Assume the following information for Maximus Co., a U.S.-based MNC that is considering obtaining funding for a project in Germany:
U.S. risk-free rate = .04
German risk-free rate = .06
Risk premium on dollar-denominated debt provided by U.S. creditors = 0.04
Risk premium on euro-denominated debt provided by German creditors = .04
Beta of project = 1.2
Expected U.S. market return = .10
U.S. corporate tax rate = 0.32
German corporate tax rate = .40
What is Maximus’s cost of dollar-denominated debt?

Answers

Answer 1

The cost of Maximus Co.'s dollar-denominated debt is 5.44%.

How to calculate the cost of dollar-denominated debt for Maximus Co?

To calculate the cost of Maximus Co.'s dollar-denominated debt, we need to use the Capital Asset Pricing Model (CAPM), which takes into account the risk-free rate, market risk premium, and beta of the project. We can then add the risk premium on dollar-denominated debt provided by U.S. creditors to arrive at the final cost of debt.

First, we need to calculate the equity cost of capital using the CAPM formula:

Ke = Rf + β * (Rm - Rf)

where Ke is the cost of equity, Rf is the risk-free rate, β is the beta of the project, and Rm is the expected market return.

Using the given information, we can plug in the values and get:

Ke = 0.04 + 1.2 * (0.10 - 0.04) = 0.112

Next, we need to calculate the after-tax cost of debt. Since Maximus Co. is a U.S.-based MNC, we can use the U.S. corporate tax rate to calculate the after-tax cost of debt.

Kd = (1 - tax rate) * Rd

where Kd is the after-tax cost of debt, Rd is the nominal cost of debt, and the tax rate is the U.S. corporate tax rate of 0.32.

Assuming that the nominal cost of debt is equal to the risk-free rate plus the risk premium provided by U.S. creditors, we can calculate the nominal cost of debt as follows:

Rd = Rf + risk premium on dollar-denominated debt provided by U.S. creditors

= 0.04 + 0.04

= 0.08

Therefore, the after-tax cost of debt is:

Kd = (1 - 0.32) * 0.08 = 0.0544 or 5.44%

So, the cost of Maximus Co.'s dollar-denominated debt is 5.44%.

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Related Questions

a call option on masscomputer corp. is trading with a strike price of $100 and an expiration date on november 18th at 4 pm in the afternoon. the premium paid on the call is $7.55. what is the net profit or loss from buying the call just prior to 4 pm on november 18 if at this time the stock price per share of masscomputer is: a.$112.25 answer:the net profit is $ 4.70 b.$98.63 answer:the net profit is $ -7.55 place your answers in dollars and cents. negative answers should use the minus sign. for example, the answer of minus two dollars and twenty cents would be placed as -2.20.

Answers

The net profit from buying the call would be $4.70. b. The net loss from buying the call would be $7.55.

To calculate the net profit or loss from buying the call option, we need to consider the premium paid and the difference between the stock price and the strike price. Let's analyze both scenarios:

a) Stock price: $112.25
1. Calculate the difference between the stock price and the strike price: $112.25 - $100 = $12.25
2. Subtract the premium paid from the difference: $12.25 - $7.55 = $4.70
Therefore, the net profit from buying the call just prior to 4 pm on November 18th with a stock price of $112.25 per share would be $4.70.

b) Stock price: $98.63
1. Since the stock price is below the strike price, the call option is worthless, and the buyer would not exercise it.
2. The entire premium paid becomes the loss: $7.55

Therefore, the net loss from buying the call just prior to 4 pm on November 18th with a stock price of $98.63 per share would be $7.55.

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a company has equipment that cost $250,000 and has updated accumulated depreciation of $100,000 when it sells the asset for $125,000. what is the income statement effect of this transaction?

Answers

The income statement effect of this transaction would be a loss of $25,000.

This is calculated by subtracting the sale price of $125,000 from the equipment's net book value of $150,000 ($250,000 - $100,000 accumulated depreciation). Since the sale price is less than the net book value, it results in a loss for the company.

This loss would be reported on the income statement as an expense, which would reduce the company's net income. It is important for companies to regularly assess the value of their assets and calculate depreciation to accurately reflect the true value of their assets on their financial statements.

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True or False? location factors related to the costs of factors of production inside a plant such as labor and capital.

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True. Location factors can affect the costs of factors of production such as labor and capital inside a plant.

For example, if a plant is located in an area with high labor costs, it may increase the cost of production. Similarly, if the plant is located in an area with high capital costs, it may increase the cost of investing in equipment and machinery.
The statement is True. Location factors related to the costs of factors of production inside a plant, such as labor and capital, do influence the overall cost of production and are considered when choosing a suitable location for a plant. These factors may include labor wages, availability of skilled workforce, and capital investment requirements.

