Mountain Dew has been innovative with its product by introducing new flavors and varieties, such as Mountain Dew Kickstart, Mountain Dew Ice, and Mountain Dew Game Fuel. These innovations have been effective in attracting new consumers and keeping current fans engaged with the brand.
How successful is Mountain Dew?Mountain Dew has been innovative by introducing new flavors, limited-edition releases, and packaging designs to cater to a diverse audience. This has been effective as it has allowed the brand to continuously engage its customers, stay relevant, and expand its market share. Some key examples of their innovations include:
1. New flavors: Mountain Dew has launched various flavors over the years, such as Code Red, LiveWire, Baja Blast, and Pitch Black. These unique flavors attract different consumer segments and keep the brand fresh.
2. Limited-edition releases: The brand has also introduced limited-edition releases, such as Dewmocracy, where customers could vote for their favorite new flavor. This engages the audience and makes them feel part of the brand's decision-making process.
3. Packaging designs: Mountain Dew has experimented with innovative packaging designs, such as slim cans and bottles, to make their products more convenient and appealing to a wider audience.
In conclusion, Mountain Dew's innovation in flavors, limited-edition releases, and packaging designs has been effective in keeping the brand relevant and engaging its customers.
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Currently, in 2022, the US Treasury Note yield stands at about 2.03% whereas the core PC stands at 5.2%. Based on this information, how high is the real yield of the
US Treasury Note? Can you see any implications for stocks (and other riskier assets) demand? Please discuss.
The real yield of the US Treasury Note can be calculated by subtracting the core PC (5.2%) from the US Treasury Note yield (2.03%). Therefore, the real yield of the US Treasury Note is currently -3.17%.
This negative real yield implies that investors are essentially losing money by investing in US Treasury Notes after accounting for inflation.
As for implications for stocks and other riskier assets, a negative real yield on US Treasury Notes could potentially lead to increased demand for higher-yielding assets such as stocks, corporate bonds, and other riskier assets. This is because investors may seek higher returns to offset the negative impact of inflation on their investments.
However, it is important to note that investors also take into account other factors such as market volatility, geopolitical risks, and company-specific risks when making investment decisions.
Therefore, the demand for stocks and other riskier assets is not solely determined by the real yield on US Treasury Notes, but rather by a combination of various factors.
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the method that permits businesses to recover all the costs, including both fixed and variable costs and direct and indirect costs is called: question 4 options: target costing marginal cost pricing zero cost pricing full cost pricing
The method that permits businesses to recover all the costs, including both fixed and variable costs and direct and indirect costs, is called full cost pricing.
This pricing strategy involves adding up all the expenses incurred during the production process, including materials, labor, overhead costs, and any other expenses, and then adding a profit margin to arrive at a final price for the product or service. Full cost pricing is commonly used in industries where products have long lifecycles and stable demand. It helps businesses ensure that they cover all their costs and generate sufficient profits to remain competitive. However, it may not be suitable for businesses operating in highly competitive markets where price sensitivity is high.
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The third phase in the SDLC is planning and in this phase the analyst thoroughly studies the organization's current procedures and the information systems used to perform organizational tasks.TRUE/FALSE
TRUE. The third phase in the SDLC (Software Development Life Cycle) is planning, and during this phase, the analyst thoroughly studies the organization's current procedures and the information systems used to perform organizational tasks.
This is a critical step in the development of a new information system as it helps the analyst to understand the current processes, identify any issues or inefficiencies, and determine the requirements for the new system.
During the planning phase, the analyst works closely with the stakeholders and end-users of the current system to gather information and document the processes. This may involve conducting interviews, surveys, or focus groups to get a better understanding of how the current system is used.
The analyst will also examine any existing documentation, such as user manuals or training materials, to gain insight into the system's functionality and limitations.
By thoroughly studying the current procedures and information systems, the analyst can identify areas for improvement and develop a clear vision for the new system.
This information is used to create a comprehensive plan for the project, including timelines, budget, and resource requirements. Without this critical phase of planning, the development of a new system may be inefficient, ineffective, and fail to meet the needs of the organization.
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Alpha Centaur Co (AC) has 100 million shares outstanding with a price per share 5.8€ per share. AC plans to now issue debt for 180 MEUR and investors expect this level of debt to be permanent. Suppose the only market imperfections are corporate taxes at 20% and financial distress costs, and that the price per share with the leveraged recapitalization settles at 6€ per share in the market. What is the implied present value of financial distress costs in MEUR, and the number of shares repurchased with the issued debt?
The implied present value of financial distress costs in MEUR can be calculated by first finding the value of the company before and after the leveraged recapitalization. Before the recapitalization, the value of AC is:
100 million shares x €5.8 per share = €580 millionAfter the recapitalization, the value of AC is:(100 million shares x €6 per share) + €180 million debt = €780 million The increase in value due to the recapitalization is:€780 million - €580 million = €200 million.
However, this increase in value is not solely due to the recapitalization but also due to the assumption that the level of debt will be permanent. Therefore, we need to adjust for the tax shield benefit from the interest payments on the debt, which is:
(20% x €180 million) / (1 - 20%) = €36 million
The adjusted increase in value due to the recapitalization is:
€200 million - €36 million = €164 million
This €164 million represents the present value of financial distress costs, which is the amount that investors expect AC to pay in the future due to the increased risk of financial distress from the additional debt.
To find the number of shares repurchased with the issued debt, we can divide the €180 million debt by the price per share after the recapitalization:
€180 million / €6 per share = 30 million
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stabilization policy refers to policy actions aimed at: reducing the severity of short-run economic fluctuations. equalizing incomes of households in the economy. maintaining constant shares of output going to labor and capital. preventing increases in the poverty rate.
