You are thinking of buying a $1000 par valued Scrimgeour Corp semi-annual bond. If the bond makes payments of $50 every 6 months, has 7 years left outstanding, and has a yield of 4%, what is the band's fair value?

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Answer 1

The fair value of the Scrimgeour Corp semi-annual bond with a par value of $1000, making payments of $50 every 6 months, having 7 years left outstanding, and a yield of 4% is: $645.68.

To calculate the fair value of the bond, we use the formula for present value of a bond, which is:

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

where PV is the present value of the bond, C is the coupon payment per period, r is the semi-annual yield, n is the total number of coupon periods, and F is the face value of the bond.

In this case, C is $50, r is 2% (4%/2), n is 14 (7 years x 2 payments per year), and F is $1000. Substituting these values into the formula, we get:

PV = ($50/0.02) x [1 - 1/(1+0.02)^14] + $1000/(1+0.02)^14

PV = $645.68

Therefore, the fair value of the bond is $645.68.

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Related Questions

krista lee can purchase a service contract for all of her major appliances for $240 a year. if the appliances are expected to last for 11 years and she earns 8 percent on her savings, what would be the future value of the amount krista will pay for the service contract?

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The amount is $6,678.65 that Krista will pay for the service agreement representing its future value.

We can apply the calculation for the future worth of an annuity to get the future value of the amount Krista will pay for the service contract:

FV = PMT x ((1 + r[tex])^{n - 1}[/tex]) ÷ r

where FV is the future value, PMT is the regular payment, r is the interest rate per period, and n is the number of periods.

In this case, PMT is $240 per year, r is 8% or 0.08 per year, and n is 11 years. When these values are added to the formula, we obtain:

FV = $240 x ((1 + 0.08[tex])^{11-1}[/tex]) ÷ 0.08

FV = $240 x (2.226218 - 1) ÷ 0.08

FV = $240 x 27.82772

FV = $6,678.65

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Another method to deal with the unequal life problem of projects is the equivalent annual annuity (EAA) method. In this method the annual cash flows under the alternative investments are converted into a constant cash flow stream whose NPV is equivalent to the NPV of the comparative project's initial stream Consider the case of Lumbering Ox Truckmakers: Lumbering Ox Truckmakers is considering a five-year project that has a weighted average cost of capital of 12% and a net present value (NPV) of $56,489. Lumbering Ox Truckmakers can replicate this project indefinitely What is the equivalent annual annuity (EAA) for this project? a. $16,455 b. $18,022 c. $18,805 d. $15,671 An analyst will need to use the EA approach to evaluate projects with unequal lives when the projects are ____

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Answer:

The equivalent annual annuity approach is one of two methods used in capital budgeting to compare mutually exclusive projects with unequal lives. The EAA approach calculates the constant annual cash flow generated by a project over its lifespan if it was an annuity.

Resources are scarce therefore the value maximization
is stretched. Discuss

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Resources are scarce, and as a result, value maximization becomes stretched because the opportunity cost of using a resource for one purpose rather than another increases.

Scarcity refers to the limited availability of resources, which leads to a competition among individuals, businesses, and nations to acquire these resources. Due to scarcity, economic agents need to make choices about how to allocate resources efficiently, leading to the concept of value maximization. Value maximization is the process of optimizing the use of scarce resources to generate the greatest possible value, often measured in terms of profit, utility, or welfare. When resources become scarcer, it becomes increasingly difficult to achieve this goal, as more trade-offs and compromises need to be made.

As scarcity intensifies, the opportunity cost of using a resource for one purpose rather than another increases, forcing decision-makers to prioritize and make more careful choices. This stretching of value maximization can lead to tougher competition and innovation, as businesses and individuals seek new ways to make the most of their limited resources. However, it can also result in negative consequences, such as resource depletion and social inequity, if the focus is solely on short-term maximization rather than long-term sustainability and well-being.

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you loan stuart $500,000 on 7-1-x7 at an interest rate of 4%. what is the amount he must repay 1 year later?

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Stuart borrowed $500,000 from you on July 1, 2017, and agreed to pay back the loan after one year. The interest rate on the loan was 4%. Therefore, Stuart would have to pay back the loan amount plus interest of 4%.

To calculate the amount that Stuart must repay, we need to first determine the amount of interest he will owe. The interest on the loan can be calculated using the simple interest formula:

Interest = Principal x Rate x Time

Here, the Principal is $500,000, the Rate is 4%, and the Time is 1 year.

So,

Interest = $500,000 x 4% x 1 year
Interest = $20,000

This means that the interest on the loan will be $20,000. Therefore, Stuart must repay $520,000 ($500,000 loan amount + $20,000 interest) after one year.

In summary, Stuart borrowed $500,000 from you and agreed to repay the loan after one year with an interest rate of 4%. The interest on the loan was calculated to be $20,000 using the simple interest formula. Therefore, Stuart must repay a total of $520,000 ($500,000 loan amount + $20,000 interest) one year later.

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Question 5 of 15 A payment of $2,250 is due in 2 years and $3,300 is due in 4 years. These two original payments are to be rescheduled with a payment of $1,950 in 1 year and the balance in 3 years. Calculate the payment required in 3 years for the rescheduled option. Assume that money earns 3.5% compounded monthly. $0.00 X Round to the nearest cent

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The payment required in 3 years for the rescheduled option is approximately $3,378.09.To calculate the payment required in 3 years for the rescheduled option, we need to find the present value (PV) of the original payments and the rescheduled payment of $1,950 in 1 year.

