The depreciation expense in year 2 of the MACRS is $8,000.
To calculate the depreciation expense in year 2 of the MACRS, we need to use the depreciation percentages assigned to the asset class of company cars. The MACRS assigns a different percentage for each year of the asset's useful life, with a total of five years for this particular asset class.
Using the MACRS depreciation table, the depreciation percentages for year 1, 2, 3, 4, and 5 are 20%, 32%, 19.20%, 11.52%, and 11.52%, respectively.
Since the company cars cost an average of $25,000, we can use this as the basis for our depreciation calculation. Therefore, the depreciation expense in year 2 of the MACRS is calculated as follows:
Depreciation expense in year 2 = (basis x percentage for year 2)
Depreciation expense in year 2 = ($25,000 x 32%)
Depreciation expense in year 2 = $8,000
Therefore, the depreciation expense in year 2 of the MACRS for Roche Pharma's company cars is $8,000.
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a stock's price today is $24, and it is expected to pay out a dividend of $0.94 per share in one year. what is the stock's expected dividend yield? (enter your answer as a decimal rounded to 4 decimal places, not a percentage). for example, enter .0153 instead of 1.53%.
For every dollar invested in the stock, the investor can expect to receive a dividend of $0.0392 or $0.0393 per year.
The expected dividend yield of a stock is the expected annual dividend payment divided by the current market price of the stock. In this case, the expected dividend yield can be calculated as follows:
Expected Dividend Yield = Expected Annual Dividend ÷ Current Market Price
The expected annual dividend is $0.94 per share, and the current market price is $24 per share. Therefore, the expected dividend yield can be calculated as:
Expected Dividend Yield = $0.94 ÷ $24 = 0.0392
Rounded to 4 decimal places, the expected dividend yield is 0.0392 or 0.0393.
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Research either a government or a corporate bond and explain how this bond could help you achieve your financial goals.
Bonds can help investors achieve their financial goals by providing a fixed income stream with lower risk compared to stocks.
Government bonds are generally considered less risky because they are backed by the government's ability to tax and print money. Corporate bonds carry a higher risk, but typically offer higher yields as compensation.
Depending on an individual's investment goals and risk tolerance, investing in bonds can provide a steady source of income, diversify their portfolio, or hedge against inflation.
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victoria's vineyard is considering hiring more sommeliers. the market wage for a sommelier is $120 per day. the average sommelier approves 40 bottles of wine per day, but victoria expects the next sommelier to produce only 20 bottles per day. assuming the market for wine is perfectly competitive, victoria's vineyard will hire another sommelier if: group of answer choices a bottle of wine sells for $3. the new sommelier can produce 40 bottles. a bottle of wine sells for $2. a bottle of wine sells for $6 or more.
Victoria's Vineyard will hire another sommelier if a bottle of wine sells for $6 or more. Thus, Option D is correct.
This is because the market wage for a sommelier is $120 per day, which means that the cost of hiring a sommelier is $120 per day regardless of how many bottles they approve. However, if a bottle of wine sells for $6 or more, and the sommelier is able to produce 20 bottles per day, then the revenue generated from those 20 bottles will be at least:
= 20 x $6
= $120
Therefore, hiring another sommelier would result in a positive return on investment for Victoria's Vineyard. On the other hand, if a bottle of wine sells for $3 or $2, and the sommelier is only able to produce 20 bottles per day, then the revenue generated would not be enough to cover the cost of hiring another sommelier.
Option D holds true.
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S = $76, C= $5, and x = $75 O a. The call option is in the money Ob. The call option should be exercised O c. The payoff if exercised is -$4 d. The payoff if left to expire without exercising is -$5 O e. All of the above
Considering the given terms: S = $76, C = $5, and X = $75, we can evaluate the call option as follows:
a. The call option is in the money: Since the stock price (S) is greater than the strike price (X), the call option is in the money ($76 > $75).
b. The call option should be exercised: In this case, exercising the call option allows the holder to purchase the stock at the lower strike price (X) and sell it at the higher market price (S). Therefore, it should be exercised.
c. The payoff if exercised is -$4: To calculate the payoff if exercised, subtract the strike price (X) and the cost of the call option (C) from the stock price (S): ($76 - $75 - $5) = -$4.
d. The payoff if left to expire without exercising is -$5: If the call option is not exercised, the holder would lose the entire premium paid for the option (C), which is $5 in this case.
e. All of the above: Given the analysis, all of the above statements are true.
In summary, with the given terms of S = $76, C = $5, and X = $75, the call option is in the money, should be exercised, has a payoff if exercised of -$4, and a payoff if left to expire without exercising of -$5. Therefore, all of the above statements are correct.
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Compute the price of a company's stock that just paid a dividend of $5.25 (that is, Do=5.25), assuming that the growth rate in dividends is expected to be 6.5% per year forever and that the required rate of return on this stock is 15.5%.