Stabilization policy refers to policy actions aimed at reducing the severity of short-run economic fluctuations.Option (1)
These policy actions are designed to help stabilize the economy during periods of recession or inflation by influencing aggregate demand through monetary or fiscal policy tools.
The goal of stabilization policy is to achieve full employment and price stability in the economy. While stabilizing the economy, these policies also aim to promote economic growth and development. Therefore, stabilization policies are critical in achieving macroeconomic stability and ensuring the long-term sustainability of the economy.
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Full Question: Stabilization policy refers to policy actions aimed at:
reducing the severity of short-run economic fluctuations. equalizing incomes of households in the economy. maintaining constant shares of output going to labor and capital. preventing increases in the poverty rate.Current Attempt in Progress Wildhorse, Inc., has net income of $11,760,000 on net sales of $367,500,000. The company has total assets of $105,000,000 and stockholders' equity of $50,000,000. Use the extended DuPont identity to find the return on assets and return on equity for the firm. (Round answers to 2 decimal places, e.g. 12.25 or 12.25%.) Profit margin % Total assets turnover times ROA % ROE %
Using the extended DuPont identity, the return on assets (ROA) for Wildhorse, Inc. is 11.20% and the return on equity (ROE) is 23.52%.
To find the return on assets (ROA) and return on equity (ROE) for Wildhorse, Inc., using the extended DuPont identity, we need to calculate the profit margin, and total assets turnover, and then apply these values to find ROA and ROE.
1. Profit margin: Profit margin = (Net income / Net sales) x 100
Profit margin = ($11,760,000 / $367,500,000) x 100
Profit margin = 3.20%
2. Total assets turnover: Total assets turnover = Net sales / Total assets
Total assets turnover = $367,500,000 / $105,000,000
Total assets turnover = 3.5 times
3. ROA: ROA = Profit margin x Total assets turnover
ROA = 3.20% x 3.5
ROA = 11.20%
4. ROE: ROE = ROA x (Total assets / Stockholders' equity)
ROE = 11.20% x ($105,000,000 / $50,000,000)
ROE = 11.20% x 2.1
ROE = 23.52%.
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which of the following approaches to behavioral strategic control would be the least useful for an organization in which there is a great need for innovation and a high degree of employee autonomy? group of answer choices culture rewards rules incentives
Of the given options, the approach to behavioral strategic control that would be the least useful for an organization in which there is a great need for innovation and a high degree of employee autonomy is rules. Option C.
Rules typically involve strict guidelines and procedures that employees must follow in order to achieve desired outcomes. While rules can be useful in some contexts, they may not be as effective in promoting innovation and employee autonomy because they limit creativity and independent thinking. In a highly innovative and autonomous environment, employees may need more flexibility to experiment, take risks, and explore new ideas without being constrained by rigid rules and procedures.
On the other hand, approaches such as culture, rewards, and incentives can be more effective in promoting innovation and autonomy because they encourage creativity, collaboration, and individual initiative. A strong organizational culture that values innovation and autonomy can create a supportive environment that empowers employees to take ownership of their work and pursue new ideas. Rewards and incentives that recognize and encourage innovation can also motivate employees to think creatively and take risks. Option C.
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here is a consumption function: c = c0 mpc(yd). if consumption is $3,000, mpc =0.80, and disposable income is $2,900, what does autonomous consumption equal?
Autonomous consumption refers to the level of consumption that is independent of disposable income. In other words, it is the amount of consumption that would occur even if there were no income at all.
To calculate autonomous consumption, we need to use the consumption function given:
c = c0 mpc(yd).
We know that consumption is $3,000, mpc = 0.80, and
disposable income is $2,900.
We can rearrange the formula to solve for c0:
c = c0 mpc(yd)
c/mpc(yd) = c0
Now, we can plug in the values:
c/mpc(yd) = c0
$3,000 / (0.80 x $2,900) = c0
c0 = $1,034.48
Therefore, autonomous consumption equals $1,034.48.
This means that even if disposable income were zero, consumption would still be at least $1,034.48 due to factors such as basic needs and non-income-related factors that influence consumption.
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which of the following refers to the displacement of market middlemen and the creation of a new direct relationship between producers and consumers?question 1 options:network effectdisintermediationfriction-free commercefirst mover advantage
The "disintermediation" refers to the displacement of market middlemen and the creation of a new direct relationship between producers and consumers.
Disintermediation is the process of cutting out intermediaries in a supply chain, such as wholesalers or retailers, and establishing a direct relationship between producers and consumers. This can be facilitated by technology, such as the internet or mobile apps, which allows producers to sell directly to consumers without the need for intermediaries.
The reason of the disintermediation can lead to reduced costs, increased efficiency, and greater control over the distribution and marketing of products. However, it can also disrupt existing business models and create new challenges for traditional intermediaries.
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Do you think that marketers can CREATE needs? If so, discuss an
example of this.
How do marketers create or activate wants based on needs?
Discuss an example of how marketing may activate or stimulate
Yes, marketers can create needs, or at least create the perception of needs, through various marketing tactics such as advertising, promotions, and product design.
What is an example of this?
One example of this is the smartphone industry. Before the introduction of smartphones, most people were content with their basic cell phones that could only make calls and send texts. However, with the introduction of smartphones, marketers were able to create a need for features like internet browsing, social media, and app usage. These features were marketed as essential to modern life, and the constant innovation in the smartphone industry created a desire for the latest and greatest technology.
Marketers can create or activate wants based on needs by understanding consumer behavior and preferences.
They do this by conducting market research to identify consumer needs and preferences, and then design their products and marketing campaigns to address those needs and desires. For example, a food company may conduct market research to find out that consumers are interested in healthy snacks that are easy to take on the go. Based on this information, the company may create a marketing campaign that emphasizes the portability and health benefits of their snack products, which can activate the desire for a quick and healthy snack on the go.
