kando company currently pays $15 per unit to buy a part for a product it manufactures. instead, kando could make the part for per unit costs of $6 for direct materials, $4 for direct labor, and $2 for incremental overhead. kando normally applies overhead costs using a predetermined rate of 200% of direct labor cost.(a) prepare a make or buy analysis of costs for this part.(b) should kando make or buy the part?

Answers

Answer 1

The make or buy analysis of costs for the part is as follows:
Current cost of buying the part = $15 per unit
Cost of making the part = $6 for direct materials + $4 for direct labor + $2 for incremental overhead = $12 per unit
Total cost of making the part including overhead = $12 + (200% x $4) = $20 per unit.

Based on the analysis, it would be cheaper for Kando to buy the part at $15 per unit rather than making it at $20 per unit.

Therefore, Kando should continue to buy the part instead of manufacturing it.To make the decision, we need to compare the buy cost per unit with the make cost per unit.

The total overhead cost per unit is calculated as:

Overhead cost per unit = 200% x Direct labor cost per unit

= 200% x $4

= $8

The total make cost per unit is:

Total make cost per unit = Direct materials cost per unit + Direct labor cost per unit + Overhead cost per unit

= $6 + $4 + $8

= $18

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Related Questions

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

Answers

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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which of the following costs is deductible as an itemized medical expense?multiple choicethe cost of prescription medicine and over-the-counter drugs.medical expenses incurred to prevent disease.the cost of elective cosmetic surgery.medical expenses reimbursed by health insurance.none of the costs are deductible.

Answers

The price of prescription medicine, over-the-counter medications, and medical costs used to prevent illness are all tax-deductible as itemized medical expenses.

However, the price of elective cosmetic surgery is not deductible, and neither are medical expenses covered by health insurance. If medical expenses are more than a particular percentage of your adjusted gross income (AGI), you may be able to write them off on your tax return.

However, some medical expenses are not tax deductible. Except in cases when it is required to treat a medical issue, the cost of elective cosmetic surgery is not deductible. Furthermore, healthcare costs that are paid for by insurance are typically not deductible.

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

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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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Aaron received a 30 year loan of $315,000 to purchase a house. The interest rate on the loan was 4.10% compounded semi-annually.
a. What is the size of the monthly loan payment?
Round to the nearest cent
b. What is the balance of the loan at the end of year 3?
Round to the nearest cent
c. By how much will the amortization period shorten if Aaron makes an extra payment of $30,000 at the end of year 3?

Answers

a. To calculate the size of the monthly loan payment, we need to use the formula for mortgage payments:

P = L[c(1 + c)^n]/[(1 + c)^n - 1]

Where:

P = monthly payment

L = loan amount

c = periodic interest rate

n = total number of payments

First, we need to convert the annual interest rate to a semi-annual rate:

r = 4.10% / 2

 = 0.0205

Next, we need to calculate the total number of payments:

n = 30 years x 12 months

   = 360

Now we can plug in the values and solve for P:

P = 315,000[0.0205(1 + 0.0205)^360]/[(1 + 0.0205)^360 - 1]

P = $1,527.72

Therefore, the size of the monthly loan payment is $1,527.72.

b. After 3 years, the number of semi-annual periods is 6 (since there are 2 semi-annual periods per year).

Using the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

A = ending balance

P = principal amount

r = annual interest rate

n = number of times interest is compounded per year

t = time in years

We can calculate the balance of the loan at the end of year 3 as follows:

A = 315,000(1 + 0.041/2)^(2*6)

  = $290,615.96

Therefore, the balance of the loan at the end of year 3 is $290,615.96.

c. Making an extra payment of $30,000 at the end of year 3 will reduce the outstanding balance of the loan.

To calculate the new amortization period, we need to first calculate the new monthly payment based on the reduced principal:

L = 290,615.96 - 30,000

  = 260,615.96

n = 30 years x 12 months

   = 360

P = 260,615.96[0.0205(1 + 0.0205)^360]/[(1 + 0.0205)^360 - 1]

P = $1,248.09

The new monthly payment is $1,248.09.

We can now calculate the new amortization period using the same formula:

n = log[P/(P - rL)] / log(1 + r)

Where:

log = logarithm

P = monthly payment

L = original loan amount

r = periodic interest rate

For the original loan, n = 30 years x 12 months

                                     = 360.