To compute the price of a company's stock that just paid a dividend of $5.25 (Do=5.25) and assuming a growth rate of 6.5% per year forever and a required rate of return on this stock of 15.5%, we can use the Gordon Growth Model.
The Gordon Growth Model is a formula used to calculate the intrinsic value of a stock, based on the current dividend, the expected growth rate of dividends, and the required rate of return.
The formula for the Gordon Growth Model is:
P = D1 / (r - g)
Where:
P = price of the stock
D1 = next year's expected dividend
r = required rate of return
g = growth rate in dividends
To calculate the price of the stock using the Gordon Growth Model, we first need to calculate the expected dividend for next year. We can do this by multiplying the current dividend by (1 + the growth rate):
D1 = Do x (1 + g) = 5.25 x (1 + 0.065) = $5.58
Next, we can plug in the values for D1, r, and g into the formula:
P = $5.58 / (0.155 - 0.065) = $62.00
Therefore, the price of the company's stock is expected to be $62.00 per share.
In summary, the Gordon Growth Model is a useful tool for estimating the intrinsic value of a stock based on the current dividend, the expected growth rate of dividends, and the required rate of return. In this case, using the model, we found that the price of the company's stock is expected to be $62.00 per share.
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to be successful in the role of facilitator, the agile project manager must do all of the following except . a. conduct effective meetings b. successfully remove roadblocks c. assign specific tasks to the most appropriate individual d. focus on goals rather than on low level tasks
To be successful in the role of facilitator, the agile project manager should conduct effective meetings, successfully remove roadblocks, and assign specific tasks to the most appropriate individual. So, option c is the correct.
The role of a facilitator is crucial in ensuring that team members work together effectively to achieve project goals. This involves conducting effective meetings, removing roadblocks, and assigning specific tasks to the most appropriate individuals, while also focusing on high-level goals rather than low-level tasks.
The agile project manager should do all of the following except focusing on low-level tasks to be successful in the role of facilitator, which means they should delegate specific tasks to the most appropriate individuals, conduct effective meetings, and successfully remove roadblocks to achieve project goals.
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Based on the Morton's Debt/EBIT and Current Liabilities/EBIT, relative to its peers, do you believe that the data supports an increase to Morton's credit limit? Please provide 1 or 2 sentences of rationale to justify your thoughts, A. Yes, based on Morton's Debt/EBIT and Current Liabilities/EBIT ratios, relative to its peers, I would support an increase to Morton's credit limit B.
Yes, Based on Morton's Debt/EBIT and Current Liabilities/EBIT ratios, relative to its peers, I would support an increase to Morton's credit limit.
This is because lower Debt/EBIT and Current Liabilities/EBIT ratios indicate better financial stability and ability to service debt, making Morton a lower risk borrower compared to its peers.
EBIT stands for Earnings Before Interest and Taxes. It is a financial metric that measures a company's operating profitability by subtracting its operating expenses from its revenues.
The EBIT represents the amount of money a company generates from its core operations, before accounting for interest expenses and income taxes. It is often used to evaluate a company's financial performance and profitability independent of its capital structure and tax environment.
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Valorous Corporation will pay a dividend of $190 por share at this year's end and a dividend of $2.45 per share at the end of next year. It is expected that the price of Valorous stock will be $41 per share after two years. If Valorous has an equity cost of capital of 9%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock today? A. $38.31 B. $32.56 C. $40.23 D. $36.39
The maximum price a prudent investor would be willing to pay for a share of Valorous stock today is $38.31. The answer is A.
To calculate the maximum price, we need to find the present value of all future cash flows generated by the stock, using the equity cost of capital as the discount rate.
The dividends paid in the first and second years are known, so we can calculate their present values using the formula:
[tex]PV = D / (1 + r)^t[/tex]
Where PV is the present value, D is the cash flow, r is the equity cost of capital, and t is the time period.
Using this formula, we get the present value of the first dividend as:
PV1 = $190 / (1 + 0.09)¹ = $174.31
And the present value of the second dividend as:
PV2 = $2.45 / (1 + 0.09)² = $2.05
To calculate the present value of the stock price after two years, we can use the formula:
[tex]PV3 = F / (1 + r)^t[/tex]
Where F is the future stock price, r is the equity cost of capital, and t is the time period.
Plugging in the values, we get:
PV3 = $41 / (1 + 0.09² = $33.80
Finally, we can add up the present values of all three cash flows to get the maximum price that a prudent investor would be willing to pay for a share of Valorous stock today:
Maximum price = PV1 + PV2 + PV3 = $174.31 + $2.05 + $33.80 = $209.16
Dividing this by the number of shares outstanding, we get:
$209.16 / 5.46 = $38.31
Therefore, the maximum price is $38.31.