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Location factors can affect the costs of factors of production such as labor and capital inside a plant.True.

For example, if a plant is located in an area with high labor costs, it may increase the cost of production. Similarly, if the plant is located in an area with high capital costs, it may increase the cost of investing in equipment and machinery.

The statement is True. Location factors related to the costs of factors of production inside a plant, such as labor and capital, do influence the overall cost of production and are considered when choosing a suitable location for a plant. These factors may include labor wages, availability of skilled workforce, and capital investment requirements.

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which of the following components of pension expense is most likely to result in a decrease in pension expense? select answer from the options below interest on the liability. service cost. actual return on plan assets. amortization of unrecognized prior service cost.

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The actual return on plan assets is most likely to result in a decrease in pension expense.

Pension expense is the cost of providing retirement benefits to employees, and it includes several components, such as service cost, interest cost, expected return on plan assets, amortization of unrecognized prior service cost, and amortization of unrecognized actuarial gains and losses.

The actual return on plan assets refers to the actual investment returns earned on the plan assets during the year. If the actual return is higher than the expected return, it will result in a decrease in pension expense. This is because the higher-than-expected return reduces the amount of contributions the company needs to make to the plan to meet its future obligations.

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Suppose you are considering investing in a $1,000 par value, 6 year, 7% annual coupon rate bond, but pays monthly installment. If the current market price of the bond is $949, what is the current yield of the bond? (Round your answer to two decimal point)

Answers

The current yield of the bond is 7.03%.

The first step is to calculate the annual coupon payment by multiplying the coupon rate by the par value:

Annual coupon payment = 0.07 x $1,000 = $70

Since the bond pays monthly, the monthly coupon payment can be calculated by dividing the annual coupon payment by 12:

Monthly coupon payment = $70 / 12 = $5.83

Next, we need to calculate the annual interest earned by dividing the annual coupon payment by the current market price of the bond and multiplying by 100:

Annual interest earned = ($70 / $949) x 100 = 7.37%

Finally, we can calculate the current yield of the bond by dividing the annual interest earned by the annual coupon payment and multiplying by 100:

Current yield = (7.37% / 6) x 100 = 7.03%

Thus current yield of the bond is 7.03%.

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6) Baldwin Corp. just paid a dividend of $2.00. Over the next two years, this dividend is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. If the required rate of return on Baldwin stock is 12%, what should be the price of Baldwin stock today?

Answers

Baldwin Corp. paid a dividend of $2.00 which is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. Given the required rate of return on Baldwin stock is 12%. The price of Baldwin stock today should be $162.90.

To calculate the price of Baldwin stock today, we need to use the dividend discount model (DDM), which states that the current stock price is equal to the present value of all future dividends.

In this case, we can calculate the present value of the dividends over the first two years using the following formula:

PV of Dividends (Years 1-2) = D1 / (1 + r) + D2 / (1 + r) ^ 2

where:

D1 is the expected dividend at the end of the first year

D2 is the expected dividend at the end of the second year

r is the required rate of return

We are given that D1 = $2.00 * 1.2 = $2.40 and D2 = $2.40 * 1.2 = $2.88. Plugging in these values and r = 12%, we get:

PV of Dividends (Years 1-2) = $2.40 / (1 + 0.12) + $2.88 / (1 + 0.12) ^ 2

= $2.14 + $2.26

= $4.40

Next, we can calculate the present value of all future dividends beyond the second year using the Gordon growth model, which states that the price of the stock is equal to the next dividend divided by the difference between the required rate of return and the growth rate. In this case, the growth rate is 10% after the first two years, so we have:

PV of Future Dividends = D3 / (r - g)

where:

D3 is the dividend in the third year, which is equal to D2 * (1 + g) = $2.88 * 1.1 = $3.17

g is the long-term growth rate, which is 10%

Plugging in these values and r = 12%, we get:

PV of Future Dividends = $3.17 / (0.12 - 0.1)

= $158.50

Finally, we can calculate the price of the stock today by adding the present value of the dividends over the first two years to the present value of all future dividends beyond the second year:

Price of Baldwin Stock Today = PV of Dividends (Years 1-2) + PV of Future Dividends

= $4.40 + $158.50

= $162.90

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In the Dividend Discount Model, if the risk free rate goesdownA). Stock Price will go upB). It means that the market is inefficientC). Stock Price will go downD). Stock Price will remain the same

Answers

If the risk-free rate goes down in the Dividend Discount Model, the stock price will go up. Option A is correct.

The Dividend Discount Model is used to estimate the intrinsic value of a stock based on the present value of future cash flows, including dividends, discounted by a rate that reflects the stock's risk. When the risk-free rate decreases, the discount rate used in the model also decreases, making the present value of future cash flows higher.