For the new loan, we have:

n = log[1248.09/(1248.09 - 0.0205*260,615.96)] / log(1 + 0.0205)

n = 322 months or 26 years and 10 months

Therefore, making an extra payment of $30,000 at the end of year 3 will shorten the amortization period by 3 years and 2 months.

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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.

Answers

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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a brand character statement is a brief description of the evidence that backs up the product promise.

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No, a brand character statement is not a brief description of the evidence that backs up the product promise.

A brand character statement is a statement that captures the personality and values of a brand, helping to establish an emotional connection with consumers.

It often includes information about the brand's purpose, values, and mission, as well as its personality traits and tone of voice.

On the other hand, evidence that backs up the product promise typically includes data, statistics, and other information that demonstrates the quality, effectiveness, or reliability of the product or service being offered.

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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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Trip is confused that not all his health care honored by his care. Which can be covered by his managed can Annual contact lensecam X-ray for potential broken arm Cavity in his molar Annual teeth cleaning Trip is confused that not all his health-careclaims were honored by his managed-care plan. Which health-care expense would be covered by his managed-care plan? a. Annual contact lens exam b. X-ray for potential broken arm c. Cavity in his molar d. Annual teeth cleaning

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The health-care expense would be covered by his managed-care plan are b. X-ray for potential broken arm and d. Annual teeth cleaning

Trip is confused that not all his health-care claims were honored by his managed-care plan. Typically, managed-care plans cover a range of essential health services, with certain limitations. In Trip's case, the health-care expenses that would most likely be covered by his managed-care plan are X-ray for potential broken arm, this is usually covered as it is a necessary diagnostic procedure for a potential injury and annual teeth cleaning - Most plans cover preventive dental care, which includes annual teeth cleaning to maintain oral health.

However, expenses like the annual contact lens exam and cavity treatment in his molar may not be covered, as they could be considered as specialized care or outside the scope of basic services provided by the managed-care plan. It's essential for Trip to review his plan's specific coverage to understand which services are included. The health-care expense would be covered by his managed-care plan are b. X-ray for potential broken arm and d. Annual teeth cleaning.

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sponsorship agreements within the sport industry commonly refer to the team, event, or sport organization as the . a. intermediary b. brand c. property d. agency

Answers

Sponsorship agreements within the sports industry commonly refer to the team, event, or sports organization as the property. Hence, Option (C) is correct.

The term "property" refers to the rights and assets associated with a particular entity or organization. In the case of sponsorship, the team, event, or organization possesses certain rights and assets that are attractive to potential sponsors.

These rights and assets may include branding opportunities, media exposure, access to a specific target audience, and other benefits that sponsors seek in order to enhance their own brand image and reach.

Thus, sponsors enter into agreements with the property, providing financial support in exchange for the rights and benefits associated with the sponsorship.

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True or False? a pull system is likely to struggle to meet demand during demand spikes.

Answers

The Pull system will probably struggle to meet demand during peak demand. It's true.

The pull system is a spare fashion to reduce waste in product processes. Using the traction system allows you to start a new job only when it's necessary.

This minimizes above and optimizes store house costs. The pull system is a control- acquainted system that works by picking up signals that bear raised product.

The traction system contrasts with the typical thrust system common in mass product. In a pull system, the need to produce further volume appears as a" signal" from one process to the former bone .

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The Pull system will probably struggle to meet demand during peak demand. It's true. The pull system is a spare fashion to reduce waste in product processes.

Using the traction system allows you to start a new job only when it's necessary. This minimizes above and optimizes store house costs. The pull system is a control- acquainted system that works by picking up signals that bear raised product. The traction system contrasts with the typical thrust system common in mass product. In a pull system, the need to produce further volume appears as a" signal" from one process to the former bone .

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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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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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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?

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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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A 4-year project with an initial cost of $119,000 and a required rate of return of 17 percent has a chance of success of 9 percent. If the project succeeds, the annual cash flow will be $1,591,000. If the project fails, the annual cash flow will be −$214,000. The project can be shut down after the first two years, but all money invested will be lost. None of the initial cost can be recouped after four years. What is the net present value of this project at Time 0?

Answers

Answer:

The net present value of the project at Time 0 is $83,062.72. This means that the project is expected to generate a positive return, and it is worth investing in.

Explanation:

To calculate the net present value (NPV) of the project at Time 0, we need to find the present value of all cash flows associated with the project using the required rate of return of 17 percent.