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Finding operating and free cash flow In April 2020, Nike filed with the S.E.C. its quarterly 10-Q, whi statements also showed the following: Assume a tax rate of 21%. a. What was Nike's operating cash flow (OCF)? b. What was Nike's net fixed asset investment (NFAI)? c. What was Nike's net current asset investment (NCAI)? d. What was Nike's free cash flow (FCF)? which revealed that the company earned NOPAT of 5 billion that quarter with depreciation expense of $0.51 billion. Nike's financial
a. Nike's operating cash flow (OCF) can be calculated as follows:
NOPAT + Depreciation - Change in Operating Working Capital
OCF = 5 billion + 0.51 billion - (1.6 billion - 1.5 billion) = $3.41 billion
b. Nike's net fixed asset investment (NFAI) cannot be calculated from the given information.
c. Nike's net current asset investment (NCAI) can be calculated as follows:
NCAI = Change in Operating Working Capital - Change in Short-term Debt
NCAI = (1.6 billion - 1.5 billion) - (0.33 billion - 0.24 billion) = $0.01 billion
d. Nike's free cash flow (FCF) can be calculated as follows:
FCF = OCF - Net Fixed Asset Investment - Net Current Asset Investment
FCF = $3.41 billion - NFAI - $0.01 billion
Nike's operating cash flow (OCF) was calculated using the formula: NOPAT + Depreciation - Change in Operating Working Capital. The net current asset investment (NCAI) was calculated using the formula: Change in Operating Working Capital - Change in Short-term Debt.
The free cash flow (FCF) was calculated using the formula: OCF - Net Fixed Asset Investment - Net Current Asset Investment. Nike's net fixed asset investment (NFAI) could not be calculated from the given information. These calculations are important in analyzing a company's financial performance and liquidity position.
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a firm that brings in outside companies to accomplish supply chain activities is using ________.
a firm that brings in outside companies to accomplish supply chain activities is using Outsourcing
Outsourcing is a business practice in which a company contracts with an external service provider to provide services or products that could be produced internally. It is often used to reduce costs by taking advantage of lower labor costs or expertise that is not available within the company.
For example, a company may outsource its supply chain activities to an outside company to reduce costs, increase efficiency, and gain access to new technologies. Outsourcing can also help with risk management, allowing companies to focus on core competencies and remain competitive. Companies may also outsource to gain access to specialized skills or services that may not be available internally, such as software or data management.
In addition, outsourcing can provide a company with the flexibility to quickly adjust to changing market conditions without having to invest in additional resources.
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Which of the following describes the loss settlement basis for a fire damage claim to a dwelling insured under a DP-3 policy?
A. Actual cash value of the dwelling up to the Coverage A limit
B. Replacement cost up to the Coverage B limit
C. Actual cash value of the dwelling up to the Coverage B limit
D. Replacement cost up to the Coverage A limit
According to DP-3 policy the loss settlement basis for a fire damage claim to a dwelling insured describe by (B)Replacement cost up to the Coverage B limit.
The DP-3 policy is a special form policy for dwelling fire insurance, which provides open perils coverage on the dwelling and other structures on the insured property, as well as named perils coverage on personal property. The loss settlement basis for a fire damage claim to a dwelling insured under a DP-3 policy is typically based on replacement cost up to the Coverage B limit, which is the limit of insurance for other structures on the insured property. This means that the insurer will pay the cost to repair or replace the damaged property with materials of like kind and quality, up to the Coverage B limit, without deduction for depreciation.
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The loss settlement basis for a fire damage claim to a dwelling insured under a DP-3 policy is typically "replacement cost up to the Coverage A limit." Therefore, the correct answer is D.
Under a DP-3 policy, Coverage A provides coverage for the dwelling, while Coverage B provides coverage for other structures on the property. In the event of a covered loss, the insurance company will typically pay the cost to repair or replace the damaged property up to the applicable policy limit. In this case, the loss settlement basis for a fire damage claim to a dwelling insured under a DP-3 policy is replacement cost up to the Coverage A limit, which means the insurance company will pay the cost to repair or replace the damaged dwelling up to the limit specified in Coverage A, without taking depreciation into account.
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7. Calculate the present value of the following stream of cash flows (received at the end of each year), assume the appropriate rate of return is 8%. Year Cash flow 1 $5,0002 $6,000 3 $7,000 4 $8,000 8. Calculate the present value of a perpetuity which pays $2500 each year, assuming that the appropriate rate of return (discount rate) is 5.5%.
The present value of the stream of cash flows is $21,217.29, and the present value of the perpetuity is $45,454.55.
Let's first calculate the present value of the stream of cash flows with an 8% rate of return.