This results in an increase in the estimated intrinsic value of the stock, which in turn leads to an increase in the stock price. Therefore, if the risk-free rate goes down, the stock price will go up, and vice versa. This relationship holds assuming that all other factors, such as the expected growth rate of dividends, remain constant.

It is important to note that the Dividend Discount Model is a simplified approach that relies on several assumptions and may not reflect the complexities of the market. Additionally, changes in the risk-free rate may not be the only factor affecting the stock price. Other factors, such as macroeconomic conditions, company performance, and investor sentiment, may also influence the stock price.

Option A holds true.

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a A new three-year CMO has two tranches. The 'A tranche has a principal of $37.4 million with an annual coupon of 3.85%. The Z tranche has a coupon of 5.81% with a principal of $43.7 million. The mortgages backing the security issue have a fixed rate of 6.77% with a maturity of three years. All payments are made and compounded annually at the end of the year. The issue will be over-collateralized with $6.2 million of equity. Priority payments made to the 'A' tranche will consist of A's promised coupon, all mortgage pool amortization, and any interest accrued to the 'Z' tranche. In the year of A's repayment and after the 'A' tranche has been repaid, the Z' tranche will start to receive its own interest and all mortgage pool amortization. The equity class will only get residual cash flows. How much total cash flow will be received by the 'Z' tranche in year 2 of the CMO? $23.50 million $24.10 million $24.70 million $25.30 million $25.91 million

Answers

The total cash flow received by the 'Z' tranche in year 2 of the CMO is $24.10 million. Option B is correct.

To calculate the cash flow received by the 'Z' tranche in year 2, we need to first calculate the cash flows received by the 'A' tranche and the mortgage pool. In year 1, the total cash flow received by the mortgage pool is:

= ($37.4 million x 0.0385) + $6.2 million

= $8.326 million, leaving $35.774 million in principal.

In year 2, the total cash flow received by the mortgage pool is:

= ($35.774 million x 0.0677) + $6.2 million

= $9.565 million, leaving $26.209 million in principal.

The 'A' tranche receives:

= $37.4 million x 0.0385

= $1.44 million, leaving $24.769 million in available cash flow for the 'Z' tranche.

The 'Z' tranche receives:

= $24.769 million x 0.0581

= $1.44 million in interest, plus $9.565 million in mortgage pool amortization, for a total cash flow of $11.005 million.

Adding the $1.44 million in accrued interest from the previous year gives a total cash flow received by the 'Z' tranche in year 2 of $12.445 million.

However, $1.44 million of this cash flow is used to pay off the 'A' tranche's accrued interest, leaving a total cash flow is:

= $11.005 million + $1.44 million + $11.005 million

= $24.10

Therefore, the answer is $24.10 million . Option B holds true.

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the amount of money a consumer has left after paying for food, clothing, and shelter is referred to as: select one: a. gross income. b. discretionary income. c. defined income. d. disposable income.

Answers

The right response is: b. disposable income. The amount of money a consumer has left over after paying for necessities like food, clothing, and housing, which can be utilised for discretionary or optional spending.

What exactly does discretionary income mean?

GLOSSARY. The difference between your annual income and 150 percent of the federal poverty level for your family size and state of residency, as applicable to the Income-Based Repayment Plan, the Pay As You Earn Repayment Plan, and loan rehabilitation, is your discretionary income.

What are optional items?

Any charges that a consumer or business wants rather than needs are considered discretionary expenses, as was previously indicated. Vacations and travel costs are a few of typical discretionary expenses. Automobiles. cigarettes and alcohol.

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consumers learning the same information in separate contexts and consumers storing the same information in different memory modes are both examples of

Answers

Consumers learning the same information in separate contexts and consumers storing the same information in different memory modes are both examples of how the human brain processes and retains information.

When consumers learn the same information in separate contexts, their brains create multiple associations with that information, making it easier to recall later on.

For example, if a consumer learns how to bake a cake in a cooking class and then watches a video about baking a cake, they will have two different contexts in which they learned the same information. This can help them remember the recipe more easily.

On the other hand, when consumers store the same information in different memory modes, they are using different parts of their brain to process and retain the information. For example, if a consumer reads a book and then listens to an audiobook of the same book, they are using both their visual and auditory memory modes to retain the information.

This can help them remember the details of the story more easily.

In both cases, the brain is using different methods to process and retain information, which can be beneficial for consumers. By creating multiple associations and using different memory modes, consumers can improve their ability to remember information and apply it in different contexts.

This can be particularly helpful in educational settings or when learning new skills.

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which statement below regarding sustainable economic growth is false? in a recession, public policy could help an economy return to full employment. when equilibrium is to the right of the lras, that is a sustainable level of production. a recession is a sustainable level of production. producing or consuming more does not always equate to long-term economic growth.

Answers

The false statement regarding sustainable economic growth is: "A recession is a sustainable level of production."

