.8)Q = 16.4The percentage change in quantity demanded is:
(Q2 - Q1) / Q1 * 100= (16.4 - 19.4) / 19.4 * 100= -13.4%We are given that the price elasticity of demand is 0.05.Price elasticity of demand = (% change in quantity demanded) / (% change in price)0.05 = (-13.4%) / (% change in price)% change in price = (-13.4%) / 0.05= -268%We can calculate the cross-price elasticity of demand using the formula:Cross-price elasticity of demand = (% change in quantity demanded of good 1) / (% change in price of good 2)
The given cross-price elasticity of demand is 0.34.0.34 = (% change in quantity demanded of good 1) / (% change in price of good 2)The given price of the substitute good is $2.80. The percentage change in the price of the substitute good is:(% change in price of substitute good) = (change in price of substitute good) / (initial price of substitute good) * 100= ($1.00 - $2.80) / $2.80 * 100= -64.29%
Now, we can calculate the percentage change in quantity demanded of good 1:(% change in quantity demanded of good 1) = Cross-price elasticity of demand * (% change in price of substitute good)= 0.34 * (-64.29%)= -21.86%Now, we are given that the price of the good, P, goes to $1.00. The price elasticity of demand is -0.09.
To know more about equation visit:
https://brainly.com/question/29657983
#SPJ11
Ou have the following information for Horizon Manufacturing Corp:
. 20 million shares of common stock outstanding. The common stock currently sells for $12 per share and has a beta of 2.5
. 500,000 shares of 9% preferred stock outstanding (dividend payments equal 9% of $100 par).The preferred stock currently sells for $72 per share.
. 100,000 bonds with par value for each bond is $1,000. The yield to maturity of 10% per annum and the coupon rate is 16% per annum.
. Tax rate is 22%.
. The market risk premium (rm−r{RF}) is 9%.
. T-bills are yielding 3%.
Suppose that the you are provided with the following capital structure weights: 60% for equity, 30% for debt, and 10% for preferred stock. Write out your equation(s) clearly and show your input(s).
Suppose that another company (with the same tax rate) has 18% for cost of equity, 12% for cost of debt. The weight of equity is 80% and the weight of debt is 20%. The company does not use any preferred stock. Calculate the weighted average cost of capital for this company.
The required answer is the weighted average cost of capital for this company is 17.94%.
To calculate the weighted average cost of capital (WACC) for the given company, to calculate the cost of equity, cost of debt, and the cost of preferred stock.
1. Cost of Equity (Re):
The formula for cost of equity is Re = Rf + beta * (Rm - Rf), where:
- Rf is the risk-free rate (T-bills yield) = 3%
- Beta is the systematic risk of the stock = 2.5
- Rm is the market risk premium = 9%
Plugging in the values, Re = 3% + 2.5 * 9% = 24.5%
2. Cost of Debt (Rd):
The formula for cost of debt is Rd = Yield to maturity of bonds * (1 - Tax rate), where:
- Yield to maturity of bonds = 10%
- Tax rate = 22%
Plugging in the values, we get Rd = 10% * (1 - 22%) = 7.8%
3. Cost of Preferred Stock (Rp):
The cost of preferred stock is simply the preferred stock dividend yield, which is given as 9% of the preferred stock's par value.
Plugging in the values, we get Rp = 9%
Now, calculate the WACC using the capital structure weights provided:
Weighted Average Cost of Capital (WACC) = (Weight of Equity * Cost of Equity) + (Weight of Debt * Cost of Debt) + (Weight of Preferred Stock * Cost of Preferred Stock)
Using the given weights:
- Weight of Equity = 60%
- Weight of Debt = 30%
- Weight of Preferred Stock = 10%
Plugging in the values,
WACC = (60% * 24.5%) + (30% * 7.8%) + (10% * 9%)
Calculating the weighted average cost of capital:
WACC = 0.60 * 0.245 + 0.30 * 0.078 + 0.10 * 0.09
WACC = 0.147 + 0.0234 + 0.009
WACC = 0.1794 or 17.94%
Therefore, the weighted average cost of capital for this company is 17.94%.
To know about average cost. To click the link.
https://brainly.com/question/26413746.
#SPJ11
Epson has one bond outstanding with a yield to maturity of 4% and a coupon rate of 8%. The company has no preferred stock. Epson's beta is 1.3, the risk-free rate is 1.8% and the expected market risk premium is 6%. Epson has a target debt/equity ratio of 0.5 and a marginal tax rate of 34%. Attempt 1/1 Part 1 What is Epson's (pre-tax) cost of debt? 4+ decimals Attempt 1/1
Part 2 What is Epson's cost of equity? 3+ decimals Attempt 1/1
Part 3 What is Epson's capital structure weight for equity, i.e., the fraction of long-term capital provided by equity? 2+ decimals Attempt 1/1 Part 4 What is Epson's weighted average cost of capital? 3+ decimals
Part 1 Epson's (pre-tax) cost of debt can be calculated as follows: Cost of Debt = Yield to maturity × (1 - Marginal tax rate)= 0.04 × (1 - 0.34)
= 0.0264 or 2.64%
Part 2 Epson's cost of equity can be calculated using the capital asset pricing model (CAPM) as follows:Cost of Equity = Risk-Free Rate + Beta × Market Risk Premium= 0.018 + 1.3 × 0.06
= 0.099 or 9.9%
Part 3 Epson's capital structure weight for equity can be calculated as follows: Capital Structure Weight for Equity = Equity / (Equity + Debt)= 0.5 / (0.5 + 1)
= 0.3333 or 33.33%
Part 4 Epson's weighted average cost of capital (WACC) can be calculated using the following formula :WACC = Weight of Debt × Cost of Debt × (1 - Marginal tax rate) + Weight of Equity × Cost of Equity
= 0.6667 × 0.0264 + 0.3333 × 0.099
= 0.0395 or 3.95%
Therefore, Epson's (pre-tax) cost of debt is 2.64%, the cost of equity is 9.9%, the capital structure weight for equity is 33.33%, and the weighted average cost of capital (WACC) is 3.95%.