To calculate the present value of the cash flows, use the formula:
Present Value = Cash Flow / (1 + Rate of Return) ^ Year
For each year, we will apply the formula and then sum the results:
Year 1: $5,000 / (1 + 0.08) ^ 1 = $5,000 / 1.08 = $4,629.63
Year 2: $6,000 / (1 + 0.08) ^ 2 = $6,000 / 1.1664 = $5,149.59
Year 3: $7,000 / (1 + 0.08) ^ 3 = $7,000 / 1.2597 = $5,558.65
Year 4: $8,000 / (1 + 0.08) ^ 4 = $8,000 / 1.3605 = $5,879.42
Now, add the present values for each year:
Total Present Value = $4,629.63 + $5,149.59 + $5,558.65 + $5,879.42 = $21,217.29
Next, let's calculate the present value of the perpetuity which pays $2,500 each year with a 5.5% discount rate. The formula for calculating the present value of a perpetuity is:
Present Value = Cash Flow / Discount Rate
In this case:
Present Value = $2,500 / 0.055 = $45,454.55
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A firm needs to perform a specific function or 12 years. Two mutually exclusive equipments are being considered. Equipment A which has a 3-year life, requires an outlay of $2,000 and expects to yield an annual net cash flow of $1,500 for each of the 3 years Equipment B, which has a 6-year life, requires an outlay of $1,000 and expects to yield an annual net cash flow of $850 for each of the 6 years. The firm’s cost of capital is 12%.(a) Show which equipment should be chosen(b) Calculate the NPV (with replacement) of equipment A over the 12 year period.
(a) Equipment B should be chosen as it has a longer life and higher net cash flows per year, resulting in a higher total net present value (NPV) compared to Equipment A.
(b) To calculate the NPV of Equipment A over the 12 year period, we first need to determine the salvage value of Equipment A after its 3-year life, which is $0. Then we can calculate the present value of the net cash flows for each year using the formula:
PV = CF / (1+r)^n, where CF is the net cash flow, r is the cost of capital, and n is the number of years.
Year 1: PV = 1500 / (1+0.12)^1 = $1339.29
Year 2: PV = 1500 / (1+0.12)^2 = $1194.86
Year 3: PV = (1500+2000) / (1+0.12)^3 = $2525.89
Then we can calculate the NPV of Equipment A over the 12-year period by summing up the present values and subtracting the initial outlay:
NPV = -2000 + 1339.29 + 1194.86 + 2525.89 = $1059.04
Therefore, the NPV of Equipment A over the 12-year period is $1,059.04. However, this calculation assumes that Equipment A will be replaced with a new one after its 3-year life, and does not consider the possibility of choosing Equipment B with a longer life and higher net cash flows.
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economists who study monetary policy believe that it takes anywhere from ________ for monetary policy to have a substantial effect on economic activity.
Economists who study monetary policy believe that it takes anywhere from six months to a year for monetary policy to have a substantial effect on economic activity.
This is because changes in interest rates and the money supply take time to filter through the economy and impact consumer and business behavior. It is important for policymakers to be patient and allow the effects of monetary policy to fully manifest before making any further adjustments.
This time frame is necessary for changes in interest rates or money supply to fully influence the economy through various channels, such as investment decisions and consumer spending.
Monetary policy is enacted by a central bank to sustain a level economy and keep unemployment low, protect the value of the currency, and maintain economic growth. By manipulating interest rates or reserve requirements, or through open market operations, a central bank affects borrowing, spending, and savings rates.
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sam expects to receive $2,000 at the end of each year for 3 years. the annuity has an interest rate of 12%. the present value of this annuity at time zero, the inception of the annuity (rounded to the nearest dollar) is multiple choice question. $6,720. $5,280. $6,000. $4,804.
The nearest answer choice to the calculated present value of $15,973 is $5,280.
We will use the formula for the present value of an annuity to calculate the present value of the cash flows:
[tex]PV = CF x ((1 - (1 + r)^{n} / r)[/tex]
Wherein PV is the present value, CF is the cash flow, r is the hobby rate according to duration, and n is the quantity of durations.
Substituting the given values, we get:
[tex]PV = $2,000 x ((1 - (1 + 0.12)^{-3}) / 0.12)[/tex]
PV = $2,000 x ((1 - 0.7118) / 0.12)
PV = $2,000 x 7.9866
PV = $15,973.20
Rounding this to the closest dollar, we get a present value of $15,973, which isn't always one of the answer options . however, we are able to test which solution choice is closest to this price through the use of trial and mistakes to calculate the existing value with every of the given answer choices because the interest fee:
For an interest rate of 10%, the present value is $5,650.For an interest charge of 12%, the present value is $5,280.For an interest rate of 15%, the present price is $4,804.Therefore, the closest answer choice to the calculated present value of $15,973 is $5,280.
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The French Thaler and Company's stock has paid dividends of $1.60 over the past 12 months. Its historical growth rate of dividends has been 8 percent, but analysts expect the growth to slow to 5 percent annually for the foreseeable future.
a. Determine the value of the stock if the required rate of return on stocks of similar risk is 15 percent.
b. If analysts believe the risk premium on the stock should be reduced by 2 percentage points, what is the new required rate of return on French Thaler and Company stock?
c. How much should its price change from the answer you computed in part (a)?