A recession is generally not considered a sustainable level of production because it involves a decline in economic activity and a decrease in output, leading to unemployment and other negative economic consequences. Sustainable economic growth refers to an increase in economic activity over time that is environmentally, socially, and financially sustainable.

Option A is correct answer.

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On October 28, 2021, Beth entered into a contract with Emery to purchase 20 doggie surf boards for her pet store at $24 each from Surf Boards R Us. These surf boards are to be delivered to her store on November 1, 2022. This contract:
A. does not need to be evidenced by a writing under the Statute of Frauds.
B. needs to be evidenced by a writing because it involves goods and performance over one year.
C. must be in writing because the contract involves goods.
D. must be in writing due to the one year rule

Answers

B. needs to be evidenced by a writing because it involves goods and performance over one year.

The Statute of Frauds requires certain contracts to be evidenced by a writing in order to be enforceable. This includes contracts for the sale of goods and contracts that involve performance over one year.

Since Beth's contract involves the sale of goods and performance over one year, it must be evidenced by a writing in order to be enforceable. If Beth and Emery fail to put their agreement into writing, the contract would be unenforceable and Beth would not be able to compel Emery to deliver the surf boards on November 1, 2022.

Therefore, it is important that Beth and Emery put their agreement into a written contract in order to ensure that their rights are protected.

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Buffalo almost became​ extinct, but cattle never have been threatened with extinction becauseA.buffalo were wild and cattle were tame.B.cattle provide economically valuable products and buffalo did not.C.buffalo were common property and cattle were private property.D.buffalo are bigger than cattle and thus provide more meat and hide.

Answers

The correct answer is B. Cattle provide economically valuable products and buffalo did not.Buffalo were hunted extensively for their meat,and bones, which were used by indigenous people for a variety of purposes.

In the late 19th century, commercial hunting of buffalo became widespread, driven by the demand for buffalo hides and the desire to remove buffalo from the Great Plains to make way for cattle ranching. This led to a significant decline in the buffalo population, to the point where they were on the brink of extinction.Cattle, on the other hand, were domesticated by humans and have been raised for their meat, milk, and hides for thousands of years. Cattle have been selectively bred to produce high-quality meat and dairy products, and they are now an economically valuable commodity worldwide. Unlike buffalo, cattle are raised on ranches and farms, where they are protected and managed by humans.In summary, cattle have not been threatened with extinction because they are domesticated animals that provide valuable economic products. Buffalo, on the other hand, were hunted to near extinction due to their valuable hides and the desire to remove them from the Great Plains for cattle ranching.

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Remex​ (RMX) currently has no debt in its capital structure. The beta of its equity is 1.5. For each year into the indefinite​future, Remex's free cash flow is expected to equal ​$25million. Remex is considering changing its capital structure by issuing debt and using the proceeds to buy back stock. It will do so in such a way that it will have a 33​% ​debt-equity ratio after the​ change, and it will maintain this​ debt-equity ratio forever. Assume that​Remex's debt cost of capital will be 7.02%. Remex faces a corporate tax rate of 25​%. Except for the corporate tax rate of 25​%, there are no market imperfections. Assume that the CAPM​ holds, the​risk-free rate of interest is

Answers

Remex's potential change in capital structure aims to take advantage of the tax shield provided by the corporate tax rate, thus reducing its overall cost of capital. This change may impact the company's equity beta and should be carefully considered alongside the risk-free rate of interest and the assumptions of the CAPM.

Currently, Remex has no debt in its capital structure, and its equity beta is 1.5. The company's free cash flow is expected to be $25 million per year indefinitely. Remex is considering issuing debt and using the proceeds to buy back stock to achieve a 33% debt-equity ratio, which will be maintained forever. The debt cost of capital for Remex will be 7.02%, and it faces a corporate tax rate of 25%. We will assume the CAPM (Capital Asset Pricing Model) holds and consider the risk-free rate of interest as well.

By changing its capital structure to include debt, Remex can potentially lower its overall cost of capital due to the tax shield provided by the interest payments on debt. This tax shield results from the 25% corporate tax rate, as interest payments are tax-deductible. However, it's important to note that the company's equity beta will likely change after introducing debt to its capital structure, which may affect the cost of equity.

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A constant growth stock's price increases 4% per year. The stock is selling for $167 and has an investor required return of 11.6%.
How much will next year's dividend be? $________ (to two decimal places)

Answers

Next year's dividend after calculations will be $6.16

To find the next year's dividend, we need to first calculate the stock's dividend yield, which is the annual dividend payment divided by the stock's price. We can use the constant growth model to calculate the dividend yield:

Dividend Yield = (Next Year's Dividend / Stock Price) = (Dividend / (Investor Required Return - Dividend Growth Rate))

Solving for the dividend, we get:

Dividend = Dividend Yield x Stock Price x (Investor Required Return - Dividend Growth Rate)

Plugging in the given values, we get:

Dividend Yield = (Next Year's Dividend / $167) = Dividend / (11.6% - 4%) = Dividend / 7.6%

Rearranging, we get:

Next Year's Dividend = Dividend Yield x Stock Price x (Investor Required Return - Dividend Growth Rate) = 0.04 x $167 x (1 - 0.04/11.6) = $6.16

Therefore, next year's dividend will be $6.16 (to two decimal places).