First, let's calculate the expected cash flows for the project:

Chance of success = 9%

Chance of failure = 91% (100% - 9%)

If the project succeeds, the annual cash flow will be $1,591,000, and it will continue for four years. Therefore, the total cash flow for the project's life will be:

Total cash flow if the project succeeds = $1,591,000 x 4 = $6,364,000

If the project fails, the annual cash flow will be -$214,000, and it will also continue for four years. Therefore, the total cash flow for the project's life will be:

Total cash flow if the project fails = -$214,000 x 4 = -$856,000

Now, we can calculate the expected value of the project's cash flows:

Expected value = (Chance of success x Total cash flow if the project succeeds) + (Chance of failure x Total cash flow if the project fails)

Expected value = (0.09 x $6,364,000) + (0.91 x -$856,000) = $415,320

This means that the expected value of the project's cash flows is $415,320.

Next, we can calculate the NPV of the project at Time 0:

NPV = -Initial cost + PV of expected cash flows

NPV = -$119,000 + (PV factor for 4 years at 17% x $415,320)

NPV = -$119,000 + (0.486 x $415,320)

NPV = -$119,000 + $202,062.72

NPV = $83,062.72

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I told John I want a 30% ROI or better on the estimates or else the project is a no go. "Prove it to me in a business case John. Then we’ll run with your idea." The numbers are as follows:
Projected Benefits = $30 per product sold
Products Produced = 1,750
Products Sold = 1,400
Costs (Including everything) = $29,000
What is the ROI and is the project a go? Show all work.

Answers

The ROI is 41.38%, and the project is a go as it exceeds the 30% minimum requirement.

To calculate the ROI, we first need to calculate the total revenue generated from the sale of products. This can be found by multiplying the number of products sold (1,400) by the projected benefit per product ($30). Total revenue = 1,400 x $30 = $42,000.

Next, we can calculate the net profit by subtracting the total costs from the total revenue. Net profit = $42,000 - $29,000 = $13,000.

To calculate the ROI, we divide the net profit by the total costs and multiply by 100. ROI = ($13,000 / $29,000) x 100 = 41.38%.

Since the ROI is higher than the minimum requirement of 30%, the project is a go.

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Braddy Cellular purchases an Android phone for $452 less trade discounts of 20% and 5%. Braddy's overhead expenses are $20 per unit. a) What should be the selling price to generate a profit of $20 per phone? Selling Price = $ 0.00 b) What is the markup on cost percentage at this price? Markup on Cost = 0.00% c) What is the markup on selling price percentage at this price? Markup on Selling = 0.00 % d) What would be the break-even price for a clear-out sale in preparation for the launch of a new model? Break-Even = $ 0.00

Answers

a) The selling price to generate a profit of $20 per phone would be $557.20.

b) The markup on cost percentage at this price would be 23.1%.

c) The markup on selling price percentage at this price would be 18.8%.

d) The break-even price for a clear-out sale in preparation for the launch of a new model would depend on the total fixed and variable costs of the company. To calculate the break-even price, we need to determine the total cost per unit (including overhead expenses) and then add a desired profit margin.

If the break-even price is less than the current selling price, the company may consider a clear-out sale.

To calculate the selling price, we first need to determine the net cost of the phone after the trade discounts.

Net cost = $452 - ($452 * 0.20) - (($452 - ($452 * 0.20)) * 0.05) = $345.96

Selling price = Net cost + desired profit per unit = $345.96 + $20 = $557.20

The markup on cost percentage can be calculated as:

Markup on Cost = (Selling Price - Cost) / Cost * 100%

Markup on Cost = ($557.20 - $452) / $452 * 100% = 23.1%

The markup on selling price percentage can be calculated as:

Markup on Selling = (Selling Price - Cost) / Selling Price * 100%

Markup on Selling = ($557.20 - $452) / $557.20 * 100% = 18.8%

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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 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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loans that require payments of principal and interest at regular intervals are called ______.

Answers

Loans that require payments of principal and interest at regular intervals are called amortizing loans.

In an amortizing loan, the principal and interest are paid through a series of fixed, regular payments, which gradually reduces the outstanding principal balance over time. A loan that amortises is one in which the principal is repaid over the course of the loan in accordance with a schedule, often through equal payments. A bond that also repays a portion of the principal along with the coupon payments is known as an amortizing bond.

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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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209. A perpetual preferred stock pays $5 annual dividends at a
par value of $100. The current stock price is $75. The market's
required rate of return on this security is closest
to:
A. 5%
B. 7%
C. 1

Answers

The market's required rate of return on this perpetual preferred stock is closest to 6.67% (Option B).