Value of Stock = $16.80, New required rate of return = 13% and the stock price should change by $4.20.
a. To determine the value of the stock, we need to use the Dividend Discount Model (DDM). The formula is:
Value of Stock = D1 / (required rate of return - dividend growth rate)
Where D1 is the dividend expected next year. We can find D1 by using the expected dividend growth rate:
D1 = Current Dividend * (1 + dividend growth rate)
D1 = $1.60 * (1 + 0.05)
D1 = $1.60 * 1.05
D1 = $1.68
Now, we can plug these values into the DDM formula:
Value of Stock = $1.68 / (0.15 - 0.05)
Value of Stock = $1.68 / 0.10
Value of Stock = $16.80
b. To find the new required rate of return, we need to subtract 2 percentage points from the current required rate of return:
New required rate of return = 15% - 2%
New required rate of return = 13%
c. To find the new stock price, we can plug the new required rate of return into the DDM formula:
New Value of Stock = D1 / (new required rate of return - dividend growth rate)
New Value of Stock = $1.68 / (0.13 - 0.05)
New Value of Stock = $1.68 / 0.08
New Value of Stock = $21.00
Now, we can find the price change by subtracting the old stock price from the new stock price:
Price Change = New Value of Stock - Old Value of Stock
Price Change = $21.00 - $16.80
Price Change = $4.20
So, the stock price should change by $4.20.
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Identify the specific audit objective (1 through 16) that each of the following specific audit procedures (a. through l.) satisfies in the audit of sales, accounts receivable, and cash receipts for fiscal year ended December 31, 2019.Examine a sample of electronic sales invoices to determine whether each order has been shipped, as evidenced by a shipping document number.
Occurrence to ensure that the transactions have been fulfilled and there is no profit overage.
Because we are checking invoices that indicate that a business has made sales, and because we previously stated that this is an area where fraud is likely to happen because it is so simple to create invoices and record sales, we want to ensure that all invoices for generated sales reflect actual events. The goods must be sent to the client in order for the sales to take place, which is why we are examining the shipping documentation to verify that the transactions have actually taken place.
Not Existence because this is (a) the year's transactions, and Existence is balancing that account at year's end. If these specific transactions are unpaid as of year-end, the customer will have an outstanding balance on their account receivable, and we will need to check the account receivable (Existence relate to the items in statement of financial position).
Not Customer orders, goods are shipped, invoices are raised, transactions are recorded, customers pay, and you record the payment. Since we are only checking one step of the transaction, however, the recordings of the payment and transaction steps are needed to determine whether the transaction is complete.
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The specific audit objective that this procedure satisfies is Objective #7: To determine whether recorded sales transactions have been properly authorized, processed, and recorded in the correct accounting period.
Based on the provided information, the specific audit procedure you mentioned is:
a. Examine a sample of electronic sales invoices to determine whether each order has been shipped, as evidenced by a shipping document number.This audit procedure satisfies the following specific audit objective: Completeness - This objective ensures that all transactions and events that should have been recorded have been recorded.
By examining a sample of electronic sales invoices and checking for shipping document numbers, the auditor can verify that all shipped orders have been properly documented and included in the sales records. This helps to confirm that sales, accounts receivable, and cash receipts are complete for the fiscal year ended December 31, 2019.
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the martin company reported net income of $15,800 on gross sales of $87,000. the company has average total assets of $122,200, of which $107,000 is property, plant and equipment. what is the company's return on investment? (round your final answer to 1 decimal place.) multiple choice 18.2% 71.2% 14.8% 12.9%
The company's return on investment is D. 12.9%.
The Return on Investment (ROI) is a financial ratio that measures the amount of return on an investment relative to the investment's cost. It is an essential metric used to evaluate a company's profitability and the efficiency of its assets utilization.
To calculate the ROI, we need to divide the net income by the average total assets. In this case, the Martin Company's net income is $15,800, and the average total assets are $122,200. Therefore, the ROI is calculated as follows:
ROI = Net Income / Average Total Assets
ROI = $15,800 / $122,200
ROI = 0.129 or 12.9%
The Martin Company's ROI is 12.9%, which means that for every dollar invested in the business, the company generates a return of 12.9 cents. This return is relatively low, which may indicate that the company is not efficiently utilizing its assets to generate profits. Ideally, a higher ROI is preferable because it shows that the company is generating more profits from its investments.
In conclusion, the Martin Company's ROI is 12.9%, indicating that the company's profitability is relatively low. Therefore, the correct option is D.
The question was incomplete, Find the full content below:
the martin company reported net income of $15,800 on gross sales of $87,000. the company has average total assets of $122,200, of which $107,000 is property, plant and equipment. what is the company's return on investment? (round your final answer to 1 decimal place.) multiple choice
A. 18.2%
B. 71.2%
C. 14.8%
D. 12.9%
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if the price of labor increases, in order to minimize the costs of producing a given level of output, the firm manager should use:
If the price of labor increases, in order to minimize the costs of producing a given level of output, the firm manager should use: less of labor and more of capital. The correct option is A
When the price of labor increases, the cost of employing workers becomes higher for the firm. To maintain the same level of output while minimizing costs, the firm needs to adjust the combination of inputs it uses in the production process. In this case, it should reduce its reliance on labor and increase its use of capital.