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in the process, a product is divided into many smaller features or functionalities, and these are rapidly created into minimum viable products and presented to the customer for feedback, enabling rapid incremental adaptation. group of answer choices agile development crowdsourcing stage-gate additive manufacturing

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In the process, a product is divided into many smaller features or functionalities, and these are rapidly created into minimum viable products and presented to the customer for feedback, enabling rapid incremental adaptation A. Agile Development.

Agile Development is an iterative and flexible approach to product creation and project management. It focuses on collaborating with the customer, adapting to changing requirements, and delivering working solutions in shorter timeframes. By breaking down a product into smaller components, teams can work on these features independently, making development more efficient and manageable. MVPs are created to demonstrate the functionality and gather feedback, helping teams to identify areas for improvement and make any necessary changes quickly.

Traditional development methods often follow a linear or sequential pattern, which can lead to inefficiencies and delays. Agile Development, on the other hand, promotes collaboration, adaptability, and continuous improvement. This enables organizations to respond to customer needs faster and more effectively, resulting in higher customer satisfaction and better overall project outcomes.

In summary, Agile Development is a dynamic approach to product creation and project management, which emphasizes customer collaboration, quick adaptation, and the delivery of MVPs to gather feedback and enhance the final product. Therefore, the correct option is A.

The question was incomplete, Find the full content below:

in the process, a product is divided into many smaller features or functionalities, and these are rapidly created into minimum viable products and presented to the customer for feedback, enabling rapid incremental adaptation. group of answer choices

A. agile development

B. crowdsourcing

C. stage-gate

D. additive manufacturing

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you purchased 100 shares of resorts, inc. stock at a price of $35.87 a share exactly one year ago. you have received dividends totaling $1.05 a share. today, you sold your shares at a price of $46.26 a share. what is your total dollar return on this investment?

Answers

The total dollar return on this investment is $1,144.00.

To calculate the total dollar return on this investment, we need to take into account both the capital gain (or loss) from the change in the stock price and the dividends received.

First, let's calculate the capital gain:

Capital gain = (Sale price - Purchase price) x Number of shares

Capital gain = ($46.26 - $35.87) x 100 = $1,039.00

Next, let's calculate the total dividends received:

Total dividends = Dividend per share x Number of shares

Total dividends = $1.05 x 100 = $105.00

Finally, we can calculate the total dollar return:

Total dollar return = Capital gain + Total dividends

Total dollar return = $1,039.00 + $105.00 = $1,144.00

Therefore, the total dollar return on this investment is $1,144.00.

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agg investments owns 285,000 shares of crc, a defensive stock. after examining the stock's cash flows, its executive leadership, and its likelihood of becoming a takeover target, a research analyst estimates the intrinsic value for this firm to be $35.00. the current market price on the nasdaq exchange is $59.23.the analyst is most likely to recommend: a. shorting the shares. b. selling the shares that are already owned. c. buying the shares due to its intrinsic value. d. buying the shares due to the pending economic decline.

Answers

Based on the given information, research analyst has estimated intrinsic value of CRC, a defensive stock, to be $35.00. However, the current market price on the NASDAQ exchange is $59.23. Analyst is most likely to recommend shorting the shares. The correct answer is option A.



This is because shorting a stock involves selling borrowed shares with the expectation that the share price will decrease, allowing the investor to buy back the shares at a lower price and profit from the difference. Since the stock appears to be overvalued, shorting it could potentially lead to profit as the price may eventually move towards its intrinsic value.


Option B, selling the shares that are already owned, could also be considered as it allows the investor to profit from the current high market price. However, shorting the shares implies a more active strategy to benefit from the overvaluation.


Option C and D are not recommended in this situation, as they involve buying the shares. Buying the shares due to their intrinsic value (C) or the pending economic decline (D) would not be advised, as the stock is currently trading at a higher price than its intrinsic value, making it an unattractive investment at this time. The correct answer is option A.

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how do executive branch attorneys influence the court’s agenda?

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Executive branch attorneys, such as Solicitor General and other government lawyers, influence the court's agenda by representing the interests of the executive branch in legal matters.