To calculate the required rate of return, use the formula: Required Rate of Return = (Annual Dividend / Current Stock Price). In this case, the annual dividend is $5, and the current stock price is $75.

Steps to calculate percentage change:


1. Plug the values into the formula: Required Rate of Return = ($5 / $75)
2. Calculate the result: Required Rate of Return = 0.0667
3. Convert the result to a percentage: 0.0667 x 100 = 6.67%

Hence, the required rate of return is approximately 6.67%.

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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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when then number of needed items are computed based on the number of higher-level items produced, one is operating in a(n)

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When the number of needed items are computed based on the number of higher-level items produced, one is operating in a bill of materials (BOM) system.

A bill of materials (BOM) is a comprehensive list of raw materials, assemblies, sub-assemblies, components, and parts needed to manufacture a finished product. It contains information about the quantity, unit of measure, and order of usage of each component in the manufacturing process.

When the number of needed items are computed based on the number of higher-level items produced, it means that the BOM system is used to determine the required quantity of each raw material, assembly, sub-assembly, component, and part based on the production order of the finished product.

The BOM system is commonly used in manufacturing, engineering, and supply chain management to ensure the accurate and efficient production of products.

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Sardano and Sons is a large, publicly held company that is considering leasing a warehouse. One of the company’s divisions specializes in manufacturing steel, and this particular warehouse is the only facility in the area that suits the firm’s operations. The current price of steel is $784 per ton. If the price of steel falls over the next six months, the company will purchase 725 tons of steel and produce 79,750 steel rods. Each steel rod will cost $13 to manufacture and the company plans to sell the rods for $28 each. It will take only a matter of days to produce and sell the steel rods. If the price of steel rises or remains the same, it will not be profitable to undertake the project, and the company will allow the lease to expire without producing any steel rods. Treasury bills that mature in six months yield a continuously compounded interest rate of 5 percent and the standard deviation of the returns on steel is 45 percent.Use the Black-Scholes model to determine the maximum amount that the company should be willing to pay for the lease. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answers

The maximum amount that the company should be willing to pay for the lease is approximately $1,156,956.38.

How to determine the maximum amount to be paid

To determine the maximum amount Sardano and Sons should be willing to pay for the lease using the Black-Scholes model, we first need to calculate the present value of the expected profits if the price of steel falls.

1. Calculate the profit per steel rod:

Profit per rod = Selling price - Manufacturing cost

Profit per rod = $28 - $13 = $15

2. Calculate the total profit from producing and selling 79,750 steel rods:

Total profit = Profit per rod × Number of rods

Total profit = $15 × 79,750 = $1,196,250

3. Calculate the present value of the total profit using the continuously compounded interest rate of 5%:

[tex]PV = Total \: profit \times {e}^{ - rt} [/tex]

PV = $1,196,250 × e^(-0.05 * 0.5)

PV ≈ $1,156,956.38

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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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which could constitute a second class of stock? group of answer choices treasury stock phantom stock. unexercised stock options. warrants. none of the above.

Answers

None of the above could constitute a second class of stock

Treasury inventory refers to shares of a agency's stock that have been repurchased by the corporation itself. It does not constitute a second class of stock.Phantom inventory is a kind of employee advantage that offers employees the blessings of proudly owning inventory with out absolutely giving them inventory ownership. It does not represent a second class of stock.

Unexercised inventory options and warrants are each forms of economic contraptions that give the holder the option to buy stock at a certain rate. however, they do not represent a 2nd class of inventory.

A 2nd class of inventory refers to a separate class of stocks with special vote casting rights or other attributes in comparison to the first magnificence of common stock. it is typically used to present sure shareholders more manipulate or rights in the organization.

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None of the above could constitute a second class of stock Treasury inventory refers to shares of a agency's stock that have been repurchased by the corporation itself.

It does not constitute a second class of stock. Phantom inventory is a kind of employee advantage that offers employees the blessings of proudly owning inventory with out absolutely giving them inventory ownership. It does not represent a second class of stock. Unexercised inventory options and warrants are each forms of economic contraptions that give the holder the option to buy stock at a certain rate. however, they do not represent a 2nd class of inventory. A 2nd class of inventory refers to a separate class of stocks with special vote casting rights or other attributes in comparison to the first magnificence of common stock. it is typically used to present sure shareholders more manipulate

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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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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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