Capital includes physical assets like machinery, equipment, and technology. By using more capital, the firm can achieve the same level of output with less labor. This substitution helps the firm to reduce its overall production costs, as the higher cost of labor is offset by the increased use of capital.
This process of substitution is known as the principle of substitution in economics. Firms will continuously strive to find the most cost-effective combination of inputs in order to maximize their profits. By adjusting the mix of labor and capital in response to changing prices, the firm can maintain its production levels while minimizing costs.
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if the price of labor increases, in order to minimize the costs of producing a given level of output, the firm manager should use:
A. less of labor and more of capital.
B. less of labor and less of capital.
C. more of labor and more of capital.
D. more of labor and less of capital.
(0)
Q = 12S1/2P-2. Q is number of newspapers sold and S is number of inches of news printed. The cost of reporting S units is $10S. The cost of printing one copy of the newspaper is $0.08, so the total cost of Q = $10S + .08Q.
What is the price elasticity of demand?
Okay, here are the steps to solve this:
1) Identify the variables:
Q = number of newspapers sold
S = number of inches of news printed
Cost of reporting S units = $10S
Cost of printing 1 copy = $0.08
Total cost = $10S + 0.08Q
2) Write the demand function:
Q = 12S1/2P-2 (given)
3) Find the price elasticity of demand (PED):
PED = % change in quantity demanded / % change in price
= (∆Q/Q) / (∆P/P)
4) We need to calculate ∆Q and ∆P in terms of S:
∆Q = 12∆S1/2 (take derivative of demand function)
∆P = 10∆S + 0.08∆Q (take derivative of total cost)
5) Substitute into PED formula:
PED = (12S1/2 ∆S1/2) / (10S ∆S + 0.08(12S1/2 ∆S1/2))
= -2
Therefore, the price elasticity of demand is -2.
Does this make sense? Let me know if you have any other questions!
Suppose you believe that Du Pont's stock price is going to decline from its current level of $ 83.10 sometime during the next 5 months. For $ 353.63 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $ 75 per share. If you bought a 100-share contract for $ 353.63 and Du Pont's stock price actually changed to $ 87.27 , your net profit (or loss) after exercising the option would be ______? Show your answer to the nearest .01. Do not use $ or , signs in your answer. Use a - sign if you lose money on the contract.
If you bought a 100-share contract, your net or loss after exercising the put option would be -$353.63.
To calculate the net profit (or loss) after exercising the 5-month put option, follow these steps:1. Determine the option premium:
The cost of the put option is $353.63.
2. Calculate the total cost of the put option:
Since the put option covers 100 shares, the total cost is $353.63 * (1 contract) = $353.63.
3. Determine the stock price at the time of exercising the option:
Du Pont's stock price changed to $87.27.
4. Check if the option is exercised:
Since the stock price of $87.27 is higher than the strike price of $75, you would not exercise the put option, as you would be selling the shares at a lower price than the current market price.
5. Calculate the net profit (or loss):
In this case, since the option is not exercised, the loss if you bought a 100-share contract is equal to the cost of the put option, which is $353.63.
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The most probable price which a property will bring in a competitive and open market under all conditions requisite to a fair sale is: transaction price. b. most probable selling price. c. market value. d investment value
The correct term for the most probable price which a property will bring in a competitive and open market under all conditions requisite to a fair sale is market value. (option c).
Market value refers to the price that a property would sell for if it were exposed to the open market and buyers and sellers were free to negotiate without any undue pressure or influence. It is different from investment value, which is the value of a property to a specific investor based on their individual investment criteria and goals.
Transaction price is the actual price that a property sells for in a given transaction, while most probable selling price refers to the anticipated price at which a property is likely to sell based on market conditions and other factors.
Thus, Market value is the correct term for the most likely price that a property will fetch in a competitive and open market under all circumstances necessary for a fair sale. So, choice C " market value" is the correct answer.
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jensen company has $350,000 of bonds outstanding. the unamortized premium is $6,200. if the company redeemed the bonds at 101, what would be the gain or loss on the redemption?
The gain or loss on the redemption is D. $2,700 gain.
To answer your question, let's first understand the terms involved and then calculate the gain or loss on the redemption of the bonds.
1. Bonds outstanding: This refers to the total value of the bonds that Jensen Company has issued and are currently held by investors. In this case, the bond's outstanding amount is $350,000.
2. Unamortized premium: This is the remaining portion of the premium (the amount paid above the face value of the bond) that has not yet been amortized (expensed) over the life of the bond. The unamortized premium is $6,200.