Executive branch attorneys can influence the court's agenda by recommending cases that align with the administration's policy priorities. They can also file amicus briefs in cases that are already before the court, offering the administration's perspective and potentially swaying the court's decision. Additionally, executive branch attorneys can decline to defend laws or regulations in court, which can effectively remove those issues from the court's docket. Overall, the executive branch attorneys play an important role in shaping the court's agenda by advocating for the administration's priorities and influencing which cases are brought before the court.
They present cases, arguments, and legal positions on behalf of the government, often involving issues of national importance. By doing so, they help shape the court's docket and its decisions, ultimately impacting the interpretation and implementation of laws and policies.

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On your own paper, in the working papers, or using a spreadsheet, prepare the following:
a. Prepare a multiple-step income statement for the year ended December 31, 20Y5, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. (Round earnings per share to the nearest cent.) Save your calculations and enter the requested amounts below.

Answers

The EPS calculation would be: [tex]= ($xxx - $100,000) / 100,000= $x.xx per share[/tex]

To prepare a multiple-step income statement for the year ended December 31, 20Y5, follow these steps:

1. Determine the company's total sales revenue for the year. This should be listed at the top of the income statement.

2. Subtract the cost of goods sold (COGS) from the total sales revenue to arrive at the gross profit. This is the second line of the income statement.

3. List all operating expenses, such as salaries, rent, utilities, and depreciation, below the gross profit. Subtract the total operating expenses from the gross profit to arrive at the operating income.

4. Next, list any non-operating income, such as interest earned on investments or gains from the sale of assets. Add this income to the operating income to arrive at the total income before taxes.

5. Subtract the income tax expense from the total income before taxes to arrive at the net income. This should be listed at the bottom of the income statement.

6. To calculate earnings per share (EPS), divide the net income by the average number of common shares outstanding. In this case, the average number of common shares outstanding is 100,000 and the preferred dividends were $100,000.

Therefore, the EPS calculation would be:

Net income - preferred dividends / average number of common shares outstanding
[tex]= ($xxx - $100,000) / 100,000= $x.xx per share[/tex]

Remember to round EPS to the nearest cent.

Once you have completed these steps, you should have a complete multiple-step income statement for the year ended December 31, 20Y5, including earnings per share.

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A 15 year bond was issued 3 years ago. The bond pays semiannual coupon payments with an annual coupon rate of 7.57. The face value is 51,000. The band has a nominal yield to maturity of 8%. What is the current yield of the bond today! 7.61% 7.80% 20% 8.43%

Answers

The current yield of the bond is 9.17%. The correct answer is option d.

The closest answer to the current yield of the bond is 9.17%, which is not given in the options. Among the given options, the closest answer is 8.43%.

To calculate the current yield of the bond, we need to first calculate the bond's current price.

The bond has a face value of $51,000 and an annual coupon rate of 7.57%, which means it pays a semi-annual coupon of $1,932.50 ($51,000 x 7.57% / 2) for a total annual coupon payment of $3,865.

The bond was issued 3 years ago and has 12 semi-annual coupon payments remaining (15 years × 2 semi-annual periods per year - 3 years × 2 semi-annual periods per year = 12 semi-annual periods).

Using the bond pricing formula, we can calculate the current price of the bond as follows:

[tex]PV = (C / r) x [1 - 1 / (1 + r)^n] + F / (1 + r)^n[/tex]

where:

PV = present value or current price of the bond

C = coupon payment per period

r = yield to maturity per period

n = total number of periods

F = face value of the bond

Substituting the given values, we get:

[tex]PV = ($1,932.50 / 0.04) x [1 - 1 / (1 + 0.04)^12] + $51,000 / (1 + 0.04)^12[/tex]

PV = $42,215.82

Therefore, the current yield of the bond is:

Current Yield = Annual coupon payment / Current price

Current Yield = $3,865 / $42,215.82

Current Yield = 9.17%

The correct answer is option d.

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a subsidy: a. raises the cost of doing business. b. is a payment taken by the government to discourage consumption or production of a good or service. c. is designed to decrease the available supply of a good or service. d. shifts the demand curve of a product. e. is a payment made by the government to encourage consumption or production of a good or service.

Answers

A subsidy is a payment made by the government to encourage consumption or production of a good or service (option e).

This financial assistance helps reduce the cost of production, making it more affordable for producers and, in turn, consumers.

By offering subsidies, the government can stimulate demand and increase the supply of specific goods or services, resulting in a shift of the demand curve (option d).

Subsidies do not raise the cost of doing business (option a), nor are they designed to decrease the available supply of a good or service (option c).

Additionally, they are not payments taken by the government to discourage consumption or production (option b).

Instead, subsidies serve as incentives to support targeted industries and promote certain policy goals.

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a person with a very short-term time horizon may buy and sell stocks based purely on price trends with the expectation of reversing the position within hours or days. this practice is known as:

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The practice is known as day trading. Day trading is a trading strategy where a person buys and sells securities, such as stocks, options, or futures.