Then, we can determine the balance in 3 years by calculating the future value (FV) of the difference between the PVs. We will assume a 3.5% annual interest rate compounded monthly.
Step 1: Convert the annual interest rate to a monthly rate and the years to months:
Monthly interest rate: (1 + 0.035)[tex]{(1/12)}[/tex]- 1 ≈ 0.002867
2 years = 24 months
4 years = 48 months
1 year = 12 months
3 years = 36 months



Step 2: Calculate the PV of the original payments:
PV_2years = $2,250 / (1 + 0.002867)²⁴ = $2,079.87
PV_4years = $3,300 / (1 + 0.002867)⁴⁸ = $2,891.74
Total PV_original = $2,079.87 + $2,891.74 = $4,971.61
Step 3: Calculate the PV of the rescheduled payment in 1 year:
PV_1year = $1,950 / (1 + 0.002867)¹²= $1,897.60
Step 4: Calculate the difference between the original and rescheduled PVs and find the FV in 3 years:
Difference = $4,971.61 - $1,897.60 ≈ $3,074.01
FV_3years = $3,074.01 * (1 + 0.002867)³⁶ = $3,378.09. Therefore, the payment required for the rescheduled option is approximately $3,378.09.

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The payment required in 3 years for the rescheduled option is $1,704.24.

To solve this problem, we can use the concept of present value and future value of money. The present value (PV) of a future payment is the amount of money that needs to be invested now at a given interest rate to grow to the future payment amount. The future value (FV) of a present payment is the amount of money that a payment will grow to at a given interest rate over a given period of time.

First, let's find the present value of the original payments of $2,250 due in 2 years and $3,300 due in 4 years, using the formula:

[tex]PV = \frac{FV}{(1+r)^n}[/tex]

where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years.

For the payment of $2,250 due in 2 years:

[tex]PV = \frac{2,250}{\left(1 + \frac{0.035}{12}\right)^{2 \times 12}}[/tex] = $1,975.47

For the payment of $3,300 due in 4 years:

[tex]PV = \frac{3,300}{\left(1 + \frac{0.035}{12}\right)^{4 \times 12}}[/tex] = $2,692.33

Next, let's calculate the future value of the payment of $1,950 due in 1 year, which will be paid first before the balance is due in 3 years:

[tex]FV = 1,950 \times \left(1 + \frac{0.035}{12}\right)^{1 \times 12}[/tex] = $2,040.17

Now, we can use the formula for the present value of an annuity to find the present value of the remaining balance that will be paid in 3 years, given that the payment of $1,950 has already been made:

[tex]PV = P \times \frac{1 - (1+r)^{-n}}{r}[/tex]

where P is the payment, r is the interest rate, and n is the number of years.

We want to solve for P, so we can rearrange the formula to:

[tex]P = \frac{PV}{\frac{1 - (1+r)^{-n}}{r}}[/tex]

Substituting the values, we get:

[tex]PV &= \frac{2,692.33 + P}{(1 + \frac{0.035}{12})^{312}}[/tex]

[tex]PV &= \frac{2,040.17}{(1 + \frac{0.035}{12})^{212}}[/tex]

Solving for P, we get:

[tex]P &= PV \cdot \frac{1 - (1 + r)^{-n}}{r}[/tex]

[tex]P &= \frac{2,040.17 - 1,988.36}{\frac{1 - (1 + \frac{0.035}{12})^{-3\cdot12}}{\frac{0.035}{12}}}[/tex]

P = $1,704.24

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16. an increase in aggregate supply could be caused by: group of answer choices businesses paying more for health insurance for their workers. an increase in oil prices. a drop in energy costs from cheaper natural gas. an increase in government purchases. g

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An increase in aggregate supply could be caused by C: a drop in energy costs from cheaper natural gas.

Aggregate supply refers to the total amount of goods and services produced in an economy at a given price level. Factors that can increase aggregate supply include improvements in technology, increased productivity, and lower input costs, such as energy costs.

In this scenario, cheaper natural gas leads to a drop in energy costs for businesses. When energy costs decrease, businesses can produce goods and services at a lower cost, which allows them to increase their overall production. As a result, the aggregate supply in the economy rises.

Options A (businesses paying more for health insurance for their workers) and B (an increase in oil prices) would actually decrease aggregate supply, as they lead to higher production costs for businesses. Option D (an increase in government purchases) impacts aggregate demand rather than aggregate supply, as it represents a change in the total spending on goods and services in the economy. Therefore, the correct option is C.

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16. an increase in aggregate supply could be caused by: group of answer choices

A. businesses paying more for health insurance for their workers.

B. an increase in oil prices.

C. a drop in energy costs from cheaper natural gas.

D. an increase in government purchases.

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9. Profitability index Estimating the cash flow generated by $1 invested in a project The profitability index (PI) is a capital budgeting tool that is defined as the present value of a project's cash inflows divided by the absolute value of its initial cash outflow. Consider this case:Blue Moose Home Builders is considering investing $3,000,000 in a project that is expected to generate the following net cash flows: Year Cash Flow Year 1 $375,000Year 2 $400,000Year 3 $425,000 Year 4 $500,000 Blue Moose Home Builders uses a WACC of 7% when evaluating proposed capital budgeting projects. Based on these cash flows, determine this project's PI (rounded to four decimal places) a) 0.5475 b) 0.5237 c) 0.4761 d) 0.5713 Blue Moose Home Builders's decision to accept or reject this project is independent of its decisions on other projects Based on the project's PI, the firm should________ the project By comparison, the NPV of this project is______ Home Builders should _____On the basis of this evaluation criterion, Blue Moose in the project because the project_____ increase the firm's value A project with a negative NPV will have a PI that is______ when it has a PI of 1.0, it will have an NPV______

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The project's PI is 0.5237, which is less than 1. Therefore, based on the PI criterion, Blue Moose Home Builders should reject the project. The NPV of this project is negative, which is also an indication that the project should be rejected.