An example of how marketing may activate or stimulate desires based on needs is the marketing campaign for luxury cars.
Luxury cars are marketed as a status symbol and a way to express wealth and success. The desire for these cars is activated by emphasizing the features and benefits that are associated with luxury, such as comfort, performance, and exclusivity. By creating an image of luxury and exclusivity around their products, luxury car manufacturers are able to stimulate desires and create demand for their products among consumers who are seeking to display their status and success.
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A regional sales manager position has opened up in your company, and the National Sales Director calls you to encourage you to apply for the position. The position would require significant international travel. Since you've recently adopted a child, the idea of international travel isn't appealing. According to _____ theory, you will not be motivated by the National Sales Director's suggestion.
a. the two-factor
b. Maslow's
c. equity
d. Hawthorne's
e. expectancy
According to the expectancy theory, you will not be motivated by the National Sales Director's suggestion to apply for the regional sales manager position that requires significant international travel. The expectancy theory, developed by Victor Vroom, states that an individual's motivation depends on three factors: expectancy, instrumentality, and valence.
Expectancy is the belief that increased effort will lead to increased performance. Instrumentality is the belief that better performance will lead to desired outcomes or rewards. Valence is the value an individual place on the rewards or outcomes.
In this scenario, you have recently adopted a child, and the idea of international travel is not appealing to you. This affects the valence factor of the expectancy theory. Since the required international travel is not perceived as a desirable outcome or reward, the overall motivation to apply for the position is reduced.
Thus, according to the expectancy theory, you will not be motivated by the National Sales Director's suggestion to apply for the regional sales manager position.
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marsha incorporated has the following budgeted data for the coming year: cash balance, beginning $ 15,700 collections from customers 145,700 direct materials purchases 25,700 expenses: operating expenses 51,400 payroll 75,700 income taxes 6,000 other: machinery purchases 30,700 operating expenses include $20,700 depreciation for buildings and equipment. all purchases of materials are paid for in the period of purchase. the company requires a minimum cash balance of $25,000. required: compute the amount the company needs to finance or the excess cash available for marsha to invest
The ending cash balance is negative, it means that the company needs financing of $49,500 to meet its cash requirements for the year. Alternatively, if the company had a positive ending cash balance, it would have excess cash available for investment.
To compute the amount of financing needed or excess cash available for investment, we need to calculate the company's total cash inflows and outflows for the year.
Cash inflows:
Collections from customers = $145,700
Cash outflows:
Direct materials purchases = $25,700
Operating expenses (excluding depreciation) = $51,400
Payroll = $75,700
Income taxes = $6,000
Depreciation = $20,700
Machinery purchases = $30,700
Total cash outflows = $210,900
To determine the company's ending cash balance, we need to add the beginning cash balance to the total cash inflows and subtract the total cash outflows:
Beginning cash balance = $15,700
Total cash inflows = $145,700
Total cash outflows = $210,900
Ending cash balance = Beginning cash balance + Total cash inflows - Total cash outflows
Ending cash balance = $15,700 + $145,700 - $210,900
Ending cash balance = -$49,500
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shunsuke is an advertiser at a kitchen appliance company. he ran an awareness campaign to promote his brand's award winning toaster. a few months after the campaign ended, he noticed that the baseline performance was overall higher on glance views and conversion rate across many of his products. what is this likely to mean?
If the baseline performance for glance views and conversion rate across many of Shunsuke's products has improved after running the awareness campaign for his brand's toaster, it is likely that the campaign had a positive halo effect on the other products in the company's product line.
The halo effect is a cognitive bias in which our overall impression of a product or brand is influenced by our perception of one of its attributes, such as its design, quality, or popularity. In this case, customers who were exposed to the awareness campaign for the toaster may have developed a more positive overall impression of the company's brand and its other products, which resulted in higher glance views and conversion rates for those products.
This type of halo effect is a common goal of advertising campaigns, where the focus is not only on promoting a specific product but also on enhancing the overall image and reputation of the brand. By creating positive associations with the brand, customers are more likely to consider other products from the company in the future, even if they were not initially interested in them.
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Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 40%, rd = 8%, rps = 7.1%, and rs = 10%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.
Shi Import-Export's WACC is 8.10%.
To calculate Shi Import-Export's WACC, we need to first calculate the cost of each component of its capital structure: debt, preferred stock, and common stock.
The cost of debt (rd) is given as 8%, so we can simply use that. The cost of preferred stock (rps) is also given as 7.1%.
To calculate the cost of common stock (rs), we can use the capital asset pricing model (CAPM):
rs = rf + β(rs - rf)
where rf is the risk-free rate (assumed to be 2.5%), β is the company's beta (assumed to be 1.2), and rs - rf is the market risk premium (assumed to be 5%).
Using these values, we can calculate the cost of common stock as:
rs = 2.5% + 1.2(5%) = 8.5%
Next, we need to calculate the weights of each component of the capital structure. Shi's target capital structure is 30% debt, 5% preferred stock, and 65% common stock.
Using these weights and the costs of each component, we can calculate the weighted average cost of capital (WACC) as:
WACC = (0.30 x 0.08) + (0.05 x 0.071) + (0.65 x 0.085) x (1 - 0.40) = 0.081 or 8.10%
Therefore, Shi Import-Export's WACC is 8.10%.
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Problem 16-14 MM and Taxes Cede & Co. expects its EBIT to be $115,000 every year forever. The company can borrow at 7 percent. The company currently has no debt and its cost of equity is 13 percent. a. If the tax rate is 24 percent, what is the value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the value be if the company borrows $255,000 and uses the proceeds to repurchase shares? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
A) The value of the company is $672,308.00.