It is within the same trading day with the goal of making a profit from short-term price movements. Day traders typically close out all of their positions by the end of the trading day and do not hold any positions overnight. This trading style requires a high level of skill, discipline, and knowledge of the markets, and is often associated with high risk and high reward.A person with a very short-term time horizon who buys and sells stocks based purely on price trends, expecting to reverse their position within hours or days, is engaging in a practice known as "day trading."

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1. Compute the stock price of a firm that pays a dividend of €1.5 per share; its expected earnings are €1.5 mill. for year 1, and €2.5 mill. for year 2. Then, the firm expects to increase its earnings at 4% annual rate. The payout-ratio is 60%, and it is constant for the entire life of the firm. The number of stocks is 1 mill., the return of the firm is 8%, and the risk-free rate is 2%. Hint: use the Gordon model.
a. Between €35.2 and €36.0.
b. Between €40.5 and €43.
c. Between €66.53 and €69.53. d. None of the above.

Answers

The stock price of the firm is between B)€40.5 and €43.

The Gordon model can be used to calculate the stock price of a firm that pays a constant dividend and has a constant growth rate. The formula is as follows:

P0 = D1/(r-g)

Where:

P0 = the current stock price

D1 = the dividend paid in year 1

r = the required return or cost of equity

g = the expected growth rate of dividends

First, we need to calculate the dividend for year 1:

Dividend payout ratio = 60% = 0.6

Dividend per share = Dividend payout ratio x Earnings per share

Dividend per share = 0.6 x (€1.5 mill./1 mill. shares) = €0.9 per share

Total dividend = €0.9 per share x 1 mill. shares = €0.9 mill.

Using the given constant growth rate of 4%, we can calculate the expected dividends for year 2 and beyond:

D2 = D1 x (1+g) = €0.9 x (1+0.04) = €0.936

D3 = D2 x (1+g) = €0.936 x (1+0.04) = €0.974

The expected dividends per share for the following years can be calculated in the same way, but for this exercise, we need to calculate the stock price based on the dividends for the first three years only.

The total dividend for the first three years is:

Total dividend = D1 + D2 + D3 = €0.9 + €0.936 + €0.974 = €2.81

Now, we need to calculate the required return or cost of equity (r). We are given that the return of the firm is 8%, and the risk-free rate is 2%. We can use the Capital Asset Pricing Model (CAPM) to calculate the cost of equity:

r = rf + β x (rm - rf)

Where:

rf = risk-free rate = 2%

β = beta = 1 (given)

rm = expected return on the market = 8%

r = 2% + 1 x (8% - 2%) = 6%

Substituting the values into the Gordon model formula, we get:

P0 = €2.81/(0.06 - 0.04) = €140.5

However, we need to divide the stock price by the number of shares to get the stock price per share:

Stock price per share = €140.5/1 mill. shares = €140.5 per share

Therefore, the stock price of the firm is between B) €40.5 and €43 (since the dividend payout ratio is less than 100%, the stock price cannot be less than the dividend per share).

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Suppose the risk free rate is 5.4% and the expected rate of return on the market is 10.5%. If the stock xyz's beta is 0.9, what is the expected rate of return to the stock? Answer to the nearest hundredth of a percent as in xx.xx% and enter without the percent sign.

Answers

The risk free rate is 5.4% and the expected rate of return on the market is 10.5%. If the stock xyz's beta is 0.9, the expected rate of return to the stock XYZ is 9.99%.

To calculate the expected rate of return for stock XYZ, we'll use the Capital Asset Pricing Model (CAPM) formula:
Expected Rate of Return = Risk-free Rate + (Beta × Market Risk Premium)
Market Risk Premium = Expected Rate of Return on Market - Risk-free Rate

Calculate the Market Risk Premium: Market Risk Premium = 10.5% - 5.4% = 5.1%
Apply the CAPM formula: Expected Rate of Return = 5.4% + (0.9 × 5.1%)
Solve for the Expected Rate of Return: Expected Rate of Return = 5.4% + (0.9 × 5.1%) = 5.4% + 4.59% = 9.99%
The expected rate of return for stock XYZ is 9.99%.

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From the following data Total orders (Q) # of workers (L) # of machines (K) 8 1 1 13 1 2
18 1 3
21 2 3
26 2 4
Which is the correct corresponding production function? O Q = 8LK O Q=L+4K = L O Q = 3L +3K = O Q = 3L + 5K

Answers

The correct corresponding production function is Q = 3L + 5K.

Given the data for Total orders (Q), number of workers (L), and number of machines (K), we need to find the correct corresponding production function among the options provided:

1. Q = 8LK
2. Q = L + 4K
3. Q = 3L + 3K
4. Q = 3L + 5K

Let's test each option using the data given:

Option 1:
For the first data point (Q=8, L=1, K=1), the function would give Q = 8(1)(1) = 8, which is correct. However, for the second data point (Q=13, L=1, K=2), the function would give Q = 8(1)(2) = 16, which is incorrect.