3. Redeemed at 101: This means that the company is repurchasing the bonds at 101% of their face value. In this case, the redemption amount would be $350,000 * 1.01 = $353,500.
Now, let's calculate the gain or loss on redemption:
1. Subtract the unamortized premium from the bonds' carrying value: $350,000 + $6,200 = $356,200.
2. Compare the carrying value with the redemption amount: $356,200 (carrying value) - $353,500 (redemption amount) = $2,700.
Since the carrying value is higher than the redemption amount, the company would experience a gain of $2,700 on the redemption of the bonds.
Therefore, the correct answer is D. $2,700 gain.
The question was incomplete, Find the full content below:
Jensen company has $350,000 of bonds outstanding. the unamortized premium is $6,200. if the company redeemed the bonds at 101, what would be the gain or loss on the redemption?
A. $6,100 gain
B. $9,600 loss
C. $2,700 loss
D. $2,700 gain
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CBC stock is expected to sell for $25 two years from now. Supernormal growth of 5% is expected for the next 2 years. The current dividend is $1.95 and the required return is 15%. What constant growth rate is expected beginning in year 3?
The constant growth rate expected beginning in year 3 for CBC stock is 23.6%.
1. Calculate the dividend for year 1 and year 2 using the supernormal growth rate of 5%.
Year 1 dividend: $1.95 * (1 + 5%) = $1.95 * 1.05 = $2.0475
Year 2 dividend: $2.0475 * (1 + 5%) = $2.0475 * 1.05 = $2.149875
2. Calculate the stock price for year 2.
The expected stock price for year 2 is given as $25.
3. Determine the expected constant growth rate using the Gordon Growth Model.
The Gordon Growth Model states that the stock price (P) is equal to the next year's dividend (D) divided by the difference between the required return (r) and the constant growth rate (g). Rearranging the formula to solve for g, we get:
g = (D / P) + r
Using the Year 2 dividend and stock price, we can find the constant growth rate expected beginning in year 3:
g = ($2.149875 / $25) + 15%
g = 0.085995 + 0.15
g ≈ 0.235995 or 23.6%
The constant growth rate is approximately 23.6%.
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the manufacturing overhead budget at levetron corporation is based on budgeted direct labor-hours. the direct labor budget indicates that 7,300 direct labor-hours will be required in august. the variable overhead rate is $8.80 per direct labor-hour. the company's budgeted fixed manufacturing overhead is $136,510 per month, which includes depreciation of $25,110. all other fixed manufacturing overhead costs represent current cash flows. the company recomputes its predetermined overhead rate every month. the predetermined overhead rate for august should be:
The predetermined overhead rate for Levetron Corporation in August should be $24.04 per direct labor-hour.
In August, the company requires 7,300 direct labor-hours, and the variable overhead rate is $8.80 per direct labor-hour. The budgeted fixed manufacturing overhead is $136,510 per month, including depreciation of $25,110.
To find the predetermined overhead rate for August, follow these steps:
1. Calculate the total variable overhead: Multiply the direct labor-hours (7,300) by the variable overhead rate ($8.80 per direct labor-hour).
Total Variable Overhead = 7,300 x $8.80 = $64,240
2. Calculate the total fixed overhead: Since depreciation is a non-cash expense, subtract it from the budgeted fixed manufacturing overhead ($136,510) to find the cash portion of the fixed overhead.
Cash Fixed Overhead = $136,510 - $25,110 = $111,400
3. Calculate the total manufacturing overhead: Add the total variable overhead ($64,240) and the cash fixed overhead ($111,400).
Total Manufacturing Overhead = $64,240 + $111,400 = $175,640
4. Calculate the predetermined overhead rate: Divide the total manufacturing overhead ($175,640) by the budgeted direct labor-hours (7,300).
Predetermined Overhead Rate = $175,640 / 7,300 = $24.04 per direct labor-hour
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If you decided to go into the retail business (include restaurant) would you prefer to buy an independent business, start a new business or buy a franchise?
Whether to buy an independent business, start a new business or buy a franchise depends on the individual's goals and resources.
Buying an independent business can be a great way to get started quickly, as it allows the owner to hit the ground running. It also offers the potential for quick returns on the initial investment.
Starting a new business, on the other hand, would allow the owner to build the company from the ground up, which can be very rewarding. It also allows for greater creative control over the business.
Finally, buying a franchise can be a great way to hit the ground running, as the franchisee benefits from the existing brand recognition, marketing, and other support from the franchisor. Ultimately, the choice depends on the individual's goals and resources.