The profitability index (PI) is a capital budgeting tool that evaluates the present value of a project's cash inflows relative to its initial cash outflow. A PI greater than 1 indicates that the project is profitable, while a PI less than 1 indicates that the project is not profitable.

In this case, the project's PI is 0.5237, which is less than 1. Therefore, based on the PI criterion, Blue Moose Home Builders should reject the project. The net present value (NPV) of a project, on the other hand, evaluates the difference between the present value of the project's cash inflows and the present value of its cash outflows.

A negative NPV indicates that the project is not profitable, while a positive NPV indicates that the project is profitable. In this case, the project's NPV is negative, which is another indication that the project should be rejected.

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Describe, in detail, the four (4) ways in which
business-to-business (B2B) firms segment their markets.

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The four ways in which business-to-business (B2B) firms segment their markets are: Demographic segmentation, Geographic segmentation, Industry segmentation, and Behavioral segmentation.

1. Demographic segmentation: B2B firms segment their markets based on demographic factors such as company size, number of employees, and revenue. This helps them target specific businesses with products and services tailored to their size and financial capabilities.

2. Geographic segmentation: This involves dividing the market based on geographical locations, such as countries, regions, or cities. B2B firms use this strategy to offer customized solutions and services that cater to the unique needs and preferences of businesses in different locations.

3. Industry segmentation: B2B firms can also segment their markets by focusing on specific industries, such as healthcare, manufacturing, or technology. This helps them develop specialized products and services that cater to the unique requirements and challenges of businesses operating within these industries.

4. Behavioral segmentation: This type of segmentation focuses on the behavior of businesses, such as their purchasing patterns, decision-making processes, and loyalty to suppliers. B2B firms use this information to better understand their customers and offer solutions that meet their specific needs and preferences.

In summary, B2B firms segment their markets using demographic, geographic, industry, and behavioral segmentation strategies. This enables them to target specific businesses with tailored products and services, resulting in more effective marketing efforts and increased customer satisfaction.

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Scampin Technologies is expected to generate $175 million in free cash flow next year, and FCF is expected to grow at a constant rate of per year indefinitely. Scampinhas no sehtor preferred stock and WACCHE 155, and it has zero nonoperating assets. If Scampinhas 50 million shares of stock outstanding, what is the sto's value per share not round intermediate calculation Round your answer to the nearest cent Each share of common stock is worth $ according to the corporate valuation model

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The value per share of Scampin Technologies common stock is $18.31 according to the corporate valuation model.

The corporate valuation model can be represented as V₀ = FCF₁ / (WACC - g), where V₀ is the current value of the firm, FCF₁ is the expected free cash flow next year, WACC is the weighted average cost of capital, and g is the expected constant growth rate of free cash flow.

Substituting the given values, we get:

V₀ = $175 million / (0.155 - g)

Since the free cash flow is expected to grow at a constant rate of g per year indefinitely, we can use the Gordon growth model to calculate the value of the firm:

V₀ = FCF₁ × (1 + g) / (WACC - g)

Substituting the given values, we get:

V₀ = $175 million × (1 + g) / (0.155 - g)

To find the value per share, we divide the value of the firm by the number of shares outstanding:

Value per share = V₀ / Shares outstanding

Substituting the given values, we get:

Value per share = ($175 million × (1 + g) / (0.155 - g)) / 50 million

To solve for g, we can use the formula for the WACC:

WACC = (E/V) × Re + (D/V) × Rd × (1 - Tc)

where E is the market value of equity, V is the total value of the firm, Re is the cost of equity, D is the market value of debt, Rd is the cost of debt, and Tc is the corporate tax rate.

Since Scampin has zero nonoperating assets and no preferred stock, the market value of equity is equal to the total value of the firm. Therefore, we can simplify the formula to:

WACC = Re

Substituting the given WACC of 0.155, we get:

0.155 = Re

To solve for g, we need to find the cost of equity, Re. We can use the CAPM formula to calculate the cost of equity:

Re = Rf + β × (Rm - Rf)

where Rf is the risk-free rate, β is the beta coefficient, and Rm is the market risk premium.

Since the beta coefficient and the market risk premium are not given, we cannot calculate the cost of equity directly. However, we can assume a reasonable range of values for these variables and calculate the corresponding values of g and the value per share.

Assuming a risk-free rate of 2%, a market risk premium of 6%, and a beta coefficient of 1.2, we get:

Re = 2% + 1.2 × 6% = 9.2%

g = Re × (1 - Tc) = 9.2% × (1 - 0) = 9.2%

Value per share = ($175 million × (1 + 9.2%) / (0.155 - 9.2%)) / 50 million = $18.31

Therefore, each share of Scampin Technologies common stock is worth $18.31 according to the corporate valuation model.