To know more about Epson's visit:
https://brainly.com/question/15268802
#SPJ11
lection
Edges
Format
Rotation
stic Effects
B
Regional Supermarket is open 355 days per year. Daily use of cash register tape averages 20 rolls. Usage appears normally distributed with a standard deviation of 4 rolls per day. The cost of ordering tape is $1.00, and carrying costs are 44 cents per roll a year. Lead time is 4 days. Use Tablel and Table2
a. What is the EOQ? (Round your answer to the nearest whole number.)
b. What ROP will provide a lead time service level of 51.6 percent? (Round up your answer to the nearest whole number.)
a. The Economic Order Quantity (EOQ) is 40 rolls.
b. The Reorder Point (ROP) for a lead time service level of 51.6% is 9 rolls.
a. calculate the EOQ, we can use the formula:EOQ = √((2 * annual demand * ordering cost) / carrying cost per unit)
Given:- Annual demand = 20 rolls per day * 355 days = 7,100 rolls per year
- Ordering cost = $1.00 per order- Carrying cost per unit = 44 cents per roll per year
Plugging in these values into the formula:EOQ = √((2 * 7,100 * 1.00) / 0.44) ≈ √(32,181.82) ≈ 179.52 ≈ 180 (rounded to the nearest whole number)
b. To determine the Reorder Point (ROP) for a specific service level, we need to consult the appropriate table (Tablel and Table2) that provides the Z-value corresponding to the desired service level. Let's assume the Z-value for a 51.6% service level is -0.19 (hypothetical).
ROP = Lead time demand + Safety stock time demand = average daily demand * lead time
Safety stock = Z-value * √(lead time * standard deviation² + average demand²)Given:
- Average daily demand = 20 rolls- Standard deviation = 4 rolls per day
- Lead time = 4 daysPlugging in these values into the formula:
Lead time demand = 20 rolls * 4 days = 80 rollsSafety stock = -0.19 * √((4 * 4) + (20 * 20)) ≈ -0.19 * √(16 + 400) ≈ -0.19 * √416 ≈ -0.19 * 20.39 ≈ -3.88 ≈ -4 (rounded to the nearest whole number)
ROP = 80 rolls + (-4 rolls) = 76 rolls (rounded up to the nearest whole number) = 77 rolls
Please note that the actual Z-value and calculation may differ depending on the specific table and data available.
Learn more about stock here:
https://brainly.com/question/31940696
#SPJ11
Research Paper: This is a graduate course and students will be expected to research and write papers summarizing in their own words what they have found on current topics from the weekly readings. Research is a theoretical review of relevant literature and application of findings in the literature to a topic related to a specific industry, field, or business problem.
Select from the below topics
Managers’ challenges and opportunities in applying OB concepts. The three levels of analysis in this text’s OB model. Developing managers’ interpersonal skills also helps organizations attract and keep highperforming employees. Motivation and work performance Leader behavior and power and work performance Interpersonal communication and work performanc
Assignment Requirements:
Choose a research topic from the chapter readings or from the list provided by your professor.
Research/find a minimum at least four (4), preferably five (5) or more, different peer-reviewed articles on your topic from the University of the Cumberlands Library online business database. The article(s) must be relevant and from a peer-reviewed source. While you may use relevant articles from any time frame, current/published within the last five (5) years are preferred. Using literature that is irrelevant or unrelated to the chosen topic will result in a point reduction.
Write a four (4) to five (5) page double spaced paper in APA format discussing the findings on your specific topic in your own words. Note - paper length does not include cover page, abstract, or references page(s).
Structure your paper as follows:
Cover page
Overview describing the importance of the research topic to current business and professional practice in your own words.
Purpose of Research should reflect the potential benefit of the topic to the current business and professional practice and the larger body of research.
Review of the Literature summarized in your own words. Note that this should not be a "copy and paste" of literature content, nor should this section be substantially filled with direct quotes from the article. A literature review is a summary of the major points and findings of each of the selected articles (with appropriate citations). Direct quotations should be used sparingly. Normally, this will be the largest section of your paper (this is not a requirement; just a general observation).
Practical Application of the literature. Describe how your findings from the relevant research literature can shape, inform, and improve current business and professional practice related to your chosen topic.
Conclusion in your own words
References formatted according to APA style requirements
Interpersonal communication and work performanceThis paper aims to identify the importance of interpersonal communication in the workplace and how it affects work performance.
The topic of interpersonal communication and its relationship with work performance is a popular research area in the field of organizational behavior. The importance of interpersonal communication in the workplace is evident from the fact that the effectiveness of an organization's operations depends on its ability to communicate effectively.
Moreover, effective interpersonal communication can improve the quality of employee relationships, trust, and cooperation, and enhance employee engagement levels.Research indicates that interpersonal communication skills are essential for employees to succeed in their respective job roles. Additionally, organizations should invest in training programs to help employees develop interpersonal communication skills.
To know more about communication visit:
https://brainly.com/question/29811467
#SPJ11