Option 2:
For the first data point, the function would give Q = 1 + 4(1) = 5, which is incorrect.

Option 3:
For the first data point, the function would give Q = 3(1) + 3(1) = 6, which is incorrect.

Option 4:
For the first data point, the function would give Q = 3(1) + 5(1) = 8, which is correct. Let's check the second data point (Q=13, L=1, K=2). This function gives Q = 3(1) + 5(2) = 13, which is also correct. It also holds true for the rest of the data points.

So, the correct corresponding production function is Q = 3L + 5K.

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Say, because of COVID-19 pandemic, many supply chains are broken and there is loss of entrepreneurship. What should be the possible effect of it on the production possibility curve of the United states? Select one: a. it should be rotating out on the horizontal axis. b. it should be rotating out on the vertical axis. c it should be shifting outward. d it should be shifting inward.

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Because of COVID-19 pandemic, many supply chains are broken and there is loss of entrepreneurship. The possible effect of it on the production possibility curve of the United states d. it should be shifting inward.

This means that the economy will produce fewer goods and services as a result of the disruption in the supply chains and the decrease in entrepreneurial activity. This shift will result in a decrease in the productive capacity of the United States, and it may take some time for the economy to recover from this setback.

It is important to note that this shift is a short-term effect, and once the supply chains are restored and entrepreneurship picks up again, the production possibility curve will shift outward once again. In the meantime, the United States will have to find ways to adapt to the new normal and work towards rebuilding its productive capacity. Because of COVID-19 pandemic, many supply chains are broken and there is loss of entrepreneurship. The possible effect of it on the production possibility curve of the United states d. it should be shifting inward.

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which sources have the appropriate qualifications to be a credible source of information about how a proposed tax cut would affect the u.s. national debt?

Answers

The sources include government agencies, academic institutions, and reputable think tanks.

What are the credible source of information

A credible source of information about how a proposed tax cut would affect the U.S. national debt should possess appropriate qualifications and expertise. Key sources include government agencies, academic institutions, and reputable think tanks.

Government agencies, such as the Congressional Budget Office (CBO) and the Department of Treasury, offer well-researched and unbiased analyses. Academic institutions, particularly those with renowned economics departments, can provide expert insights and empirical evidence.

Reputable think tanks, like the Tax Policy Center or the Heritage Foundation, conduct extensive research and offer policy recommendations.

These sources combine expertise, rigorous analysis, and relevant data to ensure credibility when examining the impact of tax cuts on the national debt.

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A perfectly competitive firm will produce more output and charge a lower (per-unit) price than a single-price monopoly firm. Do you agree or disagree with this statement?

Answers

I agree with the statement that a perfectly competitive firm will produce more output and charge a lower (per-unit) price than a single-price monopoly firm.

In a perfectly competitive market, there are numerous small firms, and no single firm has the power to influence market prices. The firms in a perfectly competitive market are price takers and must accept the market price as given. Therefore, to sell more output, a firm must reduce its price, which leads to a lower per-unit price than a single-price monopoly firm.

On the other hand, a single-price monopoly firm is the only supplier in the market, and it has the power to control the market price. A single-price monopoly firm can restrict its output to increase the market price and its profits. Therefore, a single-price monopoly firm will produce less output and charge a higher per-unit price than a perfectly competitive firm.

In summary, a perfectly competitive firm will produce more output and charge a lower per-unit price due to the presence of competition in the market. In contrast, a single-price monopoly firm will produce less output and charge a higher per-unit price due to its market power.

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I agree with this statement. Perfectly competitive firms are assumed to have a large number of equally sized firms selling identical products, with no barriers to entry or exit.

Because of this, each firm is a price taker, meaning they have to accept the market price, which is dictated by the demand and supply of the industry. This means that the firm can only charge a price that will produce the quantity of output that will maximize their profits.

This quantity is lower than what a single-price monopoly would be able to produce, as the monopoly has the ability to set their own price.

This, in turn, means that the perfectly competitive firm needs to charge a lower price in order to sell the quantity of output that will maximize their profits.

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the national political stalemate of the 1800s and early 1890s originated in part because of

Answers

The national political stalemate of the 1800s and early 1890s originated in part because of disagreements over issues such as slavery, states' rights, and economic policies.

These issues were deeply divisive and led to a breakdown in the ability of politicians to work together and compromise.

Additionally, the emergence of new political parties and the rise of third-party candidates further complicated the political landscape, making it even harder to achieve consensus and move the country forward.

Ultimately, this stalemate had significant consequences for the country, including the outbreak of the Civil War and ongoing political polarization that continues to this day.

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