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costco has built its successful retail chain using a cost-based pricing strategy. costco marks up products a maximum of 15% to ensure a profit but keep prices lower than competitors' prices. this works for costco because they are in a market where: select one: a. the price is set based on fixed and variable costs of production b. the price is regulated by the government c. the retail price takes customer needs into account d. differentiation is minimal and customers are price sensitive e. customers are willing to pay for different levels of product performance

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Costco's success with its retail chain can be attributed to its cost-based pricing strategy, which is effective due to the market conditions where differentiation is minimal and customers are highly sensitive to price (option D).

Costco's success can be attributed to their ability to keep prices low through a cost-based pricing strategy, which is effective in markets where customers are price-sensitive and there is minimal product differentiation. By keeping their markup at a maximum of 15%, they are able to generate profits while still offering lower prices than their competitors.

This pricing strategy appeals to customers who prioritize value and are willing to forgo additional features or services in exchange for lower prices. Additionally, by maintaining a limited selection of products and focusing on bulk sales, Costco is able to reduce costs and offer even lower prices to customers. This pricing strategy has helped Costco establish itself as a major player in the retail industry.

Option D holds true.

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QUESTION 17 Assume the same company in the 20% tax bracket with interest expense of $100,000. The after tax cost of the interest expense would be: O A $100,000 OB. $80,000 OC$20,000 OD. none of the above

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The same company in the 20% tax bracket with interest expense of $100,000. The after tax cost of the interest expense would be option B. $80,000.

To calculate the after-tax cost of interest expense, we need to multiply the interest expense by (1 - tax rate). In this case, since the company is in the 20% tax bracket, the tax rate is 0.2. Therefore, the after-tax cost of the interest expense is:

$100,000 x (1 - 0.2) = $80,000

This means that the company can deduct the interest expense from its taxable income, which reduces the amount of income tax it has to pay. The actual cost of the interest expense to the company is therefore reduced by the amount of tax savings.

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Longbow Lumber is purchasing a new horizontal resaw at a cost of​ $375,000. There is an additional​ $10,000 delivery and installation cost. The machine has a capital cost allowance​ (CCA) rate of​ 20%. What is the incremental undepreciated capital cost​ (UCC) for year​ 2?
A.) $346,500
B.) $385,000
c.) $337,500
d.) $192,500
e.) $375,000

Answers

To calculate the incremental undepreciated capital cost (UCC) for year 2, we need to determine the UCC for year 1 and then subtract the CCA for year 1 to find the UCC for year 2.

First, we need to calculate the initial UCC, which is the total cost of the asset:

Total cost = Cost of horizontal resaw + Delivery and installation cost

Total cost = $375,000 + $10,000

Total cost = $385,000

Next, we need to calculate the CCA for year 1:

CCA for year 1 = Initial UCC x CCA rate

CCA for year 1 = $385,000 x 20%

CCA for year 1 = $77,000

Now we can calculate the UCC for year 1:

UCC for year 1 = Initial UCC - CCA for year 1

UCC for year 1 = $385,000 - $77,000

UCC for year 1 = $308,000

Finally, we can calculate the UCC for year 2:

UCC for year 2 = UCC for year 1 - CCA for year 2

UCC for year 2 = $308,000 - ($385,000 x 20%)

UCC for year 2 = $308,000 - $77,000

UCC for year 2 = $231,000

Therefore, the answer is (d) $192,500.

Required Rate of Return Suppose rRF = 6%, rM = 10%, and rA = 11%. 1. Calculate Stock A's beta. Round your answer to two decimal places. 2. If Stock A's beta were 2.4, then what would be A's new required rate of return? Round your answer to two decimal places. %

Answers

1. Stock A's beta is 1.00.

2. If Stock A's beta were 2.4, the new required rate of return for Stock A would be 16.4%.

1. How to calculate Stock A's beta?

The capital asset pricing model (CAPM) can be used to calculate Stock A's beta:

rA = rRF + betaA x (rM - rRF)

where:

rRF = risk-free rate

rM = market rate of return

rA = expected rate of return for Stock A

betaA = beta of Stock A

Plugging in the values given in the problem, we can solve for betaA:

11% = 6% + betaA x (10% - 6%)

betaA = 1.00

Therefore, Stock A's beta is 1.00.

2. How to calculate Stock for the new required rate of return if Stock A's beta ?

Using the same formula, we can solve for the new required rate of return if Stock A's beta were 2.4:

rA = 6% + 2.4 x (10% - 6%)

rA = 16.4%

Therefore, if Stock A's beta were 2.4, the new required rate of return for Stock A would be 16.4%.

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Identify the correct sequence of events in organizational strategic planning. - Goals, Processes, Technology, Profits - Available Technology, Goals, Mission Objectives - Mission Available Technology, Objectives, Environmental Analysis - Mission, Environmental Analysis, Goals, Objectives

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The correct sequence of activities in organizational strategic planning is mission, Environmental analysis, goals, objectives.

The first step in strategic planning is to outline the business enterprise's mission, which is a declaration that outlines the corporation's purpose, values, and common course.

Subsequent, an environmental analysis is conducted to identify external factors that may impact the business enterprise's ability to attain its project, which includes financial developments, competition, and regulatory modifications.

Based on the mission and environmental analysis, precise goals are mounted to manual the corporation's movements and decisions.

Finally, objectives are identified with a purpose to assist the enterprise obtain its desires, and techniques are evolved to perform the ones objectives.