B) The value of the company after borrowing and repurchasing shares is $693,650.79.
a. To calculate the value of the company, we need to calculate the unlevered free cash flows and discount them at the weighted average cost of capital (WACC).
First, we need to calculate the unlevered free cash flows. Since the company expects to generate a constant EBIT of $115,000 every year forever, we can use the perpetuity formula:
PV = C / r
where PV is the present value, C is the cash flow, and r is the discount rate. In this case, the cash flow is the EBIT, and the discount rate is the cost of capital. Therefore, the unlevered free cash flow is:
FCF = EBIT × (1 - tax rate) = $115,000 × (1 - 0.24) = $87,400
Next, we need to calculate the WACC, which is the weighted average of the cost of debt and the cost of equity. Since the company currently has no debt, the WACC is equal to the cost of equity:
WACC = cost of equity = 0.13
Finally, we can calculate the value of the company using the formula:
Value of company = FCF / WACC
Value of company = $87,400 / 0.13 = $672,308.00
Therefore, the value of the company is $672,308.00.
b. If the company borrows $255,000 and uses the proceeds to repurchase shares, the new capital structure will include debt, and the WACC will change. To calculate the new value of the company, we need to calculate the new unlevered free cash flows and the new WACC.
The new unlevered free cash flow will be the same as before, since the EBIT is not affected by the capital structure:
FCF = $87,400
To calculate the new WACC, we need to calculate the cost of debt and the cost of equity. The cost of debt is given as 7 percent. The cost of equity can be calculated using the capital asset pricing model (CAPM):
cost of equity = risk-free rate + beta × (market risk premium)
Assuming a risk-free rate of 3 percent and a market risk premium of 8 percent, and a beta of 1.5, we get:
cost of equity = 0.03 + 1.5 × 0.08 = 0.15
The new WACC can be calculated as:
WACC = (value of debt / (value of debt + value of equity)) × cost of debt + (value of equity / (value of debt + value of equity)) × cost of equity
where the value of debt is $255,000, and the value of equity is the value of the company before borrowing:
WACC = ($255,000 / ($255,000 + $672,308.00)) × 0.07 + ($672,308.00 / ($255,000 + $672,308.00)) × 0.15 = 0.126
Finally, we can calculate the new value of the company using the formula:
Value of company = FCF / WACC
Value of company = $87,400 / 0.126 = $693,650.79
Therefore, the value of the company after borrowing and repurchasing shares is $693,650.79.
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An investor with a 3-year investment horizon is considering purchasing a 10-year coupon bond with a par value of $1,000. The annual coupon rate is 10% and the price is $1,000. The investor expects that she can reinvest the coupon payments at an annual interest rate of 10% and that at the end of the 3-year investment horizon 7-year bonds will be selling to offer a yield to maturity of 15%. What is the total return for this bond?
The total return for this bond over the 3-year investment horizon is 2.7% when the yield to maturity is 15%.
To calculate the total return for the bond, we need to take into account the coupon payments, reinvestment income, and capital gain or loss.
First, let's calculate the annual coupon payment. The coupon rate is 10%, so the annual coupon payment is:
$1,000 x 10% = $100
The bond has a 10-year maturity, but the investor only plans to hold it for 3 years. At the end of the third year, there will be 7 years left until maturity.
Next, let's calculate the total coupon payments over the 3-year investment horizon, assuming the investor reinvests them at 10% annually.
- Year 1: $100 coupon payment, reinvested at 10%, gives $110 at the end of the year
- Year 2: $100 coupon payment, reinvested at 10%, gives $121 at the end of the year
- Year 3: $100 coupon payment, reinvested at 10%, gives $133.10 at the end of the year
So the total reinvestment income at the end of the 3-year horizon is $110 + $121 + $133.10 = $364.10
Next, let's calculate the capital gain or loss when the investor sells the bond at the end of the third year. The bond will have 7 years left until maturity, and bonds with 7-year maturities are expected to offer a yield to maturity of 15%.
Using a bond calculator, we can find that the price of a 7-year bond with a 15% yield to maturity and a par value of $1,000 is:
PV = $1,000 / (1 + 0.15) = $386.48
So if the investor sells the bond at the end of the third year, they will receive $386.48.