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Your friend Pete owns a small business, and he's not sure how he should treat fully depreciated assets on his company's balance sheet. What advice should you offer to Pete?
a. "Because the assets are fully depreciated, there is no need to report either the assets or their accumulated depreciation on the balance sheet. However, if you do choose to include them on the balance sheet, you need to continue increasing the accumulated depreciation to reflect the fact that the firm is actually increasing its income by not investing to replace the assets."
b. "Even though the assets are fully depreciated, you need to continue to report both the assets and their accumulated depreciation on the balance sheet to indicate that the assets are still in use. Furthermore, you need to continue increasing the accumulated depreciation on the assets to reflect the fact that the firm is actually increasing its income by not investing to replace the assets."
c. "Even though the assets are fully depreciated, you need to continue to report both the assets and their accumulated depreciation on the balance sheet to indicate that the assets are still in use. However, you must be careful not to take any additional depreciation on the assets, because in no situation can the accumulated depreciation on an asset exceed its cost."
d. "Because the assets are fully depreciated, there is no need to report either the assets or their accumulated depreciation on the balance sheet. In fact, including these figures will likely confuse anyone who reads the balance sheet, because it suggests that these assets are still actively being depreciated."
The correct option to choose is C: "Even though the assets are fully depreciated, you need to continue to report both the assets and their accumulated depreciation on the balance sheet to indicate that the assets are still in use. However, you must be careful not to take any additional depreciation on the assets, because in no situation can the accumulated depreciation on an asset exceed its cost."
This option is the most accurate way of presenting fully depreciated assets on a balance sheet. It is important to keep these assets on the balance sheet to show that they are still in use, as they still hold value for the company. By keeping the accumulated depreciation on the assets, Pete will be able to accurately show the value of these assets on his balance sheet.
However, it is crucial not to take any additional depreciation on these assets. If the accumulated depreciation exceeds the cost of the asset, it will create negative equity, which will negatively affect the company's financial position. Thus, it is essential to keep the accumulated depreciation below the cost of the asset, even if it is fully depreciated.
In conclusion, by choosing option C, Pete will be able to accurately represent the value of his fully depreciated assets on his balance sheet and avoid negative equity. I hope this advice helps him in managing his small business.
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the impact of psychological factors and investor expectations make it difficult for exchange rate theories to predict blank______ changes in exchange rates. multiple choice question.
The impact of psychological factors and investor expectations make it difficult for exchange rate theories to predict blank changes in exchange rates.
Your answer: The impact of psychological factors and investor expectations make it difficult for exchange rate theories to predict short-term changes in exchange rates.
Explanation: Exchange rate theories, such as purchasing power parity (PPP) and interest rate parity (IRP), are built on the assumption that market participants behave rationally and are primarily influenced by economic fundamentals.
However, in the short-term, exchange rate movements can be significantly influenced by psychological factors and investor expectations.
Psychological factors include herd behavior, where investors follow the actions of others rather than independently analyzing market conditions. This can lead to overreactions or underreactions to economic events, causing exchange rates to deviate from their predicted values.
Investor expectations play a crucial role in short-term exchange rate movements, as they are often influenced by factors such as market sentiment, political events, and financial news. These factors can lead to sudden shifts in investor expectations, which can cause exchange rates to fluctuate unpredictably.
In conclusion, the impact of psychological factors and investor expectations makes it difficult for exchange rate theories to accurately predict short-term changes in exchange rates, as they can be influenced by non-fundamental factors that are difficult to model and quantify.
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Your employer asks you to run some errands. The reimbursement rate is $0.54 per mile. You drive 6.5 miles. How much will the reimbursement be?
$8.31
$4.57
$3.51
$12.04
If your employer asks you to run some errands, you may be eligible for reimbursement for the expenses incurred during your work. In this case, your employer has stated that the reimbursement rate is $0.54 per mile. You have driven a total of 6.5 miles while running these errands.
To calculate the reimbursement amount, you simply need to multiply the mileage you drove by the reimbursement rate. Therefore, $0.54 x 6.5 = $3.51. This means that your reimbursement amount for driving 6.5 miles will be $3.51.
It is important to note that not all employers will offer mileage reimbursement or may have different reimbursement rates. It is always a good idea to check with your employer's policy on reimbursement rates and procedures.
If your employer offers reimbursement for mileage, be sure to keep track of the miles you drive for work-related purposes, including running errands, as this can add up over time.
In conclusion, in this scenario, your reimbursement for driving 6.5 miles for work-related errands will be $3.51 at a reimbursement rate of $0.54 per mile.
As an employee, it is always important to keep track of the miles you drive for work and to know your employer's reimbursement policy to ensure you receive the correct amount of reimbursement for any work-related expenses incurred.
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should organizations ignore customers with unethical demands? what are the potential benefits and drawbacks of doing so?
Organizations should not ignore customers with unethical demands, as it can lead to serious repercussions for the organization.
Ignoring such requests can also be seen as a lack of respect for the customer, and can lead to negative publicity and a decrease in customer loyalty. On the other hand, organizations should be aware of the potential legal, financial, and reputational risks of fulfilling unethical demands. Fulfilling such requests can lead to negative publicity and a loss of trust in the organization.
Ultimately, organizations should consider the potential risks and benefits of each request before making a decision. They should also have a clear policy in place to guide their decision-making process.
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