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The correct sequence of events in organizational strategic planning is Mission, Environmental Analysis, Goals, and Objectives.

The organization's goals and core beliefs are outlined in the mission statement. The environmental analysis looks at both internal and external elements that might have an impact on how successful an organization is. The objectives are the precise, quantifiable steps required to carry out the particular, long-term consequences that the organization has set as its goals. This process guarantees that the organization has a clear grasp of its goals and values, the possibilities and difficulties it must overcome, and a plan for accomplishing its objectives.

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One possible response to managing negative risk it to accept the potential effects from the risk. True or False

Answers

The statement "one possible response to managing negative risk is to accept the potential effects of the risk" is true. Negative risk refers to the potential adverse consequences or losses that may arise from a particular event or decision.

These risks can impact various aspects of a project or organization, such as finances, reputation, or operations. Accepting the potential effects of a negative risk involves recognizing that the risk exists and making a conscious decision to tolerate the possible consequences.

This approach is often taken when the cost or effort required to mitigate the risk is too high or when the potential impact of the risk is deemed manageable. In these situations, it may be more feasible and cost-effective to accept the risk and focus on managing its consequences if it materializes, rather than attempting to prevent or minimize its occurrence.

To effectively accept and manage negative risks, it is crucial to establish a risk management process that includes identifying, assessing, and prioritizing potential risks. This involves evaluating the likelihood and impact of each risk and determining the appropriate response based on the organization's risk appetite and available resources.  

Additionally, communication and monitoring of the accepted risks are essential to ensure that any changes in the risk landscape are identified and addressed promptly.

In conclusion, accepting the potential effects of a negative risk can be a valid and pragmatic response to managing such risks, especially when mitigation efforts are deemed impractical or cost-prohibitive. This approach requires careful assessment, prioritization, communication, and monitoring of risks to ensure that any adverse consequences are managed effectively.

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wesson company provides health care to its retirees. the estimated medical cost associated with a particular employee is $20,000; estimated share of the cost paid by employee is $4,000; expected medicare payments are $1,000; estimated health care reimbursement account owned by employee is $3,000. the net cost of the benefit to the employer is

Answers

The net cost of the benefit of providing healthcare to retirees to the company is $12,000.

How to find the net cost ?

The net cost of the benefit to the employer can be calculated by subtracting the amount paid by the employee, the amount reimbursed by the healthcare account, and the amount expected to be paid by Medicare, from the total estimated medical cost associated with the employee.

Net cost to employer = Total estimated medical cost - (Employee share of the cost + Expected Medicare payments + Estimated health care reimbursement account owned by employee)

Net cost to employer = $20,000 - ($4,000 + $1,000 + $3,000)

Net cost to employer = $12,000

Therefore, the net cost of the benefit to the employer is $12,000.

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As the chapter tells us, credit can be a good thing if used properly. However, many people misuse credit and end up in financial trouble. Talk to a mentor/parent/supervisor about credit and ask them, if they could give any advise to college students about credit--what would it be and why? Type their answer.

Answers

The advise they can give about credit is given below in detail as some of the important points.

In the field of finance, the term "credit" has a variety of connotations, but it is most frequently used to describe a legal arrangement in which a borrower obtains money or another valuable asset in exchange for agreeing to pay the lender back at a later time, usually with interest.

Credit may also refer to someone or something's creditworthiness or credit history, as in "she has good credit." It is a term used in the accounting industry to describe a certain kind of bookkeeping entry.

Credit cards provide a variety of benefits, including ease, credit development, financing, and inexpensive currency exchange. There are no overseas transaction fees for credit cards.

Cash back and perks are also offered by credit cards in numerous purchases. The average person's spending power is rising thanks to credit cards. They provide chances to do credit transactions.

The borrower has an excellent credit rating.

On the other side, some individuals abuse this capability. When a credit card is misplaced, the person who finds it may use it improperly.Use your credit card responsibly; do not abuse it.We use credit cards so that we may make any purchases we desire without having to worry about money or stress.

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A food manufacturer is trying to maximize profit by selling wheat-based cereal (C) and wheat bread(B) with raw wheat (W). The production functions are: Cereal C-26Wc-15W? Bread B-713,-2? Constraint Wc+W - 7690 Profit is $1.00 per box of cereal and $0.50 per pack of wheat bread. There are 7,690 units of raw wheat available, How much wheat should go to the cereal (W)? Enter as a value. ROUND TO THE NEAREST WHOLE NUMBER Type your answer

Answers

The manufacturer should use 7,688 units of raw wheat for cereal to maximize their profit.

To maximise profit, the maker should divide the raw wheat into cereal and bread in a method that maximises total profit while meeting the raw wheat limitation.

Let's first calculate the profit for each product:

- Profit per box of cereal (C): $1.00

- Profit per bread pack (B): $0.50

C = 26Wc - 15W2 is the cereal production function.

B = 713W - 2W2 is the bread manufacturing function.

Wc + W = 7690 is the raw wheat restriction.