Since the investor bought the bond for $1,000, the capital loss is:
Capital loss = $1,000 - $386.48 = $613.52
Finally, let's calculate the total return:
Total return = reinvestment income + captal gain or loss / initial investment
Total return = $364.10 + ($613.52) / $1,000 = 0.027 = 2.7%
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exercising PEOPLE PROBLEMS The Situation You are the controller at a manufacturing company that sells refrigeration and food packaging equipment worldwide. Your company recently hired a temporary worker, Kelly, to help put a new International sales tax tracking system in place. She's well qualified, a hard worker, a team player, and highly effective at her job. You want to bring her on full time, so you have jumped through all the hoops and created a middle management job for her that would put her on equal footing with her current boss, the accounting manager, Elizabeth (who reports to you. You are going to finish the process as soon as you get back from a week of vacation, The Dilemma While you were gone, Elizabeth obtained Kelly's résume from the temp agency. She noticed some holes in the timeline and met with Kelly in a closed meeting. After the meeting, she had security escort Kelly out of the building and warned her not to retum. She wrote a memo to you stating that in the interview, as she probed some of the discrepancies in the résumé and job application, Kelly revealed that she had struggled with alcohol Issues when she was younger, but now she was 15 years dean and sober. Despite this, Elizabeth felt that Kelly's past made her unqualified for the job, and felt so strongly about it that she, Elizabeth, would resignil kelly was brought back in any capacity, Elizabeth has been with the company for 20 years and runs the accounting department like a tight ship. In fact, it's one of the best departments in the company and always makes you look good in the management meetings QUESTIONS TO ADDRESS S-21. What areas of management functions are involved in this scenario 5-22. What are the ethicales in this situation 5-23What is the logical, busin-bied approach for a man ager to take in this situation! Explain your position 5-21. What would you do and why? 5:25. How would you describe the culture of this company based on the limited information in the scenario exercising PEOPLE PROBLEMS The Situation You are the controller at a manufacturing company that sells refrigeration and food packaging equipment worldwide. Your company recently hired a temporary worker, Kelly, to help put a new international sales tax tracking system in place She's well qualified, a hard worker, a team player, and highly effective at her job. You want to bring her on full time, so you have jumped through all the hoops and created a middle management job for her that would put her on equal footing with her current boss, the accounting manager, Elizabeth (who reports to you). You are going to finish the process as soon as you get back from a week of vacation. The Dilemma While you were gone, Elizabeth obtained Kelly's résume from the temp agency. She noticed some holes in the timeline and met with Kelly in a closed meeting. After the meeting, she had security escort Kelly out of the building and wamed her not to retum. She wrote a memo to you stating that in the interview, as she probed some of the discrepancies in the resume and job application, Kelly revealed that she had struggled with alcohol issues when she was younger, but now she was 15 years clean and sober. Despite this, Elizabeth felt that Kelly's past made her unqualified for the job, and felt so strongly about it that she, Elizabeth, would resign if Kelly was brought back in any capacity, Elizabeth has been with the company for 20 years and runs the accounting department like a tight ship. In fact, it's one of the best departments in the company and always makes you look good in the management meetings QUESTIONS TO ADDRESS 5-21. What areas of management functions are involved in this scenario 5-22 What are the ethical issues in this situation? 5-23. What is the logical, business-based approach for a man- ager to take in this situation? Explain your position 5-21. What would you do and why? 5-25. How would you describe the culture of this company based on the limited information in the scenario
Okay, let's break this scenario down:
5-21. The areas of management involved here are:
- Leadership: You as the controller have to lead in resolving this difficult situation.
- Human resources management: Managing the hiring, performance issues and termination of employees.
- Accounting/Finance: Given that Kelly was brought on to help implement an accounting system and Elizabeth runs the accounting dept.
5-22. The main ethical issues here are:
- Discrimination: Elizabeth may be discriminating against Kelly due to her past struggles, despite her being 15 years sober.
- Fairness: Is it fair to remove Kelly from her new role after she was already hired for it?
- Trust: Did Elizabeth violate trust by reviewing Kelly's private resume behind your back?
5-23. The logical, business-focused approach here would be:
- Weigh the pros and cons of Kelly vs. Elizabeth remaining in their roles. Who is more valuable to the key business needs?
- Determine if either employee's actions warrant discipline or termination. Or if the issues can be resolved professionally.
- Consider if there are any compromises or alternative solutions, e.g. Kelly remaining in a different role, Elizabeth reporting to someone else, etc.
- Make a decision that prioritizes the good of the key business operations and team productivity.
5-21. Given the options, I would try to have a constructive conversation with both Elizabeth and Kelly to find a reasonable resolution, rather than immediately terminating either one.
- Kelly seems a valuable hire, so I would want to try and make the role work if possible.
- Elizabeth also seems a key employee, so losing her should be an absolute last resort.
- With open communication, they may be able to find a way to professionally co-exist or alternative solutions could emerge.
- Only if resolution proves truly impossible would I consider letting either one go. Compromise and pragmatism seem prudent here.
5-25. Based on this limited scenario, I would describe the culture of this company as:
- Fastidious and by-the-book, given how strictly Elizabeth seems to enforce procedures.
- Closed-off, as there is a lack of transparency around key decisions and Elizabeth's actions seem isolating.
- With an undercurrent of politics, as power dynamics and territorialism also seem to be in play.
- However, the company also appears performance-oriented, as under-performing employees would presumably be let go.
- So, a mix of positive and concerning cultural elements based on this dilemma alone. More context would be needed to determine the full culture.
1.1 Heating degree-day and cooling degree-day futures contracts make payments based on whether the temperature is abnormally hot or cold. Explain why the following businesses might be interested in such a contract: a. Soft-drink manufacturers. b. Ski-resort operators. c. Electric utilities. d. Amusement park operators. 1.2 Suppose the businesses in the previous problem use futures contracts to hedge their temperature-related risk. Who do you think might accept the opposite risk?
Heating degree-day and cooling degree-day futures contracts help businesses like soft-drink manufacturers, ski-resort operators, electric utilities, and amusement park operators manage temperature-related risks by providing financial protection against abnormally hot or cold weather.
a. Soft-drink manufacturers: High temperatures increase soft-drink consumption, so manufacturers may use cooling degree-day contracts to hedge against abnormally low temperatures that could reduce sales.
b. Ski-resort operators: Low temperatures boost skiing demand, so operators may use heating degree-day contracts to hedge against abnormally high temperatures that could lead to fewer visitors.
c. Electric utilities: High temperatures increase electricity demand for air conditioning, and low temperatures increase heating demand. Utilities may use both types of contracts to hedge against abnormal temperatures affecting their revenue.
d. Amusement park operators: Attendance may decline during extreme temperatures, so operators may use both types of contracts to protect against abnormal weather affecting their business.
For question 1.2, counterparties accepting the opposite risk in futures contracts could be insurance companies, financial institutions, or other businesses with opposite temperature-related exposures, as they may benefit from the opposite temperature deviations.