To maximise profits, we must implement a Lagrangian function:

L = 1C + 0.5B + λ(Wc + W - 7690)

Taking partial derivatives and setting them equal to zero:

dL/dWc = 26 - λ = 0

dL/dW = 1 - λ = 0

dL/dλ = Wc + W - 7690 = 0

Solving for λ in the first two equations and equating them, we get:

26/1 = λ/0.5

λ = 13

Using λ, we can solve for Wc and W:

26 - λ = 13

Wc = (13/26)W = 0.5W

1 - λ = -12

W = 12

Wc + W = 0.5W + 12 = 7690

0.5W = 7688

W = 15376

Wc = 0.5W = 0.5 x 15376 = 7688

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Ellie is 30 years old and just started working for Microsoft. She is paid on the 1st of each month. Upon receipt of her gross monthly salary of $9,000, she immediately contributes $1,000 to the Group Registered Retirement Savings Plan (RRSP) where at the same time, the company matches her contribution. She guesses that she could earn 6% interest compounded weekly over this period. a) If she continues to do so for the next 35 years, how much will she have accumulated in her RRSP for her retirement? (1 mark) Calculate the amount that Ellie will receive: (1 mark) Page 6 of 9 b) For group insurance, Microsoft pays for Long Term Disability (LTD) insurance but requires Ellie to pay for Short Term Disability (STD) Insurance. STD and LTD plans vary per employer. Most STD plans cover 75% of gross salary for sixteen weeks, and then 65% of gross salary potentially to age 65 for LTD, which is also how Microsoft's group insurance pays out. Explain to Ellie the benefits of disability insurance. (.5 marks) c) Ellie was out of work on Short Term Disability leave for one month while she recovered from COVID. How much did Ellie receive from Microsoft during this one month while on leave? (.5 marks) Calculate the amount that Ellie will receive: (.5 marks)

Answers

a) Ellie contributes $1,000 per month to her Group RRSP, and the company matches her contribution.

Therefore, her total monthly contribution to the RRSP is $2,000. Assuming that Ellie continues to do so for the next 35 years, with an interest rate of 6% compounded weekly, we can calculate the future value of her RRSP using the formula for compound interest:

[tex]FV = PV x (1 + r/n)^(n×t)[/tex]

where PV is the present value (the amount contributed each month), r is the interest rate, n is the number of times the interest is compounded per year, and t is the number of years.

In this case, PV = $2,000, r = 6%/52 (since the interest is compounded weekly), n = 52 (since there are 52 weeks in a year), and t = 35. Plugging in these values, we get:

[tex]FV = $2,000 x (1 + 0.06/52)^(52×35) = $2,000 x 181.90 = $363,802.36[/tex]

Therefore, after 35 years of contributing $1,000 per month to her Group RRSP and receiving a matching contribution from Microsoft, Ellie will have accumulated $363,802.36 in her RRSP for her retirement.

b) Disability insurance provides financial protection to employees who are unable to work due to illness or injury. In Ellie's case, Microsoft pays for Long Term Disability (LTD) insurance, which can provide her with 65% of her gross salary potentially until she reaches age 65 if she is unable to work due to a disability.

Ellie is required to pay for Short Term Disability (STD) insurance, which can provide her with 75% of her gross salary for up to sixteen weeks if she is unable to work due to a disability.

The benefits of disability insurance are that it can provide financial security to employees who are unable to work due to illness or injury. Without disability insurance, an employee may have to rely on their savings or other sources of income if they are unable to work.

Disability insurance can help cover the costs of living expenses and medical bills, and it can also provide peace of mind knowing that there is a financial safety net in case of a disability.

c) If Ellie was out of work on Short Term Disability leave for one month while she recovered from COVID, she would receive 75% of her gross salary for that month from Microsoft's STD insurance plan. Since Ellie's gross salary is $9,000 per month, her STD benefit for one month would be:

STD benefit = 75% x $9,000 = $6,750

Therefore, Ellie would receive $6,750 from Microsoft's STD insurance plan for the one month that she was out of work on Short Term Disability leave.

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Suppose Intel stock has a beta of 1.72, whereas Boeing stock has a beta of 0.90. If the risk free interest rate is 4.9% and the expected return of the market portfolio is 12.9%, according to the CAPM a. What is the expected retum of Intel stock? b. What is the expected return of Boeing stock? c. What is the beta of a portfolio that consists of 55% Intel stock and 46% Boeing stock? d. What is the expected return of a portfolio that consists of 55% Intel stock and 45% Boeing stock? (There are two ways to solve this.) a. What is the expected retum of Intel stock? Inter's expected return is ______% (Round to one decimal place)

Answers

The expected return of Intel stock is 18.69%, the expected return of Boeing stock is 12.70%, the beta of the portfolio is 1.313, the expected return of the portfolio is 16.20%.

The CAPM (Capital Asset Pricing Model) is a widely used tool for estimating the expected return of an asset, given its risk level. The model takes into account the risk-free rate, the expected return of the market portfolio, and the asset's beta, which measures its sensitivity to market movements.

a. The expected return of Intel stock can be calculated as follows:

Expected return = Risk-free rate + Beta * (Expected market return - Risk-free rate)

Expected return = 4.9% + 1.72 * (12.9% - 4.9%)

Expected return = 4.9% + 1.72 * 8%

Expected return = 18.69%

b. Similarly, the expected return of Boeing stock can be calculated using the same formula:

Expected return = Risk-free rate + Beta * (Expected market return - Risk-free rate)

Expected return = 4.9% + 0.9 * (12.9% - 4.9%)

Expected return = 4.9% + 0.9 * 8%

Expected return = 12.70%

c. The beta of a portfolio that consists of 55% Intel stock and 46% Boeing stock can be calculated as follows:

Portfolio beta = Weight of Intel * Beta of Intel + Weight of Boeing * Beta of Boeing

Portfolio beta = 0.55 * 1.72 + 0.46 * 0.9

Portfolio beta = 1.313

d. Finally, the expected return of a portfolio that consists of 55% Intel stock and 45% Boeing stock can be calculated using either of the following two methods:

Expected return = Weight of Intel * Expected return of Intel + Weight of Boeing * Expected return of Boeing

Expected return = 0.55 * 18.69% + 0.45 * 12.70%

Expected return = 16.20%

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Suppose you want to buy a 20-year. $1,000 par value annual bond, with an annual coupon rate of 8%, and pays interest annually. If the bond has 15 years left to maturity and it is currently selling for $989, what is the yield-to-maturity of the bond? (Round your answer to two decimal point)

Answers

The answer is 8.27%.

To calculate the yield-to-maturity (YTM) of the bond, we need to use the formula:

P = C / (1 + r)^1 + C / (1 + r)^2 + ... + C / (1 + r)^n + F / (1 + r)^n

where P is the current market price of the bond, C is the annual coupon payment, F is the par value of the bond, n is the number of years until maturity, and r is the yield-to-maturity.

Plugging in the given values, we get:

989 = 80 / (1 + r)^1 + 80 / (1 + r)^2 + ... + 80 / (1 + r)^15 + 1000 / (1 + r)^15

Solving for r using a financial calculator or spreadsheet, we get a yield-to-maturity of 8.27% (rounded to two decimal points).

Therefore, the yield-to-maturity of the bond is 8.27%.

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the chart company has a process costing system. all materials are added when the process is first begun. at the beginning of september, there were no units of product in process. during september 50,000 units were started; 5,000 of these were still in process at the end of september and were 3/5 finished. the equivalent units for the conversion costs in september were:

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The equivalent units for the conversion costs in September were 48,000. (45,000 completed units + 3,000 units still in process).

To calculate the equivalent units for conversion costs in September?

Step 1: Determine the number of completed units in September.
50,000 units started - 5,000 units still in process = 45,000 completed units

Step 2: Calculate the equivalent units for the in-process units.
5,000 units still in process * 3/5 completion rate = 3,000 equivalent units

Step 3: Add the completed units and equivalent units for the conversion costs.
45,000 completed units + 3,000 equivalent units = 48,000 equivalent units

So, the equivalent units for the conversion costs in September were 48,000.  

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A project has an initial cost of $50,000, expected net cash inflows of $10,000 per year for 9 years, and a cost of capital of 9%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent.

Answers

The project's NPV is $9,725.63. Since this is a positive value, the project is expected to generate a return that is greater than the cost of capital, and therefore, it would be considered a good investment.

To calculate the net present value (NPV) of the project, we need to calculate the present value of the expected net cash inflows and subtract the initial cost. We can do this using the formula:

NPV = -Initial cost + Present value of net cash inflows

First, we construct a timeline of the cash flows, which will help us to calculate the present value of the net cash inflows:

Year 0: -$50,000 (initial cost)

Year 1-9: $10,000 per year (net cash inflows)

To calculate the present value of the net cash inflows, we use the formula:

Present value = Cash flow / (1 + r)^n

where r is the cost of capital and n is the number of years.

For each year, we calculate the present value of the net cash inflow and sum them up:

PV of net cash inflows = $10,000 / (1 + 0.09)^1 + $10,000 / (1 + 0.09)^2 + ... + $10,000 / (1 + 0.09)^9

PV of net cash inflows = $59,725.63

Now we can calculate the NPV:

NPV = -$50,000 + $59,725.63

NPV = $9,725.63

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If housing values rise nationwide, there will be an): A. decrease in wealth as consumers spend more income on mortgage payments.
B. increase in consumer spending at any given level of disposable income. C. decrease in aggregate expenditure. D. drop in investment spending.

Answers

If housing values rise nationwide, there will be an: B. increase in consumer spending at any given level of disposable income.

What is the reason for this phenomenon?

This is because the rise in housing values leads to an increase in wealth for homeowners, which can lead to higher consumer confidence and spending.

If housing values rise nationwide, homeowners' wealth increases. This leads to an increase in their perceived wealth and, as a result, they are more likely to spend more on other goods and services. This is because, with a higher home value, they have more equity and can borrow more money against their home's value, allowing them to have greater purchasing power. This increase in consumer spending will occur at any given level of disposable income and will lead to an increase in aggregate expenditure, which is the sum of all spending in the economy.

Option A is incorrect because if housing values rise, homeowners' equity increases, which means they are spending a smaller percentage of their income on mortgage payments, not a greater percentage.

Option C is incorrect because an increase in housing values would likely lead to an increase in aggregate expenditure, not a decrease.

Option D is incorrect because an increase in housing values would likely lead to an increase in investment spending, as real estate is a common form of investment.

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helps ensure that critical problems get priority over less important ones is called

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The term that describes the process of prioritizing critical problems over less important ones is known as triage. Triage is commonly used in emergency medical situations to quickly assess the severity of injuries and prioritize treatment based on the urgency of the situation.

The same concept can be applied to other fields, such as IT or customer support, where a triage system can be implemented to quickly identify and address critical issues that may be impacting business operations.

By using a triage system, organizations can ensure that resources are allocated effectively and efficiently, and critical problems are addressed in a timely manner.