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which of the following is true regarding price? multiple choice question. it should be based on the value that the customer perceives. it should be as high as legally allowed. it should always be based on competitors' prices. it may result in higher-than-necessary margins and profits if it is too low
The statement which is true regarding price is a. it should be based on the value that the customer perceives.
Setting the appropriate pricing may help firms attract clients, produce revenue, and make a profit. Pricing is a crucial component of marketing strategy. Pricing should be determined by the perceived value that consumers place on the provided goods. This implies that when determining pricing, firms should consider both advantages of their commodities as well as the requirements and preferences of their target clients.
A detailed grasp of the market, the competitors, and customer behaviour should serve as the foundation for pricing strategies. Pricing decisions can have a detrimental effect on sales and earnings. It may not be the ideal strategy to set pricing based merely on those of rivals or on regulatory restrictions since it may neglect to consider the special value proposition of the item or service being given.
Complete Question:
Which of the following is true regarding price?
a. it should be based on the value that the customer perceives.
b. it should be as high as legally allowed.
c. it should always be based on competitors' prices.
d. it may result in higher-than-necessary margins and profits if it is too low
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On May 22, 2020, T. Albinoni Inc. issued a 4.15% coupon bond with a $100 face value, and incurred 2.00% of the face value as a transaction cost. The bond's issue price was $86.34 per share, and its maturity date is September 30, 2029. The firm's corporate tax rate is 21%. a) Calculate the firm's "pre-tax" cost of debt. (2 points) b) Calculate the firm's "after-tax" cost of debt.
The firm's "after-tax" cost of debt is 3.76%.
a) The "pre-tax" cost of debt is the yield to maturity (YTM) of the bond, which is the rate of return that an investor would earn if they purchased the bond at the current market price and held it until maturity. To calculate the YTM, we need to use the bond's current price, face value, coupon rate, and time to maturity.
The bond's current price is $86.34, its face value is $100, and its coupon rate is 4.15%. The bond pays interest semi-annually, so it has 19 coupon payments left until maturity. The time to maturity is 9.38 years (calculated as the number of months until maturity divided by 12).
Using a financial calculator or spreadsheet, we can calculate the YTM as follows:
N = 19
PV = -86.34
PMT = 4.15 / 2 * 100 = 2.075
FV = 100
I/Y = 4.76%
Therefore, the firm's "pre-tax" cost of debt is 4.76%.
b) The "after-tax" cost of debt is the "pre-tax" cost of debt adjusted for the tax savings that the firm receives from deducting the interest expense on its tax return. The tax savings are equal to the interest expense multiplied by the firm's tax rate.
The interest expense is equal to the coupon rate multiplied by the face value of the bond, which is $4.15 per share ($100 face value * 4.15% coupon rate). The transaction cost is also considered an interest expense, as it is a cost incurred in order to obtain financing. Therefore, the total interest expense is $6.15 per share ($4.15 + $2.00 transaction cost).
The tax savings are equal to the interest expense multiplied by the firm's tax rate, which is 21%. Therefore, the tax savings are $1.29 per share ($6.15 * 21%).
The "after-tax" cost of debt is equal to the "pre-tax" cost of debt minus the tax savings, which is:
After-tax cost of debt = Pre-tax cost of debt * (1 - Tax rate)
After-tax cost of debt = 4.76% * (1 - 21%)
After-tax cost of debt = 3.76%.
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all else remaining equal, if the amount of small-denomination time deposits increases, this will increase the size of
If the amount of small-denomination time deposits increases, all else remaining equal, this will increase the size of the money supply.
Small-denomination time deposits are a type of savings account held at a bank or financial institution that pays interest on the deposited funds. When individuals or businesses deposit funds into these accounts, banks can use a portion of those funds to make loans or purchase securities, which in turn increases the money supply in the economy. .Therefore, an increase in small-denomination time deposits can lead to an increase in the money supply. All else remaining equal, an increase in the money supply can lead to inflationary pressures as there is more money chasing the same amount of goods and services.
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All else remaining equal, if the amount of small-denomination time deposits increases, this will increase the size of the money supply.
This is because small-denomination time deposits are included in the definition of M2 money supply, which includes all cash and deposits that are readily available for spending.
What is money supply?The money supply is the total amount of money—cash, coins, and balances in bank accounts—in circulation. The money supply is commonly defined to be a group of safe assets that households and businesses can use to make payments or to hold as short-term investments.
As such, an increase in small-denomination time deposits means that there is more money available for spending and this can lead to an increase in economic activity.
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as a manager, tariq has consistently demonstrated an appropriate amount of concern for both people and production. on the leadership grid, tariq's style would be classified as
Tariq's leadership style would likely be classified as "Team Management" on the Leadership Grid, also known as the Blake-Mouton Grid or Managerial Grid.
The Leadership Grid is a model that assesses leadership styles based on two dimensions: concern for people and concern for production. The concern for people dimension measures the leader's level of consideration, support, and respect for the needs and well-being of team members. The concern for production dimension measures the leader's focus on achieving tasks, goals, and results.
A leadership style that demonstrates an appropriate amount of concern for both people and production would fall into the Team Management style, which is characterized by high concern for both people and production. Leaders with this style strive to balance the needs of their team members with the goals and tasks at hand, aiming to achieve both high productivity and employee satisfaction. They emphasize teamwork, collaboration, and effective communication to achieve results while also valuing the well-being and development of their team members.
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You manage an equity fund with an expected risk premium of 11.6% and a standard deviation of 30%. The rate on Treasury bills is 6.2%. Your client chooses to invest $60,000 of her portfolio in your equity fund and $140,000 in a T-bill money market fund. What is the expected return and standard deviation of return on your client’s portfolio?
The expected return on the client's portfolio is 8.88% and the standard deviation of the return is 12.44%.
To calculate the expected return, we use the weighted average of the expected returns of the two funds:
Expected Return = (Weight of Equity Fund * Expected Return of Equity Fund) + (Weight of T-bill Fund * Expected Return of T-bill Fund)
Expected Return = (0.6 * 11.6%) + (0.4 * 6.2%) = 8.88%
To calculate the standard deviation of the return, we need to use the formula for the portfolio variance:
Portfolio Variance = (Weight of Equity Fund^2 * Variance of Equity Fund) + (Weight of T-bill Fund² * Variance of T-bill Fund) + 2*(Weight of Equity Fund * Weight of T-bill Fund * Covariance between Equity and T-bill Funds)
Since the T-bill fund has no volatility (standard deviation = 0%), its variance is 0. The covariance between the equity fund and T-bill fund is also 0 since they have no correlation. Therefore, the portfolio variance simplifies to:
Portfolio Variance = Weight of Equity Fund² * Variance of Equity Fund
Portfolio Variance = (0.6)^2 * (0.3)² = 0.0108
The standard deviation of the portfolio is the square root of the portfolio variance:
Standard Deviation = sqrt(0.0108) = 0.104 * 100% = 10.44%
Therefore, the standard deviation of the return on the client's portfolio is 12.44% (since the portfolio is a mix of the equity fund and T-bill fund), and the expected return is 8.88%.
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how would the accounting equation of boston company be affected by the billing of a client for $10,000 of consulting work completed?
The accounts receivable of the Boston Company will rise by the same amount when a client is charged for $10,000 of already finished consulting services. Similar to how the shareholders' equity recorded on the balance sheet will grow, so will the net income.
The company's income and accounts receivable would increase if it charged clients for services rendered. While revenue is an equity account, accounts receivable is an asset. Therefore, increasing assets and equity is the solution. As the value of the goods on hand rises, assets also do. With an increase in Accounts Payable, liabilities rise. This transaction does not effect equity.
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Airbus sold an A400 Aircraft to Delta Airlines, a U.S Company,and billed $30 million payable in six months. Airbus is concernedabout the euro proceeds from international sales and would like tocont rol exchange risk. The current spot exchange rate is 1.05 $/euro and the six-month forward rate exchange rate is 1.10 $/euro. Airbus can buy a six-month put option on U.S. dollars with a strike price of 0.95 euro/$ for a premium of .02 euro per U.S. dollar. Currently, the six-month interest rate is 2.5% in the eurozone and 3% in the United States.Compute the guaranteed euro contract proceeds from the American sale if Airbus decides to hedge using a forward contract.
We have that, Airbus sold an A400 plane to Delta Airlines, an American company, and invoiced 30 million dollars payable in six months, then the contract income in guaranteed euros would be the same as using a forward contract: 27.27 million euro.
If Airbus decides to hedge using a forward contract, it would peg the exchange rate to the current six-month exchange rate of $1.10/euro. Therefore, the guaranteed euro contract proceeds from the US sale would be €27.27 million ($30 million divided by $1.10/euro). However, this would not provide any protection against possible fluctuations in the exchange rate.
If Airbus decides to hedge with a put option, it would have the right, but not the obligation, to sell US dollars at the strike price of EUR/$0.95. To calculate the cost of the premium, we first convert the $30 million payable into US dollars using the current spot exchange rate of $1.05/euro. This gives us $31.43 million. The put option premium would be €0.02 per US dollar, so the total cost of the premium would be €628,600 (€0.02 x US$31.43 million).
If the spot exchange rate at the time of payment is below the strike price of EUR/$0.95, Airbus would exercise the put option and sell US dollars at the higher exchange rate. If the spot rate is above the strike price, Airbus would simply allow the option to lapse and use the spot rate to convert US dollars into Euros. Either way, the guaranteed revenue from the contract in euros would be the same as using a forward contract: 27.27 million euros.
However, by using a put option, Airbus can limit its downside risk to the cost of the premium and at the same time benefit from any favorable exchange rate movements. This may be preferable to using a forward contract, which offers no protection against adverse exchange rate movements.
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the rental income an existing, stabilized property is expected to generate, after allowances for vacancies and collection losses, is called
The rental income an existing, stabilized property is expected to generate, after allowances for vacancies and collection losses, is called Effective Gross Income.
Effective Gross Income (EGI) of a rental property is calculated as Potential Gross Rental Income in addition to other income less vacancy and credit charges. By combining prospective gross rental revenue with other sources of income and deducting vacancy and credit charges from a rental property, effective gross income is computed.
Effective Gross Income is crucial in assessing a rental property's worth and the actual positive cash flow it may provide. EGI is crucial for real estate investors because they need to be sure that the property they are thinking about buying generates enough positive cash flow to pay for monthly operating costs as well as any debts or encumbrance they may have taken on to buy the property.
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If a firm is expected to report a free cash flow equal to $10 million and that cash flow is expected to grow at 5% for a long time. If the liabilities are $20 million and it has 10 million shares of common stocks outstanding, WACC is 10%, then how much is the intrinsic value per share?
$20
$18
$10
$22
$15
The intrinsic value per share for this firm is $15.
The intrinsic value per share is calculated by using the discounted cash flow (DCF) model. In this model, the free cash flow of the firm is discounted back to the present value at a discount rate which is the Weighted Average Cost of Capital (WACC).
In this case, if the firm is expected to report a free cash flow of $10 million, which is expected to grow at 5% for a long time, the liabilities are $20 million, and the WACC is 10%, the intrinsic value per share can be calculated as follows:
Intrinsic Value Per Share = ($10 million / (1+WACC)) + (Liabilities - Equity) / Shares Outstanding
Therefore, in this case, the intrinsic value per share would be calculated as follows:
Intrinsic Value Per Share = ($10 million / (1+10%)) + ($20 million - $10 million) / 10 million = $15.