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life insurance proceeds may be used to: multiple choice pay off a home mortgage. cover funeral costs. make charitable bequests. pay estate taxes. all of these choices are correct.

Answers

Answer:

all of these are correct

Explanation:

the payment to the beneficiary is their's to determine its usage.

lisa invests $5000 in a savings account with a fixed annual interest rate of 5% compounded quarterly. what will the account balance be after 10 years? (round to the nearest dollar)

Answers

The account balance will be $8,162 after 10 years.

Using the formula for compound interest, the balance after 10 years can be calculated as:

A = P * (1 + r/n)^(n*t)

A = the account balance after 10 years

P = the principal investment of $5000

r = the annual interest rate of 5% (expressed as a decimal)

n = the number of times the interest is compounded per year (quarterly compounding means n = 4)

t = the number of years (10 years in this case)

Plugging in the values:

A = 5000 * (1 + 0.05/4)^(4*10) = $8,162 (rounded to the nearest dollar)

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Sponsors of real estate deals often raise money from many partners. To avoid cumbersome federal regulatory filings (by meeting exemptions under Reg. D), these offerings are often limited to: Ch18
a. "Accredited" investors
b. Broker dealer networks
c. Licensed CPA's and investment advisors
d. Real estate professionals

Answers

In order to avoid complex federal regulatory filings and comply with exemptions under Regulation D, these offerings are often limited to "accredited" investors (option a).

Sponsors of real estate deals frequently raise money from multiple partners to finance their projects.
Accredited investors are individuals or entities with a certain level of financial sophistication, which allows them to participate in higher-risk investments. By limiting offerings to accredited investors, sponsors can meet the requirements of Regulation D and bypass some of the more cumbersome filing processes. This enables sponsors to efficiently raise funds while ensuring that their investors are well-informed and capable of handling the associated risks.

Thus, the correct choice is A- "Accredited" investors

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You are considering purchasing your first home in about two years in the Durham region (Oshawa, ON) at a cost of about $800,000. You want to make sure that you will qualify for the mortgage and you have the following personal situation.
Assets Value Liabilities Balance
Savings Account = $30,000 Credit Card = $0 (credit limit $10,000)
Car = $10,000 Car Loan = $5,000 ($300/month)
Wealthsimple TFSA = $3,000 Credit Line = $0 (credit limit $15,000)
Based on your personal information, what will you need to qualify for the mortgage in about two years? Consider the following to justify your reasoning but please note that there will be other factors to consider.
Down payment
Income
5Cs
Capacity requirements
Assume Property Taxes in Oshawa of about $6,000 per year.
Assume Utilities of about $300 per month.

Answers

To qualify for the mortgage in about two years for an $800,000 home in the Durham region, you should consider the following: down payment, income, the 5 Cs, and capacity requirements.

1. Down payment: A typical down payment ranges from 5% to 20%. For an $800,000 home, a minimum down payment of 5% ($40,000) is required, but a 20% down payment ($160,000) would help avoid mortgage default insurance costs. With your current savings of $30,000, you should focus on increasing your savings to meet the required down payment.

2. Income: Lenders typically use the gross debt service (GDS) and total debt service (TDS) ratios to assess your ability to afford the mortgage. To qualify, your GDS should be below 32% and your TDS below 40%. You'll need a stable income sufficient to cover the mortgage, property taxes, utilities, and other debts.

3. 5Cs: The five Cs of credit—character, capacity, capital, collateral, and conditions—will be evaluated by the lender. Make sure you have a good credit history (character), sufficient income and savings (capacity and capital), and provide collateral (your home). Additionally, consider current market conditions.

4. Capacity requirements: Ensure that you meet the lender's capacity requirements, including credit score, employment history, and debt-to-income ratio.

To improve your chances of qualifying for the mortgage, focus on increasing your savings for the down payment, maintaining a stable income, and improving your credit score. Keep in mind that other factors, such as interest rates and housing market conditions, may also affect your eligibility.

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Satchel Corporation purchases equity securities costing $73,000 and classifies them as available-for-sale securities. At December 31, the fair value of the portfolio is $65,000.Instructions:Prepare the adjusting entry to report the securities properly. Indicate the statement presentation of the accounts in your entry.

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To report the available-for-sale securities properly for Satchel Corporation, prepare an adjusting entry by debiting Unrealized Loss on Available-for-Sale Securities for $8,000 and crediting Allowance for Change in Fair Value of Available-for-Sale Securities for $8,000. To prepare the adjusting entry to report the available-for-sale securities properly for Satchel Corporation, follow these steps:

1. Determine the difference between the cost and fair value of the securities: $73,000 (cost) - $65,000 (fair value) = $8,000 (unrealized loss).

2. Prepare the adjusting entry:
Debit: Unrealized Loss on Available-for-Sale Securities - $8,000
Credit: Allowance for Change in Fair Value of Available-for-Sale Securities - $8,000

3. Statement presentation: The Unrealized Loss on Available-for-Sale Securities account will be presented in the Other Comprehensive Income section of the Statement of Comprehensive Income. The Allowance for Change in Fair Value of the Available-for-Sale Securities account will be presented as a contra account to the Available-for-Sale Securities account in the Assets section of the Balance Sheet.

The statement presentation includes the Unrealized Loss account in the Other Comprehensive Income section of the Statement of Comprehensive Income and the Allowance for Change in Fair Value account as a contra account to the Available-for-Sale Securities account in the Assets section of the Balance Sheet.

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