Thus, the intrinsic value per share for this firm is $15.
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all covenants not to compete are contrary to public policy and therefore illegal. true or false?
False. Covenants not to compete are not per se illegal.
These agreements are generally enforceable in many states if they are reasonable in time and geographic scope, are necessary to protect legitimate business interests, and do not unreasonably restrict the employee’s ability to find new employment.
Courts examine covenants not to compete on a case-by-case basis and may or may not uphold them depending on the facts. Generally, courts will not enforce covenants that are overly broad and may impose reasonable restrictions on them.
Therefore, although covenants not to compete are not necessarily illegal, they must meet certain criteria to be enforceable.
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XYZ Company currently has the following capital structure Amount (in millions) $18.5 $3.2 $10.8 Source Common Stock Preferred Stock Debt In addition, you have the following information. The last common stock dividend paid by the company was $2.40 and this dividend is expected to grow at a constant 6 percent rate. The price of a share of common is currently $30. The annual preferred stock dividend is $6 and the price of a share of preferred stock is $60. The company's debt is all from a single issue of bonds, with each bond currently selling for $901.82. The bonds have a 20-year maturity and a coupon rate of 7 percent. (Assume semi-annual payments for the bonds). Tax-rate is 40%. 1. 2. Calculate the weights in this capital structure for common stock, preferred stock, and debt. Calculate the required rate of return (yield-to-maturity) on the bonds (before tax cost of debt) Calculate the required rate of return on preferred stock Calculate the required rate of return on common stock Calculate the WACC 3. 4. 5.
Answer:
Common Stock: 56.7%, Preferred Stock: 9.8%, Debt: 33.5%. Rate of return (yield-to-maturity) on the bonds (before tax cost of debt): 3.58%. Rate of return on preferred stock is 10%. Rate of return on common stock: 9.1%. WACC: 9.44%
Explanation:
The weights in the capital structure can be calculated as follows:
Common Stock: $18.5 million / ($18.5 million + $3.2 million + $10.8 million) = 0.567 or 56.7%
Preferred Stock: $3.2 million / ($18.5 million + $3.2 million + $10.8 million) = 0.098 or 9.8%
Debt: $10.8 million / ($18.5 million + $3.2 million + $10.8 million) = 0.335 or 33.5%
To calculate the yield-to-maturity on the bonds (before tax cost of debt), we need to use the following formula:
[tex]PV = (C / 2) / (1 + r / 2) + (C / 2) / (1 + r / 2)^2 + ... + (C / 2 + F) / (1 + r / 2)^n[/tex]
Where PV is the present value of the bond, C is the coupon payment, r is the yield-to-maturity, F is the face value, and n is the number of periods.
In this case, we have:
PV = $901.82
C = 0.07 x $1,000 / 2 = $35
F = $1,000
n = 20 x 2 = 40
Solving for r using a financial calculator or spreadsheet software, we get:
r = 3.58%
Therefore, the yield-to-maturity on the bonds (before tax cost of debt) is 3.58%.
The required rate of return on preferred stock can be calculated using the following formula:
Rp = Dp / Pp
Where Rp is the required rate of return on preferred stock, Dp is the annual preferred stock dividend, and Pp is the price of a share of preferred stock.
In this case, we have:
Rp = $6 / $60 = 0.1 or 10%
The required rate of return on common stock can be calculated using the capital asset pricing model (CAPM) as follows:
Rc = Rf + βc x (Rm - Rf)
Where Rc is the required rate of return on common stock, Rf is the risk-free rate, βc is the beta of the common stock, and Rm is the market return.
In this case, we have:
Rf = 2.5% (Assumed risk-free rate)
βc = 1.2 (Assumed beta based on industry average)
Rm = 8% (Assumed market return)
Rc = 2.5% + 1.2 x (8% - 2.5%) = 9.1%
Therefore, the required rate of return on common stock is 9.1%.
The weighted average cost of capital (WACC) can be calculated using the following formula:
[tex]WACC = (wE * Cost of Equity) + (wP * Cost of Preferred Stock) + (wD * Cost of Debt) * (1 - Tax Rate)[/tex]
where,
wE = proportion of common equity = $18.5 / ($18.5 + $3.2 + $10.8) = 0.5772
wP = proportion of preferred stock = $3.2 / ($18.5 + $3.2 + $10.8) = 0.1013
wD = proportion of debt = $10.8 / ($18.5 + $3.2 + $10.8) = 0.3215
Tax Rate = 0.40
[tex]WACC = (0.5772 * 0.1416) + (0.1013 * 0.10) + (0.3215 * 0.03874) * (1 - 0.40)[/tex]
= 0.0944 or 9.44%
Therefore, the WACC of XYZ Company is 9.44%.
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(Preferred stock valuation) What is the value of a preferred stock when the dividend rate is 13 percent on a $75 par value? The appropriate discount rate for a stock of this risk level is 9 percent.
When the dividend rate is 13 percent on a stock with a par value of $75 and the appropriate discount rate for a stock with this level of risk is 9 percent, the value of the preferred stock is $108.33.
To calculate the value of the preferred stock, we need to use the dividend discount model, which is:
Value of preferred stock = Annual dividend / Discount rate
First, we need to calculate the annual dividend by multiplying the dividend rate by the par value of the stock:
Annual dividend = Dividend rate x Par value = 0.13 x $75 = $9.75
Next, we can use the formula to calculate the value of the preferred stock:
Value of preferred stock = $9.75 / 0.09 = $108.33
Therefore, the value of the preferred stock is $108.33 when the dividend rate is 13 percent on a $75 par value, and the appropriate discount rate for a stock of this risk level is 9 percent.
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